Buying in the US

Dave,

Thanks for your comments.

I picked the US over NZ because you could do better web research. I think NZ still has quite a few bargains left, but you have to be over there to find them. I also think that Aussie money has inflated the whole market significantly and because in population terms the country is so small, most of the markets are terribly thin and vulnerable. I would have preferred to do NZ, but I wasn't finding bargains on the web.

The UK market was more web-savvy, but again had gone through an investor led price explosion. I looked at quite a number of areas but the ones that were still offering anything were looking dicey, and most of the returns were negative.

Only in the US did I find bargains that outweighed the perceived risks. It's all about risk/reward ratio and for me, the US was it. It was a case of what I found, not what is there. I'm sure some of our Kiwi forumites could boast of some pretty good bargains even now.

As for good areas over bad - bad areas had lots of empty shops, lots of boarded up houses, depression and aggression in the way people carried themselves, lack of halloween decorations (yup, seriously) and lots of new cars (again, seriously). If you could (a) breathe and (b) provide a social security number, you could get a car for nothing down. Brand new chevy.

Good areas had none of the above, except the cars, and there you saw more of a range of cars. Lawns were kempt, about 1 house in three had a sign promoting a political candidate and not too much was for sale.

You could get a feel pretty quickly for the worse areas of town, and it wasn't good. I got near the war zones by accident and I kept driving - the one thing you DON'T do is stop the car. I found my way out, but I was sweating.

Plus, lots of guidance from my team and plenty of advance research.

Bob
 
A motivating story

Good on you Quibbles for having the guts to break into the US market.

There are not many Oz to US property investment story. I am sure a book about your experience, including step by step, contacts, etc. will have an audience.

Your goal must be pretty stretching! :D
 
My goal is to replace my income with investment property income (note lack of the word 'passive' in there). Then it's more time with family.

Unfortunately, I'm reasonably well paid. :(

Fortunately, the pay makes up for that, somewhat. ;)
 
Quiggles :)
this is great, an example of all the hard work that goes into investing
and setting up a good team, once set up, it should be a lot easier to
buy more IP
thank you for sharing this with us
glenn :D
 
Reply Geoff W

The CG I have had in USA has been astounding. In fact having tried to get Florida property and being stung quite badly I kind of got stuck in my little patch in LA. LA County, not the city, just the county BTW has itself the population of Australia, so it's not that little, but with a couple of nice properties there now very lowly geared it's 'easier' to stay. I have just put down another $200,000USD on an 8unit so I hope it works as Quiggles performances are very good. Of course I am jealous knowing how good his returns are. Mine were that good when I bought 4 years ago. He will have great CG. How could you not for 100% being $40,000????

He suggests he will pull his original cash out - as I said I would, but I got greedy and doubled up. Very easy when the AUD is at 50c..... I put in $100,000AUD originally and it is now worth about $1.5m. I just put my second $100,000 in and although it won't go so well it won't be bad. I anticipate my new 8 plex will be worth $100-$150k USD more in a year or so.

The rental figures I have been getting are not _quite_ as advertised but work out after taxes etc at about 65% gross. My Australian ones are around 80%.

You do get big damages bills, heating problems in northern US and snow etc causing things we don't know about. I have finally talked my sister into buying IP's and she has just moved to Alaska. No concrete there because the ground freezes and cracks the concrete. Great returns though.

In short the jump to commercial (5units and up) was a big one, with finance hard to get but I am 'in' now and doubt I will give it up. I am leaning more and more to investment properties in USA paying for PPR in Australia.

I have done it, Quiggles has done it and I know we will be the first of many. It is challenging, it is frustrating and scary but it always ends up OK and is (eventually!) fun.

What has always amazed me is the Aussie's who go over and even lecture about property in the US but even they don't play in the US pond. It is a big pond and since we have a very small and _extremely_ competitive one, it makes sense to move into a less competitive market. A huge one as well.
 
Quiggles earns too much (he says)

Quiggles,
Just re read your great post. Cannot agree more with you about the returns not quite being what you want or think. It is true in most cases, but compare that to a property in Sydney or Melbourne.

Let me help you with your little problem of replacing your high salary. If you don't know I have a restaurant and if you ever needed an easier job to replace, I am always looking for staff.
 
US$28K, that sounds like a bargan to me, the reason I say that is because it appears that you are buying well under replacement cost of the building. So I suspect the price paid has "factored" in expectations of futher declines. Is it really possible that the price could sink 50% further to US$14K?...I doubt it. If the property remains livable and there are tenants in the area I think you will do well.
 
Read carefully - I did say that I saw a 4-plex going for $8,000. That was genuine. But suppose I get no CG - SO WHAT?? CG is the gravy that makes wealth build faster, providing you use it. Cashflow is what I plan to live off. Banks are never going to make margin calls on property.

Hmm, I've never been a waiter and I'm not sure I'm cut out for the job. Of course if lawsjs has a position as sommelier and wine purchaser going, I might have think seriously about it. Pay tends to be lousy, but the fringe benefits are magnificent, or magnifique, if I'm buying Bordeaux, or possibly even magnum with Champagne. :D
 
Aceyducey said:
Thanks for your insights Quiggles - when are you going to host a buying trip over there?

Someone whose opinion I generally trust suggested to me that in spite of my educative postings on the topic, and the huge benefits involved, very few Aussies would have the courage or the gumption to do what I’ve just done, i.e. buying abroad.

I hope that person is wrong. I am neither exceptional nor outrageously bold. I’m just a bloke who likes property.

The rest of what I have to say will take a little while to put together and will properly belong in Caveat Emptor, which is where I will post it.

In the meantime, I have had a number of messages, responses and PMs on a variety of related topics. I would be very pleased to keep answering these as my original intention was to give something back to the forum that has given so much, through so many.
 
Hi quiggles,

I have got a question for you?
Why don't you setup a Corporation instead cos it has got a better protection and benefit

I have got one myself for what i do

Regards
Jerry
 
Quiggles,

Well done mate, what an inspiration, I went to a property seminar just recently and we talked about US property, I am definately keen to get my teeth into the market, now having read your post it takes even more fear out of the equation. I am making it my major priority to get over there and have a look...Thanks for the inspiration mate...

I have a couple of questions for you if you dont mind..
Did you look at Owner will carry deals, foreclosures or assumable loans...were these not compatible for your plan...as you wanted to buy wholesale for cash? and then refinance.

The states you purchased in are they Mortgage or Trust Deed states...



Mitch
 
Jerry Maguire said:
Hi quiggles,

I have got a question for you?
Why don't you setup a Corporation instead cos it has got a better protection and benefit

I have got one myself for what i do

Regards
Jerry

I have set up an LLC - the question is whether people will lend to it. I don't want to set up a C-corporation in the US because you get taxed both in Australia and in the US, or twice in the US depending on how you are structured - resulting in a tax rate of about 60-70%. Asset protection in an LLC is supposed to be very good, although of course I am hoping not to have to use it.
 
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