US foreclosures - Boholt Seminars - NO

[lawsjs]

Reeco,
Thanks very much for that great summary of your banking efforts. I discounted Citi as my first experience with them was very iffy. In order to bank with them in the US (15 years ago now admittedly) they required USD$50,000 of my money to be held in trust by them in a seperate account for 'security'! I had over $1.5 worth of loans with them in Australia at that time as well - just couldn't believe it!

I guess what annoys me so much (and starting to at home as well - I want the best of both worlds) is when people work in a system that clearly doesn't work, everyone knows it doesn't work but no one says or does anything to fix it!!

You are absolutely 100% right about seminars. You will NOT understand what it is you are doing until you go yourself and 'immerse' yourself in a different market. America particularly is weird because you expect it to be the same because we are so familiar with it in movies and TV etc. Going to a bar and actually meeting real Americans will teach you far more than reading and being lectured. After all they are who you will be dealing with as tenants and managers.

Nice to know you are still alive!! I had half expected to see you with Charlie in 'Sheens Korner'. When you get home, or even buy it now in LV at Best Buys or somewhere (and to make yourself feel better get a series of 'Celebrity Rehab with Dr Drew' - pretty funny!! I had a laugh when someone asked you what your 'next step' would be (AA's 12? step program) - you don't seem the type to let LV pass you by without making your presence known

Bigfire - well done too BTW. I said this to you before but I'll say it again. After my issues with lower end tenants I will always tend towards the higher grade property as well. Emma has made investment there a speciality, but for 'part-timers' like me I have always had less issues and more enjoyment from a 'slightly' better property. You won't regret it, and as you said the returns are so similar and the price is really not that much more.

PS: Reeco, I think MandyH needs someone like you to go to her meeting with those US property marketing people today - I think it would have been fascinating to be a fly on the wall before you went to the US yourself, now you 'know' first hand what you are talking about you would have taken them apart. I suspect you will have the same attitude that Emma and I have about people being ripped off so badly.

 

[Chui]

Is that net of expenses or gross yield?

I did have to wait 3 days for Emma to find me a tennant and I'm only getting a 12% return......Come to think of it, I'm trying to think of the down-side??

I'm told that about 50% goes in expenses, so does this make the return around 6% with no leverage?

 

[Rolf Latham]

DO NOT BUY IN A COLD CLIMATE... lesson from me this morning....
!@#$!@$!@##$!@#$#@!$@!%$@!#

Expletives..... my tenant left a garage door open last night in Alaska...... PIPES ARE FROZEN... DUPLEX IS FROZEN... trying to contact my insurance agent to find out if this is covered due to my bloody tenant having left the garage door open. Furnace is in the garage as they are with most duplexes/4 plexes/6 plexes and SFR's in cold climates.

I want to kill someone right now - I am as I type:

1) trying to house my other tenants (legal requirement)
2) trying to contact the tenant at fault
3) waiting for the pipes to hopefully thaw long enough to attempt some repair

4) Facing a minimum of 15 - 25k in bills, rehousing, broken furnace etc.....

GOD I LOVE THIS WARM DESERT ENVIRONMENT........... LOVE LOVE LOVE VEGAS..... most expensive, absolute most expensive line item - a new a/c unit and no legal requirement to pay hotel bills if that breaks......

DO NOT BUY IN A COLD CLIMATE THAT FREEZES/THAWS... please please please, you just have no clue on how quickly bills add up when things go wrong......and they will.

By the way, if someone is charging ANYTHING and not guaranteeing YOU A TENANTED PROPERTY WITH THE APPLICATIONS ACTUALLY SCANNED TO YOU TO ALSO CHECK... SURELY there would be alarm bells....

Tenant lease terms are 1 year throughout the US.

The sweet spot is about 14 - 19% net yield in an under 80k purchase here in Vegas. I am constantly waiting to hear a legitimate better/equal/new market but I know this one works.

Just keep asking the questions, keep doing due diligence and go with your gut. If it sounds crappy, it is probably crappy and buy shares in zillow. Always know what the property last sold for and to whom.

PS Yes the tenant has presented renters insurance but that doesn't mean a lot with a communal garage area and I am seeing $$ signs between two insurance companies on the AK issue.

I assume that "chill" is not a good though well meaning response

 

[reeco]

I'm told that about 50% goes in expenses, so does this make the return around 6% with no leverage?

What wise soul told you so? Keen to know...pretty sure that's a net figure chui. Not gross

 

[bigfire]

yield

I guess a very conservative budget may allow for 50% costs

More realistically yield after costs will be about 8.7% (depending on maintenance/repairs etc)

I figure this gives me enough to pay the 7.6% on my Australian LOC plus a bit of spare change to boot

wadaya know...still cash +ve

Better yields are to be had in Emma's $70k market...but she's there to keep an eye on her properties and I'm not so prefer a younger house and (hopefully) a better tennant.

 

[bevk]

Bigfire, that seems like a really low yield.

With many Aussie online banks offering up to 6.51% interest, that's only a little bit higher for the risk and hassle involved.

I'm interested to find out why you were willing to accept such a low potential yield when we know the sweet spot we want is nett 14% and up.

Perhaps I am misunderstanding your post. Would you share the numbers so we can see how you arrived at your figure?

Well done for making a purchase though!

Thanks

 

[bigfire]

Yield

I paid $115k for a surprisingly excellent house that would probably cost twice that to rebuild (I could not insure it for less than $200k).

As mentioned before there are better yields to be had from cheaper properties (in USA...not Australia).

Cheaper properties though may also be older, require more maintenance and/or reno and perhaps attract a different type of tennant.

There is risk both ways.

Let's not forget the potential of capital gains (not to mention currency play).

I'm prepared to accept a lower yield to get a young property in a good location.

If needs be I can also negatively gear....SHOCK HORROR

I guess time will tell if my strategy is a good one.

I feel comfortable enough to go again...now if I can just find someone to finance the next one.......

 

[MandyH]

Well, back from my two + hour meeting and I think that the poor guy was a bit taken aback with my 2 pages of questions (thanks guys!)

I actually feel a little better about them now as "Steve" was happy to answer all of my questions and didn't seem evasive.

They source their property's from wholesalers. So basically once the property makes it to them it has already had reno's it has a clear title, it fits the criteria that myusa gives them for the right socio economic areas, close to schools.... ect...

myusa make their money from the $3750 + GST you pay them on completion of a sale. The $500 to "join" is what pays for them to have their department get everything set up like bank account ect... The owner has just moved to Florida and currently has 3 property mamagement offices over there. That is where the money is for the company once this opportunity fizzles out and the house prices are no longer bargains.

The areas that they find property in have three different appeals to different buyers, high yield no capital growth. Low yield high capital and high capital growth.

Ohio (high yield, no CG)
Parts of Kansas, missouri, north carolina, mississippi & florida

The wholesalers will offer 50 % finance @ around 8% they do have some banks in florida that will offer up to 70% LVR and they have vendor finance available.

We touched on Terry Kaye (can't remember if that is the right name) and boholt. They have no affiliation with them and "Steve" said that he thought Boholt has really just selling accounting services.

One thing that got up my nose on a feminine level was: I asked about their tours and they have a 4 days tour that costs about $2500 and a 10 day tour that costs approx $4500. I mentioned that all of the video testimonials that were on the website were by men only and were the women shy. He said that women sometimes accompanied there husband but I should probably just send hubby It's funny that THAT is what annoyed me! Maybe I shouldn't worry my silly little head about it all....

Anyway, I too lots of notes and he gave me a folder full of info so happy to answer any questions if I can, if anyone has any.

 

[lawsjs]

So the wholesalers are making the killing...

Fact remains - you CAN pay 60-80% more for anything if you want to, but why??

The whole object is to avoid wholesalers like the plague

 

[MandyH]

I think that it comes down to the help that you get.

Unless you want to buy in LV, there doesn't seem to be a lot of legitimate help out there.

As a first timer, it might be worth the extra money to have your hand held and everything set up for you.

 

[lawsjs]

So the wholesalers are making the killing... Whether they are unrelated or not..

Fact remains - you CAN pay 60-80% more for anything if you want to, but why??

The whole object is to avoid wholesalers like the plague

Did you ask about financing? How much are they making there?? - considering the bank values on these properties are at least 60% less than they are selling them for?

Its Henry Kaye BTW, who finally fell foul of the Australian legal system some years ago for selling property to Australian 'investors' for 50-70% more than he bought them for Frankly my opinion of Henry (and I met him a few times here and there) was that if he could convince people to buy something for 50% more than it was worth a) the buyers were complete morons and b) good on him for salesmanship... He also 'sold' joining fee's and courses for multiple thousands of dollars to the same people. So, legally not affiliated in any way, but can you see any similarities??

I have made a couple of posts on Mr Big Hat's site (propertyinvesting.com) on this very issue but it seems some people actually want to pay as much as they can for a US property in deadbeat towns.

Just because something is cheap does NOT mean it is a bargain - or even a 'good' buy.

Thank you very much for posting though MandyH - I look forward to your response..

 

[Aaron Sice]

Unless you want to buy in LV, there doesn't seem to be a lot of legitimate help out there.

As a first timer, it might be worth the extra money to have your hand held and everything set up for you.

no help? you're kidding right?

 

[lawsjs]

I haven't bought anything in LV BTW - but my sister deliberately chose it for very good reasons that she spent years formulating. I do know my brilliant property manager in LA is buying property there as well and says it is 'very' good.

Unless it matters to you where you buy in the US - for me it is LA because a) I can get on a jet and ONE SECTOR later I am there and b) I have been buying there for 12 years - I think Emma's reasons for LV are inarguable.

 

[Chui]

What wise soul told you so? Keen to know...pretty sure that's a net figure chui. Not gross

From looking what's deposited in my bank account after the property manager deduct outgoings.

 

[lawsjs]

The dollar has fallen a bit today - does that make up for it

I don't know the precise answer, but I am pretty sure the costs are minimal - Emma's numbers I believe are net. Reeco would know more than me now

 

[handyandy]

From looking what's deposited in my bank account after the property manager deduct outgoings.

Having looked at a number of US properties the ball line expenses including the property tax still seems to be about a third 33% of gross earnings.

What I am still investigating is the tax you will be liable for from owning US based property. It seems that it is actually tax advantages that you own the group LLC that holds the other LLC's in the investors name rather than an Australian discretionary trust. If you hold it personally then the LLC is viewed as an extension of the investor and you are only liable for personal tax rates, all deductions are still applicable.

Where you hold the top LLC owned by the discretionary trust then my understanding is that it is taxed as a company, you then pay company tax and an additional dividend tax giving a total of about 59% based on tax brackets. I have been doing calcs on a gross income of $300k so lesser amounts will pay less (but not much)

The idea would be that you reduce the net income by generating management fees and the like, that another personally owned LLC charges or even levied direct from Australia, but what is the maximum allowed before getting to unacceptable levels. This would be solely to reduce the double taxation that applies in a corparate setting.

The withholding tax on interest is still a concern but I would rather pay a surcharge of 10% on the interest payments remitted to Australia then have the interest charges not accepted and have to pay interest from monies that has been doubly taxed.

In discussing this with various US based CPA's I am getting mediocre answers as no doubt they want money for advice. The problem is that without some pre knowledge you could end up with a CPA who simply isn't attuned to the right concepts and leads you up the garden path.

Cheers

 

[MandyH]

no help? you're kidding right?

I am not kidding.

There are 900+ answers on this thread. So far as I can see, Emma has LV covered and people are taking advantage of her.

That is 1 state, I haven't seen anyone advertising in the other 49.

People who have come on here and spoken of their success in LV didn't do it by themselves (forgive me if I missed someone who did) they had Emma on their side.

The information in this thread is invaluable and you really couldn't put a $$$ on it, but for those that just want to invest, have their hand held and obviously don't care what their yield is these kind of companies might appear to be a god send.

Like I said in an earlier post, if I hadn't spent 4 days reading this thread they would have had me hook line and sinker!

 

[Aaron Sice]

I think Emma's reasons for LV are inarguable.

i agree if you use her strategy then yes, it's very clear it's irrefutable that it works.

 

[Chui]

The dollar has fallen a bit today - does that make up for it

I don't know the precise answer, but I am pretty sure the costs are minimal - Emma's numbers I believe are net. Reeco would know more than me now

No. These properties are in Australia. But the 50% Rule http://www.123flip.com/education/the-50-rule seems to be borne out in practice.

 

[lawsjs]

Handy Andy - thank you for that very interesting post. I am going through EXACTLY the same issues. Tricky. The 1031 exchange issue is perplexing.

Mandy: How much are they charging for their finance? Did you find out?

Aaron: I was referring to the weather, jobs and ready market. It appears LV ticks all the boxes, I think Emma's strategy is pretty basic. Buy low, sell high and get maximum return on the money in the mean time

My net on MFR's is usually 70-75%. I think the singles are a bit higher, but I am no expert.