Buying in the US

mitchmakhan said:
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...
You can also check out the offer in Caveat Emptor ;)

mitchmakhan said:
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
Only purchased in New York. It's a mortgage state, as the taxes will show you - mortgage tax is pretty exxy. I didn't look at owner finance deals as none presented themselves. I considered a number of foreclosures (made some offers, but largely foreclosures were in a hideous state and I wasn't prepared to do a long distance rehab). I didn't try for assumable finance as I had become aware what a minefield finance was and that banks might well be able to say "Yes, it's assumable, but not by non-resident aliens."

Hope this helps.
 
leapyeah said:
For those considering buying in the Niagara Falls township in the US, please bear in mind the following information about some serious chemical contamination difficulties parts of the township have experienced in the last 25 years.

http://onlineethics.org/environment/lcanal/
This should probably be with the thread in caveat emptor, but it makes a very valid point - research the field. War zones, chemical spills and other hazards seem to be a lot more frequent over there than here (although a lot of residents in Watson ACT got a real shock two years back when they found they were living on an old arsenic dump).

There's no substitute for local knowledge and you need someone on your team who has it. My PM in Niagara Falls was the first to warn me off that particular area.
 
Please don't feel inferior - that certainly wasn't the purpose of the post. And as the posts of both Highlander000 and lawsjs in the caveat emptor thread show, I'm certainly not the be-all and end-all of OS investing (or US investing). I'd defer to both of them most days of the week.

More importantly, the story I've told may be fun, but entirely inconsistent with your investing philosophy - property developers would probably have zero interest in moving offshore, for instance, and cap growth people certainly wouldn't be buying in my area on current form.

The big message is that if you've looked around and there are no opportunities available for you, then you haven't looked in the right place or the right way. Be inventive, be careful and be successful.
 
Inspired

Nice one Quiggle - great to understand there is potential to move out of our comfort zones and do some real exciting stuff o/s. Thank you for sharing !
 
US update

I've been asked to bring this up to date but what with the holidays and stuff it's taken some time.

The properties were all due to settle on 30 November. As rent is due monthly that meant that I could rent out easily those that were vacant and have the rents for December on the occupied flats paid to me.

Ha, ha, it is to laugh.

Only one settled on the day, and three out four tenants in the units I had bought from Australia had not only missed November's payment but hadn't coughed up Dember's either. fortunately one got a job and has been hassled by the PM into one month's back rent, plus January, but is still one month behind. The other two tenants did a bunk in late December.

Meanwhile property after property was gradually settling. I made an offer on a proeprty I had earlier inspected (to replace the one that had so severly failed the building inspection) and it was accepted. It was lower than the offer I had made while in Buffalo, but had retracted when time ran out.

Some of the properties had had tax or social security liens slapped on them, and I instructed my attorney not to go through unless the liens were paid and removed. I nearly didn't complete one transaction because of that, but the vendor's attorney came good with a personal guarantee at the death (i.e. during settlement) and the title insurers were willing to accept that. (Whew!).

I was getting more and more frustrated with the PM as I didn't know what the heck was happening, where the rent money was or anything. I finally sent him an ultimatum with carefully set out requirements of what he had to do in order to keep the job.

As it turned out, I had misjudged him. He'd actually been working his butt off trying to get the properties mended (minor repairs needed all over the place) and rented out, plus he hadn't been fully in the loop on the purchases. We've mended our fences, and I've sent him the format I want reporting in. The properties should start flowing cash this week. Finally.

I've been having nightmares about what happens if it all goes pear shaped and had to reread books about taking control of your life. Rereading Jan Somers also helped as it reminded me (and my wife) how far we had come. Our aim had been to own six median priced income producing properties by 2013, sell two and have four owned outright.

My attorney has been solid gold. She's fought for me, warned of potential problems, orgainsied the title insurance at really short notice and worked everything out. Legal costs, including the insurance which goes back at least 60 years but in some cases to colonial days, was less than US$1200 per property.

I still haven't organised finance, and to be truthful I've had to let that slip in the rush to Christmas and in organising the purchases. It was like pushing through a bramble bush, the way I kept hitting snags. I'd repeat my caution about the extra level of risk and hassle involved, but I'm still convinced it was the right thing to do. The way the $A is moving, I'm going to need a higher level of income than I was expecting to make this come really good, but I knew there was exchange rate risk when I started.

January is property tax month, so I expected to pay out every cent I get in rent to the taxman this month. Even so, despite all the first off costs, I should be pretty positive by April. Happy to talk to all and sundry about it.

Happy investing,

Quiggles
 
Hey, I'm famous

I've just found that the tale of my adventures has made it to propertytalk.co.nz and from there to a webboard of property agents in the US. I think it's pretty cool, but funny too. Some of the US RE agents didn't react too well. :D
 
quiggles said:
I've just found that the tale of my adventures has made it to propertytalk.co.nz and from there to a webboard of property agents in the US. I think it's pretty cool, but funny too. Some of the US RE agents didn't react too well. :D
Congradulations!!! lol

Do you have a link for it?

Thanks
 
Outstanding Effort

Quiggles,

Talk about leading from the front!! Outstanding effort. My wife and i have been thinking about the states but after reading your story, warts and all, we are sure that now is the right time to take the plunge. Thanks.

Kind regards,
Gary
Mashari Pty Lty
'Anything is possible'
 
Mashari said:
Quiggles,

Talk about leading from the front!! Outstanding effort. My wife and i have been thinking about the states but after reading your story, warts and all, we are sure that now is the right time to take the plunge. Thanks.

Kind regards,
Gary
Mashari Pty Lty
'Anything is possible'
Thanks for that.

Do read the cautionary notes sounded by Highlander in the similar thread in Caveat Emptor and remember, anything is possible (even losses). That said, best of luck.
 
Hey quiggles. Like everyone else, I am very impressed with the way you dived in and went for it in the U.S. Congrats.
But, what has impressed me more is the way you have conducted yourself in the forums - responding to anyone with a question, no matter how small.
I just read your post on the Real Estate Webmasters site. Glad to see that you didn't hold back on the agents over there - and still, to my knowledge none have replied. It's a great read.
Good job all round.

Ralph Wiggum
 
Next installment

Got this from my attorney:

"I have good news and bad news. The good news is it looks like you got some real deals on the property you purchased in Niagara Falls. The bad news is that I just received a mound of of new tax assessment values which should reflect fair market value. This may increase your property tax next year.

The increase in assessment is as follows:
IP1 - you paid $28,000 and the new assessment is $51,300
IP2 - you paid $27,500 and the new assessment is $42,000
IP3 - you paid $20,000 and the new assessment is $33,000
IP4 - you paid $28,000 and the new assessment is $46,500
IP5 - you paid $33,000 and the new assessment is $43,900
IP 6 is fine. You paid $39,000 and the new assessment is $38,000.
IP 7 is fine. You paid $77,000 and it has increased to $68,500
No word on IP8."

So I guess I'm going to do 2 things - take the valuations to the bank and ask for a loan, and take the purchase contract to the government and ask to have the valuations downgraded. I love this game. :D

We are flying back in a couple weeks to do more shopping. Will need to cut down on forum time but will try for the occasional post.
 
quiggles said:
Got this from my attorney:

"I have good news and bad news. The good news is it looks like you got some real deals on the property you purchased in Niagara Falls. The bad news is that I just received a mound of of new tax assessment values which should reflect fair market value. This may increase your property tax next year.

The increase in assessment is as follows:
IP1 - you paid $28,000 and the new assessment is $51,300
IP2 - you paid $27,500 and the new assessment is $42,000
IP3 - you paid $20,000 and the new assessment is $33,000
IP4 - you paid $28,000 and the new assessment is $46,500
IP5 - you paid $33,000 and the new assessment is $43,900
IP 6 is fine. You paid $39,000 and the new assessment is $38,000.
IP 7 is fine. You paid $77,000 and it has increased to $68,500
No word on IP8."

So I guess I'm going to do 2 things - take the valuations to the bank and ask for a loan, and take the purchase contract to the government and ask to have the valuations downgraded. I love this game. :D

We are flying back in a couple weeks to do more shopping. Will need to cut down on forum time but will try for the occasional post.
Forgive me for my ignorance, but what does this all mean?
You have to pay loads in tax on your US prpoerty?

Also ... just a question.. I have heard of some buyers agents in Aus that source property, organise finance and insureance etc for properties in the US for a fee of around $3-4k AUD...
Can anyone recommend some of these?

Im a bit of a newbie... but Is there anything potentially risky / need to be aware of with taxation, transfers, legalitles of buying property in the US from australia ?
 
li21 said:
Forgive me for my ignorance, but what does this all mean?
You have to pay loads in tax on your US prpoerty?

Also ... just a question.. I have heard of some buyers agents in Aus that source property, organise finance and insureance etc for properties in the US for a fee of around $3-4k AUD...
Can anyone recommend some of these?

Im a bit of a newbie... but Is there anything potentially risky / need to be aware of with taxation, transfers, legalitles of buying property in the US from australia ?

Li21,
I think you better read all the posts in this thread. There is a much greater risk of purchasing outside of Australia & Quiggles lays it all on the line. This is not something for a newbie to undertake IMHO.
 
skater said:
Li21,
I think you better read all the posts in this thread. There is a much greater risk of purchasing outside of Australia & Quiggles lays it all on the line. This is not something for a newbie to undertake IMHO.
You are soooooo right, skater. I just hope the promoters that Li21 refers to have the sense to warn off newbies - it can be a short trot to a big loss of money otherwise.
 
quiggles said:
You are soooooo right, skater. I just hope the promoters that Li21 refers to have the sense to warn off newbies - it can be a short trot to a big loss of money otherwise.
Thanks for the advice Quiggles and Skater, I've read the entire thread, but i guess my question is, would it not made easier to purchase abroad with guidance of experienced brokers and agnets working with you to secure the property, finance and insurance as opposed to entering alone (and succeeding !) as Quiggles did.
 
li21 said:
Thanks for the advice Quiggles and Skater, I've read the entire thread, but i guess my question is, would it not made easier to purchase abroad with guidance of experienced brokers and agnets working with you to secure the property, finance and insurance as opposed to entering alone (and succeeding !) as Quiggles did.
Li21

Please take the following post the right way. I sympathise with your desire to do what sounds exciting and profitable, but your very question shows me that for you it would be very much higher risk than it was for me.

In answer to that question, no, it's dead easy to BUY property. It's also easy to get finance (just costly). Insurance is a bit harder to find, but can be done. A bit of research and study as well as the cash, and you're on your way.

The problems come if you don't understand the market, have troubles with your property manager, haven't checked what you might be liable for, haven't taken the time to understand the dual tax system, don't know what the expectations of landlords are and don't have experience in dealing with all the issues. As I said to one uncomprehending banker, it's NOT passive income. You have to work your butt off on this stuff. Do I have these problems? You bet, and some of them will damage my cashflow this year.

Read the threads on the property management forum about things that can happen even if you're experienced and live in the same town. Then add inexperience with dealing with the numbers and the money, complex it by adding exchange rate risk, foreign laws, legal standing and communication problems and you'll see why I am so negative about doing this first. If you LIVED there, fine! You could as a first off probably do it better than me. But from anywhere else try closer to home.

The guys selling these properties should be understood. They are sourcing deals and setting you up, but it's not 'set and forget'. They don't owe you a duty of care once they've done what they said they would, and after that point you're on your own. How could they be expected (or able) to do anything else?

Be careful. You are RESPONSIBLE for your own actions, in every sense of the world.
 
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