Based in San Antonio Texas

[MarkB]

The property market in Texas overall is undervalued compared to the rest of the United States. Just as a comparison the medium price of property in California is around $540,000 compared to $139,000 in San Antonio. Clearly this allows for some great property deals.

California and Texas?!

That's like comparing Sydney with Broken Hill*.

/me clears his throat and speaks in an authoritative voice...

The property market in Broken Hill is undervalued compared to the rest of Australia. Just as a comparison, the medium (huh?!) price of property in Sydney is around $500k, compared to $100k in Broken Hill. Clearly this makes for some great property deals.

Clearly this allows for some great property deals.

Actually, the only conclusion that I can draw from that statement is that you have little grasp of how property markets work and no understanding the most basic economic forces of demand and supply.

That statement is possibly the most ludicrous and ill-founded one I have ever heard in property.

M

* Granted, San Antonio is considerably larger than Broken Hill - still, you are comparing a coastal sun-belt destination with an inland city (in the middle of a very dry part of the US).

 

[Nigel Kibel]

you need to be on the ground here

Clearly Pitt Street, you sit in your chair making nothing but negative comment no matter what I write. I will answer you questions.

First San Antonio has a population of around 1.5 million people, hardly a small town. Since the Katrina San Antonio is seen by people and business as a safe place to live.

San Antonio at one point was mainly a military city, however that has now changed, with a number of large companies moving here including Toyota.
The next point and many people may not know this is that Austin which is the state capital of Texas is only a 45 minute drive away. Infact once you are on the freeway there is development all the way through. Austin with a smaller population of 600,000 is none the less matching San Antonio in both employment and growth.

The one thing that appears to have just started is the redevelopment of the city and inner city areas. The is a city that brings a lot of tourists. The riverwalk is a delightful setting, there is also the Alamo, which the city is built around.

Many inner city areas you will find expensive homes and yet just a few blocks away period homes are available for a fraction of the cost. I believe that these areas will perform well over the next 5 years. There is a lot of land available here but little in the way of public transport, as the city continiues to grow the demand will increase for inner city living just as it has in most cities around the world.

This week I will look at some of the commercial buildings in the city centre and with the constuction company we have run some senarios to see how profitable they would be to turn into apartments. There are already a few projects underway. The city has a lot of buildings constructed in the 1940s and 1950s and as you walk around its clear that the redevelopment of the city has only just began.

In terms of pitts comments on comparing Texas and California, let me make the point that much of the United States is currently overpriced. In Texas it is still undervalued. The reason that I make the comparison is that as I have already mentioned our market here is for California investors, they are currently making up the largest buying group. The reason is that they can still buy positive cashflow properties here. We also have people talking to us about commercial development projects again most of these people are from California. These are professional investors. The end product will sell to the residential market here and commercial businesses.

I will post detailed findings and figures as the research comes through. During the first 2 weeks I have been busy just trying to get a feeling for both the city and the company that I am running.

 

[MarkB]

Clearly Pitt Street, you sit in your chair making nothing but negative comment no matter what I write.

Hey, it isn't my fault you've posted bugger all credible information up to this point.

I will answer you questions.

Finally!

Nigel - I am impressed - your last post actually provides some decent information.

Was that so hard to do?!

M

ps. Nigel - do yourself a favour and keep it in one thread. I think it is fair to say that the tolerance for your continual barrage of new threads is very low atm.

 

[jrc]

Interesting article from the Chicago Tribune

http://www.chicagotribune.com/class...6oct01,1,3879306.column?coll=chi-business-col

Mary Umberger

Don't look at the stats behind curtain


Published October 1, 2006


An advisory to our sensitive readers: If you can't absorb more bad housing news, avert your eyes.

Chicago home prices are about 20 percent overvalued, according to the latest chapter of an ongoing study by analysts at National City Bank and Global Insight, an economic-data analyst. A report from the Illinois Association of Realtors this week said the median single-family home in the nine-county Chicago area in August sold for $280,000.

By some measures, 20 percent isn't so bad. Consider the place that the study deemed the nation's No. 1 pricing offender, Naples, Fla., which topped the list of 317 metro areas analyzed based on their home prices, interest rates, household incomes, population and other factors. Homes in Naples, which lately had a median price of about $469,000, were deemed to be 101 percent over their theoretical fair market value, according to the report.

The other top overpriced markets were: Bend, Ore., by 89.2 percent; Salinas, Calif., 79.4 percent; Merced, Calif., 78.4 percent; and Madera, Calif., 76.9 percent. The most undervalued were all in Texas: College Station, by 22.3 percent; Dallas, 21 percent; Ft. Worth, 19 percent; Houston, 17 percent; and McAllen, 16.4 percent.

 

[alexlee]

The property market in Texas overall is undervalued compared to the rest of the United States. Just as a comparison the medium price of property in California is around $540,000 compared to $139,000 in San Antonio.

Nigel, if I may ask, what's the 'medium' price? Is that some US term that we don't use here? What does it mean?
Alex

 

[Sultan of Swing]

Good post Nigel, and the link that jrc posted, although not mentioning San Antonio, backs up your claim that Texas is undervalued.

 

[Waverlybay]

hi - i dont see any marketing just yet... so thus far, i dont think nigel has been in breach of any forum guidelines.

Nigel, say i have a US$150,000 cash to burn ... on a texas property.

What kind of gross and net yields can i expect to pick up? The perception seems to be that US property have typically higher gross yields vis a vis oz - but not necessarily higher NET yields - do u find this to be the case?

regards wb

 

[grossreal]

hi all
I am also interested in the reason why buy in the states when most of the investors into the pacific and asia are americans
I would like to look at yeilds but also ability to invest direct without an american agent and manage direct without an american pm company.
also the total cost against return inc all costs.
mr meriton likes to give a return but that leaves out the little detail like strata fees in there advertising it always gets me 5% return and the rent is a return of 5% per year and looks great put get down and dirty thats what I like and get into the real numbers.
I would like to see the run costs and the return after all expenses.
the upfront purchase and sell fees or charges.
I have looked at the market but for me the hidden charges are the thing that got me and the actual land you own is another issue that I couldn't get my head around.
I think nigel should post not nessarily for people to invest in the states but to work why not to invest in the states there are profits to be made in any market in the world its just at what cost?

 

[Nigel Kibel]

costs

Much of my time so far has been running the company. I do not think that I have ever attended so many meetings. In terms of what you get for say $150,000 US you can buy a multifamily with 2-4 apartments, in a average area. You returns will vary from about 8-15% depending on the deal. What you have to remember in Texas is that if you are in the city you are looking at property taxes of around 3%, and thats per year. So at $150,000 you are looking at around $4500 per year, thats on top of any mortgage that you may have. Generally you will only recieve around 70% loan, so if you are funding from a line of credit you need to take that into account. In terms of not dealing with a agent or property manager, it is a long way away if something goes wrong.

 

[Uncle Perce]

How is san antonio progressing?

Just interested to hear from other people how you are finding san antonio
progressing.
I am having some issues renting one of mine currently.
I would love to hear from those of u on the ground currently if possible?!!

Thanks
The Uncle percey.

 

[Nigel Kibel]

market slowing down

I have now been in San Antonio for around 3 months. There is no doubt that the market is slowing here. There are still some great deals around. However many of the cheap properties being snapped up by both Australian and American investors are slums that we do not see in Australia, so do not buy at the bottm end of the market. I find that small apartment complexes here work well. It is important to remember that a 13% gross return may come back to around 7%, the reason is that property taxes here are amonst the highest in the United States. If you buy a small complex for say $300,000 the yearly property tax alone will cost you around $9,000. That will certainly have an impact on your net return.
Here depreciation on construction is spread over 27.5 years, and it counts from when you settle or close the transaction. You should be able to depreciate your fixtures and fittings over a 5 year period. In all this is an exciting market but you do need to be very careful and carry out extensive due dilligence before you purchase here.