US foreclosures #2 (aka the Emma171 thread)

WG:
Falling into some US dollar money at that. If you had to come up with $70,000 or $100,000 + in US$ using AU assets in 5 years time and the $AUS was $0.65 (something like its historical average - let alone $.48) it would not be so much fun.

Paying as much cash as possible now makes sense (cents?) for Aussies. We want $US rent flowing our way when the dollar falls. The big finance question is 'how much are you _really_ confident of throwing on red today?' - if you have to pay that money back in a short time frame using foreign currency assets. On the 'toy' I mentioned above, tempted though I was, having a $400,000 bill blow out to anything up to $800,000 was enough to make me really question it.

Currency is really a seperate issue. I have only bought one group of properties with the dollar above $0.80c - although I have got great finance on all of those in $US. I play it both ways, sort of arbitrage I guess. I borrowed $US on my US assets when the AUD was low and pulled out enough cash to cover my original investment. Obviously, now at 1:1ish I am going the other way as much as I am able to do.

For this reason alone, there is great power in having solid assets (in US banks eyes) that you can borrow on. I still have questions about these valuations on 'renovated' properties in sub-prime areas and how much they will go up in value relative to their neighbours.

I really do wish everyone the best, but IF for example someone has a 5 year loan on a property and it doesn't have the 'predicted' stunning CG, then there will be tears. I don't like predicting captial growth - almost as much as I cant predict currency...
 
Ok, I did a bit of research (refer comment #971 on earlier thread).

Appears many of the spruikers buy properties for under $20K (sometimes as little as $14K)
Reno for approx $5K (work usually carried out AFTER you've closed the deal)
Sign you up for approx $4K excluding legal costs
Sell to you for approx $50K+

Whilst you still end up with a nett return somewhere north of 12%, you really have to think about whether you can justify the $30K+ gap.
 
i wonder how is the actual process from bank foreclosure make it to the mls listing ?

seems like it all started from high 70 (for newish property, 1996 above, 4 bedder, 2 bath).

if it is 14k wholesale average, someone must be making a killing there.

bevk said:
Ok, I did a bit of research (refer comment #971 on earlier thread).

Appears many of the spruikers buy properties for under $20K (sometimes as little as $14K)
Reno for approx $5K (work usually carried out AFTER you've closed the deal)
Sign you up for approx $4K excluding legal costs
Sell to you for approx $50K+

Whilst you still end up with a nett return somewhere north of 12%, you really have to think about whether you can justify the $30K+ gap.
Click to expand...
 
umm im pretty sure i know what 5 years p+i is.. however I have also seen financing structured over 25 years for repayments but the balance due in 5...

ok now we have some rough figures to analyse your property.

Ill assume roughly half of 80k so $40,000

7.75% fixed for 5 years P+I @ 50% LVR.

12% net return not inc repayments, so $400 a month net return
Monthly repayments are $405, so its cash flow neutral.

So yes that can work on paper, my issue that I would have would be paying so much in fees as a % of purchase price.

My USA fee - 3750 + joining (300?) = 4000
Loans USA = 2000
application fee with actual bank in US (ive read 3-5% of loan value) = 800
closing costs = 1000

so $7800 in fees or 19.5% of purchase price.
 
Of course, some specifics would have solved the problem in the first place, but much like a trip to the dentist, we did at least get somewhere in the end.

What you have done with your purchase then is lower the purchase price to a point where massive percentage markups are more easily 'covered up' - for want of a better expression, and at that level you worked 'in' their system to make it work for you. No shame in that - well done!

I still see BevK's excellent points (they usually are excellent, but this one particularly so) and believe there is still a case to answer.

Why are these guys selling things with such massive markups (I guess 'cos they can) and then the obvious question following on from that is how in gods name (or allah - strictly non denominational here!) is a supposedly legitimate finance company able to finance the thing knowing (or ignoring) full well that a low value renovation has made 80+% instant capital gain?

The question left for me, once I understand the machinations is simple, and I stated it in a post to WG. How can I get as much of their money in my own grubby little paws before someone comes a cropper and the game is up? Becasue just like Lehmans et al the game will be up.

Look up Housemouseuk (Lady Lea Bevan - who bought her title) and find out her story - the 'nasty bits' are probably still out there in webland. She organised to meet me in London once and for some reason took me to her banker. In the UK she set up more or less what you are seeing in myusaproperty etc etc. I sat through her meeting and just could not believe that a 'senior' Barclays loans manager was into her blatant scam as much as she was. This was the stuff that a basic loans officer in Sydney would have been sacked for even thinking of! Years later I found out what sort of bonus that level of guy was on and it made sense. Thing is this, she was wildly successful for a time and then went wildly bust for something like stg18m. That was the very first time I was watching something from the inside that obviously didn't make sense but people were treating seriously. I WAS right, sitting there thinking they were mad (with greed). I have since seen it time and time again.
 
long88 said:
i wonder how is the actual process from bank foreclosure make it to the mls listing ?

seems like it all started from high 70 (for newish property, 1996 above, 4 bedder, 2 bath).

if it is 14k wholesale average, someone must be making a killing there.
Click to expand...

Just a point. In foreclosure auctions the liens etc are not cleared and as such the 'wholesaler' is up for some level of expenses clearing the title.

In casting my net around these expenses can vary from $0 to substantial. I would think that in the main they aren't substantial - or at least if the wholesaler knows his job:rolleyes:

Cheers
 
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Ahhh yes. RS did mention that.

Knowing the 'type' of property and a little of the history I am guessing these guys are the ones that just got 'dumped' and no one cares about.

However, there is no doubt that there is a title risk in there - which is of course why you can get title insurance. Notwithstanding this, a clear potential cost above the minimal (sorry RS, but they are minimal) reno expenses.

Anyone got an idea what these expenses on an average of say 50 or 100 properties would be?

The statistical risk would (I am quite certain) be near zero. First there is the legal cost of chasing someone and who would you chase on relatively low end properties? The myusaproperty type marketeers would no doubt have legally protected themselves so the 'real people' dont carry much risk at all.


PS RS: I chose 80k completely randomly, it seemed a reasonable middle figure. Absolutely no hidden agenda whatsoever.
PPS:
I don't lie, and by the way, as I do not have to promote a business, I am just a humble investor like I believe the majority of people on this forum are.
Click to expand...
People may get the wrong message here, RS. Just to make it 100% crystal clear, I do not, have not and will not make a cent from any property person, group or company either in referrals or direct recommendations or in any other way whatsoever. Nor do I make anything in pointing out blatant rip offs. I really do find any suggestion that I am quite offensive. Obviously you wouldn't have meant that, so I won't be offended. I just point it out so no one would mis-construe your well intended words.
 
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Just to change direction slightly and come back to my tax/structure issue.

Karina has located a series of Youtubes that are a presentation of ------ 'Tax rules for Aust investing in the USA' by Skip (Ralph) Swany.

The content of this presentation puts to rest some of my concerns - particularly the double taxation issue on across border dividend payments.

Still to get the absolute answer on the 10% withholding on interest payments.

Cheers

PS link - http://www.youtube.com/watch?v=iT0QkUVbXMU&feature=BF&list=ULyFCRLRfKwvc&index=1
 
OMG I am SO blushing! Just FOUND the thread! Lol. Okay, on the massive plus side financing options are starting to come through on this thread but as with desperate buyers there are those who will try to lend desperately so just be really REALLY careful to ask:

Are there early payout fees?
Can you roll more than one property into a loan (the latest STUPID US rule is no more than 5 properties are to be financed) so you may face issues once you are at your "multiple property" scenario but for brevity... we'll just go with "yay" there ARE options out there.

YES to WG - you HAVE to buy the foreclosed market with cash but as someone many pages and now a different thread actually stated.... if you have to buy your first one through conventional financing to get the $$, sell the property 6 months later, pay off the loan and pull sufficient to buy a cash one outright, so be it...

Average time in foreclosure depends on the individual state - here about 1 year but some are a lot quicker - if you are looking and see CDOM that = combined days on market and probably includes time the property was being sold as a short sale...
You CAN buy conventionally financed properties that are bargains - they are just obviously a different game to the one discussed here.

PS.... bigfire, THANK YOU... I knew I was doing something fundamentally wrong... OH THAT'S RIGHT, I still want a life..... major flaw with not marketing....it allows me the wonderful luxury of having one...

PPS - for the small fee of 16k ( have to be serious now), I will cut and paste this thread and resell to every somersofter who has contributed to this thread for a DISCOUNTED price of 15.5k.... only fair the way I see it... this will also come on DVD and a soon to be released reality show that I am talking to Bravo/Arena/TLC/??? about....
 
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Its not fair unless you offer an early bird special Em.

I want an early bird special like everyone else gets:) If you can have a whole thread named after you, the very least I deserve is an early bird special...

The 5 property rule would probably not stop the AU based loans. The admirably clever part of this is obviously the multi jurisdictional aspect. Whose laws are they breaking? And as international businessmen of some standing in the community have found out, it is brilliantly opaque and very hard to see the rip offs, unless you _really_ know what you are looking for.

Uncle Sam is primarily out there to protect US citizens. He won't give two shakes about Aussies being stupid or losing money.

There is no proof out there (that I can find - yet, which doesn't mean it isn't there) but I am convinced enough in my own mind that the loans and the property spuiking business are related. It is just too much of a stretch of my imagination to believe that there are TWO very closely operating businesses in the same field at the same time that work sooo closely together on properties that ARE (sorry RS) grossly inflated - even if it is 'in writing'.

If whatever fool is handing out money through them is prepared to do it though, I want some of it - just need to work out how to make it work for me...
 
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Thank GOD for big brothers... Okay Jeremy, early bird special of $500....oh but I just added a sign up fee so back to $15.5k....

FINANCING
Okay from what I know Loans USA do also sell properties and organize bus tours or something so no brainer to want to cringe... BUT, here is my stance:

If they could get someone financing and dear GOD check they are 100% legitimate and you deal with them PURELY for financing and check they ultimately don't try to shove some hyped up property onto you and you reread every bit of the fine print etc, when it comes to the question of REFINANCING AN EXISTING PURCHASE THAT YOU BOUGHT WELL SO THAT YOU CAN BUY ANOTHER WELL, ultimately I have to say that it would be worth pursuing......CAVEAT........

.... deal only with anyone with balls of steel and stand firm from any crossmarketing and insist upon a confidentiality clause that they do NOT give your details to ANY other company, affiliate etc under penalty of being sued to the max......which they would be obliged not to under ASIC anyway to the best of my knowledge...

In the specific example given....the fees are high, no question, but the interest rate is a LOT lower than I have found thus far....the second that I hear changes I will notify the world (DAMN...must stop that... DAMN....BigFire/Jeremy, I swear I will work on that bit).....I would balance the origination fee with how desperately do I need the financing... and verify that they have no early pay out fees. In the US you do NOT have early pay out penalties and I would caution ANYONE looking at financing to be VERY careful. I asked specifically regarding US based loans for this reason and to verify they are FIXED interest rates.... you just never know when/if hyperinflation occurs....
 
Australians' obsession with both a quick buck and real-estate PLUS the US crash was always going to be a two-tiered marketer's dream.

My suggestion to all concerned it to pretend the deals are on the Gold Coast and the person telling to you about the awesome opportunity has badly dyed blonde hair and white shoes.

That might clear mind a touch.....
 
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Sidetracking a bit - I reread some of the more recent threads.

RS said he wasn't interested in cap growth at this point. I think that sums up his 8 paragraph entry. He is net at 12%.

Every day I see 25 properties that would EASILY nett 12 - 14% after even 8% financing.... and for some who I have discussed this with REALLY, REALLY carefully, it may be a strategy they choose - 4 properties or so at 40k a pop with high yield... BUT...

You are buying low socioeconomic properties in the 30 - 45k range - oh, they WILL rent (ANY 3 bedder will rent for at least $750 a month - people want space not quality at a certain level)... but they WILL have issues and they WILL be ones that you may have higher vacancy rates, drug issues, beaten doors, destroyed carpets, overloaded appliances etc... you can try and insist on renters insurance and I highly recommend it but you are also probably looking at a pre 1978 property that has it's own issues. You will face the chance of domestic violence issues, chasing rent, possession charges etc... BUT THEY ARE DOABLE...

I don't want anyone to think that these returns are "special" they are just ones that I personally would only recommend after laying the issues really, really, brutally on the table. You will have a hard time finding ongoing property managers who give a damn about your property but realistically you are a slumlord extraordinaire at this point.

SO why NOT buy these? .... again, for some - and maybe this IS reformedsceptic - they don't care WHAT they buy and it is purely a yield game with zero capital growth. This is a one time chance at this and go for it (I think you should move here and manage yourself though).....I would argue some of these do even achieve cap growth. Buy anything at 30k, put 3k into it and you can find some idiot to pay 50k for it.... and I am trying not to say Australians because RS is right, there are Americans who are clueless too.... and if you vendor finance someone, you could ABSOLUTELY make a double killing as Jeremy pointed out... which is meaning that you become a mini wholesaler yourself....(make sure your cap gains tax is paid in high vendor financing fees)... it isn't per se wrong, just a model of playing the US market I am not into.

If I couldn't afford a house and wanted the best for my family and knew what I was getting into, I would STILL consider doing this. A home owned outright is a dream most, including I bet many reading this, would LOVE to have. Long term, I am not so sure on the capital appreciation - it only takes 2 months of vacancy, 4 lots of tenants just walking out because they smoked the rent instead of paying it... change of lock fees, new windows (it isn't worth deducting on insurance at 1k a pop)....

Here is the thing - if they are not mobile homes or modular and stand some chance of being able to be refinanced for the right person, these are a go - just DON'T pay 80% more than they are worth (or whatever the figure is)....

Oh and if there IS a meth lab - your property now faces Hazmat clean up (you are now housing your tenants elsewhere) and is recorded for any future buyer to see......

Yield is there. Zero question... just how absolutely upfront are people about the standard of tenant you will get and WHO is vetting your tenant?

This game at that level is for the brave....
 
There are 221,000 households in LV and 49,200 houses for sale. That's almost 1 in 5 houses on the market.

I'm especially interested in the downtown area, near the 'strip. What does the OP think of such centrally located properties, rather than the stuff out in the outskirts?

I'm especially interested in redeveloping in strategic locations rather than just being a fixerupper who wants to buy and rent out homes. Any advice? What are zonings like.......do they (the NV version of the local council) allow owners to pull down old houses and replace them with townhouses or anything else?
 
ReformedSceptic... max work on this property would be about 6k..

PROOF IN PUDDING..... no join up fees, just a straight up property that is an REO... and post 1978 - no liens, no further fees, no nothing - reno costs and that is IT....

Nearby sales DOUBLE this list price...even condos are more expensive...

http://las.mlxchange.com/EmailView.asp?r=283467250&s=LAS&t=LAS

Large 3 bedder.... yummy.... 38k list... Rental Zestimate $925....

HUGE yard for kids.... if I was in the under 40k market - this is one I would play with....walk to the largest swap meet in Vegas.

Haven't even delved further than that but seriously.... this was just literally the last email I looked at as I prepare for beddy byes and I just wanted to prove a small point which is....

NOT THAT HARD.


RE REDEVELOPMENT

- this is how one of my business partners started - it is cheaper to buy than build so why tear something down to build... buy now, hold and then when the market picks up... HECK yes build.

My DREAM property ... dream, dream, love of my life property is 800 metres from the strip and everyone on this forum is sick of hearing about it
2201 Beverly Way, 89104 - bought right between the strip and downtown.... they have to merge and some point and I am landbanking and living there until then... but the enclaves are hard to find..

ANYONE WITH A SSN OUT THERE CAN BE MY NEIGHBOR IF YOU CALL THE HOUSE "HOME"... 2301 Beverly came back up for sale - haven't seen in it but still! Lol

REASON I LOVE VEGAS... .most pro landlord/business state in the nation... cash is king and I LOVE city councils that LOVE rezoning places... I used to spend my past life going to planning committee meetings and Borough Assembly meetings - trust me, rezoning is not that hard to convince a pro business council of.

Last enclave of free gambling zone too.... kerching, kerching, kerching....

Closer to any city is higher crime in general but the historic district Beverly falls almost into is just gorgeous..... otherwise, depends on your strategy.

One day, one day, Australians will take over Vegas and put in non ornate, sleek lined properties.... I see condos everywhere! Okay it is LATE... bed!
 
Emma, what advice would you give to someone who wants to develop property in LV rather than be a fixer-upper and rent collector? Are there any specific locations you recommend? I am interested in the down town areas, near the strip because one would think that these locations are close to peoples workplaces.
 
Removed posts... Interesting.

I would have thought that stopping outright scams as discussed was important. And the only way to do that is put in the work to join the dots.. Clearly I am at odds with someone on that.

However, I have forwarded my findings to ASIC, the REI, Neil Jenman and media outlets for good measure. It is a shame that the actual real life time line is lost - though the original posts are not.

What will be interesting is if anything 'real' happens. Do Australian's really mind being ripped off blind? Seems they might not...

I will credit Steve McKnight with this: He was concerned enough to address the issue personally. And also immediately fully understood its significance.

Keithj,
Kindly explain what _exactly_ is libellous in the post you removed and labelled as such?
 
lawsjs said:
Keithj,
Kindly explain what _exactly_ is libellous in the post you removed and labelled as such?
Click to expand...

Lawsjs - you've been living in the USA too long. Don't forget that libel laws are different in Aussie land. You can be sued for libel here even though you are stating the truth.

It does seem wrong that spruikers are given so much protection in Australia and their followers who believe in "trust" are the victims. It's a real shame that on a property forum those who know the truth are unable to warn others of the bear pit they are about to fall into.

Thank heavens for the Jenman's of the world.

For anybody who needs to know what has been deleted just do your own due diligence. Put the words "trent richards insight jenman" altogether into a search engine and see for yourself what comes up.
 
pierso said:
Interesting blog on lv market from a flippers point of view. According to author B of A comes/came out of foreclosure moratorium (self imposed due to robo signing debacle?) in March - forecasts plenty more foreclosures on way from this and more strategic defaults.

http://www.irvinehousingblog.com/blog/comments/one-in-eight-nevada-has-167564-empty-houses/#more
Click to expand...

good news, as the banks holdings dont add to rent-able stock, all it does effectively is suppress prices long enough whilst not effecting rental vacancy adversely

just my opinion on it, probably skewed bias outlook out of hope prices stay low long enough to build a portfolio in LV
 

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