AK71: 'My total passive income from REITS this year is nearly $105K"

AK71 is single and has just turned 40. He is a business executive in a local SME. After selling his properties a few months ago, he moved back to stay with his parents. He started investing in the stock market as an undergrad although he had no knowledge of TA or FA. "Totally ignorant, I shouldn't call myself an investor back then. I am a little less ignorant now, I  hope," he says.

The following content is reproduced with permission from AK71's blog http://singaporeanstocksinvestor.blogspot.com

ON 7 DEC, I received income distribution from AIMS AMP Capital Industrial REIT. It was the final distribution for my portfolio of S-REITs this year.

Total income distribution received in 4Q 2011: S$ 29,040.65.

Add this to S$ 75,785.49 received in the first three quarters of 2011, the grand total for the year is S$ 104,826.14.

I received more income this quarter because I made use of the weakness in the stock market to accumulate more units in selected S-REITs.

I have imperfect knowledge definitely and I can only try to do the best with what I know. I don't spend time asking questions which I cannot reasonably find answers for.

As many may already know, it was after much deliberation that I decided to share in dollar terms the passive income I receive from my investments in S-REITs. From the flood of comments I received in my last blog post on the subject, I guess readers do appreciate this candid sharing.

However, I doubt such a blog post serves any other purpose than to show what is achievable if we put our minds to it. The message is really simple and it is meant to inspire.

Blog post on Sept 18: With the end of 2011 more or less in sight, I decided to take a look at how my aim to generate at least $50K in annual passive income from the stock market has fared this year. Of course, compared to the end of 2010, many things have changed. Don't they say that the only constant in life is change?

Saizen REIT was my largest investment up till early this year. The massive earthquake that struck Japan on 11 March 2011 left huge areas of the country devastated, areas which are economically important. I reduced my investment in Saizen REIT even though its buildings were largely unaffected with only a handful requiring repair work.

It was a decision premised upon possibly more difficult times that would hit the country and from a technical standpoint, further upside in its unit price could be capped. So, reading the charts back then, I waited for a rebound in the REIT's unit price and partially divested my investment in the REIT at gap resistance.

Next, I tweaked my portfolio with funds freed from the partial divestment of Saizen REIT. I further increased my investment in First REIT and initiated long positions in Sabana REIT and Cache Logistics Trust after doing the necessary due diligence.

Plaza Medan is part of the Lippo Malls REIT. The plaza's tenants include Carrefour, KFC, A&W, Electronic City and Timezone. The plaza's Net Property Income yield is 8.5%. Photo: LippoMall REIT

Not long after, I reduced my investment in AIMS AMP Capital Industrial REIT, shifting the funds from that partial divestment to Sabana REIT, in the process balancing the two REITs' weight in my portfolio.

In 2011, thus far, I have received income from the following S-REITs:

1. AIMS AMP Capital Industrial REIT
2. Saizen REIT
3. First REIT
4. LMIR
5. Cache Logistics Trust
6. Sabana REIT
7. Suntec REIT
8. Cambridge Industrial Trust
9. FCOT

Total: $75,785.49

The following are comments by some readers and AK71's replies. For the full works, visit AK71's blog 

>> Hwang said... AK, the number is IMPRESSIVE! Sure you can retire without headache anytime now :)

AK71 said...Hi Hwang,Generating an amount of passive income that is as much or more than our earned income is just the first step to a possible retirement, I have discovered.There are other obstacles to retirement from active employment besides not having enough money as no man is an island and decisions made will affect others around us.I must admit also to wondering whether my passive income is really enough to retire on. I have to care for my parents too.Recently, I wonder what would I do after retirement. I know people who retired rather young in life before they turned 40. Boredom is one thing they had to deal with. I have an idea what I might want to do but how sure am I? So, headaches don't go away but take on other forms. This could be something for another blog post when I do retire. ;)

>> Temperament said...Hi AK71,To me you are indeed a brave soul. My portfolio invested in Equity only amount to 30-33%. i presume you have a larger portfolio in equity. If not you are already a multi-millionaire. Now , don't be modest. Ha! Ha! Cheers & Shalom!

AK71 said...Hi Temperament, With the recent LMIR rights issue, I am more than 50% invested, for sure. I am probably closer to 70% invested now.I look forward to LMIR being a major contributor to my passive income stream in 2012.LMIR now joins AIMS AMP Capital Industrial REIT and Sabana REIT as my biggest investments.I am not likely to make any big moves in equities in the near future unless I see compelling value to add to my long positions.With the latest property cooling measures by the government, I am also looking to possibly buying a private residential real estate within the next 2 or 3 years at a much lower price. I will need to have cash on standby. :)

>> Serendib said... Hi AK, congratulations are in order. Earning a passive income of six figures -and free of tax / CPF too! Would you care to give some idea of what % yield this is? just curious as I figure that a dividend stock portfolio would yield about 6-7% pa on average.

AK71 said...Hi Serendib, Thank you. :)The distribution yields on cost vary from 7% to 17% per annum for the different REITs in my portfolio, depending on my entry prices and the DPU of the REITs.Please excuse me if I would not reveal how much in average is the distribution yield for the entire portfolio. ;)Yes, having tax free passive income is rather pleasing. :)

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