Today our CEO held his quarterly staff communications session in which he shared with us the financial results and quarter plans. I like the way this CEO talks. He has the ability to speak smoothly without a script and add punch lines at the end of some facts. He also made the financial results seem easy to understand for those who are not in the finance department, almost teaching us certain terms in a mentor like manner.
Some points of the session which I thought are wisdomic in nature and these are all related to real estate:
- Debt-Equity ratio is crucial to the longevity of a real estate company. Some listed companies may have borrowed much more than they can afford, in order to buy land. The more land they buy they are able to increase the value of the company and the share of the company will increase. This can go on until the economy hits a bad patch and banks run into a credit crunch and high interest rates. When the time comes for the company to construct the actual building, they will find it hard to borrow from the banks to build and they will be under pressure, as some governments will confiscate the land back if there is no development for a few years. So if you ever want to join a company it is good to find out about their debt – equity ratio.
- Your job will grow on you. Nobody ever likes their job 100%. A comparison is wine and beer, where it is hard to like it at first and slowly you learn to appreciate it more and more.
- When buying a house, always check your affordability power. A rough guide is that the monthly installment should not be more than about 40% of your monthly income.
- Singapore real estate climate is such that property price is going to get higher and higher in the long run. It is a rising curve with ups and downs. With increasing population and a limited land mass, prices can only go up….freehold will rise higher than leasehold
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