US foreclosures #2 (aka the Emma171 thread)

[Sunfish]

{Edit - thread continued from here: US foreclosures - Boholt Seminars - NO}

What a thread 1,000 posts.

Good to see you are taking exchange risk seriously. Only six - seven years ago the A$ was worth US48c. Any investment you made using A$ buying a US$ asset you have lost half of the asset value.

I feel this because I have a significant asset denominated in the Loony and I have foregone 25% of my investment as our $ has gone from C$1.25 to parity.

Later this year I might look at a US investment, but only if can do it with <20% A$. I'll print this thread and read it on the trip over. Won't need a book. LOL

 

[Emma171]

The only way to "lock in" is to do what a lot of people I know are doing - forego interim interest rates Australia side and whack the funds into a US bank account now - if you don't have a US bank account and are seriously buying property, dial a friend.... there are ways around everything but you aren't alone with your thoughts and many are thus making a bit of a rush on this.

 

[karina]

For those struggling with the US bank account. I believe HSBC in sydney will open a US bank account in your personal name for a $200 fee , they cannot open US bank accounts for LLC 's from Australia last time I checked.

 

[reeco]

Welcome newbies

Cashflow and Reformedsceptic to the rescue. Your timing...is impeccable. Scratch that. Its highly improbable...People do there due dilligence prior to purchasing.eg they jump online FIRST thing. Then they stumble across the FIRST google page with the most hits...one such search would be this one...

You say youve already brought?

Ill give you the run down on how popular threads work. When a company or product is mentioned to ANY degree, guess who pops up without fail? The spruikers. And they are ALWAYS first posters. Never met one that wasnt. Like the rest, Money is youl never return or contribute the way emma or Lawsys have. Ive been here much longer then Emma and i confess ive definately taken more then ive given. A testimate in itself.

I can guarantee your only input here will be to tell us how amazing myUSA and the like are...such a shame...you will be missed.

May i ask...How many years of actual experience do you have personally of investing in the US??

 

[patwxz]

The spuikers. I can guarantee your only input here will be to tell us how amazing myUSA and the like are...such a shame...you will be missed.

Funny, I was thinking exactly the same. ReformedSeptic, we asked you for some figures, yield, where/what you bought, costs etc so that we could become reformed sceptics too but you haven't posted any. What is the big secret ? All you have done is defend MyUSAProperty, tell us all the services offered and accuse Jeremy of promoting his sister. Well at least he is honest about it. He isn't masquerading as an independent investor touting her services.

 

[reeco]

Funny, I was thinking exactly the same. ReformedSeptic, we asked you for some figures, yield, where/what you bought, costs etc so that we could become reformed sceptics too but you haven't posted any. What is the big secret ? All you have done is defend MyUSAProperties and accuse Jeremy of promoting his sister. Well at least he is honest about it. He isn't masquerading as an independent investor touting her services.

Money is they wont say..why? well that would reveal exactly who they are..County records ya see. Anyone can look into a property to reveal the owner. Some counties even give out phone numbers! No wonder there are so many damn scams in the US.

Hows this...when i went to open a bank account with Wells fargo they said i should make a seperate account for micro transactions..so i thought "logistically makes sense" ..i thought they wanted me to keep a tidy profile for when the statements get sent out etc. Nice...

But no. Its called a protection or shield account. So if people some how gain access to that account (the one you give out to tennants etc) then they only have access to funds in that account. Not the one you apparently have most of your $$ in.
The banker felt it pressing to share that with me as it is was more then a common occurance.

So when you do get an account in the US i suggest... what i was suggested. Get another linked account. Checking, Savings, and Transient/Shield account.

Back to the newbies...Any self respecting SS formite must give benefit of a doubt.. So what say you newbies?

 

[patwxz]

Hows this...when i went to open a bank account with Wells fargo they said i should make a seperate account for micro transactions..so i thought "logistically makes sense" ..i thought they wanted me to keep a tidy profile for when the statements get sent out etc. Nice...

But no. Its called a protection or shield account. So if people somhow gain access to that account (the one you give out to tennants etc) then they only have access to funds in that account. Not the one you apparently have most of your $$ in.
The banker felt it pressing to share that with me as it is was more then a common occurance.

So when you do get an account in the US i suggest... what i was suggested. Get another linked account. Checking, Savings, and Transient/Shield account.

Back to the newbies...Any self respecting SS formite must give benefit of a doubt.. So what say you newbies?

Interesting. That's for the info.

 

[patwxz]

as a former pro trader I feel ashamed to ask, is there anyway I can lock in the current exchange rate (forward contracts? or something)

Hi WG,

I remember you from Forex Factory. I haven’t posted there for a long time. Oanda does currency hedging. http://fxconsulting.oanda.com/discover/hedging-scenario

 

[buster]

Would you mind telling us what city that was in and what you did to increase the value of the property ? What renovations and additions did you do ? What did you spend on it before you sold it ?
Just because that happened in Australia doesn't mean that it will happen in the US. We are fuelled by a commodity boom and we have nearly full employment. That translates into higher house prices. The unemployment rate in the US is so much higher and they have few commodities of their own so whilst commodities are going up, they have to shell out more money for them. That is not to say that house prices won't go up in the US eventually but you can't compare it with your experience in Australia.

The US as few commodities of it own?????? Only the worlds largest grain producer and controls 50% of word grain, worlds largest manufactorer (20% of world output) Holds largest amount of gold, has worlds largest commodity exchange, Duh!

 

[patwxz]

The US as few commodities of it own?????? Only the worlds largest grain producer and controls 50% of word grain, worlds largest manufactorer (20% of world output) Holds largest amount of gold, has worlds largest commodity exchange, Duh!

I should have been more specific but I assumed that people would know what I meant. I was referring to commodities like iron ore, coal, gold and oil. I didn't mean soft commodities or agricultural commodities. The US does hold gold but does not have many reserves in the ground like we do.

 

[Perp]

patwxz's point (now deleted) about not expecting the same capital growth in the US as we're accustomed to in Australia is well-made and worth reinforcing; the US housing market is much more focused on yield, and thus capital growth tends to be closely related to growth in rent.

For owner-occupiers, the difference in cost to rent vs buy has an influence, and investors in the USA demand yields which they consider appropriate for risk-reward in their market. So the US housing market operates much more "purely" (from an economic theory sense) than the Australian market, where the family home is considered (by many) an "investment", and we've seen inflated growth over a prolonged period.

 

[Chui]

US-specific building issues

Are there specific building inspection issues that Australians need to be aware of?

The only one I know of is the one with Chinese drywalls.

 

[Sunfish]

I should have been more specific but I assumed that people would know what I meant. I was referring to commodities like iron ore, coal, gold and oil. I didn't mean soft commodities or agricultural commodities. The US does hold gold but does not have many reserves in the ground like we do.

They have plenty of all of those. Don't know about iron but they have more of the others than we do. They just don't have a one dimensional economy like us.

 

[Emma171]

Reformedsceptic - what you say is highly valid EXCEPT that I feel it misses the point of this forum. This forum is about sharing and learning and giving completely free and available information so that others can benefit from that knowledge. Thus by coming on and saying I have an awesome deal but NOT giving the information it kind of moots the entry.

It almost reads "I am doing brilliantly, I am going to tell you I am doing brilliantly (because I said so), but I am not going to do anything other than gloat about doing brilliantly, certainly not tell you how .. and now I will leave and be happy that I am brilliant".

This whole thread was created out of the frustration that people feel about the whole "GET 15% NETT YIELD IN THE US - BUY HERE!!!".... with no solid details, no "how to's" and no specifics. Basically no option for those who might not want to pay 10k+ before owning a house or buy through wholesalers etc... I can assure you this is 68 pages of vertical learning curve to accomplish it for everyone and thanks to Mandy, we are now nailing finance as well. Pretty damn amazing... so join in!

I, like everyone here, love delving into the specifics....I think most of us are as great at saying what we could have done better as well as what we did well.... I ALWAYS tell people my what not to do's (2 bedders etc), as well as my wins....

I still feel that I just read 6 paragraphs without any specifics other than being told how great you are going... and what kicks me is that I am sorry that I feel that way because as you say, no matter what course of action you take, you TOOK action. Kudos for that.

 

[whitegoodman]

thanks to Mandy, we are now nailing finance as well. Pretty damn amazing... so join in!.

can you actually get finance though? to my understanding you cant use finance for foreclosure purposes?

 

[bigfire]

originally posted by reformedsceptic

Over time, I will own a large number of properties in the USA outright, that's right, no debt, due to the finance package that has been made available to me, yes the same one some say doesn't exist, and the same one many other totally uninformed negative remarks have been made about on this site.

Awesome news reformedsceptic...risk free investing, just sign here and all these houses will be mine in 5 years. Bloody fantastic!

Now Emma, how do you ever expect to become a successful spruiker when you keep sharing all your knowledge for free???

First thing you need to do is delete this forum and charge everyone $500 to become a member to read it all...but first take out all the names/details/contacts so that they have to pay more for that info, and don't forget to charge another $4k for doing what you do...

....oh yeah and don't forget to add a big profit margin onto the houses before you sell them off...

You gonna be rich girl

 

[lawsjs]

Mr Sceptic,
Thanks for posting. Again. I actually enjoy differing viewpoints, but lets be adult about this.

I find it frustrating "debating" an investment and finance structure, with well meaning folks I am sure, who have no idea of the real facts of some of the subject matter they feel obligated to try to save the investors from being ripped off

Give us an idea of the facts please. That is what this is about - and it is only the facts we are after.

I feel obligated (in the US case) to tell people my experiences, I actually started this thread on this site originally some 13?? years ago - but no one was interested back then - but you can still find the posts.. I don't like the word 'save' I would prefer 'point out' to people where the rip offs are. Especially when they are as basic and easy to see as the current group. Publicly I would rather shy away from words like 'rip off', but in the case of a number of these US deals it seems an inescapable conclusion. I am counting on the likes of myusaproperty investors to provide a good argument as to why that may be incorrect. I very much liked Amadio's words something along the lines of 'breathtaking naivety'. Amadio also made a great quip about US real estate and banks actually working... Although my US friends say I am unfair and have no idea, I have EXACTLY Amadio's views

I know where I will be in 5 years. That is in writing, documented by a fully legal document researched and signed off by a USA Attorney, on properties that have independant appraisals, documentd by before and after photos of property renovations, documented by independant building and pest inspections, etc etc.

As long as it is in writing thats great

To continue to read comments like why pay $49,900 when you could have bought it for $14,000 and spent A very small amount on it ($2,500?) I find compounds some of the absurdity I have been reading. Do you think American buyers would fall for this garbage?

That is absolutely not absurd. I am sure BevK will come up with exactly that result. It happens all the time. And they generally AREN'T selling to locals because locals (real locals) won't pay that much - by default with that argument, if they did you wouldn't own them.

I am really interested in all of this, but especially the finance that MandyH first (here) mentioned and that it seemed you received.

I haven't been home yet to do any querying (and its not that I can't be bothered, but I am in London and will when I get home).

I am not sure you got my point initially about the 5 year time frame. You mentioned cashflow and that you have that covered. Provided the tenants are half reasonable then I don't doubt that, my concern (and it is something anyone NEEDS to be aware of) is the time limit. You will either need local finance or finance from AU when the original finance time frame is 'up'. I think that will probably (not certainly) be VERY hard to do in the US. If it is AU finance, the dollar will have a very big part to play in that. It is not a killer, but it does need some thought.

Suffice it to say, Net yield is 12% plus, on a 5 year principal and interest loan, it is cash flow positive, including the taking into account the monthly bank repayments, at 7.75% interest fixed.

Assuming an $80k property (or being facetious for humour value ONLY, a property that you paid $80k for) the P&I repayments over 5 years are $1,612 per month alone. That is pretty high rental for an $80k property - and that wouldn't cover management and taxes etc etc. Is this correct?? If not, you can easily give us all the finances without anyone knowing the address.

I do think there are avenues that may be available (sub-prime style) to make that finance very exciting. I have very big concerns (which, reformedsceptic, I see as MAJOR advantages from my end) about the veracity of these valuations. So far it looks very sub-primey to me. I think they are absolutely in cloud cuckoo land financing what they are, but my issues end when I understand something. I then move onto how to make it work for me. If (as I said before) my suspicions are correct, then deals such as I mentioned to WG will be possible - just a matter of finding the 'right' property to make the numbers (and safely - WG!) work. And that idea wasn't even getting warmed up! The last loan I closed pre-sub prime was at an office in the Kilroy Center building in Orange County. I have since watched a documentary that mentioned that building as being 'ground zero for the sub-prime loans industry'. I didn't 'deal' with those particular guys as they wouldn't deal with me (my credit was too bad) but it was funny to have actually been there..

I will be devoting considerable time to working out the limits of what these guys are prepared to do, or how far they will go. At this stage, I am cautiously optimistic.

On a personal note, thanks for not just saying 'you're all wrong - cos you are!' and leaving. I always respect people with differing views (although they are all obviously wrong) but we only learn from people who see things a different way.

 

[lawsjs]

RF - I posted above without having read your reply and Emma's.

I could have written 'what she said'. We still don't really have enough info to evaluate properly, so I do stand by what I wrote.

We would rather have you here than not, and I think what you can learn here would make anyone a better investor.

From my brief (recent) foray into Steve M's forum I find the arguments here a lot more cerebral and less spruikery. I really do get the impression most posters here have been around the block a few times and are much more questioning and suspicious. I see it as being a useful tool in Steve's armory of keeping his finger on the pulse of the next 'new' thing with the people who are more likely to buy tickets at his seminars. I stress that is my feeling alone and a completely personal opinion.

One thing about being a tall poppy - I am most certainly not. I used the term 'toy' to refer to a property that I would not (in the US at least) refer to as a proper investment. It was a nice property that I just 'wanted' and therefore in my mind becomes a 'toy'. I could have made it work, and was prepared to take a gamble on getting finance on it when the VF ran out. For better or worse though, I was talked out of it.

If you do think I am a tall poppy, I am flattered, but I think you are setting your sights way too low

 

[lawsjs]

Bigfire,

Now Emma, how do you ever expect to become a successful spruiker when you keep sharing all your knowledge for free???

First thing you need to do is delete this forum and charge everyone $500 to become a member to read it all...but first take out all the names/details/contacts so that they have to pay more for that info, and don't forget to charge another $4k for doing what you do...

....oh yeah and don't forget to add a big profit margin onto the houses before you sell them off...

I think the whole problem she has is that she ISNT a good spruiker. And I think that gets down to a complete lack of initiative and ambition on her part. In short, she is being a fool to herself and a burden to others, destined to failure...

 

[whitegoodman]

Assuming an $80k property (or being facetious for humour value ONLY, a property that you paid $80k for) the P&I repayments over 5 years are $1,612 per month alone. That is pretty high rental for an $80k property - and that wouldn't cover management and taxes etc etc. Is this correct?? If not, you can easily give us all the finances without anyone knowing the address.

I remember doing a similar exercise over at steves forum. Basically called someone out who was an obvious company spokesperson or affiliation, not saying sceptic is but yeh..

7% @ 5 years fixed at 80% LVR P+I, its nearly impossible to be CF positive on finance like this even before counting all the silly fees added to cost price. Im thinking they are CF positive on paper because they are 25 years P+I loan at 80% but principal is payed back after 5 years, basically gambling on refinancing or that you will fall into some money in 5 years.