Frequently Asked Questions
- What does KlearPicture do?
- Who do your work with?
- What specific services do you provide?
- How is KlearPicture different from other Australian investment advisors?
- Where are you based?
- How can I trial your services?
- When will your next introductory seminar take place?
- When is the best time to buy property?
- I have a loan on my Australian property from my local (non-Australian) bank. Is this tax deductible for me in Australia?
- Should I consider buying a property in Australia for me to live in the future?
- I own a property in Australia where I plan to live in future. How will capital gains tax (CGT) apply to me when I eventually sell?
- How should I go about buying a second home or holiday home in Australia?
- If I buy a property in Australia will I need to lodge an Australian Tax Return?
- What is a residential investment property?
- What is a "negatively geared" property?
- What if I have no deposit for an investment property?
- In order to retire on at least half my current salary, what percentage of my income do I need to set aside?
- Is property investment still a good investment if inflation is low?
- Why do some property investments work better than others, and what can I do to make sure my property investments perform well?
- What if we can't find a tenant for our investment property?
- What if interest rates rise?
- Won't there be a glut of vacant properties when everyone discovers the advantages of owning rental property?
- Most people seem to emphasize position, position, position. Should I buy prime residential property?
- What if real estate prices stagnate?
- Are units better than houses?
- Do I have to get deeply involved if I invest in real estate?
- Am I better off buying one property for $600,000 or two for $300,000?
- I've spent a long time looking for a good property but I seem to keep missing out on the bargains. How long should I look before buying an investment property?
What does KlearPicture do?
KlearPicture provides financial education, investment opportunities and ongoing wealth mentoring to Singaporean, Malaysian and Indonesian clients and their families. We help our clients build wealth and security through investment in Australian Property.
Who do you work with?
We primarily work with Singaporean, Malaysian and Indonesian clients and their families. We hold regular property seminars and client meetings in each of these countries [click here to register for our next seminar].
What specific services do you provide?
KlearPicture provides a complete financial advising and support system to support our clients' wealth-building objectives.
Specific services include:
- Real estate investment education
- Advice on tax-effective investment strategies
- Sourcing of quality investment properties
- Advice on debt-reduction
- Loan comparison and sourcing
- Co-ordinating with related services (e.g. Solicitor, Accountant etc.)
- Ongoing mentoring and coaching for life
How are you different from other Australian investment advisors?
There are many financial advising and property investment organisations, both in Australia and abroad. Here's a short summary of what makes KlearPicture unique:
- Qualified and compliant property professionals: KlearPicture employs only qualified and compliant property professionals, not just commission-based salespeople.
- Hand-picked properties: we never recommend every property in a development, only the ones with the greatest upside potential.
- Specialists at serving overseas investors: We offer a complete service for overseas investors, from finding the right property to purchasing and rental management.
- Free wealth coaching: All our clients are eligible to receive free coaching and education so you can fully understand the principles of wealth creation and how to apply them.
- Lifelong service for a one-time fee: once you become a client of KlearPicture, you entitled to a lifetime of service with no further charge.
Where are you based?
Our Head Office is based in Melbourne, Australia, because Melbourne property offers excellent investment opportunities for our clients. We also conduct regular seminars and client meetings in Singapore, Malaysia and Indonesia, where most of our clients live.
How can I trial your services?
The best way to trial our services and get a feel for the way we operate is to attend a free introductory investment seminar in either Singapore, Kuala Lumpur or Jakarta. You can register free of charge here. You are also welcome to contact us directly to arrange an introductory consultation.
When will your next introductory seminar take place?
Please click here to register to receive advance notification of upcoming seminar dates and locations.
When is the best time to buy property?
If you look at the successful history of property in Australia, the answer to this question should be, "whenever you can afford to".
Residential property has a long and successful history of investment performance with minimal risk. One of its outstanding features is capital growth. It is this factor that allows you to build growth into your net worth over time.
The income or rental derived from property also allows you to service the investment and provides the means to buy more. Historically, house prices in Australian cities have risen by an average of 9% over a thirty year time span. If this trend continues, then property investment will continue to be one of the most effective ways to build your net worth and secure your future.
I have a loan on my Australian property from my local (non-Australian) bank. Is this tax deductible for me in Australia?
Yes. The Australian Tax Office (ATO) doesn't care about the origin of your loan.
The only thing the ATO is concerned about is whether or not your loan was used to finance an Australian property. If yes, then the loan interest and charges will be tax deductible.
Should I consider buying a property in Australia for me to live in when I return or immigrate?
Buying a property in Australia where you can live in future may be a good idea for several reasons.
One potential taxation advantage is that you can build up tax credits based on your holding expenses. When you evenually move to Australia this may entitle you to a year or more of tax free salary.
Another advantage is that you can acquire a property at today's prices and have a tenant pay off a proportion of your mortgage until you're ready to move.
One consideration that you should keep in mind is that your needs today may be different from your needs in the future. For example, you might buy a property in Melbourne but eventually decide to move to Sydney.
For this reason, we recommend that you consider a variety of factors including the overall investment potential of any property before purchasing.
I own a property in Australia where I plan to live in future. How will capital gains tax (CGT) apply to me when I eventually sell?
Under Australian tax law, Capital Gains Tax is payable on the capital gain realised when you sell an investment property.
However, there is an exemption for properties that are deemed to be your "Principal Place of Residence".
Where the use of a property has been spread between an investment property and your Principal Place of Residence, in general any tax will be assessed on a pro rata basis.
For example, if you buy an investment property and rent it out for 4 years, then live in the property for a further 6 years, when you sell you CGT will be assessed on 40% of the capital gain.
This is a very basic overview. There are a number of variations which can save you a significant amount in tax. Please talk to a KlearPicture consultant to discuss your specific situation.
How should I go about buying a second home or holiday home in Australia?
Many overseas investors wish to buy a second home or holiday home in Australia. It's easy for overseas investors to acquire property in this way but there are a couple of rules of which you should be aware.
Firstly, an overseas investor has to buy either a new property or spend at least 50% of the purchase price of an existing property on renovations and improvements. Overseas investors may buy vacant land, providing that construction commences within 12 months of purchase.
There are no restrictions on renting or selling a property acquired in this way.
If I buy a property in Australia will I need to lodge an Australian Tax Return?
Yes, you will need to complete an Australian Tax Return if you earn any taxable income in Australia. This includes rent or capital gains from rental properties. The KlearPicture team can assist you with this.
What is a residential investment property?
A residential investment property is a house, townhouse or unit that the owner does not use as a personal residence, but rather rents out. This allows the investor to benefit from both tax advantages and rental income from the property.
What is a "negatively geared" property?
The term "negative gearing" simply refers to a situation where your cash outflow to maintain an investment is greater than your cash income from the investment itself. Recent studies demonstrate that negatively geared rental property remains a very tax-efficient investment vehicle.
What if I have no deposit for an investment property?
What you mean is that you have no cash deposit. Cash is not necessary if you hold equity in your own home. Having sufficient assets against which to borrow is all that is required. In this way, you can borrow the full amount including purchasing costs without injecting any extra cash.
In order to retire on at least half my current salary, what percentage of my income do I need to set aside?
If you want to retire on the equivalent of only half your current salary, you have to set aside 12 per cent of your earnings every year of your working life (40 years).
Remember that this level of regular saving would only result in an ongoing income of half your current salary and would require a big lifestyle shift.
That's why it's important to consider more effective wealth-building programs such as those offered by KlearPicture.
Is property investment still a good investment if inflation is low?
It's not so much the absolute capital growth that is important, but rather the growth relative to inflation. With capital growth historically averaging between 2% and 4% over and above inflation, even if inflation were to fall, we would still expect property to perform at this level above inflation.
Why do some property investments work better than others, and what can I do to make sure my property investments perform well?
The key to successful property investment is minimising your “out of pocket” expenses and maximising your capital growth.
Some of the reasons property investments fail to perform as expected include:
- The loan taken out was structured incorrectly
- The loan was taken out in the wrong name
- High-maintenance properties were purchased
- Investors missed out on claiming the highest possible amount in non-cash tax deductions
- Low rents and high vacancy periods
- Paying too much for the property
- Low capital growth potential
These mistakes can easily be avoided. Before investing, contact us for free advice on which price range, area and type of property is most suited to your situation.
What if we can't find a tenant for our investment property?
Vacancy has two main causes - the rent being asked, and the location of the property.
If you can't find a tenant at the advertised rent, simply lower the rent until a suitable tenant is found. A good property manager understands market demand and will direct you accordingly.
Also, your rental property should be in a good location where there is a demand for rental properties. That is, close to transport, shops, schools and employment.
What if interest rates rise?
Fixed interest rate loans have never been so competitive. Major banks are now offering 10 year fixed rate deals that can take all the guesswork out of getting a loan.
A choice between variable and fixed must be made by the investor and should be carefully judged by the loan amount and the security of your employment.
In general, we recommend fixed-interest only loans for investment properties. If rates rise, you're insulated against rising payments. On the other hand, if rates fall you should still be smiling. Have you noticed how low interest rates are usually followed by an increase in property prices?
Won't there be a glut of vacant properties when everyone discovers the advantages of owning rental property?
It is important to remember the number of people who take any step towards becoming financially independent accounts for barely 1% of the population.
Secondly, people have been renting property since time eternal, and with more than 34% of the population renting and this percentage increasing, tenants will not disappear overnight. There will always be a pool of tenants looking for rental accommodation and it's up to you to make your property most desirable.
Supply and demand in rental properties is cyclic and vacancies can and do occur from time to time. But there are certain things you can do to keep this time to a minimum. Choosing the right property in the first place helps and well-located, well-maintained properties with reasonable rents attract more tenants.
Most people seem to emphasize position, position, position. Should I buy prime residential property?
Property in prime locations does experience strong capital growth, perhaps slightly higher than normal. However, the real return cannot be measured by the growth alone. Other factors include how the property is financed and the condition and desirability of the property.
We believe that property that is well-located, properly financed and properly managed will outperform property selected on the basis of position alone.
What if real estate prices stagnate?
Holding on to a rental property for at least 10 years should ensure a buffer against any cycles in the market.
It's important to keep sight of long-term goals and not be distracted by short-term hiccups. What happens to property values from one Christmas to the next should not concern you and although property can be cyclical, history shows that around 10% to 11% growth can be achieved long-term. More importantly, property growth has historically performed at several percent above inflation.
Are units better than houses?
This is not a simple yes/no question. There are many financial factors to consider as well as personal preferences.
Houses may experience higher capital growth because of the higher land content, but the maintenance is generally higher and the rental yield lower. The cost of entry of buying a house in some areas can also be prohibitive. So in the longer term, the overall returns from a unit could be the same as for a house.
You also have to consider the profile of potential tenants. For example, near the city centre, units or townhouses may suit young professional couples whereas in the suburbs, families might be more attracted to houses.
Do I have to get deeply involved if I invest in real estate?
No. Real estate is only a vehicle for building wealth – a means to an end and not the end itself.
The great thing about property investment is that you can do as little or as much as you want. You can do all the maintenance and bookwork yourself, or you can employ someone to do it for you.
The returns from property can be so great that you can afford to pay to have all those things done for you – they're tax deductible anyway.
A good property manager will do most things for you, from paying the rates to arranging for the shower to be fixed or making insurance claims if necessary.
Am I better off buying one property for $600,000 or two for $300,000?
Generally, it is better to buy more property at the cheaper price, but this depends entirely on the area in which you are buying.
A $600,000 property in the inner city may be the bottom quarter of the market in that area, whereas a $600,000 property in a provincial town would probably be a mansion.
In the former case, a $600,000 property would be OK but not so in the latter for a number of reasons.
Firstly, a property in the lower end of the market has a higher rental yield, which results in a better cash flow. Secondly, the lower rent should attract more tenants. Thirdly, if you wish to sell on your retirement, there's more flexibility in selling one small property rather than one large one. And finally, if you're selling, property in the lower quarter of the market should attract other investors as well as first-home buyers, so there should be more potential purchasers.
I've spent a long time looking for a good property but I seem to keep missing out on the bargains. How long should I look before buying an investment property?
If you are investing longer-term, there's no need to spend six months of your valuable weekends in a real estate agent's car chasing that elusive bargain. Time heals all wounds, and so long as you pay fair market price, you should still achieve sound capital growth.