6.1 As to "profit sharing", much depends on the integrity and management of the franchisee. Why should the franchisee give you a fair share of the profits when he does all the hard work? See paragraph 7 on how he will get the money back from you, the silent partner.

7. Expenses of furniture and changing of bed sheets after guest leave. No doubt you may have profit sharing. But the operator charges you A$65 for cleaning up the room after a guest leaves. Out of $100 income, you get $35. The operator has to take away commissions to agents and advertisements. If your guest stays 2 days/month, you find that you have not much money left at the end of the month.

7.1 You will need to change furniture which may cost A$6,000 every 2 years (same expenses will be incurred for those Malaysian and Indonesian hotel apartments too unless exempted in the Management Contract), pay $20 to the "electrician" to change a bulb and many other hidden expenses.

8. Statutory expenses. The Gold Coast City Council, for example, will think of imposing new taxes such as "tourist accommodation tax", in addition to corporate and council rates and many others. Details will be in my next report.

9. Bank interest rates are much higher if you borrow from branches of Australian banks in Singapore although I hear of one bank announcing lower rates on radio today. A bank based in UK or the Bermuda charges "annual fees" of A$150 and interest charges at rates dependent on its definition of "base lending rates".

9.1 Singapore banks have been restrained by the Monetary Association of Singapore or some policies to give you Australian mortgage loans and have missed out on a great opportunity to go regional during the last 5 years.

10. Capital gains tax and Singapore government taxation on profits sent by to Singapore are 2 factors affecting the profitablility of foreign property investment . These will be discussed later.

11. Rentability & environmental contamination. Some residential properties in the Gold Coast area had been built on toxic land (previously car battery dumping ground) and have been sold to Singaporeans. No Australian will rent such properties which have black toxic oil coming out from the ground. Australian banks do insist on an "environmental contamination" report after that bad experience.

Conclusion. Much of this report refer to income-producing residential properties such as hotel apartments which have a high turnover of guests. Landed residential properties are usually leased 6-monthly or a year and have less wear and tear expenses and lesser income.

As far as investment in Australian residential properties are concerned, there are good areas where there are excellent capital gains. Water-front or sea-front properties in fast growing towns e.g. Brisbane or some parts of Perth have big capital gains recently. Much also depends on migrants coming in from overseas as they add to the demand for residential properties. Some Singaporeans want to own an apartment with sea views and income is not a major factor in their decision to buy.

Ultimately, it is still great location that makes you wealthy in your golden years, as demand will always be there. The only catch with most non -ITR Australian properties is that you can sell only to Australians who may not pay what you will get if you sell to foreigners! There are around 7 ITR projects in Australia to the best of my knowledge and they cater to a category of buyers who do not worry about rental income to pay the bank mortgages. For the rest of us, I have a re-sale service.