Buying in the US

Discussion in 'Where to Buy' started by quiggles, 9th Nov, 2004.

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  1. Aceyducey

    Aceyducey Member

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    BTW, Here's a nice property site for the US to visit. It makes good use of Google maps.

    http://www.housingmaps.com/

    I've done a bit of work on overlaying Google maps over land I hold in the US as well. Very useful tool.

    For Australia it's not yet as useful (no street maps) though the satellite images are good for identifying local infrastructure.

    And Google Earth needs more time to develop.

    Cheers,

    Aceyducey
     
  2. MargMac

    MargMac Member

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    Taxation implicatons of LLC's

    Thanks for your reply to my last post Quiggles - did find a building inspector who did the job so thanks for that.

    I'm planning a trip to the States early Aug to do some hands on research and get the team sorted out there and am also trying to get my head around LLC's and tax implications over here. I've spoken to a guy who specialises in asset protection in the States who recommends setting up LLC's with 2 C-Corps but from what I gather, it has double taxation implications resulting in less than 50% of the funds coming back to the Trust over here.

    Can anyone give any pointers to find out about the taxation issues - I've had a look at the ATO & IRS websites but so far can't find where they talk specifically about how income is taxed in the States and then in Aus. Unfortunately its not something my accountant knows about either.

    For info - the link below is for general info on LLCs (by a company who can set them up for you in the States). You can download a free brochure about LLC's and C-Corps. Its useful background reading if anyone is interested - obviously doesn't go into the detail of how income is taxed over here.

    http://www.e-intelligenceport.com/TCC/CORPORATE/freebrochure.cfm

    Any pointers gratefully received!
     
  3. quiggles

    quiggles Member

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    MASSIVE HUGE DISCLAIMER - I am neither an accountant nor a lawyer and I haven't gotten satisfactory advice on this yet.

    1. My understanding is that a structure where a C-Corp is involved will normally incur full tax in the US which will not be recredited when you repatriate the funds no matter what structure you use to own it in Australia. There are techniques to get around this but the tax office might have unpleasant names for them.

    2. My further understanding is that structures which only involve LLCs, Australian trusts and/or personal holdings or Australian companies will be able to take advantage of the double taxation agreements which result in tax effectively being paid at the higher of the US or Australian rate.

    My critical understanding is that Australian tax law and US tax law have one similar provision - any scheme specifically designed to avoid tax is null and void. Reducing tax, especially where there are other motives such as asset protection are OK. So be honest, be careful and pay your taxes.
     
  4. guitarchick

    guitarchick Member

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    Truely Inspirational !!!

    Amazing Quiggles, I sat there and read the whole thread - you have certainly done your homework. I have been interested in this market myself, I am in the process of becoming a permenant US resident, so hopefully that will break down alot of the walls that you have had to face. If my residency doesn't come off, I to will have the same walls !! (ahhhh) I commend you on your hard work, you deserve every penny !!!

    Has anyone here invested in property (foreclosure or anykind) in Tennessee? particularly Nashville ? :)

    Again, Great work Quiggles !!
     
  5. Rick Traberg

    Rick Traberg Member

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    Hi quiggles,

    Its now been some time since you bought your first propertys in these areas , how are they all going? are they all tenented ? is your property manager doing a good job for you? how about the finance issue? Will you be investing more in these areas?
    Would just like to get a general veiw of how it is all going.

    Regards Rick
     
  6. Qld's007

    Qld's007 Member

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    Finance

    60% is certainly obtainable.

    We can normally achieve between 70- 80% for our clients dependant on a few things.

    As it has been mentioned in a previous post ensure that you have your ITIN well in time for closing.

    Cheers

    Richard
    Qlds007

    richard@yourstatefinance.com
    www.yourstatefinance.com
     
  7. quiggles

    quiggles Member

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    A bit of an update, and some timely warnings.

    In a nutshell, my property manager was not professional. He's been sacked and replaced and it's cost me dearly.

    Error number 1: (PM's error) I was happy to take welfare clients and he put some in, but Uncle Sam was slow in approving and hadn't paid the back rent on the one who was eventually approved. I later found out that Sam does pay back rent, as my PM had promised. I'd felt pretty secure over this debt as it was from the Government. Not so - until the tenant and the house are approved, government meets no bills and pays nothing retroactively. Anywhere up to $5000 down the drain thanks to his letting unapproved tenants in, and these tenants are going to find it hard to pay the back rent he allowed them to build up.

    Error No 2: (PM's error) Allowed one tenant to build up a $2000 backrent bill despite my explicit instructions. I doubt I'll see that again.

    Error no 3: (PM's error) I got tough, told him to issue eviction notices on all rent defaulters - this is a normal way of making them pay up. He told me that he had "booted" four tenants, although he got not a cent in back rent. Later found out that they had walked, hadn't been served with anything, and he had just let them go.

    Error no. 4: (My error) went over there earlier this year intending to sort things out, but got distracted and spent more time shopping than inspecting my current properties. If I had, could've saved myself some trouble and perhaps another $2000).

    Errors 5 and 6: (My errors) didn't set matters up well - I didn't have a backup option for PM so I was stuck with what I had. I also accepted excuses too easily, didn't control finances well enough and essentially didn't manage the manager.

    After this litany of failures what I did do right was interview property managers when I was last over there and came up with one decent one. We were actually looking to hand the new PM half the properties so that no PM had our whole finances. However, in sacking the old PM, I've had to give all of them to the new PM.

    I have confidence in the approach being taken (the PM has taken time to chew me out for letting things slip so badly!) and that we'll be on track. The fired property manager was about to put tenants into the vacancies he had helped create, but decided not to when I sacked him, even though he'd been paid for the month. Not impressed.

    The properties (old and new) are half to two thirds rented, but are being put back on track. I'll be showing a real loss for last financial year (as opposed to the tax loss I was expecting) but I'm certain that the worst is over. I expect positive cashflow for August and profitability for September onwards.

    Valuable lessons learnt: The least sign of discomfort with a remote manager is a bad signal. Spending hours per week managing your PM is a real problem. Focus on your business, listen to the figures and not the excuses. You occasionally need to play hardball.

    The above sounds terrible, but it's actually quite good. We now feel we're properly on track. We will go back later this year to check everything out and not shop. Well, not unless more funds come through (which is looking increasingly likely) :D :D :D

    Hope this answers questions asked above, and thanks for the comments.
     
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  8. thefirstbruce

    thefirstbruce -

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    Good update Quiggles.

    It's always hard to get good PMs who are prepared to deal with the bottom end, even in Oz.
     
  9. agent 86

    agent 86 Member

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    This is really great stuff Quiggles, esp Valuable lessons learnt
    Thanks.
    A86
     
  10. kissfan

    kissfan Member

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    Hi again Quiggles.

    Was thinking of your US adventure and just wanted to say that I admire all you've done. Sure, most of us here have bought and possibly sold multiple I/P's, but to go way out of your comfort zone like you have must've taken a lot of commitment, drive, courage and determination.

    While some of us think about doing things, you actually got off your backside and did it. You mention there were mistakes made, but I don't have to tell you that every mistake is a learning curve and is only a temporary setback and actually (in most cases) will bring us closer to our goals.

    Anyway mate, just wanted to give you a bit of well deserved praise.

    Regards
    Marty
     
  11. beech

    beech Member

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    hi Quiggles thanks for the update,

    Have you had any revals done since purchase?
     
  12. quiggles

    quiggles Member

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    See post 75 in this thread, bottom of page 5. Essentially we paid around $300k US for the properties we bought last year and the Govt reval puts the value at around $375k. 20% under market isn't too shabby, and I reckon the Government valuations are probably conservative.
     
  13. beech

    beech Member

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    Hi Quiggles,

    I now recall having already read post 75. :eek:

    Well done and go the Buffalo Bills NFL team.
    Followed them since about 1985.
     
  14. agent 86

    agent 86 Member

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    Quiggles,

    Partly off topic, but this tip helped speed things up for me when using these forums.

     
  15. Rick Traberg

    Rick Traberg Member

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    Hi Quiggles,

    Thank you for your repley .Do you think you will be doing anymore investing in the US? What about the finance prblem any luck with that?

    Cheers Rick
     
  16. blossomoz

    blossomoz Member

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    Thanks,
    I'm finding this so interesting but I feel I would need someone to hold my hand before I jumped.
    Good on you.
    cheers
    blossomoz
     
  17. quiggles

    quiggles Member

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    The US is my future investment patch. I'll never settle there, the separation would distress my parents (and me) too much, but I love the place and will be grateful to have every opportunity to visit it. When I travelled Europe in my youth, I often thought "This green, historical place is much more beautiful than most of Australia". I never thought "...and I could live here." Travelling the US, I thought "The folks here are really nice, there are wide brown lands and I could live here" but I still didn't add "...and some day I will." Home is where the heart is. And most of the US can't make a decent coffee.

    Sorry for that digression, but the US has found an unexpected warm spot in me. I've always been very cynical and dismissive of the late Peter Allen, but I'm beginning to consider that possibly "I still call Australia home" was actually written from the heart.

    Reverting to the subject at hand, I think that finance is imminent, but I'm not holding my breath. I'll let people know as and when I can.
    To an extent, that's how this post started. View it as a cyberhand, I know others have. In the end though, you have to decide how you want to do things and what your priorities are. There are those on the forum who consider, with evidence to back them up, that capital gain is the way to wealth, wouldn't glance twice at my investments. Same for those who like to manage their own properties or at least be able to drive past them.

    I take more risks than some, less than others and only the long term will show whether my risk reward ratio has panned out.

    But I'll let you know if I ever go into the (strictly platonic) hand holding biz. ;)
     
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  18. Rick Traberg

    Rick Traberg Member

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    Thanks quiggles

    I read parts of your story everyday , I have probably read it all a few times now and admire what you have done. I am heading over there in september or october depending on work commitments.

    Cheers Rick
     
  19. mitchmakhan

    mitchmakhan Member

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    Good one Quiggles, excellant work on the updates....

    I have had no problems with the finance though....although it was expensive to setup....

    Going back for more soon...

    Mitch
     
  20. chadsimons

    chadsimons Member

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    Great read Quiggles, extremely informative and interesting.I am heading over there in October sometime to also make some purchases. I have been doing heaps of research on the opportunities in the states over the last 3 months myself. Mainly researching on the net, talking to other investors who have purchased and through forums such as this.

    I first heard about the opportunities on a local radio station several months ago and a guy came out to my house to chat about it. He showed me several properties that he had for sale. It looked to good to be true. The properties were in New York State area but this guy was not willing to desclose where in New York State they were or information on the people he deals with there.I wasnt comfortable at all with this guy, but never the less started commencing my own research and found out all about "Foreclosure " properties etc and that the high returns were definately consistent.

    Through my research and talking with different people, I met a guy who is currently living in New Zealand. He is an astute investor in the USA and like yourself has established some fantastic contacts in Bufallo and Rochester. He has formed a solid relationship with these guys and have sourced over 50 properties for Australian investors since April this year.

    Anyway, one thing has lead to another and I have now officially joined forces with them to source good properties with good returns for Australian and New Zealand Investors. We have also developed good contacts in Texas in which we are focussing on capital growth opportunities as well.

    We are going to the states in October to buy property and I am itching to go.

    Once again, I really enjoyed reading your post.I will do a post on my experience and opportunities I found when I get back.

    Regards

    Chad
     
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