USA properties.

[aliciab]

Apologies if there's already a thread on this. I had a look and could only find one that had been locked.

I was wondering what sort of experiences people have had with investing in the US. I've been hearing that Florida and Ohio are good investment areas, and would like to take the plunge since you can get a property with a good return for under $30,000 in some areas.

Have any of you done this? If so, have you found any hidden traps that are worth looking out for?

 

[annabel]

USA Property

Hi there,

I have been trying to do some research on this topic. I am going along to this tomorrow night:
It is found through www.ccorp.com.au
Carly Crutchfield

You have probably heard quite a lot lately about the US property market. You may have heard how thousands of properties are being sold at well under value low prices (you can buy properties for less than the price of a car!), and you may have heard that a lot of people are making money doing this. But, you might be left wondering - how can you get involved, and where do you even start!?

Well now you can find out exactly how you can get involved in in the US property market and create large profits for yourself too. A good friend and student of mine, who I have been working very closely with, has actually done this. She has bought properties in the states, she has been over there, researched it from every angle and found out exactly what to do, how to do it right and most of all HOW TO MAKE BIG MONEY doing it! Salena Kulkarni is an Accountant and Property Investor and she will be sharing her expertise on the US market, answering all your questions, talking about the opportunities, the risk and the upside and helping you understand exactly what and where the opportunity is.

If you want to come along to these exclusive information sessions, click here for more information

Salena has been investing in the US since the start of and especially in the wake of the Global Financial Crisis. She has created a property business combining a number of sophisticted property development and investment strategies. Salena has been focused on and profiting from the overseas property market and will now be sharing her knowledge so that you can take advantage of what is literally the opportunity of a lifetime. Salena will be showing you how you can invest overseas so that you can set yourself up for retirement possibly a lot sooner than you thought.

You will learn:
The 10 stages of USA Property Investing
The essential criteria for understanding international property
The tax, contract and legal side of it all
How to locate the properties
How to control it all from Australia without going to America
How to buy a house for less than $30,000 and make more than 100% return
The finer details:
Melbourne
Date: Tuesday, May 25 2010
Time: 6.30pm registration, 7pm start
Venue: Rydges on Swanston, Swanston St, Carlton, VIC 3000

Adelaide
Date: Thursday, June 3 2010
Time: 6.30pm registration, 7pm start
Venue: TBC

Brisbane
Date: Thursday, June 10 2010
Time: 6.30pm registration, 7pm start
Venue: TBC



Sydney
Date: Thursday, June 24 2010
Time: 6.30pm registration, 7pm start
Venue: TBC

This is a massive opportunity to locate investment properties for ROCK BOTTOM PRICES!


USA banks are now overloaded with a phenomenal amount of properties that they are fire-selling at ridicuously low prices and this is where the bargains can be found. It is a crazy market and what Salena shares is extremely useful knowedge for ANYONE who has even only a tiny interest in property.

The information shared at this event is not widely known and gives you a chance to be part of the inner circle. This is a FREE event, however seats are limited so I would advise you to BOOK IN NOW , for yourself, any friends and any family members you would like to bring along.

Cheers
Carly

PS. These bargains are likely to be snapped up immediately. Don't leave it any longer, book your spot now to check it out for yourself.

PPS. Friends and family help you to discuss information you have learned and new ideas you have. Book your firends and family in so that you can share this idea, they will definitely be grateful.



I hope this helps. I will let you know how it goes.

Rgds,
A

 

[Rob Williams]

I've looked into it and run some numbers.
There are many variables, but my thoughts were:

- A US$40k home may end up costing, say US$50k or more after reno and buyers agent fees.

- What seems like an enticing 20% plus gross yield will end up being more like a 10%-11% yield after factoring in management fees, letting fees, insurance, repair costs etc etc.

- The gross yield might look good. It's a big percentage. BUT, it's a big % of a very small capital value.

- Leverage. There doesn't seem to be any. You can't (easily) borrow in the US, so you need to be a cash buyer. So your return is a return on your input only. There is no OPM to earn a return on. For me, this was a showstopper.

- Assuming you use equity release funds from your Aussie portfolio (od savings in an offset account), your opportunity cost will be around 6.5%. So the spread between the net US yield of 11% and 6.5% opportunity cost is 4.5%. Not that exciting.

- Liquidity. I'm not sure these houses are a liquid investment. You could well be stuck with it for the long haul. Not something I'd be comfortable with. If circumstances change or you findm yourself in difficulty, who do you sell it to? Not the US buyers. They couldn't get finance when it was $30k, how will they get finance for it at $50k? Aussie buyers? Why would they buy yours when they can source from a multitude of buyers agents? How would you market it to Aussi buyers, anyway.

- Foreign exchange and tax issues should also be factored in.

These are just my random thoughts. However, I don't think these cheap US properties are the golden opportunities they are advertised as. Except, maybe, for the buyers agents who make more money out of them than the buyers do and with no risk or financial input of their own.

 

[grossreal]

hi rob
in some ways you are right but in others you are wrong
first getting funding is just as hard there as it is here no more or less the differnce is how and where you buy
now the following is not as any form of advice or investing but if you buy say 4 people from here and one us person and each get 20% share then it can and does work
no this is not syndication as you cn advertise or mention that anywhere
but if it look like a duck and it quacks you get the idea
now the next question is growth
if the 4 from here are superfunds then the need to quick buy and sell is reduced and the properties are long term holds.
not into going with buyers agents but dealing with us investors on the ground that direct invest with aust investors.
is the us a great investment
depends on where you invest and in what
lots of people want to understand how to invest and most won't
but thats life
the above has the us people managing and running the new co company
they can invest the other way as well once you have been working with them
just a few ideas
and would I book into the conference in the add above or below
no
why because I would want to know what I am paying for but thats me

 

[cedase]

Having purchased and renovated my first house in the US I have had some realtime experiences with the market.
In my humble opinion there is no real value in buy and hold. Houses are still selling in certain areas and in certain price ranges so its a matter of picking your targets.
Don't try it on your own. Don't try it from the comfort of your lounge room. It is nowhere near as easy as some would have you believe but it is absolutely doable and absolutely profitable.
The concept of purchasing a 30k house, spending 10k on it then renting it out, with the odd exception, will make you a slumlord. Personally, i'd rather spend 30k on it, sell it for 80 or 90k and do it all again.
That's the way I see it.

 

[tubs]

In a $30k house don't expect a good tenant like here. You'll end up with some idiot who treats your house like crap. Generally tenants don't treat their properties with respect, and so you have to manage a managing agent (if they even use them over there) internationally.

Do you think they're going to look after you that well if you're overseas?

Plus there's the fact it's a market that's in a bad way, no real signs of recovery, massive oversupply and no demand. There's no incentive for people to keep their houses (ie most don't face major financial complications if they walk away from their house). The economy is a basket case so the future is not clear.

Personally, I'll keep my money in the strong, robust rising RE market we have here. Far better and more stable investment IMHO.

 

[Sunfish]

Rob said:

- Leverage. There doesn't seem to be any. You can't (easily) borrow in the US, so you need to be a cash buyer. So your return is a return on your input only. There is no OPM to earn a return on. For me, this was a showstopper.

I, personally, wouldn't need leverage as I have some funds looking for a home and was attracted to the idea of cheap US property but I would not use A dollars and add currency risk to the deal. If I couldn't borrow US$s I would not do it. There is still real downside risk for the USD IMHO.

 

[aliciab]

This is the company I'm looking at

http://www.myusaproperty.com.au/index.php

 

[aliciab]

In a $30k house don't expect a good tenant like here. You'll end up with some idiot who treats your house like crap. Generally tenants don't treat their properties with respect, and so you have to manage a managing agent (if they even use them over there) internationally.

Do you think they're going to look after you that well if you're overseas?

Plus there's the fact it's a market that's in a bad way, no real signs of recovery, massive oversupply and no demand. There's no incentive for people to keep their houses (ie most don't face major financial complications if they walk away from their house). The economy is a basket case so the future is not clear.

Personally, I'll keep my money in the strong, robust rising RE market we have here. Far better and more stable investment IMHO.

I have three rental properties here, only one of the three in the city I live in. I haven't had any problems at all with tenants in those. However they're only just breaking even, and I'd like something that's actually going to bring in income.

 

[Aaron Sice]

i'd say fly to buy - as in, get over there for a few months and check them out yourself.

and do the minor renovation work yourself, just use pros for the plumb/elec etc.

sweat equity is cheap equity, then hire bubba with a sidey to collect your rent each week.

 

[D.T.]

i'd say fly to buy - as in, get over there for a few months and check them out yourself.

and do the minor renovation work yourself, just use pros for the plumb/elec etc.

sweat equity is cheap equity, then hire bubba with a sidey to collect your rent each week.

Rents are paid monthly in US

 

[MTR]

This is the company I'm looking at

http://www.myusaproperty.com.au/index.php

THis group has only been operating for 18 months, this is a worry as far as I am concerned.

Lots of BA purchasing for investors and making some big $, but they don't have a track record.

If I was using a BA for a purchase in US I would want to know that they have been in the game for years and that I was not the guinea pig.

Seems that operators are popping up everywhere. I heard of a couple who have purchased 32 houses for Oz investors in US, yet not one for themselves, then again they are making such a great income from fees. Only been in the game for 3 months.

I really hate to see anyone get burnt.

Cheers, MTR

 

[Amadio]

THis group has only been operating for 18 months, this is a worry as far as I am concerned.

If I was using a BA for a purchase in US I would want to know that they have been in the game for years and that I was not the guinea pig.

You are right - it's a worry. Took me at least 5 years on the ground to get a handle on the US market.

 

[MTR]

Hi Amadio
if you care to share would like to know more about your US experience, did you actually purchase property and how long were you there?

Cheers, MTR

 

[Amadio]

Hi Amadio
if you care to share would like to know more about your US experience, did you actually purchase property and how long were you there?

Cheers, MTR

We were there for well over 20 years - I've related some of my experiences in about my 2nd or 3rd post here on SS, so won't blather on about it again - but we had good resi investment experience for years and then stepped out of our comfort zone and got into commercial. It came undone and the resulting lawsuit nearly killed us.

It's a worry hearing about all these young Aussies going off to see if they can make their fortune in the USA housing market. I visualise sardines thinking they'll go have fun in a shark pool. Most haven't a clue about how much on the ground knowledge you need.

 

[MTR]

Thanks for sharing. I have pretty much came to similar conclusion, one of the most important factors from what I have read/heard is getting your structure right so you can not be sued, LLB?
I attended a workshop on tax liens/tax deeds I think this may be a safer way to go and returns can be very attractive at 18%, but I dare say not for everyone.

Cheers, MTR

 

[Amadio]

may be a safer way to go and returns can be very attractive at 18%,

Safe + USA tax lien auctions + Australian investors is not something I'd say goes together too well. If you are really ultra good at DD it may be safe.

This tax lien/deeds workshop stuff seems to be doing the rounds again. On the propertyinvesting site there was a thread there with a kind of hysteria about it which would be amusing if it weren't for the fact that a whole bunch of young idiot aussies are about to lose their shirts if they proceed. They couldn't even figure out bank accounts and how to transfer money from the USA to Australia - how on earth will they navigate their way around the USA snakepit known as the county tax lien auctions for crying out loud.

The concern is that what people are taking away from these workshops seems to be that it is all about a piece of paper which says tax lien on it. It's not, it's about property and just as much DD should be applied to each property with a tax lien on it as the prospect of buying the property outright.

Your competitors are just about the biggest boys in the world - the major institutional investors of the USA. They have teams of analysts in place to nab the cream of the crop at the tax liens auctions. The dregs, those properties with huge problems or probably in imminent foreclosure, are left to the bright-and-shinies - the foreign investors who don't know how to open a USA bank account.

I know many people in the USA and am in daily contact with them. I know of only one person who is interested in tax lien/tax deed auctions and he is known as the Family Moron.

Rather than me go on and on about how careful you need to be, just google tax lien pitfalls, and some good stuff comes up on a wiki site.

Good luck, and take a lot of care.

 

[MTR]

You made me laugh, "family moron".
Agree with what you are stating, it's a mine field if you don't do DD.

I am also well aware of who gets the cream. There are also ways of picking up some of the crumbs if you are happy with while mitigating risk.

Don't plan to lose my shirt, I am only starting out with liens that are possibly worth around $1,000 each, so its a dip in and see what happens.

Cheers, MTR

 

[Amadio]

Ok - so you are just having a little play

Here is an up to date example of your snakepit playmates:
http://www.businessweek.com/news/20...poenaed-in-u-s-tax-lien-inquiry-update1-.html

And in these info sessions you went to, I do hope they just happened to mention the very powerful tool which homeowners in many states (not all) use?
http://en.wikipedia.org/wiki/Homestead_exemption

 

[MTR]

Hi Amadio,

Yes, the workshop was conducted by someone who has a successful business and lives in Florida, has been purchasing tax liens and tax deeds in Florida for over 10 years, Homesteads were discussed at great length, the negatives were outlined.

I appreciate you mentioning all the nitty gritty and for those starting out like myself we need to research, reasearch.... DD otherwise you will get burnt.

Cheers, MTR