A word of caution

Daddy!! SG

if you are considering to buy a private property, be mindful that small developers might not survive and go bankrupt before completing their projects.

reyes SG

well you have to check the short term debt of such property players.

i ever saw an article surveying these companies. few of them have a huge debt mature in 2009. if they fail to find finances for repayment, bank might not want extend terms due to weak performances of property market.

4sg SG

timely advice.....but wonder if it would be easy to trace their cash flow.

reyes SG

u can check them via SGX official website. most publish their quaterly statement there and there is section that will indicate their short term debt. short term debt = debt maturing in less than a year.

4sg SG

thnks

reyes SG

short term debt is just one of the way to judge the solvency of these company and cannot be use just to see whether such company will be bankrupt or not.

just my personal opinion.

4sg SG

short term debt is just one of the way to judge the solvency of these company and cannot be use just to see whether such company will be bankrupt or not.

just my personal opinion.

Yes, I agree short term debt is a snapshot of the financial health of the co. at a particular point in time.

But the harder element to trace would be the daily rolling in and out of cash/debt of the co., also known as cashflow. I heard that this is one major killer for a co. in financial diff.

reyes SG

yeah, like our company, not alot of cash, and everymth need to borrow from bank but business is profitable every year since we started, + we have a parent company that are big, lean business operation. bank knock on our door to offer money.

so debt solely is not deciding factor for company solvency.

angel7030 SG

cashflow gentlemen, whether borrowing or lending, your cashflow must be smooth to flow on...otherwise, appearance and books may look profitable in full blue or black in paper, but the flow may get stucked somewhere and before one knows it, bankruptcy might be on the horizon.

So, gentlemen, watch your back ya

Daddy!! SG

there are many small developers who bought a few landed properties and then sell the site as condo projects. These developers are not large enough to be listed on SGX.

Bankruptcies could occur on two fronts: both on the developer as well as the construction contractor. Due to their dire financial situations, some small developers would have to cut their price by more than 40%. It sounds like a good deal. However, banks now require 35% to 40% downpayment before they approve the mortgage loans. In other words, if the developer collapse, it would be difficult to reclaim 100% of the downpayment.

In other words, it would be safer to buy resale units which you could walk in and view rather than those which have not TOP.

4sg SG

timely advice indeed.....