HK rental income v. usa savings

Your first challenge is to be clear in your own mind as to why you are considering doing this and what do you plan to do after seven years with either the property or the proceeds? You then need to understand the risks, anticipated and unexpected, as well as factoring in the difficulties of managing a property for rental with the tyranny of distance.

It has to be said that HK$2 million will not buy anything. US$2 million might, but it will be small and ordinary. Where will you buy, who will manage it and what US tax exposure do you have to this transaction in terms of after tax dollars?

If you believe that real estate is an appropriate asset class for you then this amount of money would lead you towards investing in a real estate fund. Again, you will need to consider why you would take a concentrated bet on Hong Kong real estate, why seven years, and what do you need the money for at the end of the seven years?

For example, if your intention is to repatriate the funds to the USA after seven years have you considered the possible foreign exchange risk were the Hong Kong dollar to decouple from the US dollar and be converted by reference to the Chinese Yuan? And if you are depending on these funds for your retirement are you prepared to take this risk?

Advising on an investment in isolation is inappropriate unless there has been a full assessment undertaken of your total financial position, both now and projected, an agreement on your risk tolerance and liquidity needs, and an adherence to principles of diversification. For this you need to have a financial adviser advise you.

Going into real estate in Hong Kong because people need a roof over their heads, with respect, is not a strong reason for making this investment.


Asia Pacific Investment Advisers Limited

email : info@apg-hk.com