Las Vegas on ACA

A

attrill

Last night's "A current Affair" had a piece on Las Vegas which apparently is ground zero of the housing troubles in the US. The journo was shown around properties that had dropped from $1,000,000 to $100,000 and was told of prorerties that could be picked up for $20,000.

I couldn't help but think with all the people living on the streets, where are the investors who could pick up these properties and rent them out for $30 a week and still be cash +ve to get the city back on it's feet?

Perhaps it is worse than we know or maybe I am just naive?
 
MY understanding is (and someone correct me if i am wrong), that even though the house prices in some parts of the US have dropped dramatically, than whoever buys them, will still need to pay past taxes on those properties. So if you buy a house for 20k, then you may need to cough up with an extra 100k or so in taxes to cover it.

Again, please correct me if i am wrong.

If that is the case though, then the various councils and stage governments should probably try to "wear" those lost taxes - just for the sake of kickstarting the sector again.
 
Plus the ongoing property taxes, the difficulty in getting decent PM for single houses, potential difficulty in getting a tenant at all (in other states, don't know about Vegas), if you do get a tenant and need maintenance or damage repairs it'll cost you dearly etc. There's a few threads on these really cheap US properties.

I reckon there's plenty of money to be made in there somewhere, but for someone braver than I, and for that matter probably someone who's over there permenantly - not half the world away.
 
I agree Steve. I'm sure there are $$ to be made, but it would require a lot of local knowledge, if not actual local presence.
There are some pockets of empty houses that may never bounce back. The industries that created them in the first place have long gone. Never to return.
There there are pockets or markets where owners and renters will return one day. But when? And how to identify these areas are 2 big questions before you get to the many "how" questions that buying and manageing overseas properties raises.
This is one of the issues I discussed with Michael Yadney. He owns and has no desire to own overseas property. Not his strategy. Not mine, either. Guess we both like an element of control of our investment $$$. Horses for courses.
 
If you're interest in the taxes that still need to be paid on these properties, do some research on 'Tax Liens'.

Essentially the county (aka council) wants to recover the money owed to them immediately. Through various methods (auction, lucky dip, etc) they sell the outstanding debt to investors. That way they get their money immediately and the investor gets first charge over the property, as well as a high interest rate on the debt owning (between 10%-50% pa).

Apparently over 90% of debts are settled within two years. If after two years, the debt has not been repaid, the investor can reposes the house. They notify the bank of the repossession and they have 60 days to pay out the investor (plus interest owing). If the bank doesn't pay, the investor gets the house, clear title.

I'm still doing a lot of research into this, and obviously there would need to be a lot of due diligence involved before making the investment, but it does raise a lot of opportunities out there.
 
gg1965 said:
MY understanding is (and someone correct me if i am wrong), that even though the house prices in some parts of the US have dropped dramatically, than whoever buys them, will still need to pay past taxes on those properties. So if you buy a house for 20k, then you may need to cough up with an extra 100k or so in taxes to cover it.

Again, please correct me if i am wrong.

If that is the case though, then the various councils and stage governments should probably try to "wear" those lost taxes - just for the sake of kickstarting the sector again.
Click to expand...

Las Vegas was going through a boom when we first moved to the US.

There was loads and loads of "spec" develoments going up, easy terms and credit - ti was one of the fastest growing cities in the US at that time. Houses were fairly cheap as well.

No need to think too hard to work what would go wrong - oversupply and a sudden slump in the market, credit squeeze and no-one with any credit to buy.

With the $20k houses, you also have to pay any back-taxes owed, and then you have ongoing problems with getting PM's and there are future taxes at approx 1.5% of the property's value.
 
HiEquity said:
1.5% of $20k??? Schweeeeeeet! :cool:
Click to expand...

Yeah; sounds terrific - and probably is. This is part of the attraction I guess.

The real ugly part is what happens after you take over and have to try and manage the property.

From my observations over there, property management companies prefer to go for apartment buildings, preferrably with a full-time live in manager.

I didn't see much evidence of anyone having a single-family dwelling professionally managed - the people I met that had IP's did it themselves.
 
attrill said:
Last night's "A current Affair" had a piece on Las Vegas which apparently is ground zero of the housing troubles in the US. The journo was shown around properties that had dropped from $1,000,000 to $100,000 and was told of prorerties that could be picked up for $20,000.

I couldn't help but think with all the people living on the streets, where are the investors who could pick up these properties and rent them out for $30 a week and still be cash +ve to get the city back on it's feet?

Perhaps it is worse than we know or maybe I am just naive?
Click to expand...

Its pretty ugly there isn't it?
And think, things have barely hit Australia yet.
Maybe not to that degree, but sooner or later property will be hit here in OZ also. There has been some cuts in prices, but limited. More to come.
 
Ive searched and couldn't find, maybe someone could find it,

the really long and good post about a guy who buys in the USA, and tells you the pros and cons, mostly cons.... I read that in great detail, and it scared the pants off of me!!
 
asdlellel said:
There has been some cuts in prices, but limited. More to come.
Click to expand...

the western suburbs of perth are already off 20-30%. the cheaper areas such as mandurah.... well I know my villas of $400k (3 years ago) were appraised yesterday at $270k.

take another 10% off and we are looking at a 50% drop.

Steven Keen da man!
 
There's a full page article on Vegas properties in today's AFR.

Unsurprisingly, the figures it quotes aren't nearly as alarmist as those referred to in the initial post, per the ACA report last night. It talks of $300k properties now being worth $100-200k, which of course is quite bad, but not quite as extreme as the ACA story referred to. (Which I haven't seen)

The AFR article states that about half the US states are limited-recourse, which was news to me, I thought they were all limited-recourse. I wonder what's happened to house prices in the full-recourse states?
 
Property Meister said:
Ive searched and couldn't find, maybe someone could find it,

the really long and good post about a guy who buys in the USA, and tells you the pros and cons, mostly cons.... I read that in great detail, and it scared the pants off of me!!
Click to expand...

That was Rick Otton.

He certainly painted a D&G picture.

Could be worst case scenario stuff, but it pays to be very careful.
 
At a recent 3 day seminar I attended there was a session presented by a man who promotes the tax liens. I find the details of the session and post them up if anyone is interested.

Cheers
Andrew
 
Ausprop said:
the western suburbs of perth are already off 20-30%. the cheaper areas such as mandurah.... well I know my villas of $400k (3 years ago) were appraised yesterday at $270k.

take another 10% off and we are looking at a 50% drop.

Steven Keen da man!
Click to expand...

Wow, that is a huge drop. I did hear that Mandurah in particular had an over supply. I find there is not much quality under $350,000 in many areas. Maybe some, just not a lot. Still terribly over priced in many areas. I guess the western suburbs just have so much room to move its not suprising.

Yes, Steve Keen, yet to be proven wrong I guess. Patience with time will tell though.
 
asdlellel said:
I find there is not much quality under $350,000 in many areas. Maybe some, just not a lot.
Click to expand...

try midland, mandurah, singleton, rockingham, shoalwater etc for some great buying around these prices. out gosnells and maddington way too I think?

Steven Keen has been proved right already IMO. it's as good as done. It's not every house in every suburb but as a general principle in a decent number of patches it has occurred.
 
Jonathon said:
The AFR article states that about half the US states are limited-recourse, which was news to me, I thought they were all limited-recourse. I wonder what's happened to house prices in the full-recourse states?
Click to expand...
I don't think that the recourse status is the initial reason for the housing drops, but once house prices drop due to market forces, in a non-recourse state (most notably California and Florida), the process compounds because homeowners who are "upside down" (owe more than their house is worth) simply walk away. These foreclosed properties increase supply, which lowers market prices, which causes more people to be upside-down...

http://snowflake5.blogspot.com/2009/01/problem-of-american-non-recourse.html
 
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