Cash Flow Advice Needed

Leveraging, renting vs owning, making an investment or buying a home?
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Meta
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Cash Flow Advice Needed

Post by Meta » 12 Aug 2015 03:52

Hi, I'm new here and also on a Financial forum so hope for your understanding in my lack of financial terminologies and abbreviations.
Also, I'm not in US but in Milan, Italy.
Makes it more unique or complicated, whichever applies best, my Villa/property is in Indonesia.
My question is: Cash Flow.
I'm recently widowed, a little over a year to be exact, and my husband has left his pension of which I obtain 60% and a Villa we purchased outright which is in Jakarta, Indonesia.
I lease out the house in US $ which is allowed in the country although it's been regulated that the local currency has now to be applied since last month. The income I made has given me a sound financial support but due to personal problem, my tenant had to move to a smaller place.
The apartment I live in Milan is on rental. The pension of my husband covers that but with no room to move for other expenses needed to live here.
At the moment, my Villa has been vacant for 2 months now and I'm in desperate need to look for a new tenant. Ads have been distributed on several sites plus I now have the website that's just recently designed.
I do have a loan from a private financial institution Euro 15,000 and it seems that I might need to add in the immediate future if tenant can not be found asap.
What should I do?
Your input and advice is very much appreciated.
Thank you.

longinvest
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Re: Cash Flow Advice Needed

Post by longinvest » 12 Aug 2015 08:38

Hi Meta,

Welcome to the forum.

This site is mostly focused on topics and concerns for Canadian investors. I invite you to post your question in the Bogleheads forums using the format suggested in the following post Asking Portfolio Questions. There are many Italians and Europeans who read the Bogleheads forums and should be able to help you.
Last edited by longinvest on 12 Aug 2015 09:51, edited 1 time in total.
Bogleheads investment philosophy | Simple index portfolios | Lifelong Portfolio: 25% each of (domestic/international)stocks/(nominal/inflation-indexed)bonds | VCN/VXC/VAB/ZRR

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Re: Cash Flow Advice Needed

Post by kcowan » 12 Aug 2015 09:13

When you post on either forum, it would be helpful if you shared numbers. The only number (15000 euros) is not very instructive.
For the fun of it...Keith

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Re: Cash Flow Advice Needed

Post by Meta » 12 Aug 2015 11:32

What does it mean using numbers? Thanks!

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Re: Cash Flow Advice Needed

Post by OnlyMyOpinion » 12 Aug 2015 11:52

Why are you maintaining a rental villa that is located so far from you? Is that your home, or do you visit there regularly? In other words - does it make sense to sell it and use the funds to help with your costs at home.
It doesn't sound like you are using a local management company to handle the ongoing maintenance, finding and checking out tenants, etc. If there is some compelling reason to keep the villa does it make sense to find a local company to manage it for you?

P.S. I think Keith meant that it would be helpful if you provided more details about your various expenses, assets/liabilities, etc.

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Re: Cash Flow Advice Needed

Post by Meta » 12 Aug 2015 12:01

Originally my Italian husband's idea to live in Indonesia, so, yes, it is our home. I have a housekeeper and a gardener/night security man working for me there as it is my home.
I manage all myself and only advertise on the Internet.
My Villa's worth today, I can only estimate, minimum US $ 800K and waiting for a new highway completed within 2 years that goes direct to the International Airport. Then I would consider selling which could probably fetch much higher even to a Million.
In the meantime, it is use for investment for now.
Hope this gives a clearer picture although not exactly in details as per your request.

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Re: Cash Flow Advice Needed

Post by Meta » 12 Aug 2015 12:08

Forgot to mention, yes, I am Indonesian so it is my original country.
And rental of the Villa is US$ 2500/monthly last year but this year 3000K.

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Re: Cash Flow Advice Needed

Post by kcowan » 12 Aug 2015 18:02

I think you have no choice but to put the Villa up for sale. Or move from Milan into the Villa. I suspect that the 15k Euro loan has the villa as collateral? Regardless, it is now ticking down and will be gone in a few months.

The advice of hiring a local agent is sound but I have no idea what the Jakarta market is like. It seems that it would be attractive to ExPats but I am sure that they get relocated by professional agencies. You should find them in Jakarta.
For the fun of it...Keith

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Re: Cash Flow Advice Needed

Post by Meta » 12 Aug 2015 18:19

That's very discouraging to know. As a pensioner, that amount of 15K Euro is below one can ask for personal loan without a collateral as max is E 30K. I don't see why I should sell the Villa when it is an investment. It's just that currently, there's no tenant. I'm much more optimistic than you which defeats the purpose of my asking your opinion. What a bleak take, sorry.
Thanks anyways.
Good night from Italyl.

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Re: Cash Flow Advice Needed

Post by OhGreatGuru » 12 Aug 2015 19:36

I think what kcowan was suggesting is that you need to examine if you can afford to continue owning the villa in Jakarta. Or, alternatively, if you can afford to continue living in the EU.

- Based on the limited information you have provided, you do not have sufficient cash reserves to meet your needs if there is any interruption in the villa tenancy. (You had to borrow money because it has been vacant only 2 months).
-Even when you succeed in renting it, the government has passed regulations that rents have to be fixed in the local currency, not in USD. So your future rental income is going to be subject to currency risk between Indonesia and EU.
- managing a rental property at such long distance is difficult without a local agent. Paying one is going to cut further into your net rental income.
- gambling on a future increase in value due to a politician's promise of a new road is just that - a gamble.


If the villa can be sold, and the government will allow you take the net proceeds out of the country, you need to consider if taking the money and investing it would solve your cash-flow problems.

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Re: Cash Flow Advice Needed

Post by Meta » 12 Aug 2015 19:58

This sounds more rational and reasonable for me to accept and understand. E 15 K has been a necessity debt made for paying off my late hubby's credit cards among others and not so much on my personal expenses since sufficient fund from the rental income of approx., E 23K covers that. But yes, it does make sense to reevaluate on what steps to take; to wait for capital gains by continuing owning the Villa for another 2 years with the hope villa tenancy will be resolved soon in which case I'd have a win-win situation or selling it now and buy an apartment there for continued investment or buy the apartment I live in here in Milan or both.
Your response has given me a clearer vision on how to proceed.
Thank you. Much appreciated.

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Re: Cash Flow Advice Needed

Post by kcowan » 13 Aug 2015 09:30

Sorry if I came across somewhat black and white. I have the benefit (?) of having a friend who does an occasional consulting contract in Jakarta. And my former Board Chairman also worked in Indonesia for several years. Both of them would not recommend speculative holdings there. Because your are a native, maybe it is safer. Good luck in getting the villa leased out. Just set a timeframe after which you will take more drastic action if it does not happen.

(I would choose Milan over Jakarta any day. I hate humidity. I had the benefit of working in Kuala Lumpur when even the locals were complaining of the heat!)
For the fun of it...Keith

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Re: Cash Flow Advice Needed

Post by Meta » 13 Aug 2015 11:19

Thank you kcowan for your very kind response. Yes, I was also somewhat in fear given that I now have to make decisions on my own that my sensitivity is quite heightened lately.
Yes, I agree with you in that the best way for now is to hold out some more by trying to lease it with hope that tenant soon comes out of the woodwork. How fortunate I was last year that in the mids of my confusion of my husband's demise, after only 3 days I put it on ad, a tenant contacted me and 3 days decided to take the house after an immediate visit and in a week, they transferred the whole 1 year rent into my bank account without even having to sign the contract. Merely by exchanging documents via email and phone calls, all proceeded smoothly. I went to Jakarta myself 2 weeks after to sign at this prestigious office of this tenant. It was so fast that it didn't even sink in for many months after.
Now I've on ad for 4 months and still no suitable tenant found.

As for your advise on Milan, you are right. In fact, I have chosen Milan over Jakarta, exactly for the same reason you wrote. Climate! I'm native and have lived back there for 2 years (2012 -2014) and couldn't cope. Yet, there's a beautiful swimming pool at the Villa and all the amenities. Also A/C that by today, is everywhere.

Wish me luck for obtaining a new tenant, thanks again for the attention given.

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Post by Meta » 19 Jun 2017 08:22

Could Administrator delete my post please. Thank you. All the posts of this topic of mine. Thanks.

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