Chinese buying up - USA

Looks like they are not just buying in Australia now that US is heading in the right direction/recovery

They've been buying globally for the best part of 5 years. They can affect markets on a local level but on a national level they don't even put the tiniest of dents in the US market.

Chinese govt has also been converting UST's to hard assets of late. That may be why you're seeing some MSM interest in commercial.
 
The Chinese have been investing heavily in the states for years. There is a joke that if the chinese and US went to war, the US would have to ask China for funding such is the investment in states by China. I recall working on the Blackstone IPO where china had a $4b stake.

So back to US real estate. In oz, we are aware of the $5m SIV, where the rich mostly corrupt Chinese can buy Aussie passports (huge generalisation yes but focus on the $5m) in the USA the equivalent is the EB5 Visa which requires ....wait for it .... a $500k investment - so much so though the EB5 has reached its quota - yes its full. This is in fact a benefit for Australia since they are coming here.

So, in the last few years, promoters have been targeting these thousands of Chinese and most have them have been ripped off, buying rubbish and suffering the consequence, of course in the commercial market, its not necesarily the mum and dad investors its the chinese investment funds who have bought big ....

I am still seeing a heap of chinese demand in the cheap as chips real estate in florida and georgia, and in the upmarket California and New York. Its not only the chinese, its the Taiwanese who are sneaking into the numbers here, they are a sleeping giant.

Cheers Ivan
 
The Chinese government owns an ever expanding piece of U.S. assets via U.S. Government bonds, Chinese homies buying a sprinkling of U.S. resi isn't something to be concerned about.
 
Cheap US..interpretation

Definition of a cheap US property is something that long term will not cause angst! "Cheap" is not underestimating the capacity for someone in the US to rip you off. We all had the trifecta 4 years ago of exchange rate, purchase and US recession.... but I have spent the past 5 years trying to help others avoid the slip ups of the $1,000 here and there of repairs and property management and lack of just "why did I buy east coast?".... bottom line is that whatever yield YOU work out net to be in the US, deduct another 2% and then ask if it still makes sense. 150k over here (in the US) is the equivalent of arguably $450 in Australia......

Bottom line - learn tax implications, holding costs, property management, insurance costs, probably double those and then... and then....understand the mindset of the lowest common denomination of tenants and love them.

Cheap today would be under 120-130k in Vegas for SFR, Under 100k in Atlanta but be very very sure you would live in it.. because if you wouldn't, they wouldn't....
 
Thanks Emma

The reason I ask a previous poster - "what do you call cheap in USA"??? is because we are now seeing prices rise in Atlanta almost close to when the market crashed in 2007.

I did not expect this to happen so quickly and certainly did not believe at the time it would exceed 2007 property prices, but perhaps I am wrong and prices in Atlanta will just continue to rise, while the Aussie dollar continues to slide.

Anyone buying in US or purchased have any thoughts on this??

MTR:)
 
MTR,

I am seeing properties in Atlanta today in the under 100k range 30 - 50% off the Pre- GFC peak price. Some of these have already had some excellent gains (or should we call it a correction, they were grossly undervalued in 2011/2012) , still undervalued in my opinion and below replacement cost.

I am of course talking about manageable properties. Not interested in buying rubbish.

Good deals still out there for well selected properties.
 
Hi DT

These are the figures on one of my purchases in Atlanta in 2011.

I was considering selling the property below earlier this year and had an offer on the table at $127,000 but I decided not to sell.

If you can pick up something like this property today which would be good buying I guess at $80,000 with $10,000 rehab/reno you can work out the gross/net yields from my figures below. That is probably good buying in this market. I was buying properties around $18 per sq ft, it costs I believe around $90 per sq ft to build, just to give you an indication on how this market got well and truly hammered.

Of course you need to consider accounting fees, also county taxes are now increasing because property prices are increasing so may need to add $200?? guestimate to this figure.



http://www.realtor.com/realestateandhomes-detail/6120-Course-Side-Way_Lithonia_GA_30058_M52211-56194

FINANCIAL CASHFLOW ANALYSIS


PURCHASE PRICE $34,220.00


APPROXIMATE REHAB COSTS/BA FEE $19,182.00

TITTLE SEARCH AND SOLICITOR SETTLEMENT FEES
$1,200.00
LLC HOLDING COMPANY SETUP (GEORGIA ONLY)

INSPECTION $300.00

TOTAL PURCHASE COSTS: $54,902.00

MONTHLY RENTAL ESTIMATE $1,195.00

ANNUAL INCOME ESTIMATE $14,340.00

GROSS YIELD ON PURCHASE
26.12%

ESTIMATE BUILDING INSURANCE
$750.00

CURRENT COUNTY TAX (SUBJECT TO ADJUSTMENTS)
$935.08

YEARLY H.O.A. DUES (IF APPLICABLE)
$500.00

PROPERTY MANAGEMENT FEES AT 8% $1,147.20

ANNUAL EXPENSES
$3,332.28

NET INCOME
$11,007.72

NET YIELD ON PURCHASE
20.05%

.
 
Thank you, not luck though I was fortune to have Karina and Handy Andy teach me the ropes. Dont you love SS, they are living in sydney and me... Well I am in Perth and met up in Atlanta:)
 
I heard that a lot of the rebound in US prices was down to institutional investors, in particular hedge funds, buying up distressed properties en mass.

No idea how accurate it is, but if the sorts of returns that MTR posted are (or were) typical then it'd be an attractive option...

If the rumours are true, then do the hedge funds have a strategy to exit their positions in an orderly manner? And how will that affect the market?
 
Yes , Hedged funds, overseas investors and now US home owners who are now able to access finance, all driving prices up

If the Hedge funds pull the pin my guess is they will drip feed stock into the market, the alternative would be detrimental to their own position. Hedge funds were buying up with much lower yields than foreign investors who were looking at minium of 10%
 
i wonder if this news comes from people seeing folks of asian descent at auctions and then surmising they're using offshore Chinese money to pay OTT prices and artificially inflating house prices by doing so?
 
Hey all,

Just though I would chime in.

We have had some heavy buying from Chinese companies here in Toledo, Ohio.

The previous Toledo mayor had great relations with China so pretty much the entire CBD of Toledo has been bought up by Chinese firms.

They bought 2 hotels very very cheap.

Still can't believe how cheap they bought.

http://www.13abc.com/story/20197913/chinese-investor-buys-seagate-hotel - This is a steal...

http://www.toledoblade.com/Real-Estate/2011/09/15/Park-Inn-Hotel-sells-for-3M-to-Chinese-group.html - and so is this. They paid $3m and it cost $42m to build.

God Bless US real estate lol :)
 
Hey all,

Just though I would chime in.

We have had some heavy buying from Chinese companies here in Toledo, Ohio.

The previous Toledo mayor had great relations with China so pretty much the entire CBD of Toledo has been bought up by Chinese firms.

They bought 2 hotels very very cheap.

Still can't believe how cheap they bought.

http://www.13abc.com/story/20197913/chinese-investor-buys-seagate-hotel - This is a steal...

http://www.toledoblade.com/Real-Estate/2011/09/15/Park-Inn-Hotel-sells-for-3M-to-Chinese-group.html - and so is this. They paid $3m and it cost $42m to build.

God Bless US real estate lol :)

Engelo,
WOW, thanks for posting, Toledo is on sale!
 
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