Went to Eastin Hotel last Sunday to have a look at the investment of properties in Melbourne (Australia). Here is what I managed to compile:
Cheapest studio apartment is around A$180k-190k (lets take A$190k for calculation purpose).
Total cost for 1st time payment:
1. Downpayment of 30% = A$57,000
2. Stamp duty (one off) = A$8,000
3. Legal fee (one off) = A$2,000
Total = A$67,000
(Roughly RM3:A$1 RM201,000)
4. Malaysia agent fee (one off) RM5,000
Total payment in RM is RM207,000!!!
Ok fine, if say you got the spare cash and you don’t mind. You may get a yearly return of 6%. Wow better than bank interest ya? Well, think again, here’s why.
Bank loan (Australia bank) interest is about 5.6%. So 70% of A$190k = A$140k, take 5.6% annual interest = A$7,840. Assume you can really get annual return of 6% (note: 6% is on A$190k - the cost of the apartment), so:
Annual return A$11,400
Cost
Bank interest A$7,840
Maintenance A$1,800
Commission for rental (7%) A$798
Total cost A$10,438
Net annual return A$962
Your net annual return is only A$962, that’s 0.5%!!!! On top of that you have not even pay the principle to the bank!!!
Seriously, with that type of money that I have to put in I can buy a condo (with all fees included) in Malaysia with CASH. I can rent out for say RM1k per month, minus off maintenance fees with say RM200 I still left with RM800 per month net return. RM800 x 12 = RM9,600, which give me 4.8% net annual return!!!
Want some more bad news? Real Property Gain Tax in Australia is 20% vs Malaysia is only 5%!!!
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