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24 & 25 September 2016 (for weekends I’m planning to produce a short article for your leisure reading).

Today, in The Star newspaper, there are no less than 3 agents promoting properties in Australia. Most of the time, to entice you to buy the promoted properties, it is advertised that you will get no less than 5% rental yield.

Many years ago I published an article in my old blog called Generations X Y Z where I highlighted that if you are taking a loan to purchase an apartment in Australia, 100% of the time, your effective yield will be negative.

Even if you pay cash for your apartment in Australia, you’ll be lucky if you can get 1% effective yield.

Assuming you do get 5% rental income from your apartment in Australia.

Do you know that you are taxed 32.5% even if you just earn AUD1 (click here to ATO website and see it for yourself). And yes, you need to declare your rental income yearly to Australia Tax Office and pay taxes (click here to ATO website for more info)!!! And if you are losing money from your investment, it’s best to still report it to ATO yearly so that your accountant can deduct them when working out the Capital Gain Tax you need to pay when you dispose of your property.

Firstly, you have to pay the agent about 1.8% fee to manage your property. Thus, the rental yield reduces to 3.2%

Wait, there’s more…. you have to pay Body Corporate Fees, Local Council Tax, Water Tax, maintenance to your property which can be damn expensive and troublesome, etc, etc, etc, which will add up to more than 10% (more like 20% or even more) of your rental income; thus reducing your rental yield to near ZERO or into the negative zone.

Assuming that after deducting the above expenses, you still have net positive income, you’ll then be taxed 32.5% by the government of Australia!!!

Generally, rental rates have dropped throughout all major cities in Australia except for Canberra and Sydney. As for Melbourne, apartment rental rates have been stagnant for years as there are just too many vacant apartments. Below is a table from Domain dotcom dotau published in  June 2016.

australia-rental

If you are seriously thinking of investing in an apartment in Australia to earn some pocket money, click here and read an article on what Mr. Harry Triguboff, the biggest apartment builder and 3rd richest man in Australia, said about the apartment market right now at this moment.

And recently, The Daily Telegraph reported that in Rushcutter Bay, an inner Sydney suburb which is minutes from Sydney CBD, apartments there experienced up to 24.7% price drop!!!  Click here for the link, but you may not be able to read it unless to do a google search your self with the key words – “Sydney Rushcutter Bay property price drop”.

But you know me lah, when I provide you info it’s never hanging or incomplete, so here’s the article from The Daily Telegraph published on 9th September 2016:

sydney-property-price

However, there are pros and long term advantages in investing in Australia and just like anywhere on earth, landed properties are the best. As for apartments, just like Mr. Harry Triguboff said, many mainland Chinese are failing to settle their off-the-plan units (new units bought directly from developers), which means their 10% deposit is forfeited. This is where you can find some good bargains as the developer will then sell the unit to you at a price lower than when it was launched! This has been happening for the last  2 years in Melbourne where we can get 100% competed units from developers at a discounted price.

FYI, if you are not a resident of Australia, you cannot buy a second hand unit. But if you have Australia residency, it’ll be stupid to buy a new apartment when an existing apartment in a good locality is selling for less (in terms of AUD/ft2) compared to a new unit in a “not so good” area.

Coming back to agents promoting properties in Australia here in KL. I cannot comprehend why a person who has never been to Australia would splash no less than RM1M for a freaking small apartment in Australia without knowing the surroundings and what’s in the neighborhood. Seriously, if you want to invest in an apartment in Melbourne for example, take a flight there lah, a return ticket cost less than RM2K which is like peanuts compared to what you would be paying for the apartment. If I’m in Melbourne, you can even hire me as your tour guide, hahaha.

If you really are interested in buying properties in Australia, first thing to do is go to Domain.com.au and RealEstate.com.au where there are tons of new and completed units being advertised. If a property interests you, fly to Australia and buy it from the developer there and you’ll be surprised how easy it is as they can courier all the documents to you.

If you ask me whether it is a good idea to purchase a property in Australia? I would definitely say yes, that is if you still have cash reserve to survive until 100 years old and for wealth preservation purposes.

There is much more that I have to share with you….. If you are thinking of purchasing/investing in Australia or even migrating there for whatever reasons, the best thing to do is buy me a good lunch and I will share with you many horror stories so that you’ll be prepared and not get a heart attack, hahaha.

 

23 September 2016

  • Maybank GIA-i Profit Rate increased slightly to 3.60% p.a.for period 16 September 2016 to 15 October 2016. If you have yet to read my article on Maybank GIA-i account, it is to your benefit that you click here and read it. This account is really good where you can earn 3.6% p.a. even if you deposit your money into it for just a single night. It’s better than any Savings Account and better than up to 3 Months FD Promo interest rate!
  • Back in May 2016, the BMW X5 was selling for more than RM533K in Malaysia. Then BMW launched the X5 Plug In Hybrid (comes with 3 pin plug that fits into your home electric socket!) in June 2016; and, with our government’s hybrid incentive, the new X5 Hybrid price was reduced by a substantial sum from RM582,800 to RM388,800, that’s RM194K in savings!!! Well, today I am going to tell you an open secret. In a matter of months, the BMW X1 Plug In Hybrid is expected to be launched in Malaysia too. The X1 Plug In Hybrid Long Wheelbase was just launched in China!!! And with our government’s hybrid incentive, most likely the new BMW X1 Hybrid will be selling for less than RM200K (currently the petrol version is selling for RM228K). Go google BMW X1 Hybrid to see some photos circulating in the internet. As for the 3 Series, a completely new 3 series is expected  to be launched in 2018 code name G20. P.S. If you do put off getting a new X1 now and wait for the hybrid version and in the process “save” you tens of thousands of Ringgit, you can thank me by buying me a cup of coffee🙂 But in the event that the X1 Hybrid never reaches our shores next year, you still will “save” money when you purchase the X1 2017 model next year instead of the 2016 model now; and thus you’ll get to sell the 2017 model for much more compared to a 2016 model when you want to let go of your X1 later, hahaha.

22 September 2016

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