Friday, May 31, 2019

What do they really teach you in Real Estate Seminars ?

Image result for real estate seminars

For a trainer, I am actually pretty noob when it comes to attending other training seminars previews.

But to improve on my own presentation style, I have started attending the previews from other course providers because there's always room for improvement. Because of the embarrassment of getting noticed, I try to avoid investment seminars and focus on training seminars in other fields, so this week, I attended a real estate seminar and can't help but feel that training courses in this domain may be based on a lot of dubious fundamentals.

Without revealing the specific seminar I attended, I will just share with everyone what I learnt. 

Note that I am not an expert in residential properties, so feel free to correct me if my analysis is wrong.

General Strategy - The general strategy proposed in this seminar is that a working couple who is currently sitting on a private property for the past 5 years should sell it and trade up to two pieces of property - one property under the husband and one property under the wife. The couple will live in one property and rent out the other for passive income. Rinsing and repeating this every 5 years will make you a millionaire. 

I see a lot of flaws with this suggestion :

a) These strategies depending on drawing down CPF for passive cash flow.

If you look at the math, for the property that is rented out, rental income these days can seldom cover your monthly mortgage payments, but because monthly payments is covered by $1,200 from CPF, the rental income can become net cash flow positive. 

This is not real passive income but tantamount to drawing money from CPF instead which is already your money. Furthermore, it deprives you from the nice guaranteed 2.5% from the Singapore Government.

b) You will not get a tenant renting the second property all the time.

Even REIT investors get worried about tenants. SoildBuild's primary issue has become that of rent coming from NK ingredients. 

When you have one property, you either have one tenant paying rent or it lies empty and you get zero rent for a particular month. In those months when you have no rent, you are likely to be cash flow negative.

c) Things can go south very quickly when interest rates go up

SIBOR is rising as we speak and I've been paying a lot more every month since the Fed have started raising interest rates. When SIBOR ratchets upwards, you are unlikely to be able to raise rents at the same time and this will have a negative effect on your cash flows.

d) Property taxes are conveniently ignored in calculations.

Owning real property is different from owning a REIT due to taxes that have to be paid for property ownership. Rental income also flows into assessable income every year. 

No attempt was made to quantify this. 

e) The thesis that real estate will appreciate just like in the past is questionable

I have to be careful when saying this because I do quantitative backtesting so I may actually be committing the same sin. 

But when it comes to residential real estate, we know that price appreciation are probably more dependant on whether we will welcome foreign labour in the future and whether cool measures will continue. This thesis has to confront the fact that younger workers are increasingly finding it hard to own real estate because of the nature of their work. It does not help that fresh graduates are finding it harder to get permanent jobs 6 months after graduation.

Commercial property managed by REITs is simply not as big a political time bomb as real estate property. 

f) The trainer actually gets many bites of the cherry 

A lot of these seminars are taught by real estate agents. 

I suspect that trainer fees are not the only payments that the trainer will receive. Subsequent real estate transactions will also be serviced by these trainers. Does this introduce a conflict of interest when trainees are nudged to buy/sell properties through these trainers ?

Anyway, feel free to share what you do know about these seminars and correct my misconceptions if there are any. 

It was quite fun to learn what other trainers are teaching. 


  1. No difference from attending investment course and followed up by monthly subscription for software and more subscription to follow insiders tips. Some even have monthly get together workshop at discount rate.

    Trainers need regular cash flow to survive and truly passive income without market risk.

    I have attended many previews until I attended some twice after many years. Free lunch provided. Why not?

  2. To advise tapping on CPF for property speculation is irresponsible.

  3. The seminar is actually a front for potential investors to be members of a property club. Members of thes clubs then buy properties in bulk or multiple purchases with hopefully fat discount from developers.

    These Trainers, most of them property agents, make a cut from sale transactions, subscription fees, course fees and membership fees. This concept is not new and many of these old seasoned ‘trainers’ have gotten into trouble with the law. Instead of recruiting for members directly, they use lures and schemes to entice these people into their talks. One of the faves is how a working couple staying in a HDB flat can buy two properties, one to stay and the other to rent out. There are many pitfalls.....

    If the Scheme is so lucrative, these Trainers need not have to organise seminars for a living. DO NOT believe these CANT about wanting to share, to enrich you, etc etc.

  4. Hi all.

    I always have the mindset of "There is no free lunch in this world". I will not go for seminars even if they are broadcast to be free.

    My two cents of views.


  5. There is free lunch provided and they are confident that cost of free lunch is covered by few sign up.