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MILLIONAIRESPLANET EZINE
money . success . freedom
Dec 2004 Issue #28
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Welcome to the latest issue of
"MILLIONAIRESPLANET EZINE"
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IN THIS ISSUE
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1. Feature Article
2. Quote of the Month
3. Your Question Answered
4. Special Offers
5. New Books by Azizi Ali
6. Disclaimers
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1. FEATURE ARTICLE: Property Jumbo Answer (Session 2)
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Since it proved to be a hot thing, I'm answering more
property investment related questions this month.
As usual, the questions are presented the way they came in
- broken English, wrong grammar and all.
Q1: I bought your book "How to Become a Property
Millionaire". It's a fantastic book and I want to put to
good use my knowledge gained from your book. However, I
would really appreciate if you can enlighten me as how to
discern the market price of an auctioned property as
against the reserve price stated in the proclamation of sale.
Thanks.
A1: A good rough guide is the selling price of similar
houses in the same area. For example, if a neighboring
house sold for RM200k last month, the price of the auctioned
property should not be more than that. Of course, if you
want a more exact figure, hire a valuer.
Q2: 1. Is it true that I will be charged RGPT, i.e. 30%
from profit? I heard that for selling a 1st house, owner
will be exempted on this RGPT.
2. Are there any tax that I have to pay, i.e. sales
tax, government tax, etc.?
3. For the past 3 years, I fell in love with
properties. Any advice?
A2: 1. The RGPT is calculated on a sliding scale,
depending on the time period you owned it. The scale starts
from 30% for the first 2 years and drops to 0% after 5 years.
(Please refer to pg 168 of my latest bestseller "How to
Become a Property Millionaire" for the full scale).
You can get the exemption from RGPT for the first
house that you declared, which is not necessarily the first
house you actually sold. For example, it may be the third
house that you sold as you paid RPGT for the first 2 houses
that you sold. A good strategy is to get the RGPT exemption
for the property with the largest profit. This is because
we are given only one exemption a lifetime. Once taken,
it is gone forever.
2. Yes, you have to pay stamp duty on the sale.
This will be done by the lawyer handling the S & P agreement.
3. Read (and reread) my twin books on property
investment - "How to Become a Property Millionaire" and
"How to Become a Millionaire Landlord". Of course, you can
attend my property seminar as well. The next one is on
Saturday 11th December 20004. (Full details are on the
website.)
Q3: At the risk of being out-bid at an auction, I will
not only lose out on the property, but will there be any
fees incurred? Will I lose my 10% deposit?
A3: You will get back your 10% deposit should you not
win the auction. The only charge incurred is the fee you
paid to the bank for preparing the bank draft.
Q4: Great book! You're on the way (if not already) to
be the next Rich Dad of Malaysia.
One question, just an idea I have. Is it
worthwhile/legal for me to start a company and use this
company to purchase properties and collect rent before I
even own 4 residential properties? I figure this way I
could deduct a lot of the expenses like renovations as
necessities of the business and get better tax breaks.
Are there other ways other than owning 4
residential properties to consider the rent as business
income?
A4: Thank you for your kind words and support.
1. Of course you can have a company for your
property investment. You can do this anytime, even
before buying a single property. However, you will incur
added costs such as incorporation and secretarial expenses
by doing so. Therefore, make sure you are serious about
becoming a property investor first before doing this.
2. You don't need to have 4 residential properties
to be able to treat the rent as a biz income. As explained
in "How to Become a Property Millionaire" (pg 165), if you
have 2 or more shop houses, that will qualify as well.
Q5: You mentioned that banks only allow loans up to 1/3
of an individual's monthly pay for property (real estate)
loans.
Say I earn RM3000 per month. This would mean that
banks will only give a loan for a property which has a
monthly mortgage of not more than RM1000. Is it correct?
Suppose the above is correct. Now, let's say that
it will take me 20 years to service the property loan
and that my pay stays fixed at RM3000 per month for the
next 20 years. At this rate, does this mean that I cannot
buy any more property at least for the next 20 years
because my monthly pay of RM3000 is not enough for me to
take another loan from the bank (unless my pay goes up to
RM6000 – then I can take another similar loan). If this is
the case, then how can I achieve to own 5 properties in 10
years? Please help as I want to buy my first property soon.
A5: 1. Yes, banks normally allow loans up to 1/3 of
your salary. However, they will consider other consistent
source of income as well. For example, rent collected or
commission from sales or royalty from writing books.
2. If you do not have other source of income and
if your salary remained at RM3000 for the next 20 years,
your maximum loans will remain at RM1000. And you deserve
it! Even an average person's salary will increase in 20
years, what more an above average you?
Q6: I noticed that you do not recommend service
apartment as an investment. Why can't you make money from
service apartment? Please elaborate.
A6: I do not recommend service apartment because I have
never met, known or heard any individual making money
from them (developers aside)! Isn't that a good enough
reason to stay away?
Q7: I would like to congratulate you for writing
fantastic books. I first read about property investment
by Robert K. 2 years ago but wishing that a Malaysian would
write books like this. I guess my wish came true….2 months
ago I just purchase my first property in Miri, Sarawak
with an extremely very low price. I'm very excited about
getting another property but I have a few questions
that I would like to ask you, since I'm very new in this.
I'm thinking of getting into property investment as
a full time, the problem is I'm working with family so I
have no income tax.
What do I need to do? My only problem at this moment
is more to income tax, can you please advice me on this
matter?
A7: I'm not exactly certain what is it that you want
to know but here goes. You only pay income tax when
you make money. If you don't make money, or not make enough
money, or lose money, you don't pay tax.
By the way, it's only money that is the criteria
here. Whether you do it full time or part-time is immaterial.
In other words, you can remain a full time housewife,
invest in properties in your free time, and make money and
pay a little bit of tax. Life is a bed of roses!
Q8: I have obtained a loan for a property recently
bought. This said property has been rented out and
provides me an income of RM1000 per month. My loan
installment is RM950. Would like to find out:
1. Can bank mortgage interest be deducted in my
personal income tax?
2. What is the maximum amount (as in RM) that is
allowed for deduction? What are the criteria required for
a full amount of deduction?
A8: Yes, you can deduct the interest portion of the
mortgage from your income tax – all of it. For example,
if the interest portion is RM900, than you can deduct all
that. There is no other criteria except for the property
must not be the one that you are staying in.
Q9: Would like to have your advice for the followings:
1. Potential tenants
If we as a landlord have collected a down payment
from potential tenant and had agreed verbally to rent the
property out to them. However, at a later stage we realize
that they are not suitable after viewing their application
form. What can we do? Can we just refund them the down
payment without any compensation?
2. Existing tenants
If tenants continue to extend another year contract
after completing two year tenancy now has requested the
landlord to repaint the property. Are we obliged to do so?
Can we charge them the cost for the painting?
A9: 1. It depends on the agreement. Normally we would
refund their deposit and move on. If they not happy
about it, they may decide to take legal action against
you, but it takes too long, too expensive and too much
trouble. Weigh the risks and decide intelligently.
2. No, you are obliged to repaint the property
(especially if it is not in the tenancy agreement).
However, you may want to do so to maintain the appearance
(and value) of your property. Perhaps both of you (landlord
and tenant) can share the cost?
Q10: I have attended your property investment course in
Holiday Villa last year. Herewith I want to share some of
my properties investment portfolio with you.
1. I have two rental apartments in Melaka, one I
rent out to KYM (Kolej Yayasan Melaka) and the other one
to MMU (Multimedia University). Both comes with rental
agreement and managed by rental management companies.
Both are giving me a positive cash flow.
2. I also have bought one condominium in Ulu Langat
with 25 years rental contract. The contract has been legally
stamp. What should I do to ensure that the developer
fulfill their obligation to pay the rental to me for the
next 25 years? Can any legal action been taken if they do
not fulfill any of the terms in the agreement?
A10: 1. Good for you. Way to go!
2. There is nothing you can do except for taking
legal action should the other party fail to fulfill their
side of the bargain.
Oh wait, yes! There is one alternative - sell the darn property!
PS: More readers have written in to inquire about Capital
Allowance (mentioned in "How to Become a Property
Millionaire"). Since it is such a hot topic, I have
prepared a brief explanation on it, which is now on my
website. This ought to satisfy curious souls out there.
Please click on
http://www.millionairesplanet.com/art045.html
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2. QUOTE OF THE MONTH
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"The only thing that stands between a man and what
he wants from life is often merely the will to try
it and the faith to believe that it is possible."
* Richard M. DeVos *
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3. YOUR QUESTION ANSWERED
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Q: Not too long ago, I came across your book entitled "How
to become a Millionaire Landlord". After reading it, a spark
lit the fire to my quest for knowledge about the world
finance and earning money. I soon grabbed hold of another
book of yours, "Millionaires are From a Different Planet".
This book has educated me on personal finance.
After reading your profile, I was very much encouraged, not
just by your success in personal finances, but that you are
a pilot. You have become my role model. What I understand
from your profile is that you are a pilot, already have an
MBA from University of Bath, and most of all, and are in
control of your finance.
What I am particularly interested in is how you did all that?
A: Whatever you really, really, really, really, really wants
in life… you will do whatever it takes to get it. That's
how I always get what I want in my life. That's how anybody
who's anybody ever got anything in their lives.
Now what is it hat you really (10x) want in your life?
* HOT TIP *
Read "Die Broke"
by Stephen Pollan and Mark Levine
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4. SPECIAL OFFERS: Property Seminar
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Last call for the *number 1* property seminar in Malaysia.
Title: How to MAKE A MILLION from property investment
Date: Sat 11th Dec 2004
Time: 9 am - 6 pm
Venue: Holiday Villa, Subang Jaya
Click here to find out how you can benefit from the real
estate revolution.
http://www.millionairesplanet.com/events.html
PS: Each pax will receive a complimentary copy of Azizi's
latest best seller "How to Become a Property Millionaire".
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5. NEW BOOKS FROM AZIZI ALI
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Azizi's latest book "mXe! five keys to become an Extreme
Millionaire" will be out soon. As the title suggests, this
book is about how you can get to be a millionaire as
quickly as possible while doing the things that you love.
If you have benefited from Azizi's previous books, then you
will no doubt love this latest offering. You will find gems
inside this book, which include Azizi's own secret of
success and formula of living life.
This book is due to be published in Feb 2005. However, you
can place your order now and be the first to get this storm.
For more details, please click on:
http://www.millionairesplanet.com/pro.html
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6. DISCLAIMERS
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This e-zine is for educational purposes only. The author and
publisher specifically disclaim any responsibility for any
liability, loss or risk, personal or otherwise, which is
incurred as a consequence, directly or indirectly, of the
use and application of any of the contents of this e-zine.
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Copyright 2004 Azizi Ali
All rights reserved
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Azizi Ali
True Wealth Sdn Bhd
email: info@millionairesplanet.com
website: www.millionairesplanet.com
tel: 03-7880 1051
fax: 03-7880 8051
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