US foreclosures #2 (aka the Emma171 thread)

In essence locko you are 100% right.

As I think I said in a previous post, my wife said leaving a property 'well if they won't carry half the paper, we won't buy it - plenty who will!'

And it is true - however:

The 'amazing' buys are clearly foreclosures. Short sales are a pain in the butt and almost a waste of time. I buy the places genuinely for sale from the guy who geared up at the wrong time, got caught in downsizing (watch Company Men 2010) and is selling his place.

I like to buy these, and haven't bought a foreclosure - yet:)

You will be paying more, no question, but you are (hopefully) buying in a place where only one or two properties are 'distressed' and the neighbours are all AOK with mortgages created 10+ years ago (old money in other words).

Also remember the gearing issue. Say a place is for sale for $900k. Original mortgage of $700k. You immediately know they are really only wanting $200k. You 'assume' the original mortgage and offer them $100k cash and $120k at 6% for five years. That type of thing. You won't be making $800-$1000pm from a $70k property, you will probably be just over neutrally geared only - but have a much 'better' property.

Doing this also inoculated me against subprime. I really didn't lose any value since '06. Rents haven't really risen in about 8-9 years in my little patch, so it isn't a stretch of the imagination to see a 20-30% increase in the short term.

Or, you could always buy from someone who has added a 3-400% markup for painting the bathroom and achieve positive geared status on a $20,000 home. It seems this is a very popular alternative investment strategy.

Be interesting to see what happens!

Instant cashflow or future gains.....???...

BTW its become so second nature to deal with 2nd and 3rd 'notes' that I get a bit miffed when Australians won't do the same thing. Like when they look at me blankly and then say 'umm no!' I think 'gee - thats a bit rude!' Maybe one day...

PS: I'm pretty amazed _anyone_ would read this from start to finish! Well done! Or commiserations:)
 
Last edited:
Thanks Lawsjs

Always amazed at how much i don't know...

Well i guess anyone who is offering vendor finance is going to want the original-extremely overvalued (2011 price) to be covered by the purchaser, in most cases, so it would be alot more rare to find a property with vendor finance at today's value!

I'd love to purchase foreclosures, but have the same problem as most people - need more cash!! :)

My loans broker says i won't be able to get an LOC to purchase anything in the US. I guess i could tell her i want to go on a round the world trip... ;)

I will certainly get in contact with loansusa mid-next week, but am not holding my breath...

So am definately open to suggestions for un-orthodox forms of finance :)

Cheers
 
No - you aren't buying at extremely overvalued prices, just 'fair market'. Big difference.

Places I mainly look at now are $900 - $1.2ish. They were around $1.1 - $1.4. Cash +ive around $10kpa, which (in the US) I consider basically neutral on that size of property. Somewhat different to Aus.

If you noticed the jpg I posted of the Malibu properties, it isn't hard to find $3m+ places for sale for $1m or even under. Sheen central - if you are into that sort of thing. Want one of these? Offer a mortgage assume/VF deal and I bet you would have one - and cash +. You can get rentals of $20k++ per week in the 'right' gated community. Stay up all night with the MaSheen and he might offer you what he offered his neighbour - $250kpm for a $6m property... Just to spell it out that is a 50% return. Not really my cup of Oolong (he's unemployed after all) but in relation to AU property - stellar investments.

Don't ever mention to an AU financier that you are using an LOC for US property. The money is for share purchasing which you may (later) change your mind about. Or talk to Rolf (moderator who should be more understanding) or my long suffering broker Dan Lanna. Both are much more understanding of fools wanting to throw their money away on hairbrained schemes that might just work. Most other brokers know all US property is going down the toilet and is absolute rubbish. They also know no-one in the US has a job and there are 230,000,000 people begging in the streets for food.

BUT, there is no doubt that a $70k property that was worth $350-400k returning $800pm net is an unquestionable bargain. Who knows which will do better, but either way is bloody good fun - and sure as hell beats losing $500pw on an 'astute' investment in Aus.

With the VF stuff - if you don't ask you certainly won't get, but if you ask to buy that amazing property with bugger all in your pocket, you MAY just be surprised. BUT they must for sale along 'regular' lines - nice property owned by a Madoff investor or something similar.
 
Interesting your comment about the brokers 'knowledge' that the US is on a downward spiral. Pretty much exactly what mine said!!

I am fairly new to the RE game full stop (only now in the middle of closing IP number 2), but IMHO have done reasonably well so far - nearly 50% equity gain on the first one with not much more than a lick of paint, and positively geared.
Positively geared has a different meaning over there though - 10 houses paying $100 net profit each week would replace my current income!
I'd need 80-odd over here!
I'm suprised my broker didn't suggest that what i really wanted to buy, was shares (wink,wink), as she is very helpful otherwise...
I will aproach her again, with the sudden change in investment strategies :)

I will certainly be interested in your 'tactics' Jeremy once i reach a level similar to yours (fingers crossed), but right now i'm jealous of Emma :)

I will pm her and ask her thoughts on vf if i don't see her back on here soon.
 
An old friend of a friend of mine asked me about what I had been doing in the US. They had spoken with Emma but felt they wanted something more 'meaty'. I nearly choked on my breakfast because what Emma has done is actually very meaty. It is just different. Her style has been search out absolute bargains with guaranteed 'instant' CG and outstanding cashflow. I started buying seriously years ago when I could get no US finance, so had to buy firstly for finance then make everything else work. The returns on stuff I have bought are similar to strip malls and SME commercial outlets in Aust. I took the road that if I bought a decent 8u resi in LA it was less risky than one service station or hardware store in Aust. It is really no more difficult to understand than that. Buying commercial stuff (>4u) I lost a lot of the 'bubble' CG when it was going hard, conversely I gained when resi values plummeted and my quality >4u properties didn't.

If you didn't think I wasn't just a little bit jealous of Emma buying properties for $40k and renting them out for $800+ NET per month then you would be very mistaken. The only thing cushioning that jealousy is the fact that if I had been loaded up on resi in the US pre '06 (if I could have got the money I would have I'm sure) then I would have had a 60-80' boat with the go fast Porsche and partied hard on trips to Santa Catalina but I would now have an unsaleable boat and worthless property being bought by someone like Emma. And like most of her vendors I would be making damn sure I took out the $20,000 carpet before she bought it!

I agree the US is on a downward spiral. As was the UK after WWI and WWII. But I would still really like to have property in Knightsbridge.
 
Don't get me wrong, i don't wish to belittle what Emma does. I would love to do exactly the same whilst i'm still (relatively) young (32). A lot of hard work - but enjoyable and extremely rewarding. I am starting to do something similar over here, but as i still need to work (booo, hisss), the time i can spend reno-ing is somewhat limited. (not to mention, a lot less financially rewarding)

Your strategy - from what i have read- seems to involve a lot less physical work!! Great for me somewhere down the track.
 
I didnt think you were belittling the strategy (my soh) but it is different.

My 'strategy' probably does involve less work - until I get a group of feral tenants in a building and then it becomes very awkward very quickly:( Especially from across the globe!

You still have to reno places, you just have more kitchens per building. I just did 7 units in one building for $9k for example.

Hopefully the US QE will lead to substantially higher rents in the near term. I suspect fewer people will be leaping into housing there which should mean more tenants to add to rental pressures already building (or, not building I guess is more accurate:) ).
 
Last edited:
Like the graphic. I would caution the Due Diligence "any reason" concept...apart from not wanting to develop a reputation for doing it (gives the agent a bad rep/ banks stop viewing bids as favourably), it is generally deemed that for a back out it is something that was unknown during initial walk through (which isn't hard to concoct obviously) - but there is an element of otherwise everyone would by sight unseen constantly, low ball every property on the market and just back out at due diligence on the inspection time frame - so just don't assume that you will end up in that situation.

Had a quick perusal of the website...really liked. The only issue I had with Florida (other than mold) at the time that I was seriously considering it back in 2009 was the high vacancy rates, huge reliance on retirees, distance from Oz and at that time, just the streets upon streets of both for rent and for sale signs.... mid Florida seemed particularly bad and I just couldn't see the capital gain that I personally wanted at that point. Always wanted to revisit in a few years and still feel there is plenty of "life" in the foreclosed market there. Vegas was always - even back then, far tighter and still is... I feel this (Vegas) should "pop" first but that is just my gut... Vegas is a more "swing" town - quick peaks and shorter troughs, more external $$ flowing in etc. Figured I would have a 6 month period where Vegas pops and I could do a 1031 exchange into Floridian properties... but that was the thought process back then just based on my own personal experience. As we are starting to see some properties with "flip" ability already in Vegas, this may yet be a ploy - Thanks Reece!

Getting back to above - clicked on the 20% return but that didn't take me far - then went to the property examples and other than wondering where they were I thought it was great - although I must say that for gross returns, I always at least type in and calculate in taxes and insurance (property management may be a bit of an issue)... again why I always caution discussions of gross rents.

I didn't look at costs for service or anything else but straight up - nice site and good information......

Cool. Code of ethics...didn't read but there's a novelty!

Thanks Reece.
 
Vendor Financing

locko24 said:
Wow! Incredible stuff Emma, Jeremy and all (most ;) )the other contributors!

Finally read the complete 2 threads... I think about 2 weeks worth of spare moments :)
!
Click to expand...

CONGRATS.. deserve a medal...

I have approached a few people about Vendor financing as a mechanism for helping Oz people buy properties over here. I have also wrapped people in mortages in the past over here - the biggest issue you have is proving a gain to the property owner in doing it and being a foreign entity but likewise, I would try that ploy.

Not sure jealousy is warranted - my way is the damn hard slog way. I have spent 12 years scraping cockroaches, patching/painting walls, shovelled hypodermic needles, dead animals etc out of units. I critically needed yield properties to pay the bills and every cent was seriously debated. Buying my first cash positive property in the States 12 years ago was just mind boggling - I could MAKE cash each month...and that was with an AUD exchange rate that sucked, no GFC and 6% NETT was unbelievable.

NOT HARD like most people on this forum you learn how because I can't initially afford to pay anyone else to do it - $180 an HOUR for a plumber??? In Alaska, I literally last week was asked to pay $734 for a plumber who took 3 visits to try to clear a hair clog from a drain (they also tried to charge me an extra $150 for the trainee???!!!)..... total number of hours required by anyone with 1/2 an IQ to do likewise... 20 MINUTES.....I like to think I don't get ripped off now and dear heavens people need to provide me an itemised invoice.

Everyone reading this forum knows now is the time - how you do it is irrelevant. If you have the will, you will find the way without being screwed...I just have the minor technical advantage of having found something I absolutely adore and I hope I can continue to make enough money out of it to not have to do anything else..... that bit I will allow everyone else to be jealous of. Saturday night in Vegas - midnight and looking at properties... yep, still genuinely love this.

LoansUSA - must say that other than an initial discussion that made me think they were legit enough to consider and kudos for sorting any real option for financing, finding out that yep, they do also proffer properties in the US for purchase and may well try to also schlep something which I have no clue about, I didn't go any further. Jeremy wrote a bit more about them - but give them a call and ask the questions - all of them and go with your gut. Crunch numbers a million times over - if it works, it works.
 
Last edited:
I haven't heard from Loans USA yet - so can't comment. I did expect something earlier.


WG I saw your comment and thought it was actually quite brave for someone to post that.

I applaud anyone finding a better deal - it's what this post is all about. Hopefully this company has something to offer. Personally I don't think much of Fl as a long term RE investment (real estate is the only industry) but then I decided against LV in 1998 (although at least in part because no one would treat me seriously) but ended up in LA - so don't take my word as gospel - I only get 8-9% returns!

I am 100% certain though, that anyone reading and understanding this post has ALL the skills to avoid being ripped off. So good luck to anyone posting company details - legitimate and you will be rewarded, one hint of a rip off and I am sure your reputation will not escape unscathed by 'educated' US investors. And, BTW, probably the best educated (foreign) ones on the planet... Some of them (Reeco?) have missed their calling as investors and should be forensic accountants...

On that point, I will also point out: That spreadsheet is Reeco's great work and if anyone sees it anywhere else - we know where it came from!!
 
Guessing you're talking 8-9% net Lawsjs?
Gee that's terrible. ;) I think i end up with less than 1% here in Aus...

Loved the earlier quote, Emma, somewhere along the lines of 'If a plumber can do it, i sure as heck can'. (Apologies to any plumbers out there) I've said that plenty of times to the missus! (substitute 'plumber' for 'painter', 'builder' etc....)
 
for those poker players here...

last friday saw the major US pokersites being closed down (fulltilt, pokerstars etc) with US online players unable to play.

Maby a mini boom for Vegas as the rounders head back to the live games...
 
And to tie it all back to Australia, it was because of information given to the authorities by the Brisbane internet porn king - he apparently cut some sort of deal to reduce his sentence. There was a story in the Sunday Mail about it.
 
Go VEGAS! Headlines soon to read "Massive Influx of University Drop Outs Head to Vegas"..... I am officially the first that will start renting out my rooms of ilk to youth hostels with the advertisement of "Poker Players Dorm Beds only $50 a night -walking distance to Strip" - 6 to each room and they will never be there because they will be at the tables...oh, WAIT... OMG, I own in the gaming zone - I will just open a casino instead.
I am so so so changing my business model.

PS Kudos to this thread. I received a message that Zillow saved someone and it reminded me that this is what it is all about....someone was going to be whacked 4k to buy a property marked up by something like 25k... YAY TEAM!

Florida - yep, just be VERY sure you don't buy in the depressed zero cap gain areas and zero likely cap gains and check yield & vacancy rates... retirees don't make much money and are only going to be making less as Social Security dries up. Jeremy - trust me, Vegas didn't make sense before the GFC - I have yet to see a SINGLE property that was valued below $200k in 2006 here.... THAT says a lot...... even the drug enclave had their shanty houses valued at that.... but that is I suppose also the blessing of this town - when it strikes, the fever is high with investors who have tax deductible reasons to come gamble... back to my new poker player gaming model!
 
I still haven't heard from loans USA. Unusual from someone selling money. I am _starting_ to think I may not have fitted their criteria - I got the impression they understood the issues with the market they are dealing with, I wonder if most of their customers do... Anyway, I await the promised email.

ON the VF thing and Emma's point about making it worthwhile for the vendor ('seller' in the US).

You MUST make it reasonable. They are taking a (huge?) risk trusting a foreigner with their money - so respect that. Which is why it will NOT work when you want an 'out and out' bargain.

On a $1m property I would be happy to pay $100k over the 'odds' IF the finance is right. On a $100k place obviously 10k. Etc.

These are unrepeatable deals for Aussies, because believe me when normal buyers can get money we just don't get a look in, so if you go down this path, be generous, understanding and think about how you would feel if some degenerate alien offered you half what you had paid for (and worked bloody hard to come with the cash for) your dream property.

Look out for 'very good' buys, not bargains, and if you are prepared to pay a little more then I can tell you this strategy works very well.



By overpaying I do NOT mean paying 3-400% more for a property than an Australian affiliated company paid for it the day you signed on the dotted line. Just in case you were wondering:)
 
Totally agree Jeremy!
Where in Aus would you get those sort of returns? No-where (but let me know if you can :) )! So i'd be more than happy to pay a little more to convince a vendor that financing me is the way to go.

As an aside: Is it true that colour-bond is non-exsistant in the states? If this is true, i'll have to fill a suitcase with the stuff when i head over...
 
I need to do some research on that point myself. I bought a building that had a leaky roof. I think the easy solution is to put corrugated iron ABOVE the crappy spongy mangy US roof and save a fortune and make the place look better.

I will let you know.

I didn't say so before but, locko, congratulations on your great work so far. If you have enjoyed this post (and it is clear you have) then have a look at Dazz's great ones on AU commercial property. I took a definite fork in the road to buy in the US. I had the money he did (once) but threw it away - fortunately the US kept me afloat and I have done quite well out of it despite subprime. You clearly have the drive (as do others WG etc etc etc) and the brains to make it work. Go out and do it! But congratulate yourself on what you have achieved - I am confident very few of your friends would even understand what it is you are really doing - don't listen to them, you are on the right track...

Touching the subject of Dazz, in the unlikely event you read this we have very much appreciated your humour and posts. We both read one of your posts and it had us in stitches reading it - very close to home for us (were you there at our endless meetings??). It was also really appreciated to read something that we could learn a heap from...
 
Not sure about colour-bond (DEFINITELY NOT IF YOU SPELL IT SO INCORRECTLY!) but I would marry Henry if I could find him - that is the Henry of Henry's Roof patching materials if you are talking about the best of the best for roofs. I had to close on a property in Alaska with 3 feet of snow that was basically meaning that I had Niagara Falls flowing over where I needed to patch and needed an underwater virtual roof patching material.... omg, I fell in love.....plus their peel and stick patching tape is beyond brilliant for most things as well....my spare room (aka tool room) has an abundance!).

You say tomato, I say Henry.
 

Similar threads

K
20 US properties in 4 1/2 years
2 3
Replies
57
Views
14K
MTR
MTR
L
US foreclosures - Boholt Seminars - NO
48 49 50
Replies
997
Views
146K
whitegoodman
W
The Y-man
The MIW Interview
Replies
1
Views
10K
The Y-man
The Y-man
steveadl
US Stocks
6 7 8
Replies
142
Views
16K
Intrinsic_Value
I
S
Aussie Banks Financed by the US Fed
Replies
18
Views
3K
kotim
K
Back
Top