Ask Kevin Young Episode 2: The Chinese and Australian property market

Hey Guys,

today we have another episode of  Property Clubs Founder Kevin Young, where he answers every week a couple of questions from Branch Managers, Clients or people who are interesting in Property Investment. If you want to ask your question send your question either through:

1. Twitter by using Tweet: #askKevinYoung

2. Write him on Facebook or,

3. Fill out the form on Kevin Youngs official Website.

Now have a look to the Ask Kevin Young Episode 1:

The Chinese and Australian property market

Timestamps

[ 00:01:05] Most inspiring places I’ve been.

[00:02:00] That’s why I love property.

[ 00:02:30] Chinese are coming in and paying

[00:04:00] Get wealthy and start paying tax

 

Kevin Young: G’day. I’m Kevin Young. I’m Australia’s most successful property investor, but I started out poor. I’m constantly being asked, “How do you do it? How do you get there?” You ask me, I’ll give you the solutions. Between us, we’ll make you wealthy.

Nick asks, “Why do you love property?”

Kevin Young: Not  quite property so much but what property can do for me. Welcome back to the second episode of Ask Kevin Young. When the property goes up in value, don’t sell it. That’s one of the tips. Simply borrow some of that money and go overseas and have a great time with your friends. In the club now, we’ve got over 4,000 people, and we’re regularly traveling around. One of the most inspiring places I’ve been to is China. Hence, I brought that idea back and made it a theme in one of the rooms in my place.

Now, China’s property must be cheap, right? No, it’s very, very, very expensive. That’s why the Chinese are coming out here buying our property, because then our properties are cheap, but you wouldn’t believe it looking at the media, would you? As I said last week, I’ve never seen a journalist who’s wealthy, just negative, negative, negative, negative. If you compare capital cities around the world, we’re about the 17th dearest. You’ve got New York, London, Rome, Beijing. These places are much, much dearer than us. That’s why they’re coming here and seeing our properties as bargains.

The properties you’re looking at now for about $500,000, in 20 years time, will be worth 4 times as much: $2 million. The same as 20 years ago , it moved up 4 times. That’s why I love property.

Sue asks, “What advantage do the Chinese investors have over Australian investors in Australia?”

Kevin Young: The big one is that overseas people, whether they’re Chinese or not, are borrowing at a much lower rate than Australians are. That’s why I think the reserve bank is nutty. We’re going to have to bring rates down to 1.5%. At the moment, these Chinese are coming in and paying at about 2.5% for the money. How does that affect you? If you’re in the same building as them, you have to get a higher rent to cover your cost. They can get a lesser rent and still cover their cost. They have a rent advantage. I think, in these complexes where the Chinese are, we’re going to see a big drive down in rents. That’s why I think you should avoid the areas where the Chinese are going: because they can survive, and you can’t.

How do you make money out of this situation? I’d avoid the areas where the Chinese are going. I would avoid the areas where there’s big, tall, high rises being sold. It’s just like the Gold Coast surfer strip. Too quickly, this inaudible has been overloaded with hundreds and hundreds of apartments, which sagged the rents, sagged the values.

In the club, we’re avoiding these areas, and we’re looking for areas that they can’t market to the Chinese because the complexes aren’t big enough to sustain the inaudible of going to China and getting the inaudible to look at it. We’re looking at the suburbs that are outside that inner perimeter of the cities and areas that are still very hard to supply with more and more properties in the market because you can’t put a big high rise there. There are the openings in the market I think that we can benefit from, the Chinese coming out and buying the wrong sort of properties.

Hope you’ve enjoyed this second episode. I hope it inspired you to get wealthy and start paying tax and  hope you shared this with your friends. I need you questions, so I can make you wealthy. Please share it with your friends. Remember, Tweet: #askKevinYoung to ask your questions.