US foreclosures #2 (aka the Emma171 thread)

Hi All,

I am only new to this forum and having read all these postings decided I had to step in and give my 2 cents worth.
I come from a finance background and specifically property investment for nearly 20 years. Last year I decided I had enough of the finance industry and was fortunate enough to sit back for the last 12 months and not work as i had a regular income coming in anyway. I'd like to think I caught up on reading, lying in the sun etc but the fact is I spent the whole time researching USA property with the aim of investing myself. I'm an Aussie but from 2001 to 2005 I worked in Phoenix AZ with a company that built, financed and sold duplexes to Canadians initially but after 9/11 redirected marketing towards Californians instead. So I have had some experiance in US real estate. I did buy and sell while I was there and witnessed first hand the crazy market that Phoenix became and the liar loans as well....crazy times indeed. After much research online and flying back & forth I decided that now is a great time to invest in the right market in the US. During this time last year I saw an ad in the paper from MyUSAProperty looking for consultants so I thought what better way to get some information then to get it first hand....and to see if they knew anything that I didn't. Well I got the job (not that I was looking for a career) so started the training. Training consisted mainly of learning a script word by word and some high pressure sales techniques. They deliberately kept you ignorant so you wouldn't know too much information. Even as an employee you couldn't get straight answers. 3 main players involved in the management. Surprise, surprise....2 of them have a history of ripping off property investors with 2 tiered marketing. Lawsj....for your benefit this involves selling real estate to out of town investors on the premise that they won't have a clue about local property values and they end up buying property that a local wouldn't touch that is overpriced to the tune of $30-$50K....does this start to sound familiar ?? The numbers certainly didn't stack up. The property they sell has to be overpriced no questions asked. For the $3850 they charge...they were giving $2500 away to the consultant so that leaves $1350 between 3 people in charge and not even considering advertising and office costs etc and for an organisation with the amount of staff and offices they have....doesn't add up at all. So after 2 weeks I left knowing these guys have bad intentions for the Australian investing public and seems I was right.
I'm heading back in 3 weeks...this time to Dallas TX. Some incredible statistics keep coming out of TX and I have a company that I am seeing that sells properties from $50K to $140K. A close friend of mine who lives in the US referred me to them. All are foreclosed properties and have had major refurbishments carried out on them and now have tenants in place. They are able to achieve financing for foreign nationals from a Dallas private bank. Minimum 50% LTV and possibly up to 65%....depends on how much evidence I can give them regarding my income etc. Rates start from 8% as a foreign national. Even better deals for US citizens with 80% LTV available. Property Management is provided as well with the first 3 months free of management fee's. Commission is 8% of rent collected....I understand normal agreements in TX allow for the property manager to charge 10% of the months rent whether you have a tenant or not. They currently have over 500 properties under management with vacancy rate of 1.7%. I think what I like best about them is that their primary market is US investors and haven't been established just to service the Australian market. I have yet to see any so called "buyers agents" that I would trust.
Anyway...as I said I am going across to do my own due diligence and will report back my findings to you all
 
thanks speedy for your reply - an insider's knowledge is always the clear path.

confirms what a lot of us suspected anyway.

you should hook up with Tracey - "Perp" on the forums - as she's mad-keen on TX.

keep the thread allive guys. cheers.
 
Speedy - THANK YOU!!!

Nice to know you aren't the only one who thinks 'suss'.

I second Aaron's words - contact Perp...

Aside from her I am certain there are a lot more things you can help with...

Just be aware that major reno's cost bugger all in the US. I would be stunned if an average reno cost more than $4k for a 3bed 2bth house.

Thanks so much for posting.
 
Great post Speedy - rings all the right bells with those of us who are so sceptical about the company you mentioned. Looking forward to seeing what you do in Tx.
 
Just be aware that major reno's cost bugger all in the US. I would be stunned if an average reno cost more than $4k for a 3bed 2bth house.

This is my first post - seems a lot of good advice on these forums. I was moved to register when I saw this comment. I've been contacted by Cicada Property here in the UK and was quoted a package for 27K Sterling for renovated foreclosed properties in Detroit which are let out for circa 12% yields. A breakdown of the cost showed the renovation as 9K Sterling (about $15K US) for a 1200 sq ft 2 bed starter home. I guess there are a lot of firms looking to cash in on what look like great deals but making hefty sums on their fees - the cost of the foreclosure was listed as 4K Sterling (and even that was probably excessive).

If anyone has any contacts or advice on locations to consider I'd be grateful to hear from you.
 
If anyone has any contacts or advice on locations to consider
Not Detroit! ;)

In the USA, owning property in a snow-prone area places lots of responsibilities on landlords to clear driveways and paving, which for we non-snow-accustomed types is a little overwhelming. You're also more likely to get black mold problems in those climates.

So my process was to look below the snow line, and then look at the fundamentals of the various southern cities. Employment, population growth, where corporate headquarters are moving to, etc. That gave me a shortlist, and then I looked at yields and price history, going for higher yields, and capital growth that's been consistent - even if consistently slow; I avoided anywhere which had experienced a "boom", because I reasoned that those places were more likely to "bust".

But that's just what I used, and I don't know yet whether my reasoning has given me a good answer. Time will tell... :) The good thing is that there's not one "right" answer, and trying to pick the "best" location will almost certainly lead to analysis paralysis. Pick somewhere that has solid fundamentals, and get to know it well.
 
JR - great handle:)
NO !!! NO !!! Detroit may improve enough for foreigners to make money there, but unless you can see the UAW union being happy to live and work in the US for the same salary as an Indian or Chinese worker living in their own country I think the pickings are best left for the locals.

Frankly I wouldn't buy anything that is 'marketed' in that manner. Do your own research and find your own contacts - it WILL work out cheaper, even if you do fly 1st class and stay in the best hotels:)
 
Timely post Speedy thanks!

I have just started researching the US market prompted by the latest move in the USD and came cross MY USA Property and loans USA on the net. Had a chat with them last week and became concerned straightaway due to the lack of detail and a need for a non refundable membership fee ($550) before any details became available. i guess by then they have you hooked at least and less likely to back out. The advisor i spoke to didnt even have an investment in the US!

Many thanks to Emma and LawSJS and others - really informative thread.

Shame there isnt a reputable one stop shop as the finance sounds like it is going to be a real hassel for me as a non US resident and without it im just punting FX albeit at good yields by the sounds.
 
Investors buy half of Las Vegas homes sold in March

Cash buyers in March paid a median price of $88,450, down from $90,242 in February and $103,750 in March 2010.

Investors and second-home buyers combined paid a median price of $99,750 in March, down from $110,000 in March 2010. This includes those who paid cash and used loans.

“The heavy presence of cash buyers and other investors with their focus on lower-cost properties helps explain why 40 percent of all March sales were for less than $100,000,” LePage said. It was 32.4 percent in March 2010 and 28 percent in March 2009, he said.

http://www.vegasinc.com/news/2011/may/04/investors-buy-half-las-vegas-homes-sold-march/



Nevada leads nation in bankruptcies despite 15 percent decline



Nevada continues to lead the nation in bankruptcy filings per capita, according to a study released today by the Columbia University School of Law in New York City.

http://www.vegasinc.com/news/2011/may/04/nevada-leads-nation-bankruptcies-despite-15-percen/
 
Oh, that's ME.. oh, and US and others - but from the auction scene there aren't that many major players........ 150 properties on tomorrows auction list confirms Vegas still has legs thank goodness although I find it more interesting every day! Only 16,000 have left this city and the rotation continues...apparently we have 1.9 million population - I thought it was only 1.8! . However... aaah, what can I say other than strategic defaults... have to love them... everyone is buying the neighbours house. That being said, financed deals are there enough to keep prices up...Thus we investors will be reselling to the original home owners as soon as lending opens up and the "bad credit no problem" loans start the vicious cycle all over again. As a lender said - everyone in this country will have bad credit, there is no other option other than to allow it to begin again.

REHAB... again - even with replacing whole A/C units, all carpet, all paint, all kitchen cabinets all everything... and I mean borderline everything including a good few broken windows are NOT going to amount to over 10k - let's push that for an enormous house up to 12k and call that granite countertops.
 
thanks speedy for your reply - an insider's knowledge is always the clear path.

confirms what a lot of us suspected anyway.

you should hook up with Tracey - "Perp" on the forums - as she's mad-keen on TX.

keep the thread allive guys. cheers.

Thanks Aaron. I just read through all of "Perp's" posts and it may be well worthwhile to catch up and compare notes. In my opinion you just can't go past TX. It ticks all the boxes similar to what I would look for in OZ...but that's just my strategy and may not suit all
 
Speedy - THANK YOU!!!

Nice to know you aren't the only one who thinks 'suss'.

I second Aaron's words - contact Perp...

Aside from her I am certain there are a lot more things you can help with...

Just be aware that major reno's cost bugger all in the US. I would be stunned if an average reno cost more than $4k for a 3bed 2bth house.

Thanks so much for posting.

Hi Lawsj,

I'm just sorry I didn't post earlier but looking at the replies I am happy that I have at least saved another victim. :)
With the refurb cost....this confuses me a little. When I was over in Houston in October I was looking at foreclosures and was accompanied by a friend who is a developer of residential and commercial properties. A home had to be re-roofed and the cost came in at $7,000-00 with warranty or $4,500-00 done cheap without an warranty. A new HVAC came in at minimum $7,000...painting inside and out $2,500 so I can see how I could easily spend $20,000 if I wanted the home back to tip top shape with new cabinets, benchtops, bowls, toilets etc. I consider that these places have been vacant for some time and I don't know the history of the place or appliances etc so to save myself (and tenants) a headache I can see the benefit of replacing all old with new which would also assist in getting me top dollar in rent. I guess my point is that I can see the difference in a superficial makeover (real basic refurb) versus a complete makeover where everything is back to new. I guess this is the purpose of my personal visit to check things with a fine tooth comb but would be interested in your valuable feedback...it all helps.
 
Timely post Speedy thanks!

I have just started researching the US market prompted by the latest move in the USD and came cross MY USA Property and loans USA on the net. Had a chat with them last week and became concerned straightaway due to the lack of detail and a need for a non refundable membership fee ($550) before any details became available. i guess by then they have you hooked at least and less likely to back out. The advisor i spoke to didnt even have an investment in the US!

Many thanks to Emma and LawSJS and others - really informative thread.

Shame there isnt a reputable one stop shop as the finance sounds like it is going to be a real hassel for me as a non US resident and without it im just punting FX albeit at good yields by the sounds.

Sorry for all these posts guys...haven't figured out how to put them all in one posting !!:confused:

Redginald...I'll let you know how I go...I am told I can get a minimum 50% finance over a normal 30 year term P&I payments...up to 65%. All without paying buyers agents fee to a rip off company PLUS no finance fee to LoansUSA...I deal direct
 
Speedy,
I don't know about HVAC (Emma wrote about those somewhere in the last 1500 posts:) ) but those figures you are quoting are absolute garbage.

Sure you COULD spend that much (let me project manage for you please) but I 100% ironclad guarantee you that those quotes are 'rip off blind' quotes and not to be taken seriously.

My recent 18u purchase needed new roof, flooring, kitchens/bathrooms/painting/walls/plumbing and electrics in all units except the two business units on the ground floor in beachside LA where employment is good and the TOTAL bill was $9k.

PS: You don't even need to go TO Tx, let alone PAST it, you reach LAS and LAX well before Tx:)

PPS: With a name like 'Gonzales' I didn't think I would have to suggest to you whom to contact to get well priced quality labour from...
 
My recent 18u purchase needed new roof, flooring, kitchens/bathrooms/painting/walls/plumbing and electrics in all units except the two business units on the ground floor in beachside LA where employment is good and the TOTAL bill was $9k.
Holy-! I know that rehab costs are much lower there than here, but that's amazing value... I thought you were talking $7/sq ft just for the cheapest roof (those horrible asphalt shingles), and I can't imagine the roof being less than 4,000 sq ft, so either the roof estimates I've been using in my DD are way high, or you have a much taller building than I imagine.
 
Sorry for all these posts guys...haven't figured out how to put them all in one posting !!:confused:
This multi-quote button's the sucker you want:

110506multiquote.jpg


Hit that button on every post you want to quote, then when you're done selecting posts to quote, hit the "Quote" button just to the left of the multi-quote button, OR the "Post Reply" button. :)
 
Speedy,
The rehab costs are where the multi tiered's wipe their a$$ with investors that don't know what they are doing. I spent $40k rehabbing a 3br in Newcastle Sydney recently that would have cost less than $3k in the US. I am NOT kidding.

And with the bathrooms in the US I actually buy the expensive (read modern) Grohe stuff in Hong Kong and put that in my US buildings as their stuff is hideous - cheap, but IMHO hideous. My builder cannot believe I would spend $100 on a 'faucet' - regardless of how 'wild' it looks.

PS: Perp, you know the building - I got a roofing quote for $36k, but when you really get down to it, the bit that needed proper repair was $2.6k:)
 
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Bloomberg News

‘Squatter Rent’ May Boost Spending as Mortgage Holders Bail

May 6 (Bloomberg) -- Melissa White and her husband stopped paying their mortgage in May 2008 after it reset to $3,200 a month, more than double the original rate. That gave them extra cash to pay off debts and spend on staples until their Las Vegas home sold two years later for less than they owed.

“We didn’t pay it for about 24 months,” said White, who quit her job as a beautician during that period after becoming pregnant with her first child and experiencing medical complications. “What we had, we could put towards food and the truck payments and insurance and health things I was dealing with.”
....
To contact the reporters on this story: Robert Willis in Washington at [email protected] John Gittelsohn in New York at [email protected]

Despite providing the above article in full by way of its 'email this link' from the original, quoting the original source and even providing the authors personal email addresses it is clear I infringed some bizzarre law somewhere. Michael Bloomberg's outstanding publications are frequently quoted and and used by financial journalists the world over. In fact the interface is designed specifically to allow this unique 'advertising' of his primary product. The Bloomberg business model (though now encompassing cable TV and print media) focussed originally on the ubiquitious Bloomberg Terminal for trading professionals at a cost of some USD$2000 per month. What I was attempting to do was to provide a link to an article I found pertinent, well written and very interesting whilst sitting in an aircraft enjoying a glass of Champagne about to push back from the terminal. Sadly links get stale, but to keep delicate sensitivities happy I will merely post the link. I apologise to historians and the interested if, in 10 years time, this link is not longer effective:

http://www.bloomberg.com/news/2011-...st-spending-as-u-s-mortgage-holders-bail.html
 
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Having just moved to Canada from Melbourne, we approached the bank about a mortgage and were offered an amazing 2.3%.

They have also extended us a line of credit on our home which they say they can fix at the same rate. It doesn't offer us an any real leverage of course, but it's a good beginning.

Thank goodness for the strong Aussie dollar - our home in Aus settles next week and then we can start with building a property portfolio.

Will be interesting to see where this new road leads us!
 
Keithj

Your comment 'no attribution' is totally incorrect.

The cut and paste clearly stated 'Bloomberg News' at the top (as it still does) and is also freely available on the public domain - as it was attributed there is no copyright infringement.

At least be accurate if you delete things willy nilly and make comments on same!
 
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