buying land in the US

E

eeew

I am just thinking at the moment...such good value of land in the US. Since i am in australia, i am not willing to buy a house/apartment in the US, but want to take advantage of the low prices and the high aussie dollar.

My goal is long term cap gains and thus i was thinking of buying land there, so i am not concerned if the land does not appreciate much in the next 2 years or so, but should in 10-15 yrs.

I am thinking of 1/2-1/3 acre land in blue chip suburbs about 20-25km of large american cities. One such posting is: http://www.coldwellbankeratlanta.co...Num=20&StateID=15&RegionID=0&IsRegularPS=True

Plus, i am sure that american properties and land are subject to heavy negotiation, so i think i may be able to get the asking price down as well.

Your opinions?
 
I would not touch it with a barge pole.
Recently I read an article that you can buy a house, I think it was in Detroit, for $1.00.
Try to get for 50 cents!!!:p
 
electroinvestor said:
I would not touch it with a barge pole.
Recently I read an article that you can buy a house, I think it was in Detroit, for $1.00.
Try to get for 50 cents!!!:p
Click to expand...

:D
um...google the area and i think you will see that it aint exactly a run down crime infested joint in detroit.
 
Let's say you get it for $100k (for the one in your link that they are asking just over 200k for).

You have 10-15 years of paying a mortgage with no income, lodging USA tax returns (I am guessing), setting up all your doco to be able to purchase in the USA.

Seems like a hell of a lot of effort and risk for a return in 10-15 years time, even if the property quadrupled in value.

Imagine the same portfolio that you could build in Australia over 10-15 years, starting with the same investment.
 
BuildingBlocks said:
Let's say you get it for $100k (for the one in your link that they are asking just over 200k for).

You have 10-15 years of paying a mortgage with no income, lodging USA tax returns (I am guessing), setting up all your doco to be able to purchase in the USA.

Seems like a hell of a lot of effort and risk for a return in 10-15 years time, even if the property quadrupled in value.

Imagine the same portfolio that you could build in Australia over 10-15 years, starting with the same investment.
Click to expand...

all true, however 100k will get you a hole in the ground in a comparable region in australia ( top suburb of a large city).
 
eeew said:
all true, however 100k will get you a hole in the ground in a comparable region in australia ( top suburb of a large city).
Click to expand...

I don't see why holding land is your only option though, as I am not suggesting you do it in Australia either.

It is relying solely on future growth and has high holding costs due to there be no/limited income.
 
I had a look at the link. What a beautiful area ! just lovely. Looks like its very close to Atlanta, a suburb of Atlanta.
 
eeew said:
I am just thinking at the moment...such good value of land in the US. Since i am in australia, i am not willing to buy a house/apartment in the US, but want to take advantage of the low prices and the high aussie dollar.

My goal is long term cap gains and thus i was thinking of buying land there, so i am not concerned if the land does not appreciate much in the next 2 years or so, but should in 10-15 yrs.

I am thinking of 1/2-1/3 acre land in blue chip suburbs about 20-25km of large american cities. One such posting is: http://www.coldwellbankeratlanta.co...Num=20&StateID=15&RegionID=0&IsRegularPS=True

Plus, i am sure that american properties and land are subject to heavy negotiation, so i think i may be able to get the asking price down as well.

Your opinions?
Click to expand...

My opinion is worth zero, but I would not personally crawl over a modest block of land here, Apollo Bay, Victoria, Australia, for Atlanta USA:

Example: Seeberg Crt Apollo Bay, from $185,000

Decade averaged growth for land blocks, Apollo Bay from 1998 to 2009: 14.9%

Same decade house: 12.1%

Unit, same decade: 17.8%

The decade from 1994 to 2005 saw an average growth p/a of 11.4% for houses.

(Stats from Victorian Valuer General)

Having lived there as a child, and returning often, knowing people that own businesses there, following it, (Apollo Bay economic/business/tourism wise) I like it as investment potential. Having said that I don't have land there, nor IP's I am a bit further 'inland' investing.
 
our obsession said:
My opinion is worth zero, but I would not personally crawl over a modest block of land here, Apollo Bay, Victoria, Australia, for Atlanta USA:

Example: Seeberg Crt Apollo Bay, from $185,000

Decade averaged growth for land blocks, Apollo Bay from 1998 to 2009: 14.9%

Same decade house: 12.1%

Unit, same decade: 17.8%

The decade from 1994 to 2005 saw an average growth p/a of 11.4% for houses.

(Stats from Victorian Valuer General)

Having lived there as a child, and returning often, knowing people that own businesses there, following it, (Apollo Bay economic/business/tourism wise) I like it as investment potential. Having said that I don't have land there, nor IP's I am a bit further 'inland' investing.
Click to expand...



Sure there are many places in aust ( regional included) that have shown CG over the last decade, and no doubt more CG in the future.....
but...
the real issue i am asking myself is somewhat opportunistic: the US has been slow to recover from the GFC. As such there are bargains out there. The potential for CG is thus huge. Why not buy now ( and it will be cheap)and hold for a decade?

No doubt it will be risky, but potential risk= potential reward.

I believe in the american story. Most major cities ( with some exceptions such as detroit) are well diversified and have a huge GDP. They also have infrastructure in place to accomodate growth (when it comes), but come it will and i want to be there when it does.
 
Eeew:
the real issue i am asking myself is somewhat opportunistic: the US has been slow to recover from the GFC. As such there are bargains out there. The potential for CG is thus huge. Why not buy now ( and it will be cheap)and hold for a decade?

No doubt it will be risky, but potential risk= potential reward.

I believe in the american story. Most major cities ( with some exceptions such as detroit) are well diversified and have a huge GDP. They also have infrastructure in place to accomodate growth (when it comes), but come it will and i want to be there when it does.
Click to expand...

I get the 'opportunistic' point, if you decide to go ahead with this, hope it goes super well for you. I think the two things that come to mind for me are:

1. Buying the land instead of something up and running, get a return on my dollar, relatively sooner, than later. I say this because I've been a bit of a Queen on snapping up 'land' blocks, and while that is all good and well and I have built, and they continue to increase in value, the majority of my land is just 'sitting there' ...I would much rather (in hindsight) be taking in rent AND the land block value that house or property sitting on will still go up in value-regardless.

2. I am by nature a researcher-type-person, I may at times come across as boots and all, enthusiastic, but I am a very careful researcher on what I invest in, knowing the places, the framework, the economy, comparable returns, studying the averaged out growth, the plans, as much as I can possibly know...It would cost me a fortune to fly over, accommodation, travel, finding out what I personally need to know about the place, to me that would be chewing into profits.

Thirdly, and again only my view, I am concerned about the USA fullstop. I understand about them having the infrastructure, the population, I agree, but I think it is a nation in decay. It is an old democracy and I think they have lifespans, and it is dying. As opposed to relatively a stable, and young Australia that I believe has good investing opportunities..That's just my airy fairy thoughts, I sincerely hope whatever you invest in goes well for you.
 
our obsession said:
Eeew:

I get the 'opportunistic' point, if you decide to go ahead with this, hope it goes super well for you. I think the two things that come to mind for me are:

1. Buying the land instead of something up and running, get a return on my dollar, relatively sooner, than later. I say this because I've been a bit of a Queen on snapping up 'land' blocks, and while that is all good and well and I have built, and they continue to increase in value, the majority of my land is just 'sitting there' ...I would much rather (in hindsight) be taking in rent AND the land block value that house or property sitting on will still go up in value-regardless.

2. I am by nature a researcher-type-person, I may at times come across as boots and all, enthusiastic, but I am a very careful researcher on what I invest in, knowing the places, the framework, the economy, comparable returns, studying the averaged out growth, the plans, as much as I can possibly know...It would cost me a fortune to fly over, accommodation, travel, finding out what I personally need to know about the place, to me that would be chewing into profits.

Thirdly, and again only my view, I am concerned about the USA fullstop. I understand about them having the infrastructure, the population, I agree, but I think it is a nation in decay. It is an old democracy and I think they have lifespans, and it is dying. As opposed to relatively a stable, and young Australia that I believe has good investing opportunities..That's just my airy fairy thoughts, I sincerely hope whatever you invest in goes well for you.
Click to expand...

Yes, some valid points. I am under no illusions as to the risks and BS i will have to encounter should i go ahead. I dont want a house/apartment because of the more headaches to deal with ( can you imagine the fires to put out if you get bad tenants/real estate agents...all from australia...many late night long distance phone calls...). Buying land is easier to maintain ( especially if not in the country). Yes, some headaches, but much less than income producing property. Also, regarding your second point, land should, i hope, require less research than houses/apartments.
As for the last point, understand your point of view. When the americans do something, they go all in- no holds barred. During the boom years, they thus built a great many dwellings ( on the hope that there would be supply to match), thus in part the over-supply post GFC. However, i fundamentally dont agree with your point- this phoenix will rise again...will take some time, but it will eventually.
 
Giddyup said:
If you think the next 10 - 15 years in Aus are going to be the same as the last 10 - 15 years you are dreaming.
Click to expand...

Let's say the USA block was $100,000 and goes up to $500,000 in 15 years. 500% return is pretty good.

My understanding is that you will be lucky to find a 50% LVR mortgage in USA as a non-resident, meaning that a $100k block of land will mean at least $50k plus say $10k buying expenses as a rough figure pulled from the air.

I'll take that same $60k and put it in Australian property in locations I have a good understanding of at 95% LVR (let's say 2x $300k properties to start with) with neutral holding costs and refinancing back to a high LVR to reinvest whenever possible. I will also have the extra cashflow as I will not be paying a mortgage on a zero income property, so can reinvest that too. See you in 10-15 years.

I can understand and appreciate the risk in USA property if you are seeing strong positive cashflow (like the Vegas USA thread where there were returns of over 15%), but putting the money into a block of land that produces zero income in an unstable economy where oversupply is an issue, is something entirely different.
 
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An apology for slight diversion from land to commercial, but thought Eeew, others? may find of interest, (as I did), an Economist article, (3/3/11):

The Old and the New: The Crisis has Spurred Innovation in Commercial Property

Excerpt only:

UNLIKE their cousins in residential property, professionals in the commercial sector are not searching their souls after the crisis. Property is cyclical, they shrug. The basic drivers of demand are unchanged, and supply did not get out of hand. Now is a time to pick up bargains. But beneath the cyclical rhythms, the crisis has left its mark.

First, the industry’s cast has changed. Both its asset-management and its financing sides have been winnowed out, thanks to the disappearance or withdrawal of several big banks. ING, a Dutch bank that has been told to lose weight by European regulators, sold most of its huge property fund-management arm to CBRE in February, for example.
Click to expand...
 
eeew said:
I believe in the american story. Most major cities ( with some exceptions such as detroit) are well diversified and have a huge GDP. They also have infrastructure in place to accomodate growth (when it comes), but come it will and i want to be there when it does.
Click to expand...

eeew, I'm not sure where you're getting your information, but perhaps you would like to share it with the State Governments of those cities that have "a huge GDP" because this is the current reality as given by the Center of Budget and Policy Priorities:

"The upcoming fiscal year (FY2012) is shaping up as one of states’ most difficult budget years on record. Thus far, some 44 states and the District of Columbia are projecting budget shortfalls totaling $112 billion for fiscal year 2012."

Couple that with a record breaking Federal deficit in the coming year of ~$1.5 trillion, national unemployment at ~9% and and existing deficit equal to annual GDP that requires annual interest payments of over $410 Billion /yr and growing... This is the real American story.

Perhaps I am a little biased, after all, I LIVE in the US. People I talk to over here aren't buying into the government hype of "all is well in wonderland"....
 
Indifference said:
Couple that with a record breaking Federal deficit in the coming year of ~$1.5 trillion, national unemployment at ~9% and and existing deficit equal to annual GDP that requires annual interest payments of over $410 Billion /yr and growing... This is the real American story.
Click to expand...

I've bought a place in a prestigious LA suburb. Was offered 20% more, in cash, on the courthouse steps after my bid was accepted. But you are not likely to believe it. Indifference, if you saw a $100 bill on the ground, random walkers like you would deny it......"oh no, if that $100 bill was real, someone else would have picked it up by now."
 
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