Emma
Very interesting to read what you have to share. I am retired but I am hoping one day to be investing in US rental properties, especially with the exchange rates favoring the Aussie dollar.
US foreclosures - Boholt Seminars - NO
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Emma
Very interesting to read what you have to share. I am retired but I am hoping one day to be investing in US rental properties, especially with the exchange rates favoring the Aussie dollar.
Why Vegas
Vegas specifically:
1) in SFR's virtually no vacancies... See below
2) no state income tax and under US tax rules, I can claim the 8.1% sales tax back
3) the most pro landlord rules I have ever found anywhere... Where else on the planet do you have a situation where every tenant pays the $50 late fee on the fifth day of rent due? Why? Because on the sixth, I can go to the constables office, walk in, pay $39 and they, not me, go and deliver a 5 day quit or pay notice... Unless all outstanding rent is paid in full by that fifth day, THEY go down to the property, the sherrif changes the locks and evicts the tenant... NOT ME... YIPPEEE! Try that in Australia, Alaska or any other pro tenant place.
4) no earthquakes, termites, mold issues, snow, ice, hurricanes etc... Leave a house in Vegas for four thousand years untenanted and the desert dry climate will worship you... I spent three weeks driving Florida properties and apart from atrocious vacancy rates, can anyone say termites, mold and water? After Alaska I will never pay oil bills again.. First you are protecting from frozen pipes then, come thaw, you are dealing with melting snow and leaking basements that tenants don't tell you about.... Ha lessons learnt from what may look like a great yield on paper... Start thinking new furnaces at $8k a pop!
5) I didn't go to "the strip" until I had done 3 properties. Once I went though, I got it. They would bulldoze the rest of Nevada and probably the United States before Vegas would go under. It may be kitsch, it may be over the top, but it is quintessentially USA. Ever wondered why songs come out about Vegas, "the Hangover" is based in Vegas etc... There is money churning to keep Vegas going. The value of a movie based in your city is worth millions upon millions in translated occupancy. Vegas has "it". "It" requires staff and those staff are my tenants.
6) Vegas is not reliant on my real estate taxes. Government is supported by gambling revenue and liquor taxes. Name any other city in the US where property taxes were cut in half this year without a major glitsch on services? Mine were. Room rate taxes, gambling and alcohol taxes, no matter what your thoughts are, these keep my rates down and survival of Vegas guaranteed... And the police employed and the fire and ambulance...you get the idea.
7) I don't personally know what the "voluntary foreclosure" rate means in the rest of the states but in Vegas people aren't leaving the state, they are merely quitting the mortgage and buying a cash foreclosed property on the same street! I have bought back the blinds for my own property from the previous owner who lives three doors down now..... Another topic another day.
8) California is bankrupt and Arizona is anti immigration... People are moving to Vegas.. It was in the 2009 Uhaul ( massive moving rentals van company) top inbound rental destinations... Significant.
9) cheap, cheap labor...cheap, cheap qualified labor. Cheap, brand new appliances.. Whole kitchens available for $350 ( my latest... Including stainless steel microwave, stove, fridge and cabinets.. Although a bit of a don't ask don't tell but done..)
Ok, getting late, hope that answers a bit...there are of course other markets. I looked at Texas, phoenix Florida etc .. This is just my market.
Another way of thinking...
How to find a good market is another question. I do the most basic thing ever when I start a search on any real estate market.
This is coming with a caveat that this is of course just my two cents worth and not gospel
1) go to zillow.com and pick any city that you are curious about. In my mind, a good city is nowhere that involves cold weather that could freeze pipes or has a utility that the landlord has to pay to keep this from happening - especially not one that involves an ever increasingly scarce resource like oil!
2) choose any random property for sale in your target city that meets the bare minimum of walking distance to schools, transport and shops - within your target price range
3) take note of the address, the. Go to realtor.com
4) type in that you are looking for somewhere to rent.. Then type in the street (not number) of your target property and search. This will give you properties within half a mile
5) pick any of them and call them pretending you are renting. How much and how long has it been on the market... If they offer ANY discounted deal, you are looking in the wrong city or they are asking the wrong rent... That simple.. There is a glut.. Or the property is overpriced.. What would it rent for for the yield you are looking for?
It is getting late and I hate to say it but am packing in theory for Melbourne Cup. I am so happy to answer questions ..makes me feel as though all the hard work may help someone.
Ask away.
Vegas specifically:
1) in SFR's virtually no vacancies... See below
2) no state income tax and under US tax rules, I can claim the 8.1% sales tax back
3) the most pro landlord rules I have ever found anywhere... Where else on the planet do you have a situation where every tenant pays the $50 late fee on the fifth day of rent due? Why? Because on the sixth, I can go to the constables office, walk in, pay $39 and they, not me, go and deliver a 5 day quit or pay notice... Unless all outstanding rent is paid in full by that fifth day, THEY go down to the property, the sherrif changes the locks and evicts the tenant... NOT ME... YIPPEEE! Try that in Australia, Alaska or any other pro tenant place.
4) no earthquakes, termites, mold issues, snow, ice, hurricanes etc... Leave a house in Vegas for four thousand years untenanted and the desert dry climate will worship you... I spent three weeks driving Florida properties and apart from atrocious vacancy rates, can anyone say termites, mold and water? After Alaska I will never pay oil bills again.. First you are protecting from frozen pipes then, come thaw, you are dealing with melting snow and leaking basements that tenants don't tell you about.... Ha lessons learnt from what may look like a great yield on paper... Start thinking new furnaces at $8k a pop!
5) I didn't go to "the strip" until I had done 3 properties. Once I went though, I got it. They would bulldoze the rest of Nevada and probably the United States before Vegas would go under. It may be kitsch, it may be over the top, but it is quintessentially USA. Ever wondered why songs come out about Vegas, "the Hangover" is based in Vegas etc... There is money churning to keep Vegas going. The value of a movie based in your city is worth millions upon millions in translated occupancy. Vegas has "it". "It" requires staff and those staff are my tenants.
6) Vegas is not reliant on my real estate taxes. Government is supported by gambling revenue and liquor taxes. Name any other city in the US where property taxes were cut in half this year without a major glitsch on services? Mine were. Room rate taxes, gambling and alcohol taxes, no matter what your thoughts are, these keep my rates down and survival of Vegas guaranteed... And the police employed and the fire and ambulance...you get the idea.
7) I don't personally know what the "voluntary foreclosure" rate means in the rest of the states but in Vegas people aren't leaving the state, they are merely quitting the mortgage and buying a cash foreclosed property on the same street! I have bought back the blinds for my own property from the previous owner who lives three doors down now..... Another topic another day.
8) California is bankrupt and Arizona is anti immigration... People are moving to Vegas.. It was in the 2009 Uhaul ( massive moving rentals van company) top inbound rental destinations... Significant.
9) cheap, cheap labor...cheap, cheap qualified labor. Cheap, brand new appliances.. Whole kitchens available for $350 ( my latest... Including stainless steel microwave, stove, fridge and cabinets.. Although a bit of a don't ask don't tell but done..)
Ok, getting late, hope that answers a bit...there are of course other markets. I looked at Texas, phoenix Florida etc .. This is just my market.
Another way of thinking...
How to find a good market is another question. I do the most basic thing ever when I start a search on any real estate market.
This is coming with a caveat that this is of course just my two cents worth and not gospel
1) go to zillow.com and pick any city that you are curious about. In my mind, a good city is nowhere that involves cold weather that could freeze pipes or has a utility that the landlord has to pay to keep this from happening - especially not one that involves an ever increasingly scarce resource like oil!
2) choose any random property for sale in your target city that meets the bare minimum of walking distance to schools, transport and shops - within your target price range
3) take note of the address, the. Go to realtor.com
4) type in that you are looking for somewhere to rent.. Then type in the street (not number) of your target property and search. This will give you properties within half a mile
5) pick any of them and call them pretending you are renting. How much and how long has it been on the market... If they offer ANY discounted deal, you are looking in the wrong city or they are asking the wrong rent... That simple.. There is a glut.. Or the property is overpriced.. What would it rent for for the yield you are looking for?
It is getting late and I hate to say it but am packing in theory for Melbourne Cup. I am so happy to answer questions ..makes me feel as though all the hard work may help someone.
Ask away.
CNN have cottoned onto this now:-
http://money.cnn.com/2010/10/29/news/economy/australians_real_estate/index.htm
http://money.cnn.com/2010/10/29/news/economy/australians_real_estate/index.htm
If i was @ retirement stage id probably go live in america.
Emma what you looking @ for a modern 3bed/1bath/double lock up garage on a 500-600sqm blocK. In a low crime suburb?
Regards,
RH
Emma what you looking @ for a modern 3bed/1bath/double lock up garage on a 500-600sqm blocK. In a low crime suburb?
Regards,
RH
To purchase it depends on condition but between 55k and 70k for a "minimal repair" condition...ie rentable within a month (priced right and listed on craigslist and gosection8.com) with less than 6k total costs (including closing) before renting. I would strongly recommend no less than 2 bath as that is the norm. 1 bath doesn't cut it. Think at this price a1980's to mid 1990's prop. It is debatable and each to their own but check out zillow and realtor.com for zips like 89110, 89142, 89121, 89108, 89107.. There are others, these are off the top of my head. There are exceptions to every zip but god we love google earth for street views!
I mentioned in another thread that my accountant had planted the "buy US" seed.
It was the company mentioned in this article (My USA Property) that he spoke of.
I was not hooked, but have asked him to buy a few first and see how it goes.
The numbers are impressive and the cashflow would certainly be welcome.
Thanks for the reply Emma, it wasn't from an investment Point of view, but more to live in myself.
What are the ongoing costs to keep the property? (Eg. Water rates, council rates, Land taxs, other fee's etc)
What are the ongoing costs to keep the property? (Eg. Water rates, council rates, Land taxs, other fee's etc)
Yeah thanks Emma
Good to have a real pro to chat to! If you were coming straight from OZ and were starting fresh...how would you go about getting finance? Friend of mine who lives in Inland Empire SoCal reckons I should walk in BofA and ask.. Said he did and was told all he needed was 30 odd % deposit?? Maybe the person gave him bad info? He's now a Citizen though
Good to have a real pro to chat to! If you were coming straight from OZ and were starting fresh...how would you go about getting finance? Friend of mine who lives in Inland Empire SoCal reckons I should walk in BofA and ask.. Said he did and was told all he needed was 30 odd % deposit?? Maybe the person gave him bad info? He's now a Citizen though
JV on a $60k property?
Ridin-high... Don't blame you. You can have a 130k property that is 5 bedrooms, 3 bathrooms in Henderson which is deemed one of the absolute best areas - or Summerlin. This will propabably have a pool and jacuzzi with 3 car garage on the foreclosed market.
Your costs are high electricity over summer months for a/c - think about $300 per month for June, July and august for peak. No a/c in winter but gas for heat and cooking generally. This includes gas hot water... About $50 per winter month contingent on use. Would have to firm, these figures are off the top of my head but pretty darn close. Bring on solar!
Insurance will be about $600 per annum
Taxes will vary dependent on valuation so guesstimate about $1200 per annum in this market valuation year but easily checked on zillow for a sample property.
Water is cheap.. Probably average for 3 people at moderately hgh use, about $40... Per month Don't have a lawn. This is desert.
Other than that, trash is $11.33 a month and sewer about $22 per month. That's it. Completely. You may want a pool boy to service your pool and that is $120 about per month inclusive of chemicals.
Living expenses are the cheapest I have ever seen anywhere. From the fresh fruit stores you can get 20 oranges for $3. A case of coca cola is $4.50 on special every week. A roast chicken like the woolworths ones here are just $4.95.... Over 50% cheaper than oz!
Your costs are high electricity over summer months for a/c - think about $300 per month for June, July and august for peak. No a/c in winter but gas for heat and cooking generally. This includes gas hot water... About $50 per winter month contingent on use. Would have to firm, these figures are off the top of my head but pretty darn close. Bring on solar!
Insurance will be about $600 per annum
Taxes will vary dependent on valuation so guesstimate about $1200 per annum in this market valuation year but easily checked on zillow for a sample property.
Water is cheap.. Probably average for 3 people at moderately hgh use, about $40... Per month Don't have a lawn. This is desert.
Other than that, trash is $11.33 a month and sewer about $22 per month. That's it. Completely. You may want a pool boy to service your pool and that is $120 about per month inclusive of chemicals.
Living expenses are the cheapest I have ever seen anywhere. From the fresh fruit stores you can get 20 oranges for $3. A case of coca cola is $4.50 on special every week. A roast chicken like the woolworths ones here are just $4.95.... Over 50% cheaper than oz!
I personally don't have any concerns about title insurance. Fortunately my greatest concern throughout this whole experience has been to get free and clear title.. Ie no liens pending so i have bought the highest title insurance for all my properties. I hate that you cant choose which title company you deal with when purchasing but still, when i become a seller, i know the ones i would deal with again. Rule I have followed all the way through:
Always triple check that the property is indeed a foreclosure. In my earlier post that didnt post, i went into a strong lesson learned on the 1401 wilderness way. Essentially I only buy from banks and don't buy flips. Within one month of walking in to vegas they banned title changes within 90 days of purchase. That basically eliminated flips and refinancing (which screwed me on refi-ing) That applied for all properties in NV and FL by the way. Wilderness way was originally bought at 45,900... With list price 39k. Title on zillow showed it as a legit bank foreclosure etc. The offer documentation showed it was a bank foreclosure but what i found on due diligence and title company information was the week before they had changed the rules. You can cash flip now in Vegas immediately... and this one was that. My agent ended up fighting them for me and getting the price back down to 39k.. But lesson learnt on it! It was principle.
You can indeed get great flips but how do you know they did the work to code, how do you guarantee they don't have pending liens coming etc. When title is listed as a bank, they have to bring it to minimal safety requirements. I also haven't personally purchased from an auction for the same reason... What lien holders tend to do in Vegas is wait until after a new owner has walked in before filing for the liens... Banks have to sell free and clear title... Or at least to the best of their knowledge. A foreclosed property normally has been sitting vacant for a year or so having failed at short selling, failed at auction and reverted to the bank. The bank then just is ditching... Tight, tough market but was reassuring. That and a good title insurance. Overall, there was a great article on this... But my gut says The US will halt for a bit, fix internal banking oversight of the titles that effectively do nothing and move on with a few more law suits and another bank bailout at worse to settle all this. Did I mention the us economy is screwed anyway?
Bottom line not concerned.
One other thinking. You have to be a cash purchaser but they don't care where the funds came from or how long the funds have been in the account. Name on bank account with proof of funds must match name on title. You will need 5k earnest money before buying anything... Get us funds up front and cashiers check from a us bank only is accepted. File it and use it for multiple properties with your agent.
Always triple check that the property is indeed a foreclosure. In my earlier post that didnt post, i went into a strong lesson learned on the 1401 wilderness way. Essentially I only buy from banks and don't buy flips. Within one month of walking in to vegas they banned title changes within 90 days of purchase. That basically eliminated flips and refinancing (which screwed me on refi-ing) That applied for all properties in NV and FL by the way. Wilderness way was originally bought at 45,900... With list price 39k. Title on zillow showed it as a legit bank foreclosure etc. The offer documentation showed it was a bank foreclosure but what i found on due diligence and title company information was the week before they had changed the rules. You can cash flip now in Vegas immediately... and this one was that. My agent ended up fighting them for me and getting the price back down to 39k.. But lesson learnt on it! It was principle.
You can indeed get great flips but how do you know they did the work to code, how do you guarantee they don't have pending liens coming etc. When title is listed as a bank, they have to bring it to minimal safety requirements. I also haven't personally purchased from an auction for the same reason... What lien holders tend to do in Vegas is wait until after a new owner has walked in before filing for the liens... Banks have to sell free and clear title... Or at least to the best of their knowledge. A foreclosed property normally has been sitting vacant for a year or so having failed at short selling, failed at auction and reverted to the bank. The bank then just is ditching... Tight, tough market but was reassuring. That and a good title insurance. Overall, there was a great article on this... But my gut says The US will halt for a bit, fix internal banking oversight of the titles that effectively do nothing and move on with a few more law suits and another bank bailout at worse to settle all this. Did I mention the us economy is screwed anyway?
Bottom line not concerned.
One other thinking. You have to be a cash purchaser but they don't care where the funds came from or how long the funds have been in the account. Name on bank account with proof of funds must match name on title. You will need 5k earnest money before buying anything... Get us funds up front and cashiers check from a us bank only is accepted. File it and use it for multiple properties with your agent.
hi emma,
great post so far.
how do we check that the title is clear and indeed a foreclosed one without any problem after we bought it (it could have unpaid taxes, or bad debt on property etc) ?
also foreigner/aliens (no green card) can buy as well ? i read a lot on the forum that a lot of aussie buying up there in us with llc, i assume they dont have green card as well ?
there is a lot of property on zillow, and quick rental search, indicate that there is only a few for rent (2 in fact) in vegas and it has been on market for about 100 odd day empty. is this the indication on how it is going to be ?
thx again for the info
great post so far.
how do we check that the title is clear and indeed a foreclosed one without any problem after we bought it (it could have unpaid taxes, or bad debt on property etc) ?
also foreigner/aliens (no green card) can buy as well ? i read a lot on the forum that a lot of aussie buying up there in us with llc, i assume they dont have green card as well ?
there is a lot of property on zillow, and quick rental search, indicate that there is only a few for rent (2 in fact) in vegas and it has been on market for about 100 odd day empty. is this the indication on how it is going to be ?
thx again for the info
Thanks for your feedback, all i worry about is the crime now.
Eg. Were i live i can go for jogs around the block at night and not have to worry at all.
When i think of america and crime, all i can think about is seeing on good morning america every few days of a mass murder where someone has snapped it and killed 10 people etc.
But by the time i retire the property market will have probably bounced back and be expensive again
Regards,
RH
Hi Ridin-Hi
That is definitely something to consider ....we were considering a block of 30 units in Detroit Michigan and one of expenses that stood out was "$ expended to repair a bullet ridden roof"...now that is scary !
But guess if we do our DD, things should be okay.
