Pay off mortgage or buy second property

Hi property gurus - I have about $2.5M left to pay for my current mortgage and I was wondering whether I should pay off this current mortgage or, buy a second property with this $2.5M that I have. I have a good long term job here so my father is suggesting me to invest in another property but with the expensive stamp duty etc for a second property buyer is putting me off.

Please may I have your advice on this. What would you do if you were in my shoes?

Cheers,
KM

I am also in the same shoes. I am trying to find something for my future retirement. MPF has turned us down. In 17 yrs to MPF investment we have no gain. I think only HKG property is the last resort which can give at-least 2% secured return. Thanks.

I am also in the same shoes. But I think with current prices there is only one thing to go: down. I also fear a nuclear war in North Korea (the only way Trump will not get impeached), which will result in a crash of 50% of property values in Hong Kong. I think other options are cheaper and easier, for example a purchase of Reit Link (or another reit) which gives you higher returns than properties (properties give you a yield of 2%, Link Reit close to 3%, and no stamp duties, and no worries about tenants who don't pay and move out every 12 months, forcing you to repaint the house?). Anyway, I am waiting, if there is a crash I will buy another flat, but at today's prices not.

Thanks for your comments. Yes, I am looking into Reits now - am "financially" dumb so I researched a lot and am meeting my banker today :)

Please do post opinions & suggestions from your Banker. We all have to find ways to protect value of our savings against rising inflation. Thanks.

There are options other than purchasing a house if you are looking to make small gains. And please don't listen to your "banker" since they will only sell you things that they want you to buy and not things you should be buying. I find HK bankers to be exceptionally terrible with their sales tactics.

My suggestion is that you can buy some bonds with about 3% return. If you are with HSBC, I see quite a few of them, and they have ratings that tells you how good the borrower is. They are typically safe if you recognize the name. There are some major mainland banks that Chinese government will do everything to protect so they are fairly safe.

The other suggestion is to buy 2800 tracker fund of HK. This covers entire Hang Seng Index. HK government created this fund to during the 1997 Asian Currency Crisis and now managed privately.

I would imagine that being better options than just buying 2nd property with the high stamp duty and high valuation (this depends on perspective). Just my two cents, I have investing background but I'm not a financial planner.

Be very careful about any advice your banker or any other adviser suggests. Specifically, I personally would not touch anything that includes an insurance component or has any kind of commission or front or back end sales charge attached to it. I would also avoid anything that is sold as an annuity in HK and anything exotic such as art, wine or other collectables. There are a variety of packaged investments in non-mainstream assets which get peddled around by financial planners which are generally high-risk and illiquid. I've been offered everything from emu farms, exotic hardwood and bamboo plantations, hydroponics, oil leases, real estate in places I can't spell and leveraged FX and have always been happier when I haven't purchased.

I agree that property in HK is overpriced (but don't listen to me - I've been saying that for years) even before the ridiculous stamp duty is factored in and there is better value in the share and bond markets if you can live with the risks. If you are risk averse and/or not familiar with investments, the best bet is to start reading a few books and stick with low cost index funds (like HK Tracker mentioned above) and govt + investment grade bonds to start with.

I manage my own investments but am definitely not qualified or competent to give advice so this post is worth precisely what you paid for it.

As Cuban said: give that man a cigar! :D

buying a property entitles you to get financing from the bank. the leverage is pretty good. for every three dollars you put into the property, the bank lends you seven dollars. you are employing opm (other peoples money) . the cashflow can be managed very well if you are experienced in sourcing quality tenants. with the monthly cashflow and future capital appreciation in the long run, property investment is a good hedge against inflation. i rented a 3 bedroom apartment to a family ten to twelve years ago. the family has been consistent in paying rent for more than ten years. finally they decided to buy the apartment from me at a fair price. i not only profited from the monthly positive cashflow but also the capital appreciation of the premise. so i helped them finance and get a decent mortgage while i also helped them to secure an extra parking space for a reasonable price. so if you know about real estate, you can make a reasonably higher return on your initial capital to invest in real estate. the most important thing in real estate are that you have control over your investment and you employ leverage to magnify your return. a word of caution, you had better harness the power of leverage cautiously because leverage can make you rich or make you poor. what i suggest is if you want to be inside of an investment, choose to work part time in a realtor office and pretend you are helping their business. in fact you have access to vast database and inside information about a hot bargain deal. i suggest you only work partime sacrifising your weekend working in a realtor office getting into the inside of a business without cost is the best way. most realtors i employ are fairly well off these days because you are inside the deals in this property booming era. learn first, be patient before you earn. you can turn your million into multi million if you know what you are doing with property deals

Hi Kissy,

I agree with most of what @traineeinvestor has replied to you. I am an independent broker so can give you a good oversight into all your options.
Feel free to drop me a whatsapp, message or call on +852 67313411

Here's what I did:
I sold ALL my Hong Kong property, and invested elsewhere where I get higher yields.

I missed out on some gains - but I got better gains where I invested PLUS better cash flow

Richie,
If you truly have many good ideas, surely you can give us all a taste of them here.
If you only have one or two, I understand why you have to be guarded, since that is your lifeblood,

Personally, I have always been happy to share ideas freely, and I have had plenty of great feedback and ideas in return.

Check out Philaprime dotcom, or MakatiPrime dotcom, if you want to see some data and charts on places that I am finding interesting. Or ask questions here, You will find many (old) threads I started years ago on AsiaXpat loaded with insights, data, comments

BTW, Trump is not going to get impeached, he is too busy saving the country from the excesses of the Deep state and past presidents. Crimes of his opponents become more apparent every day

I'd take the (free) suggestions of TraineeInvestor - who is actually a seasoned pro - ahead of almost any commissioned salesperson

Don't forget, leverage is a double-edge sword and will HURT you in a falling market