A successful investment on the property market

My girlfriend and I bought an apartment with the goal of making money out of it after some minor renovations to make it even more attractive.

 

We were unfortunate to buy the apartment when the economy and property prices were on top 2007. Luckily we had decided before buying the apartment that we would stay here for a while in case the property market would go down and until the market would recover.

 

I still remember how angry I was when we bought the apartment. We had in my opinion paid far too much for the apartment. The apartment was sold for about 20% more than our original budget! I called my girlfriend and complained about the high price, reminding her that my sister had bought her apartment a lot cheaper in a much more desirable location (even though it was a few years ago). And if this wasn’t enough - a few months after we had purchased the apartment the house prices started to fall. Imagine our frustration for the bad timing…

 

 

 

 

 

 

 

 

 

 

 

During the period we lived in the apartment we only made some smaller adjustments since the apartment was basically fully renovated when we bought it. We installed wardrobes with more space and made the kitchen more convenient by installing some more cupboards and a built-in microwave. It was quite nice not to have to do too much work the first time we bought an apartment for renovation purposes J .

 

2010 property prices were back to the levels of 2007 we decided it was time to move to another apartment and invited a few brokers to come and evaluate the apartment. The price evaluation varied from less than we had bought the apartment for, to a profit of +20%. That’s a huge price range, considering brokers claim themselves to be “apartment sales specialists”! We had one of the leading brokers in the area over (an acquaintance of my sister) and she actually gave us the lowest price estimate of all brokers! I remember she said “10 years ago it was impossible to sell in this area and it is still difficult”, hinting that it was going to be really difficult to sell our apartment. And she also mentioned that the open floor plan style we had was out of fashion – no one wants it nowadays. I wonder if this was her strategy, to talk down the apartment before selling it and then “surprise” us with a good selling price… However, we didn’t choose the “top broker” and ended up having an extremely good sales price, +33% compared to our purchase price! Not bad considering that the market prices basically were back to the same levels as when we bought the apartment.

 

Since the loan conditions were very good at the time we bought the apartment we only had a down payment of about 2% of the apartment price (sounds crazy, considering it is currently about a minimum of 15% down payment!). This gave us a fantastic leverage on invested capital!

 

In my next posting I will tell you about my top tips how we made this property investment so successful, so stay tuned and subscribe to my blog, don’t miss out these interesting stories!

My alternative investment in teak plantation, Panama

“Timber is one of the safest and steadiest growth investments available, protecting an investor in times of inflation, and providing returns that have beaten almost every other investment sector over the past 40 years. Teak in particular offers one of the best values and highest yields in the timber sector. It is a small niche segment of the timber industry and is managed by smaller, privately owned companies rather than by big institutional operators…” (read more about teak investments on http://www.nuwireinvestor.com/howtos/evaluating-teak-and-timber-investment-opportunities-53585.aspx)

Investing in a teak plantation year 2007 was my very first alternative investment. It was exciting from the very beginning, starting with convincing my girlfriend about the great advantages this investment had to offer, since I didn’t want to take on the risk alone... The investment time is very long (20 years), so my girlfriend and I made a huge commitment back then to each other (even though a 2^nd hand market for the investment exist, but will most likely not generate as good ROI as sticking to the original investment plan). Apparently she is happy both with the investment and me, since we are now married and have a wonderful baby!

This investment company (Teak Invest, http://www.forwood.com/en/) started actually quite early with teak investments, around year 1999/2000. Already back then I was keen on investing with this company, but since a capital growth rate of about “only” 10% was predicted I chose to continue with stock investments, where I had a significant higher capital growth rate thanks to my successful investments on the stock market.

One of the reasons why I later on chose to invest in this alternative investment is that it has a steady growth pace and is less volatile than the stock market. I used to do quite well for an amateur investor on the stock market, thanks to being well informed about stock market opportunities as well as the micro- and macro conditions affecting the stock market. However, I had some changes in my life that distracted me from the stock market information flow, which made me rethink my investment strategy. In order to be on top - and stay on top - when investing in stocks you need to be continuously well informed about what is happening with your investments. Bad news on the stock market can quickly affect the value of your investment negatively. I needed an investment type with slower pace, both information flow- and volatility wise. Therefore I found the teak investment as a great opportunity: stable growth and I did not have to be on top of the information flow (as there is not much information to consider and act upon).

So far I am very happy with my investment. I get regular updates about the plantation and apparently the plantation I invested in is the most prosperous among Teak Invest’s plantations this far. Hopefully it continues like that! In terms of return I am also content. If we assume that the investment grows with 10% per year this would give us, now 5 years after the investment, a return of 61%. However, I actually bought the investment during a promotion where I got 10% off the regular investment price. Considering this fact I have made a 79% increase of my investment this far, assuming that the real value of the investment still was the original price without promotion. Not bad at all!

One perk I really appreciate about this investment is the opportunity to visit the plantation. The investment company has regular trips to the plantation and I plan to make a trip to see my investment in a few years together with my family, combining it with vacation. I think the teak plantation visit would be a terrific way to teach my children about getting interested in the private economy and understand different ways to saving and investing their money.

Tectona Capital (http://www.tectona.se/) is another investment company offering teak plantation investments in Panama (for as little as 5 500 kr, i.e. about 600 EUR). I have followed this company for a while and it seems to be doing well and has expanded its business, which always is a good sign for successful companies. Tectona Capital also offers a property fund investment, focusing on the Panama property market. I will write more about property investments later in my blog, so stay tuned and subscribe to my blog, don’t miss out these interesting stories!

Introduction to my alternative investments portfolio

I would like to give you an overview of my alternative investments. As you can see from the table below I started 2007 with my first alternative investment. There is quite a diversity of investments and lock-in periods.

Type of investment	Description	Year purchased	Lock-in time
Forest	Growing and owning trees at a teak plantation in Panama	2007	20 years
Property	Apartment to live in and refurbish	2007	None
Automated / robot forex trading	Automated grid-trading forex product	2008	None
Property	Apartment to live in and refurbish	2010	None
Forest	Investment in Baltic forest	2010	5 years
Land development	Land development in Russia	2010	3 years
Carbon credit investments		2012	1 year
Forest	Teak Brazil	2012	Min 3 years
Automated / robot stock trading	Automated stock trading product	2012	None
Forestry	Eucalyptus investment, Brazil	2012	6-7 years

I will elaborate on the "return on investment" status and give general reflections for each one of the investments above in upcoming posting. So stay tuned and subscribe to my blog, don’t miss out these interesting stories!

I also own stocks and funds, and I see alternative investments as a great complement (especially now, considering the unstable financial market climate that has dominated for a long time). Daily Finance noted in an article roughly two years ago: “If you invested $1,000 in the S&P 500 10 years ago, you would have only $850 today. And that's in nominal dollars, not factoring in inflation. Ouch.” (http://www.dailyfinance.com/2010/10/29/top-10-stocks-of-the-last-10-years). Some alternative investments have had a really good journey during the same time. For example, gold has made a 400% increase during the same period…

 

Introduction of my blog

Welcome!

This blog will mainly focus on stock market-alternative investments such as forest investments, land investments, property investments, hedge funds, forex investments, and other interesting ways of making money.

The challenge with investment prospects is that there are far too many of them out there, and all of them sound very seductive. Can it really be true that every deal from every financial advisor will be successful? The answer is of course No - not everyone has successful investment offerings. But the tricky part is to sort out the lucrative investments. I have looked for a blog that is independently evaluating different investments but haven’t found any unfortunately. Therefore, in this blog I am investing my own money and give you direct feedback from the investments, informing you how much money I make from each one of them. That is why I call this blog experimental – I am trying out different investments that look attractive from the prospects or by rumors, and trying out if they really are as good as they seem to be! This can provide inspiration for how you invest your own money by following my success and learning from my mistakes! J

In this blog you will also read about my reasoning behind my investments, discussions about prospects, and other financially interesting topics.

You are more than welcome to take part of my updates of this blog, and I look forward to having you as a reader and I appreciate feedback! Please also feel free to give me suggestions of alternative investments to explore and to invest in.

Enjoy the reading!

Chris