Dear All,

Property prices softening in Australia by 20 - 30% and the AUD currency weakening against the RM by 25 - 30%.

This seems like a juicy 50% combination.

For the purpose of giving and receiving, please contribute your important messages, experiences , views , opinions.. etc to this seemingly high yield subject of buying in Australia.

Thank you for valuable sharing and best of luck

Lee

I think it's going to be a great time to buy property soon in Western economies such as the US, UK and Australia. But I think now is not quite the time. The last time the UK had a property crash (1989) it took 5-6 years (1995-1995) before prices started picking up (I am most familiar with the UK as that is where I spent the first 30 years of my life). I don't see why this time it would be an shorter - the property boom that we've had recently has was bigger than the boom in the late 1980's, it lasted for longer, and it was even more of a bubble than in the late 1980s. So if anything it might be a good time to buy in, say, 5-6 years time.

What are rental yields like Australia? And interest rates?

But I also think that Malaysia is one of the most defensive property markets around (yet has plenty of upside). And there is increasing interest from the wealthy Arab countries. I do find it funny that Malaysians are so keen to buy outside Malaysia when there are so many opportunities here.

People are like herds. They tend not to think for themselves but tend to follow what everyone else is doing. For example when the UK or Australia had been booming they bought there because everyone else was buying, but the best time to buy is not when it has boomed but when it has bottomed. I bought a place in the UK when everyone thought I was mad buying a property - my friends thought I was crazy because I was still at university - I bought it for £80k in 1994 with a £10k deposit, and sold it for £220k in 2002. In 2002 the same friends that thought I was crazy for buying my place for £80k in 1994 were saying I was silly selling as it would go much higher than £220k. ie - they thought it was expensive at £80k, but cheap at £220k. Hmmm.

The UK grows at 4% in a good year, Malaysia grows 4% in a very bad year. The UK's population is pretty much stagnant, while KL is one of the fastest growing cities in the world. Malaysia is in vibrant Asia. The UK is in old Europe. Quite a few Malaysians have bought property in the UK and Australia through these companies that have been advertising here. The problem with property is that you don't get a good deal like that - you need local knowledge, you need to know the areas, you need to know prices, etc... And these investors that have bought in Australia or the UK have probably been burnt pretty badly now.

Lee, have you got any actionable ideas? Any juicy offers you've seen?

Asim

Thanks Asim for yr views.

I am thinking that Australia by its own already offers much potential. To top that up, Australia will continue to attract investors, migrants , students from Asean region. That seems like a constant flow of steady foreign capital and not hot money.This reflects on steady demand for property as well.

I am looking at 1 project that offers a 10+5 year guaranteed return of 7.5% per annum.It will be run as a apartment hotel in the cbd of melbourne by OAKS .

It seems that the banks there offers interest payments only loans so after you put down some deposits, interest charged to the loan sum only. With interest rate trending down ( at least for the next 2-5 years ) this investment would be be very cash positive as you can choose to not pay principal. The capital gain will take care of the princicpal owing sum when there is a selling decision or some other strategy to manage the the pricipal owing.

The intital deposit also earning the said guaranteed interest.Currently our banks paying less than 4%.

There are always capital gains with the right location.

AUD is 2.4 to the RM from 3.2

You still own a freehold property no matter what.

For a stranger there, this seems like a reasonable start up offer for real estate investment.

I was googling and yahooing.. most guarantee for first 2 yrs only.

The math shows that OAKS guarantees us like AUD 60 per day ( base on the guarantee deal ) charges AUD 150-200 per day . Seems profitable for not having to own the property.

Any math wizard out there to figure out this offer ?

Hi James

How much is the property AUD per sq ft?

regards
Wayne Hor

AUD 560 per sqft.. would you have any info to math this out ? the property is by the Yarra river so it has river views and its in the cbd area.

maybe i'm biased but i'm always wary of rental guarantee units. developers usually price your 1st 2 years' rent in, and the rental post guarantee period is usually lower than the guaranteed return. but since this is a 10+5 year guarantee.. sounds very good at face value.

i wouldn't hold my breath for capital appreciation on CBD condos though. typically in melb, good rental yield = low cap growth and vice versa.

by the yarra in the cbd - i'm guessing somewhere on or just off flinders st? is this an existing oaks property?

This is my first post on your forum, I specialise in selling hotels and resorts both in Austalia and the pacific region.

C Soong is on the money with investment units when buying into these type of properties.

We find the management companies recoginise a NET profit(after loan repayments)in the area of 16% ROI.

Happy to help with any questions.

I have a premium resort for sale at Cherating, total 127 units, plus resturant, conference halls ect. purchase part freehold and Management Rights plus all Chattels and Furniture ect. all for only $8M USD

email me on motelresort@gmail.com or call direct in Australia on 0413 770 636 anytime.

This is my first post on your forum, I specialise in selling hotels and resorts both in Austalia and the pacific region.

C Soong is on the money with investment units when buying into these type of properties.

We find the management companies recoginise a NET profit(after loan repayments)in the area of 16% ROI.

Happy to help with any questions.

I have a premium resort for sale at Cherating, total 127 units, plus resturant, conference halls ect. purchase part freehold and Management Rights plus all Chattels and Furniture ect. all for only $8M USD

email me on motelresort@gmail.com or call direct in Australia on 0413 770 636 anytime.

Welcome!

What do you mean by "NET profit(after loan repayments)in the area of 16% ROI"?

(income - loan payments) / Downpayment = 16%?

Yeah Monty I'm curious as well. Do you mean that the companies managing the hotels get a 16% ROI after factoring in guaranteed rental to the buyers?

James, how big is the unit? Do they charge any additional fees for managing the property? What other outgoings are you liable for?

Hi Guys, my reference to ROI is on the Management Business only.
The net profit is after all operating expenses, but not including purchase loan repayments or tax.

This information is only for the Hotel Management business, not from a property investors perspective.

As an investor in these hotels/Resorts you sign your apartment to be managed by the hotel operator, this may be short term corporate letting (such as in CBD Melbourne) or short term Holiday Letting (such as on the Gold Coast) or it may be long term permanant rental.

To have your investment unit managed by the onsite operator has many benefits apart from just cashflow & income. The onsite management ensure the well being of your investment and it is in their best interest to look after you as this retains value in their business aswell. It is more of a partnership then a "us and them" situation.

Back to the Business as an investment, I sell hotel management companies to both investors and owner operators. The investment model is very attractive at present with the collapse of the share market and the softening of commercial/retail property globally. Tourism property is still showing fantastic returns of upto 35%.

I have a hot new listing as an example:
you buy Unit for $650,000 AUD
you buy Business for $2,250,000 AUD
The business has a net profit of $480,000 AUD

this is a gross return of 21%

factor is your intrest on borrowings
and the ROI is reduced to 16.5%

hope this helps

cheers

Monty

it is 514 sqft.. i was told that the "market price" for a new property like this is being sold at AUD800 per sqft. Naturally there are second hand sale that can be lower proced BUT the important question here is there is NO rental guanrantee DEAL that goes with a second hand investment and it is gonna be avery lonely ride all the way on our own. Such rental guarantee DEALS include all outgoing expenses, the unit is fully managed!! our guarantee return is NETT before our loan expenses ( if any since some might buy it for cash ).

The selling point here is that with the rental guanratee scheme for the 10+ 5 years , you can actually fast foward your calculations to the future and math out yr property value in the future !There seems to very a reasonable capital gain too !
Worst or maybe not . the operator backs out , then the proeprty can be for yr own stay or you can rent it out , the property remain yours.