Wednesday, March 31, 2010

Monthly Review - March 2010

March was another positive month for financial progress with small gains on my investments and positive cash flow on my properties being partially offset by closing costs on the latest property purchase to produce a solid if unspectacular gain in net worth. Savings were low.

Here are the details:

1. my Hong Kong equity portfolio appreciated. There were no trades this month

2. all of my ETFs appreciated (Hong Kong, Russia, Taiwan and India)

3. my commodities appreciated slightly

4. all of my properties are let producing a positive cash flow and contributing to the gain in net worth. One tenant has fallen into arrears

5. currency movements produced a gain as the USD depreciated

6. I did one ELD over China Construction Bank

7. savings were positive but limited due to a combination of income at the low end of expectations and expenses being high.

My cash position took a major hit this month with the completion of the latest property purchase (a JV with mrs traineeinvestor). The expenses (air ticket, hotel etc) for both a short holiday with mrs traineeinvestor and the airfare for the family's annual visit to my parents all hit either the bank account or the credit card this month.

I have started making an accrual for redecorating our apartment next year.

For the month, net worth increased by 0.9%. The year to date increase is 7.0%. A good start to the year.

Friday, March 19, 2010

Equity put option written

This morning I wrote an equity put option. Details are as follows:

Underlying: China Construction Bank (939)
Strike price: $5.94
Market price: $6.24
Annualised premium: 8.06%
Term: 1 month

China Construction Bank is a company that I would be happy to buy for the long term. In fact, I came close to simply buying the shares directly.

Saturday, March 13, 2010

Lease renewal

Not only have property prices risen over the last 12 months, but so have rents.

One of my leases ran out at the end of February. The tenant gave notice that she intended to move out claiming that the new rent I was asking for was too high. I agreed that she could remain in occupation for an additional month on condition that my agent was allowed to show prospective tenants through the flat on reasonable notice during that month.

Two weeks later, she is asking my agent if I am still willing to renew. Apparently, my asking rent was probably a bit on the low side and she could not find a similar apartment at a cheaper rent. Needless to say I said yes. I avoid a break in occupancy and I keep a tenant who has been in occupation for three years during which she has paid the rent on time and has only called requesting repairs twice (both of which she was quite entitled to do).

The 14% increase in rent is nice. To put that in context, it will pay the school fees for one of my children for this year. The no vacancy factor is also nice as it avoids both a break in cash flow and having to do some cosmetic repainting. The only minor irritant is that if she had agreed to my proposed rent in the first place I would not have engaged the agent. As things stand, I have to pay the agent his commission. Fortunately, he has agreed to only charging one third of his usual rate for this one.

Friday, March 12, 2010

Property Purchase - Update

The latest property purchase is due to complete next week.

We have arranged financing for 50% of the purchase price. The key terms are:

1. interest rate: 1 month HIBOR + 0.65%
2. interest cap: Prime -2.75%
3. cash rebate: 0.6% of loan amount
4. early repayment penalty: partial during first two years
5. term: 20 years P+I

We have also found a tenant for the carpark. The carpark license will commence on completion so that there will be no break in rental income.

A brief visit to New York

My employer sent me to New York for three days on business. Given the logistics and costs of getting to the US from Hong Kong, I added a couple of extra days to the trip to do some sightseeing.

It was well worth it. The highlight was the full day spent in the Metropolitan Museum - one day was all I had and it was not enough. I also went to MOMA (also excellent but very crowded), took in a play on Broadway (A Behanding in Spokane starring Christopher Walken - very funny) and a musical (Mamma Mia - also good fun). I stimulated the local economy by buying some gifts for the children (made in China !).

The procedures on arrival and departure through JFK were quick and efficient. No TSA horror stories to report.

Needless to say, I ate too much (why are the portions in American restaurants so big?).

I'm already plotting how to arrange another trip.