Sunday, February 10, 2008

How healthy is your bone?

Few weeks ago, I walked by in the grocery store and somehow accidentally did a bone health check (attracted by a pretty promoter). :D It was organized by Anlene in worldwide. What surprised me was not my result but the result of a young guy who queued in front of me.



I am happy that I have the highest score that indicates my bone is at healthiest level. However the fellow in front of me has -2 score. He is very young and looks really healthy. So I silently peek on his personal particular data, he is just 27 years old! Oh my god, 27 years old at the moderate risk?

This tells me that bone problem (sound more technically it is called Osteoporosis) does not happen to old guys only but also young guys. I read the handout from Anlene and it says the following which may explains why this guy has a low score.

“You may think your bones are strong this is because you feel strong from the outside. What you don’t know is your bones could actually be rotting and decaying form the inside.”




“Do you know that your bones have 2 layers? The outer layer is hard and solid. But the inner layer is sponge-like, making it weaker and more vulnerable to decay. Because of this, bone decay usually goes unnoticed, until it’s too late.”


Understanding Your Bones

You may not aware that our bone is living and growing tissue. It is constantly breaking down, rebuilding, regenerating and repairing itself. Through this cycle, your entire skeleton is completely renewed every 10 years. Because of this reason, you can change your health bone status to become better or worst. Since I have a healthy bone now, I will have to make sure I maintain the healthy level:
  1. Continue my exercise routine (At least twice a week)
  2. Continue eating diet rich in calcium (E.g. Milk, yogurt, fruit and green vegetable)
  3. Continue my healthy lifestyle
    • I smoke and drink alcohol occasionally but I guess I have to stop smoking completely.
    • I think I will still drink alcohol occasionally because I think drink a little bit is in fact good for health. Is it the true?
    • I will still continue drinking coffee but maximum is 1 glass per day.
  4. Perform bone health check in every 5 years.
Do you have a healthy bone? Maybe you should start doing bone health check now if you haven’t done so :)

Friday, February 01, 2008

Calculate Investment Return on Real Estate

If you buy property or real estate, how do you calculate the ROI (Return of Investment)? Is it by your rental income or capital gain? Do you include the ownership fees to purchase your house? How about renovation cost? Let’s look at the calculation below how to calculate the ROI by rental income and capital gain. Calculating the ROI for property can help you decide whether you should buy that house or not.


ROI by Rental Income

If you purchase a house for the purpose of rental income, you may want to calculate your ROI based on rental income.

Property Purchase Prize: $180K
Ownership Fees: $2K
Renovation Cost & Furniture: $40K

*Ownership fees are legal fees, government stamp duties, loan agreement fees and etc.

Total Purchase Price = $222K ($180K + $2K + $40K

Maintenance Fees (Monthly): $100
Monthly Rental Income: $800

* Maintenance fees are insurance, security fees, property damages and whatever cost to maintain the house.

Monthly Net Rental Income: $700 ($800 - $100)

ROI = Net Rental Income for Year / Total Purchase Price X 100%

ROI = 3.8% ($700 X 12 / $222K X 100 %)

So, the ROI for income rental gain is 3.8%.



ROI by Capital Gain
Total Purchase Price: $222K (Calculated from above)
Selling Price (in a year): $230K

ROI = ($230K - $222K) / $222K X 100%

ROI = 3.6%

So, the ROI for capital gain is 3.6%.

If you purchase the property for the sake of investment by earning the rental income, the ROI is 3.8%. To be more optimistic, you may also include your capital gain which is 3.6%. So the total ROI for the house that you invest is 7.4% (3.8%+3.6%).

If you purchase the property for staying, you can only calculate the ROI based on the capital gain. In this case, your ROI is 3.6%. Please note that you’re now enjoying the house and at same time you’re also enjoying the capital appreciation at 3.6%. Isn’t this a perfect investment?


My 2 Cents

If I am buying a house for investment by renting out my property, I would look at the property that has at least 7% ROI (exclude the capital gain – conservative calculation). Reason is the Fixed Deposit (FD) is 4% and my average investment return from unit trust is 7%. If the ROI is less than 7%, I may as well invest it in unit trust. Remember that the rental income gain or capital gain from property is not the actual gain because we haven't consider the mortgage interest yet. On the other hand, if I am buying a house for staying, I will also look at the property with at least 7% ROI as well. The reason is same with what I mentioned.

How do you calculate the ROI for your property? What ROI value will make you decide to buy the house? Do you really calculate the ROI when purchase a house? If no, maybe it is time to think about it.

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