Buying in Atlanta

MTR and Karina, thanks for the updates. In terms of capital gain and cash flow, investing in this market has probably been my best investment decision over the past 15 years. I wish I had done more sooner, my scale is much less than MTR and some others as I purchased 3 properties in 2012, 1 in 2013 and one just a few months ago. I would have done better if I started a year sooner but the job got in the way!

I have been enjoying the new PM model that Karina talks about and this will add a couple points to the cash flow over time.

Another benefit is the fact the properties remain well maintained after each tenant renewal maximising the presentation and in turn rental potential and capital gain.

In the end this has been my gift from joining the forum as I would never have jumped in without reading about it here from members I trust.
 
Hi MTR and others,

So great to hear positive experiences in US Property investment. Finally!

Atlanta is one of the three boom areas/cities and there is no shortage of Promoters to get you there.

A positive return relies on an experienced team - including a team on the ground, which will include the property manager.

There is no shortage of horror stories where PMs have ran away with the rental money or investing in what I call slumlords, which are low socio-demographic areas where generally tenants are low income earners and your property is trashed on a regular basis - which kills your high yield.

Further, you have been successful in choosing the right property, so many Australians are blinded by the 'cheap as chips' real estate, and fail to understand the costs involved including the structuring in the local environment. Personally, I deal with SMSFs that invest in the US market (both cash and finance), which is highly specialised in terms of the structure you choose and also Australian Superannuation Regulations.

Many Australians are attracted by the low entry point and finally it seems that the US is getting their act together, which this update by MTR attests to. The fact that the dollar has held above $0.90 cents against analyst predictions has helped those who hung in the US market.

The big development is that you can not only purchase property in the US cash, however, there are now lenders who are willing to provide a loan, and you can achieve a LVR of up to 60% even in SMSF. Again, this is very specialised and you need to structure it correctly so be sure to seek specialised advice before proceeding. This is not for everyone, but a huge development where this was not possible 12-24 months ago.

Personally, I lived in the states (pre-GFC) and know the market very well, I have recently purchased in Houston and am invested in as large development. Of course, I done my due diligence - and have an awesome team on the ground - people I trust (no one will run away with the rent money).

So glad to finally hear a positive experience, well done to the team that has been mentioned in the previous posts.

I'm off to the states next month for some Whiskey and Property, looking forward to it.

Happy to share my experiences including the SMSF side, which is popular however, many SMSFs are non-compliant (I try to fix what I see however so many clients cut corners without understanding the Super regulations including the in-house asset rule/ sole purpose test and the SMSFs beneficial ownership of the property). The ATO will target those.

Hope that helps,

Cheers, Ivan
 
Awesome work guys, MTR, Oscar, Karina and Ivan

For the average joes like me, is it a difficult process to setup something to buy in the US?
 
Awesome work guys, MTR, Oscar, Karina and Ivan

For the average joes like me, is it a difficult process to setup something to buy in the US?

LW
For the average Jill like me it was also difficult at the time. My friends and relatives mentioned on a number of occasions that "I was crazy", this did not comfort me at all:eek:

Handyandy helped me with structures amongst other things, as he had already purchased some 9 properties at the time. I also had lots of help from those who went before me.



Cheers
MTR:)
 
What's the general price range that most of you have purchased in? Are the loans Redwood mentions hard to get?

I would never touch any loans, everything I looked at was dodgy, a claytons loan.
All the investors I know including myself purchased cash and we have never been able to refinance. That's a big one, because you can not leverage as you can in Australia.

However, we purchased anywhere from $32,000 - $50,000
Those houses are now worth over $120K

I know Karina is picking up some properties around $80K mark but they will require a renovation and you will be competing with others who are lining up to buy.

I have US $ so I can continue to buy, but as I said hard to source at the right price, too much competition.

Cheers
MTR:)
 
Thanks Cimbom

I would also be curious to know how investors went in Florida.

Steve McKnight was buying up at around $16,000, these were the real low feeder end, be interesting to find out how much these are now worth. I personally don't know anyone who purchased in this part of the States.

MTR:)
 
Even though we cannot turn back time to 2011 buy prices.

Based on today's purchase price and returns, you are still looking at around 10% or more, if my maths serves me correctly

Yes, the dollar is not in our favour, but if the market is predicted to move further, then there should still be more upward movements in near future as Karina has suggested.

So, the question is, is it a good time now to buy?
 
It is dependent on the deal and because you can not leverage you need to weight it up.

Can you make more money in Australia as you can finance deals, low interest rates.

I think you can achieve 10% yields in US but you are now buying at 89 Aus$, and if you are only buying 1 or 2 forget it, as structure/lawyer fees, accounting fees costly.

If you were buying at least 5, 6 and had spare cash perhaps in SMSF then yes, go for it, but still need to source good property at the right price with the right yield.

This is a discussion I would have with Karina, and also look at some of her previous deals and work out the numbers. I really have not looked at this closely in recent times, but obviously prices have gone up significantly.

MTR:)
 
Thanks Cimbom

I would also be curious to know how investors went in Florida.

Steve McKnight was buying up at around $16,000, these were the real low feeder end, be interesting to find out how much these are now worth. I personally don't know anyone who purchased in this part of the States.

MTR:)

Nigel Kibel has done well in florida. Like anywhere it comes down to investment selection, its not the State but the neighbourhood you choose. There is a heap of opportunities in each state, use Atlanta which is a popular example, however there is a significant difference between north and south of atlanta, same can be applied to most cities - termed 'slumlords', sounds like MTR has done awesome and happy to hear that.

Steve has now moved to the Commercial fund which has been extremely popular (heaps of my clients invested). The "development" is now becoming an extremely popular option as opposed to the individual property.

Each person should consider the set up costs in investing in the states, once you include this as well as a reno, with the right investment selection there is significant opportunity for making money.

My favourite is dealing with the Crazy Texans, having worked in the states, I know how to deal with these guys, but, they make Clive Palmer look normal. However, they know their ****, and generally, i've had great experiences in Texas.

Re Lone Wolfs comment, we have emailed each other, you can still get in before its too late, but i'm super honest on the upfront costs and be sure not to choose the wrong person on the ground. I spent 2 hours with a client reviewing the hundreds of pages he signed 'blind' while he purchased in Memphis recently. Please read and obtain independent review on what you are signing as the US mkt is different.

Cheers Ivan
 
research tool

What tool / site does everyone use to research city's & suburbs in the states?

e.g we have RPdata here.

Surly there's still some areas which haven't taken off.. its only a matter of time before Atlanta becomes too expensive and the investors flock elsewhere..
 
Jezza

The AU$ is hovering close to 75.

When investors were buying in USA the Au$ range was around 1.00-1.10.

This is huge, for every $100,000 you spend in US you need to dish out around $25,000 on top.

The properties in US that were selling for peanuts in 2010/11/12/ have now more than doubled and rising. Low base areas such as Atlanta, Arizona, Las Vegas, Texas, Florida have performed well, am sure there are plenty of other areas to consider, but you also need to weigh up the currency play.

Zillow, Redfin some tools that I used when researching

Also, I believe SS member Gentle Chief sourced many excellent properties in Atlanta, did it himself, all the leg work.
You can view some of these in his photo gallery, they look great.

MTR:)
 
What tool / site does everyone use to research city's & suburbs in the states?

e.g we have RPdata here.

Surly there's still some areas which haven't taken off.. its only a matter of time before Atlanta becomes too expensive and the investors flock elsewhere..


Hi Jezza

A simple google search on the property will provide a variety of sources of information. Zillow can be hit and miss for accuracy but will provide the last sold date and how much try eppraisal as well.

Atlanta is popular, yes, but as others have mentioned there are still pockets that are quite cheap, for good reason. When you research be sure to research:
1. Demographic/ ehnicity of suburb
2. Crime rates (including murder rate)
3. Importantly schools nearby

If you donot have someone on the ground - you can call a local agent, its imperative to have a reputable PM - otherwise they can rip you off quick, expect a $5k rehab bill in the mail, especially if your money is in the trust account.

Try memphis as well, a lot of activity there. Texas is seen as safe but a different price range with houston and dallas.

There are a few promoters out there promoting rubbish with guaranteed return in chicago - I won't name them here, but be careful, they have bought a mailing list and hitting aussies hard. They failed my due diligence immediately in that they have no track record of success - yet promise 20% returns.

As MTR mentioned - the exchange rate is interesting - the difference between paying a deposit 3 months ago and closing the property can be huge. Factor this in to your costs.

We are now setting up LLCs and bank accounts for our clients to reduce costs.

Finance is less stringent now - you can achieve 60% LVR in most states and definitely in Atlanta. This may assist your strategy based on your risk profile.

Cheers, Ivan
 
Thanks guys.

Yeah understand the currency situation, looked at the AUD/US chart this morning and it looks like when it peaked in 2011 @ 1.10 would of been the absolute best time to buy given the bottom of the prices over there!

I must take my hat off to those of you who got in then... very nice!

If loans are available over there now... shouldn't we be able to gear the properties?
 
Thanks guys.

Yeah understand the currency situation, looked at the AUD/US chart this morning and it looks like when it peaked in 2011 @ 1.10 would of been the absolute best time to buy given the bottom of the prices over there!

I must take my hat off to those of you who got in then... very nice!

If loans are available over there now... shouldn't we be able to gear the properties?

Hi there,

There are ways to alleviate the currency situation and yes you can gear. Loans for foreign nationals at 6.99% fixed for 3 years are attractive, its never too late and there are many who wish they did not invest in the states....that is due to trusting the wrong people. Moving on...

Don't isolate yourself to Atlanta - I would look elsewhere - depending on your risk profile, finance, and take a trip to help understand the relevant markets.

I know a heap of people taking heavy concentration risk on Ohio and Michigan as well as Chicago - I would always suggest diversification....

Cheers Ivan
 
Never thought I'd look at this again, but it was interesting to see the washup after a few years. Good to see a heap of people did well and avoided the shonks. The US market is far from overplayed, in the last 3 months my properties have jumped 30% rent across the board and show no signs of abating. It's insane really, just six months ago we were lucky to get $800pm for properties we now get swamped at $1100 for. Sure subprime is over, but there is massive growth still to come if you don't want to repatriate money. I just got a firm offer of US$1m above purchase on a property I put down $155k on a few years (3?) ago - it's just starting to move properly and I am FAR from alone. Can't see it's worth selling atm but it's nice to know it's there. My sister (from memory emma171??) hamstrung herself doing the legally safe thing getting licenced as a US broker to deal with Aussies in US property, but in the commercial realm she is personally kicking serious ***, almost embarrassing how well. And.... for an Aussie, the dollar is now moving the right way. I don't particularly like the US, but it really is the land of opportunity. If you aren't desperate for the money and have a bit available on the US side of the big pond, have a look around outside the subprime world. Subprime was always that. Below par property. The market is huge, the opportunity enormous. So what if the market has changed from 'once in a lifetime' to merely 'extraordinary'? Sure beats Australia which shows every sign of being 'fully priced' and add to that the $AUD is far more likely to to fall rather than rise. In real terms my $AUD property has just lost 30%. The RBA saying the Aussie market is risking overheating, the $AUD dropped 30% in so many months and people are bringing money back?? The party could be seen as just starting to kick into gear:)

And finance has always been available. It's a lot easier now through official channels, but it was always possible one way or another.
 
Barriers to entry, lack of local knowledge in terms of locations, cities, vibes, lack of control doing it remotely from aus, differences in markets, stock, "how it's done", all make it hard to enter.
That being said, perhaps this is why it represents great opportunity. Looking at this thread, it looks like the members that have done so well succeeded as they got into this at a great time where the market had overcorrected to the downside.
If you feel like sharing some of your thoughts about interesting places to look at - even if just for the fun of it - that would be interesting for many.
 
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