Quote:
Originally Posted by eyeC
i would like to add after you consider the income tax there will be no return on investment
so the only way to make money is on price appreciation on certain types of properties mainly
high end in penang for example or KL
if you buy for rental income consider other locations around the world
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Reasonable point, but if one shops around carefully, net returns of 3%, 4% or even 5% can be acquired. Not great, but at least there is a solid exit strategy with the strength of the domestic market. Also you donīt need to aim for just the high end.
Example - Berjaya Times Sqare Serviced Apartments. 600 metres from the Petronas Twin Towers, freehold and fully furnished. Purchase Price around RM 350.000 (c.$100.000) 20% deposit required and the balance on finance (I think this is what you are advocating - the figures are much better if you borrow a lower %).
Rental income on a long term let - RM 3.000 per month* = RM 36.000 pa.
Take off 2% of the purchase price for allowable expenses and multiple the rest by 28% (base rate for income tax). That leaves you with a net annual income (after maintenance, management fees, insurance and service charges) of RM 20.880. Take off mortgage repayments of RM 17.200*, and your net income in a year is RM 3.660 (c.$1000). Like I said, itīs not great, but represents 5% on what one has actually invested ($20.000 deposit).
That might seem like a good deal in the next 12 months compared to some other locations around the world.
Be lucky
Andy
* Sources. Property Price and rental income - iproperty.com.my
* Repayment mortgage through CIMB Bank @ 4.60%