US foreclosures - Boholt Seminars - NO

[Perp]

On a more practical note, can emma or one of you with property over there show me a typical costs breakdown for a relatively new house.

The rules of thumb which I've seen - for all expenses except finance eg property taxes, repairs, utilities, management etc - are 30-40% expenses for SFR, and 40-50% for MFR, relative to gross rental income.

There's usually so much fat in the deal that when analysing a deal, I allow 50% for expenses, and if I do better, it's a bonus! So if expenses are 50% of gross rent, and your financing costs are 6%, then you need to be making 12% gross yield to break even.

 

[Emma171]

LLC formation is simple. I am helping step someone through this and found this so might as well post. Here are the steps. You can do it yourself. Registered agents can be anyone with their doors open during business hours within Nevada (friends who have an office even work) or you can find one online who will charge you per annum who is called a registered agent... Again I am not an attorney, accountant, legal expert in any respect...llc agreements can be downloaded but PLEASE Be aware that you must follow meeting rules and regs etc. Piercing the corporate veil is a major concern. Again refi-ing isn't loved in an llc.

This is a cut and paste which I found that is very good spelling out the steps but it is straight forward and the sites themselves are (for government ones), very easy to use:
*
1. Navigate to the Nevada secretary of state website, nvsos.gov. Click the "Start a Business" link, followed by the "Limited-Liability Company" link. Next, download the "Limited-Liability Company Articles of Organization" form and the "Initial List of Managers or Members/Business License Application" form.


2. Complete the Articles of Organization. In order to do this, you must provide information regarding your company's name, contact information for your business's registered agent, whether you have a date for when the company will dissolve, the management structure of your business, and contact information for all of the business's managers. Your business name must also contain the words: "Ltd.," "Limited," "Limited-Liability Company," "Limited Company," "LLC," "L.L.C." or "LC." You must also complete the customer order and payment instructions, as well as have your business's registered agent complete the Registered Agent Acceptance form that accompanies the Articles of Organization.

3. Complete the Initial List of Managers or Members/Business License application. This form requires you to list the name of your company, the filing period, and the contact information for all of the managers or members of the business. You must also complete the customer order and payment instructions that accompany the form.

4. 
Submit your filing paperwork with the filing fees to the Nevada secretary of state. As of June 2010, filing fees run $75 for the Articles of Organization, $125 for the Initial List of Managers form and $200 for your business license. Send the forms and the fees to the appropriate address listed on the forms.

Happy reading....

 

[buster]

Thanks again Emma. It is odd that a guy I know bought property there said you have to have a Nevada Bank acount and a bunch of buisiness licenses, register with Nevada Taxatuion Dept. and an LLC to purcase properties there. But he cant be too astute because he sold everything he owned, shares, buisiness, property. Millions. Doesnt beleive in diversifiction, put it all in one area of LV just before the crap hit the fan.

 

[ok180]

simple question.

If it's so easy to get these sorts of returns isn't there some kind of american listed (or unlisted) property fund you could buy into that would offer these sorts of returns? You might take a 1 or 2 percentage drop in yield but surely 10% would be easily achievable without all the hassle of having to manage bubba and Leeroy from Australia.

 

[Aaron Sice]

emma - post up your address so we can all send you a bottle of Moet...

 

[Emma171]

LOL... Just if you happen to be in Vegas I will happily avail of the beverage. The irony of the fun of having a few like minds to catch up with in Disneyland for adults is not lost on me... war stories over a few drinks in an amazing bar on the Strip defeintely sounds like the way to go.

FYI. I am negotiating with a guy for a discounted rate on being the registered Agent for anyone interested in setting up a Nevadan LLC. If you are interested, and the price should be under $80 per annum, let me know... Normal rates are well over $200 but we fall into the high volume category. Now on THIS I have a highly vested interest as I have a fair few LLC's that I would like further discounted so if you are interested PM me and I will start the negotiating....

 

[Emma171]

Okay, we have a $75 rate per annum as my starting point on the registered agent if anyone is interested. Am exploring the bank account options. Ie. Both Bank of America and HSBC have branches in Sydney and Vegas.. If you aren't aiming for a US credit score (which seriously would be a bit pointless... Ask my brother what his is after a million years of investing...), your biggest issue isn't building credit, it is having a functional bank account in Vegas that you can operate from Sydney in my mind...one that haas the name on the account match your newly formed LLC or title on property. Of course if you aree buying the title In your own name you can skip this entire ramble.

 

[Emma171]

Dtraeger.... Typical costs.. I did put two specific properties up earlier..and can bore you to death with others but Blissfully it is so simple to calculate. basically cost of property, look up your real estate taxes for that property at Clark county, estimate insurance at a max of $700, throw in a 5% vacancy to err on high side, 7% property management if desired or not if self managing, annual registered agent and LLC costs if going that avenue... @$350.... And then what are you renting it for? I keep a buffer of $2k for any repairs before disbursement occurs. I have averaged I think about $600 a property on repairs/ maintenance and misc but would have to check. This is after initial set up repairs but some of mine are older properties and some are much younger. Can't think of anything else other than financing costs..interestingly I have had a high number of people drive through my garage doors.. (well 2). They are expensive.. Oh and a/c units can be too. Everything else is dirt cheap...

Dont know what else to add? Happy retirement? FYI, I always over budget expenses though and under budget my income to make me feel better at the end of it but just remember, sweat equity does require sweat to start with although I think you will have the dream first property being in the high proceed level... Ha, high priced = over 100k for a fantastic home... So ridiculous to think that in Oz, isn't it?

 

[reeco]

I have it on good authority that 'taking the micky' in the US is a death penalty offenSe. I would be very careful if I were you

'and in late breaking news tonight we cross to LV, Nv. where a New Zealand man was arrested at 2am for displaying a drunken rendition of the traditional 'Haka' tribal dance whilst dressed in an Elvis costume in the middle of heavy traffic on Vegas' busiest road 'the Strip.' Several women who were present at the time declined to comment...'

Lawsjs...do you know the numbers for next weeks lotto draw because mate... i am damn near certain this would have happened! Id certainly be putting on a show if vegas takes hold of me whilst im there. No business like show business!

 

[buster]

OK 180 What a coincidence I just made a mention about the Dow-Jones property index in the shares v property post. The answer is yes
I think it is a great way to get leverage and exposure to USA property. Easy to get finance ,virtually risk free as you can hedge A$ costs about 1%,
get capital protection Insurance against falling prices again costs about 1%, I got finance at 3.2%. Because of the hedging and Insurance it is low risk= cheap finance.
You can get many x more dollars worth of property, get much more diversity, no hassles with management or tennant etc. no repair bills and if property is a good investment make good money...... BUT IT IS KIND OF BORING, doesnt get you excited and youve got nothing to go and see.
You just fill in the application form send it away transfer your money, than wait for your dividend, but with a bit of luck after 3years you may have made enough to buy multiple properties directly, if you want.

 

[Emma171]

Just heard from an attorney in Vegas if anyone is interested .....asked for blanket quote if people want hand holding through the LLC formation...obviously pricier....but if you use him for your first and do 10 more you can, to use an American expression, boiler plate it.

QUOTE
$1400 for formation.
$575 for annual fees including state license, annual list and agent fee.
$250 an hour for other services including estate planning and real estate work
UNQUOTE

Obviously this is for NEVADA... He is based In Las Vegas....not sure if this helps but working with an attorney may ease minds. I threw in the estate planning for non resident aliens question.

 

[Emma171]

This is a request from Yolanda that I post a reply that I just sent to someone as she has had a few questions similar that she can't respond to. This is personal opinion only

Q. If you have @140 k do you buy one or two properties?
"One or two properties comes down to yield versus capital growth. If you bought two properties done and dusted and rented at 70k each, you can make a net of at least 15% yield anywhere in Vegas. You are looking at an older property that needs more work. In 4 years time, I project each will have appreciated approximately 80-100k. Your neighbors are likely to be solid working class.

A 120 - 140k property will be a dream property, something you could happily live in, probably have few tenant issues and STILL yield about 11% net. Your capital appreciation may be higher for the single property and be about 120k... Dependent upon how your crystal ball would look. Your neighbors will likely be professionals.

Green Valley and Henderson are lovely... Just be very careful of Home Owner Association Fees...($100 p/mth or higher) What we call strata levy fees here. it isn't just the monthly dues, if your tenant doesn't upkeep the paint and garden etc, you can be whacked, as a friend was, with $100 per day fines... At that rate your margin is lost very very quickly. I also stay away from pools but a pool boy costs $120 a month including chemicals. "

Again, my personal opinion only on projections and viewpoint.

 

[RightValue]

This is a great thread.

Thanks especially to Emma for all he Forthright posts.

When I lived in the US in 1991-92, I would have vsited Las Vegas close to 30 times with work. I always said it was the place I would like to live if I settled in the USA. Recently I too have been considering buying there and even living there for a while. - buy an RV and take the family around for a couple of years

I have a question about Finance.

The rental returns are good, but would be much better with sub 5% borrowings.

I assume Emma that you do have financing on some of these properties.

If I was to buy a say $60k to 70k house with cash (interestingly I could buy a couple of those houses outright with my credit cards alone) how easy will it be to refinance them - as an individual not an LLC -to get some of the equity back out?

Given that I am a resident with a SSN but no credit score.

What sort of LVR would they look at (60-70% would make me happy)?

My rough calculations are that you could get roughly a 35% pa net ROE, with 70% gearing which is not to be sneezed at, which means after 3 years you have your equity back, a free income with the bank taking all the risk on a non resourse loan.

If you have the email addy of a decent mortgage broker could you please pm it to me.

thanks,

RightValue

 

[D.T.]

Emma - is there a way of telling which houses are in a HOA or not?

 

[Klimmy]

Hi everyone, i am new to this forum and USA property investing. Thanks all generousity to share the info. Just got a question about zillow website:

listed for sale=100K but tax assessment = 37,561. Can anyone try to explain this ? Thanks

Price History
Date Description Price % Chg $/sqft Source
10/09/2010 Listed for sale * $100,000 -4.8% $48 Realty ONE Group
06/02/2010 Listed for sale * $104,990 -58.0% $50 Realty One Group
02/15/2005 Sold $250,000 87.3% $120 Public Record

10/13/2000 Sold $133,500 -- $64 Public Record

*not included in calculating Zestimate
Tax History
Year Taxes paid % Change Tax assessment % Change
More entries
2010 $1,791 -- $37,561 -61.4%
2009 $1,791 -18.1% $97,225 -3.3%
2008 $2,188 8.0% $100,500 22.5%
2007 $2,026 8.0% $82,073 34.3%
2006 $1,876 16.6% $61,110 12.0%

 

[D.T.]

Klimmy - I believe it's because the annual property taxes are being reduced heavily due to them making sufficient revenue from gambling taxes. It shows 2010 assessment as much lower than 2009's, meaning that next years tax bill will be based on this new value.

Could be completely wrong but this is how I interpreted it based on some information earlier in this thread.

Hooray for Nevada?

 

[lawsjs]

I just wrote a long reply full of wit, implorings to anyone who may be able to keep reeco away from Elvis wigs in Vegas to do precisely that and bountiful priceless pieces of information, but it got lost.

briefly:
Finance will be very, very difficult for anyone. On this subprime stuff I would suggest near impossible - especially in the short term.

And commenting on Emma's comment regarding my fico. I have spent 10 years actively doing my best to get it as high as possible and last I dared to check it was a sub sub-prime 500. I wouldn't say you are wasting your energy working on it, but spending time on it has done nothing for me.

Emma deserves a huge amount of respect for what she has done and is doing for people. Whilst she is treating this as an enjoyable hobby I think for what she has done so far she deserves thousands from everyone - I have learnt heaps and I have owned US apartments and houses since 98. I doubt you will meet another Aussie investor who has worked designing US cities for City Hall and is happy to pass on what she knows to people from home.

I am a little nervous of her inbox filling up with a million requests for the same information and some very serious people missing out on a timely reply. I think she should set up a website or something similar (and she does need to think about earning a buyers fee or something!!!!!!) but in the mean time (and I hope I am not speaking out of line) I would strongly suggest not to contact her directly unless you have read all her posts and/or have an Au line of credit for whatever you want to spend over there. As Dave did above, someone else may have read what you have missed on this post and be able to answer for you. Otherwise she could well spend her whold life typing for fear of not appearing 'rude' by ignoring people. Regarding finance; I think there is an arguement that would say the easiest way to get finance is to already own a place outright when you actually approach a lender. You may get finance, but I wouldnt count on it in the near term and Emma's 'skill' is helping people get the extraordinary buys that are out there NOW, which wont be as extraordinary in a years time - when they will have collapsed to simply be 'extremely good'.

It is not for everyone, but it is hugely satisfying to do something out of the ordinary and the returns will make you laugh at any Ausralian property ad that says 'INVESTORS NOTE - HIGH RETURNS' - when you KNOW they are talking about 1-2% nett MAXIMUM!!

Yes you could go down the property trust avenue (or simply buy Westfield shares which almost ARE a listed US property trust but play this market right and you will kill the returns those traditional avenues provide - if for no other reason than you don't have to print out a million glossy brochures each year or pay a secretary.

My advice to people is to spend possibly a little bit more and get a 'better' property first up if you can, until you have a bit of a feel for how things really work. Not to say a cheaper property won't be great too, but I personally have had better luck with slightly more expensive places. I still have yet to be inside (or even see an inside photo) of the first 4-plex I bought, its just sat there painlessly ticking over US$ since day one and supporting some of my less profitable forays Interestingly I bought that on credit cards from Aus, because I couldnt get credit! When you are out skiing or skydiving or whatever it is you like doing, the last thing you need is a text message from the US saying there has been a argument between tenants and some damage has happened. Like stuffing toilet paper down the toilet to block the buildings sewage... It ruins your whole day!

Risk vs Reward. Nothing is for sure. Yes you can lose, yes you could retire in 2 years. For every Soros there is probably at least one Madoff

 

[reeco]

I just wrote a long reply full of wit, implorings to anyone who may be able to keep reeco away from Elvis wigs in Vegas to do precisely that and bountiful priceless pieces of information, but it got lost.

I am a little nervous of her inbox filling up with a million requests for the same information and some very serious people missing out on a timely reply. I think she should set up a website or something similar (and she does need to think about earning a buyers fee or something!!!!!!) but in the mean time (and I hope I am not speaking out of line) I would strongly suggest not to contact her directly unless you have read all her posts and/or have an Au line of credit for whatever you want to spend over there. As Dave did above, someone else may have read what you have missed on this post and be able to answer for you. Otherwise she could well spend her whold life typing for fear of not appearing 'rude' by ignoring people.

Dont know what the message was but im sure it wouldve been cracker! Im laughing and i dont even know what it was!

The show however, it must go on...

Agreed about the PM'ing of Emma. Unless you are wise(im still working on this, but ill get there soon!) and liquid enough to actually invest, id suggest not messaging. It really is a waste of time IMO. Its hard to be sincere when folks dont read the thread and ask the same questions!

One thing that crossed my mind was the notion that a 15% yield can be highly achieved throughout the states. Why choose a wild place like LV over others. I maybe mistaken but these hard fought foreclosure battles that Emma goes into for her properties seem at a glance(from a long distance away i might add) on par with whats commonly reported throughout America. 15-20% yield.

Were they reporting from a gross point in there figures? The ebook that was mentioned before was about a young lady who BEFORE the GFC found these kinds of yields in upstate new york. She bombed out in the end but these figures have been consistent for a while now...Am i missing something?

 

[lawsjs]

Given Emma's experience in Alaska I would (as she suggests) stay away from anything cold.

I flew into New York one winter and it took me a while to work out what the smell was. You could smell it from 20,000' - a bit like a bush fire in Oz. Eventually it dawned on me it was burning oil - which is why a cold winter in Nth America sends the oil price up. And the landlord pays. And pipes freeze, and the landlord pays.

Foreclosures are an instant sugar high of CG. $4k reno'ing and then you rent out. It is a highly abnormal market. And for the moment at least unquestionably instantly profitable.

I bought where I could because that was where I could buy. Emma on the other did something a bit crazy and thought about where to buy BEFORE she bought. I'm not even sure if she has an Elvis wig even now.

I haven't read that ebook you mentioned, but I would very much like to hear the results of Quiggles Buffalo play (Earth to Quiggles, come in Quiggles...)

I mistrust articles unless I know for sure its true, but this doesn't look good:
http://www.theinquisitivetechie.com/tag/buffalo-urban-decay/

I saw an outstanding documentary called 'House of Cards' about sub prime on PBS Frontline. I downloaded on Apple TV, if you can get a copy of it I would. One of my loans came from a building in Socal that was labelled 'sub prime central' (Killroy ctr, LB) - funny to see!

This makes interesting reading too:
http://www.cbsnews.com/stories/2008/01/25/60minutes/main3752515.shtml?tag=contentMain;contentBody

I got nervous of Housemouse in the UK (I met her and her banker and they inspired no faith at all) and Kaye in Oz. It was that type of 'fibbing' for bonuses that caused the problem.

Nv was very hard hit. Our dollar is high, the weather in Ca/Nv is good and Emma's reasons for Nv make sense to me. LV is cose to LA which is a quick hop from Aus.

I have a strong suspicion that Emma's buy an hold for 5 years plan may well be extended. Yields will come down as prices go up, but where in Aus without being very imaginative or the odd mining town can you reliably get anywhere 10% net yield + CG? Just before sub prime I swore off the US because of one building, but I have found myself addicted to the returns and the potential. I got a bad case of the willies because of a couple of mutant teenagers in one building. It happens. Fortunately I couldn't sell then, or I would now be out of the US on a whim. Interestingly now I have sold it (with a different mindset) which proves to me that things are 'moving' again. What is in OZ thats fun right now? Bank buildings in country towns are selling on 5% yields. A Burger King sold for $1.8m on an about to be diverted main road 4 months ago in an outer suburb of Newcastle (Sydney) on a FOUR% yield to a super fund. WTF??? And that idiot probably got a bonus! I can see now a ppt presentation with lots of lines pointing up and a lot of 'well dones'.

Nope, I was a bit skeptical, and as I have said I am in MFR, but I think anyone looking for near term CG and great yields (and fun) should at least consider looking at Elvis wigs on ebay. If you can go that far, surely its not a big step to buy a house probably at least as good as the one you live in for $100,000?? (assuming you buy really high end!) And have you looked at the price of cars in the states? You could have a 2000 911 for around $120,000 in Australia, or spend $120k in one of Emma's nice LV suburbs (though I'm still struggling imagining Sydneys Nth Shore as a desert) and get a beautiful 911 WITH a free 3br house with jacuzzi and DLUG just to park it in...

And it gets better. Claim the car as a transport expense, rent the house out (minus one locked garage) and you earn a return of (I think she said) around 15%...

You could easily store plenty of Elvis wigs in the back of a 911 - Imagine what a complete idiot you would feel if you suddenly needed one and didn't have one immediately to hand?? Problem solved...

 

[Emma171]

Have to love your siblings sometimes... Yes ultimately I work in net yields, have also considered that there will be a glut in the housing market with yields reduced but again, I have buffer in my 3 bedders.. And room for Elvis wigs galore.

Cold = oil, snow removal, frozen pipes, melting water and floods.... and one broken furnace or window left open by tenant who couldnt give a toss will cost you more than your property could be worth. Oh I love dry warm climates... Dry ie no termites and mold... No worries that if a wall was removed all you would have is rot...show me net 15% in any cold environment including vacancy and snow removal and I had gross 32% in Alaska to start with... I cringe each time oil goes up......who wants that stress.

HOA 's show on the MLS listing from the agent... Just ask them not to include properties with HOA's.

FL Is a glut at the moment... Go back through thread... What are vacancies... Call a house for rent in the street you want to buy... How long has it sat? Are they offering discounts etc...that was FL a year ago... Times 1000. Two months free rent in SFR? There is a market not to enter.

Bright lights, big city... Don't have to live there, just have to visit... Beats Dottsville, Indiana....