US foreclosures - Boholt Seminars - NO

I didn't realise that there is only one way to do this. I actually thought that this was a thread of sharing info, not pushing one particular agenda.

I feel as though I have been chastised for using the word "wholesaler" which is what myusa calls them.

I do think that my call to loansusa my have prompted the two "testimonials" above. There is nothing wrong with that, but I had told Melinda when I called her that I had made it to the point I had with lots of info from the somersoft forum. I also told her that there was a belief that you couldn't get finance in the USA.

I am all for due diligence, I think that eveyone OWES themself and their bank account the chance to explore ALL options. Not just the most popular views in a forum full of strangers.

Do I want to invest in Florida. I don't. For most of the reasons stated by Emma I have decided to start my US investing journey in LV. I have contacted Emma and am really excited to get started.

I want finance. I want to buy multiple properties, not just the 2 I will be able to afford if I use the equity I have available to purchase them outright. Therefore I will be exploring what loansusa can offer me.

Best of both worlds if you ask me.
 
Mandyh,
Don't ever think any differently!

Even expensive finance is still finance! Its just a matter of weighing up costs/rewards.

I still have questions about how they protect themselves (which often brings up hidden fees) but what you presented was really very good info.

There are a lot of hassles owning things overseas. It would be a waste of time IMHO just owning one.

Even expensive finance is still finance - and these properties are unfinancable (to my knowledge) any other way.

Know the costs and then decide if it is worth it.

Would still like Rolfs opinion - Bueller? Bueller?

The shadow foreclosure issue has been the elephant in the room for at least a year. In a way I see it as a positive. The banks are holding stuff because even they can see things improving, or at least not getting worse. Hell, people are even paying 60-80% more than they managed to sell them for in a very short space of time, so why WOULDNT they hold on to the inventory and 'trickle' it onto the market...

Cashflow: Thank you for posting the figures on your Fl. property.
Rent (net) $11,260pa
Finance $4,044pa
Cashflow $7,126

And the $4k joining fee and $4k finance set up fees - an extra $8,000 correct?
Therefore break even (excluding very expensive research trips;) ) in year 2-3?
 
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Heck Mandy, if we can all connect the dots to financing - I'm with Jeremy - doesn't MATTER the rate if it works for you and you can have the yield padding...

Calling Loans USA as we speak.....
THANK YOU for helping to connect some dots - I agree, that IS what this is all about and

Jeremy, I rarely thank you and actually just realised I probably haven't ever on this forum but this IS what this forum is about - standing on others shoulders to ultimately get where we all want to be... and if that means we are all moored up against each others yachts off Grand Cayman drinking bubbly in 10 years time... so be it!

Cheers!
Emma
 
Perp said:
In fairness to MandyH, that is a commonly used term over there. They are middle men
Click to expand...

Ok. I hear you. I just never came across this in my playground. (CA).

And I wouldn't dream of adding any more layers between me and my property.
 
Emma171 said:
Heck Mandy, if we can all connect the dots to financing - I'm with Jeremy - doesn't MATTER the rate if it works for you and you can have the yield padding...

Calling Loans USA as we speak.....
THANK YOU for helping to connect some dots - I agree, that IS what this is all about and

Jeremy, I rarely thank you and actually just realised I probably haven't ever on this forum but this IS what this forum is about - standing on others shoulders to ultimately get where we all want to be... and if that means we are all moored up against each others yachts off Grand Cayman drinking bubbly in 10 years time... so be it!

Cheers!
Emma
Click to expand...

arent you buying strictly foreclosed properties? if so what good is finance?
 
Yields

Hi All,
Firstly many thanks to all contirbutors, esp Emma & Jeremy. Lot's of great info here.
Been following this thread from the beginning as a lurker.
Been quietly getting excited about the possibility of diving in.
Quick question re yields...
On numbers provided by Emma and Costa, I can't seem to get a starting nett yield of better than 10.3% (don't get me wrong, I understand this is much better than av AU yields), but was expecting from posted commentary approx 15%. Please see attached simple spreadsheet. I'm a novice so could be calculating incorrectly -please advise.

As you can see the spreadsheet allows for multi year adjustments to rental income and expenses. I would assume that PM, Maintenance, Insurances etc will all go up, at least by CPI (more for maint as prop gets older). What are the prospects of rent increases, given that a) section 8 tenants - voucher value may not increase 2) more shadow inventory being released keeping values low and therefore rental rates low 3) high unemployment 4) high vacancy rates (understand SFR v's MFR reasons but if your poaching from MFR then as their rent rates decrease so do your SFR rates?

I understand Emma that (putting currency aside) you see this as a growth play with padded yields. Given that average capital growth in the US is approx (anectdotally from internet research) 4.5% per annum, I had been viewing this as a yield play with potential capital upside. Where do you see the growth coming from to enable your props to be >$100k ater 5 years? Is it from higher than average growth as market recovers? - Surely we could have a couple more down years to go yet? Or is it from jump in values due to volume of foreclsoed properties dwindling in a couple of years and or increased credit availability?

Please don't get me wrong, still see good opportunity, just want to make sure I understand it.

Rgds & many thanks for your replies in advance

Piers
 

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  • Simple Yield Calc.xls
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You have projected taxes at about double what they are in Vegas - Hammond for instance was $825 per annum - your insurance is over by $200 - I just swapped brokers on my insurance for Hammond and it came in at $431 I think.... further, rents can be adjusted for Section 8 annually - give 60 days notice from renewal of lease - I increase by $25 per annum. 1k is high for maintenance on a continuing basis and your vacancy at 5% is pretty high if you have kept rents rational - you shouldn't have more than one tenant swap if you find someone who loves your place in the first instance! Max out in 5 years should be 2 weeks. I have had a tenant changeover this month and "down" time is 1 week.

Your capital growth projection is not based on the reality that if you have paid 61k, market value on that property TODAY should be 80k if you bought correctly - ie if I flipped Hammond for instance TODAY, I should get a minimum of 80k...I personally however pull back to 2001 prices and traject from there with CPI at 3% - we are surreally deflated in the US and especially Vegas - even the 80k is based purely on cash purchases.... thus that is just my personal crystal ball analysis...

Rerun the numbers.... don't forget, I don't do property management either in my figures and also some need to do debt servicing in theirs so all up, I rarely quote percentages but I think the numbers are slightly off... at least for Vegas - go gross so each can figure their own netts out.

Oh and one tenant late fee of $50 per annum will shift your nett up by about a 1%!!

Again -recommendation - do your own maths!
 
Just had a look at another Aussie site (888usrealestate), similar to myUSA etc.
I can't get my head around this one, so perhaps someone could explain?
They have the following property listed for sale - 3940 E 68th St Kansas City MO 64132 for $49,880 which has been all tarted up, apparently. They say the Zillow estimate is $88,000.

However, when you go to Zillow, the house is up for sale through Realty Executives of Kansas City for $14,000 in "as is" condition. Has been on Zillow for 151 days.

What am I missing??
 
I haven't checked, but Bevk, I think you should be VERY quick buying that one before you get crushed in the rush of Aussies desperate to pay $88+k.

I would guess they will only buy and sell it when someone pays them a deposit - or a 'joining fee'... Why spend $14,000 BEFORE you sell it for $88,000 if you don't have to??? It would be very interesting if someone knew someone who could do a drive by right now and see the 'extensive renovations' that have obviously been going on. Pay a deposit on it in Australia and they know they have 2-3 days minumum to complete the $75,000 worth of renovations before you get there.

My quick research on Steve M's site has proved to me 100% that people want to pay as much as they can and kid themselves everyone is out to help them...

I am coming to the conclusion that I have been too aggressive towards Dymphna Boholt and now myusaproperty (and others). They are merely filling a 'need' in the market for people to buy 100% overpriced 'bargains'. I have to say I am a bit shocked.

You can lead a horticulture but you can't make her read it:)



Whitegoodman, Given the 'opaqueness' of the valuations that loansusa or whatever they are called are doing, I am guessing (haven't been home to discuss this with them) that it is pretty easy to get them to fund anything. Maybe a bit like an Australian 'auction'. I am going to ask this question. 'Can i get pre approval to buy something up to $xxx value in xxx city'. If I can, then that opens up a whole world of options for me. I don't like their business model above, but if they are happy to finance the clear junk they are, then I want some of this money before the idiots handing it out work out it is a disaster:) I watched subprime happen in the US and thought people were just gambling stupidly. If an Australian company wants to be Lehman Brothers it seems only sensible to get in as early as possible.

I honestly think I am going mad. It seems I am the only one who is watching this lunacy and seeing it as lunacy. Can someone tell me if I am off the planet and everyone is being sensible and paying for good quality old fashioned service, or am I correct and just watching people throw money away as quickly as humanly possible because they want a 'bargain'?

The only evidence I have for thinking I _may_ be sane is that most of the US-centric posters are recent joiners on the (Steve M) site. There are NO 'old' posters there, so possibly it is just a massive newbie market that 'has' to jump on the next big thing.... If I am correct then there are going to be a LOT of tears. If I am wrong I will have no hats left and need someone in a white coat to help me.. I seriously feel like Dreyfuss with Clouseau in Pink Panther...
 
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LOL lawsjs! I'm lining up my finances as I type (NOT!).

Yes, I was wondering if they would only make the actual purchase upon registration/deposit from an interested party (read "sucker").

These guys are obviously not worried about tools such as Zillow that we can now use to give us honest information.

Ha - might give them a call on Monday and suss it out. Not that I intend on buying it, but it would be good "research" for the forum :)
 
Yields

Thanks Emma,
Thanks for quick reply.
Good to hear that you are able to add $25 rent increases (per mth I presume).
Yes, I was using your previous estimate of insurances at $700, good to hear that it can be got for $430.
Most would need PM.

Thanks for explanation of your thinking on cap values. 1/2 of your increase comes from buying foreclosed at the right price. I guess that big question on this one is are values of non distressed stock higher or are they being dragged down by distressed stock? If so it could be argued I guess that values will jump when distressed stock dwindles.

Taxes are a funny one - I took taxes at a padded average of 2.75% of assessment value, however I now notice that assessment value is nowhere estimated or actual value.
Anywho, have changed as per your recc's and am now achieving closer to the numbers being talked about.
I agree gross is best for general use and each can work out their nett depending on PM services required etc.
Thanks again.
 
lawsjs said:
Whitegoodman, Given the 'opaqueness' of the valuations that loansusa or whatever they are called are doing, I am guessing (haven't been home to discuss this with them) that it is pretty easy to get them to fund anything. Maybe a bit like an Australian 'auction'. I am going to ask this question. 'Can i get pre approval to buy something up to $xxx value in xxx city'. If I can, then that opens up a whole world of options for me. I don't like their business model above, but if they are happy to finance the clear junk they are, then I want some of this money before the idiots handing it out work out it is a disaster:) I watched subprime happen in the US and thought people were just gambling stupidly. If an Australian company wants to be Lehman Brothers it seems only sensible to get in as early as possible.
Click to expand...

I would love finance atm, im 23 and have about 45k saved just after uni, im tempted to buy in a place like Rochester, Kansas, Memphis etc cos im money ready but would prefer Vegas or Florida as I generally feel more comfortable buying after such a huge drops.

The problem is i really dont think its worth paying 5k in fees to get a loan for say 50-70k (70%) on 7% over 5years..
 
WG:
From Cashflow's comment he got 70% LV on a property 'worth' $90k. I have no reason to assume the 'real' value of that property for financing purposes was determined in anything other than a roulette style (or dartboard) approach. I mean seriously, how could it? How could any legitimate finance company 'value' a property at $90k when all the evidence suggests it was purchased a month earlier (if that) for maybe 50+% less.

They seem to mention 'US lenders'. The US lenders I know aren't touching my deca millionaire LA agent for even a $20k Kia vehicle when he actually has the cash in the bank to buy the thing 10 times over!

So, following on from that, I see these guys recreating Ninja loans for Aussies. There doesn't seem to be any equity or collateralisation on hard assets involved in these deals, so the only thing you are risking is the deposit. Complete utter madness and stupidity from the lenders point of view, but that seems to be the case. Valuation appears only based on a 10-12% rental return and bares no reality to 'actual' value. As you correctly pointed out their fees (just like the subprime cowboys) are huge. Also (just like subprime) they are clearly on commission to get these loans out the door. Exactly how critically do you _really_ think they are actually looking at these deals - the actual properties and their values? This seems to me real tooth fairy stuff, they arent even pretending to be real 'banks'.

Given my suspicion that they are just agog at all the 'easy' commissions they are getting, I reckon they are more likely to be looking for an excuse to hand over the money, rather than do ANY diligence at all. Wherever their money is really coming from, I bet the sales staff don't have a cent of their own money invested in these deals...

So your hard saved $45k (bloody good effort BTW!) is magically not $45k anymore, but USD$150k. Emma's properties (I do try not to push her, but I know she's real) should 'qualify' for a loan in a heartbeat if any do as there are no layers of extra 'marketing' in the price. So you get 2x70k properties right there. Thats pretty good in itself, but here is where I am going. Can you use THAT $150k for a deposit on a vendor financed deal? My suspicions being correct, I don't think they would give a toss - as long as you can prove you have a better than even chance of paying their bills with the rental income. Even then, I don't think they would look too hard.

Now, Mr 23yo WG. How would you feel if someone like Emma managed to dig you up a nice little cashflow+ property for US$1m? I know there are owners trying to sell all over the country who would carry that paper for you. Thats not a bad way to start your property career off is it?



ROLF: Are these guys totally insane or am I just being grossly unfair?? I _think_ the conclusion is inescapable...
 
I will add one more thing WG - and others.

7% for five years.... I'm a bit slow, that just sank in.

I trust anyone who has read this bit of this post in an unbiased fashion (ie:everyone agrees with me:) ) to at least suspect that a lot of these financed properties are overpriced. ****

In the cold hard light of day what do you think a 'real' valuation would be on (say) Bevk's great example above? It's for sale for $14k. What some fool foreignor pays for it is a complete irrelevance. I am not talking about the 'pie in the sky we're from Melbourne and we can finance anything' valuation, I am talking about hard bitten by subprime Bank of America or Citibank valuations. And as my agents keep telling me in LA 'remember Jeremy, one good sale does not a comp make'. Its not like Australia where the neighbours property sells for $500k more so yours is worth $500k more.

These banks will make damn sure they are NOT caught out again. And though you might not suspect it, they were VERY tough on me prior to '06. 45% deposit tough.

Back to Bevk's property in Fukushima ground zero subprime country. Its for sale with basically a pre approved price of $50k. Great rental return no doubt - someone is going to be boasting to their friends about that in Surry Hills or Kew over a glass of wine. 10% NET! Can you believe it!! - how clever was I???

Who here is really 100% certain that a property that has sat around unsold for 151 days at $14,000 is going to appreciate at a rate of 40% PER YEAR for the next five years? Because even if you _can_ as a non resident alien refinance at 65% LV (ie 35% equity) that is what it HAS to do or you will have to come up with the cash in five years - or default.

I think Emma's properties in LV that are very well researched by a clear 'expert' in the field have a pretty good chance. But she has bought extremely carefully. Extremely.

She did not start out by paying 60-80% more than everyone else. She has the game half won when she buys, the day she owns 'her' places I reckon she makes $20-30,000.

I came close to buying an $800k toy last month. Stunning ex ballroom rooftop loft apartment in a 1920's building. I was going to pay $400k cash and get the owners to carry $450k at 6% for 5 years. My agent is usually pretty gung ho about this stuff. Believe me he had a fit. Straight out DO NOT DO IT.

1) There are no available comps for that type of apartment.
2) Finance is impossible for locals, let alone you (they know me after 13+ years).
3) Banks will be tough, very tough in 5 years. S&L took 10 to fix.

Basically there was a very big concern I would not get finance in 5 years - for a PREMIUM property that had rented for $10,000 per WEEK for a while.

Reckon a non resident alien will get finance in 5 years time on an overpriced subprime property?

If you aren't 200% POSITIVE you will convince a US bank you are a good risk on a sub-prime property as a non resident alien you will have to 1) default or 2) come up with the money. How about a poll on where the $AUS will be in 5 years???

As the quote in Top Gun goes 'Thats a hell of a gamble with a $30m plane Lieutenant!'

Use this finance with EXTREME caution people. Very useful if used cautiously. But, in 5 years time, be prepared to either limit your loss to the deposit (ie throw the thing back on the financiers) OR come up with the cash.

I haven't spoken to them, but if all else fails ensure your losses are limited to your deposit. Get the doc lawyered properly.

I will speak to them though, on the right property I have ideas for their money they wouldn't have dreamed of yet!


BTW: I do have a life, I have just been stuck in a hotel room for the last 3-4 days...

**** Noted: One comment of dissention (above) unknown at time of writing:)
 
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Thanks for the response reformed sceptic.

I really hope you are right and I am wrong.

I don't play in this market so I don't care, but I do think it is highly suspect.

My views, thoughts and opinions have stood me in good stead over the years. And I was heavily invested throughout subprime and didn't lose anything, which I am pretty proud of.

Zillow is a tool or a guide, I agree. It is a pretty good one though.

You seem quite aggressive on paper - I know I do sometimes, but it is just passion in me, I don't mean it. I would guess you are the same. I appreciate the dissention/criticism and would almost certainly like to have a drink with you and discuss it. You learn from different opinions.

The more I see and hear about these sales the more 'iffy' they appear to ME. No one else, ME.

If someone sees value in MY opinions then great. If not, not a single Australian in 13+ years of successful US investing has ever even contacted my agents or bought an investment in my little patch in LA so frankly I don't care!

I've done great and I hope you go great too! If you don't go great in the next five years then a lot of other people will be in the same boat. Therefore I hope I am wrong.

Not that anyone would believe me who doesn't know me, but I really don't have anything to do with my sister. We have conversed more publicly on this forum than we have in the last 15 years.



PS: On the reno's I do know what I am talking about. Those figures are solid. I know its hard for Australians to understand really how cheaply you can get things done for in the US, but it IS true.

PPS: I can't resist this one... 'I do know what service is worth and I do know if I am being ripped off'. Granted the service comment, but in light of US property in sub-prime areas, would you care to explain the logic underlying the 'ripped off' comment? :):) I've spent some time explaining in a reasonably unbiased fashion (I think) why I disagree with that... :)

PPPS: I do get where you are coming from with the Emma comment. However I do not play in the subprime pond and I have been at pains to point out frequently 'someone LIKE Emma'. The beginning and end of my involvement is not seeing people ripped off. I don't expect you to have read this from post 1, but that is how it started. I have NOT bought anything outside southern LA. I have NOT bought a foreclosure. I have recommended some of my friends contact Emma or my LA agent, and they all contacted Emma because of her spectacular returns. I haven't heard of, or met anyone who has said a bad word about her professionalism or the quality of her advice. I would like to know of someone else who does what she does, but as yet I have not heard of anyone else. Of course my knowledge is NOT perfect, but I can only speak of someone that I know. I have even gone so far as to say look at the multi tiered marketers and also pointed out I purchased one property through them. To do so though, you need to know exactly what you are paying for. And I would bet VERY few of their purchasers would _really_ know.
 
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Reformed Sceptic.
I do take some offence at your comment 'What fees do you charge Emma, Lawssj, I am damn sure you don't spend most of your wakeing day handing out "advice" for free'.

I do precisely that. I was an invited speaker at seminars for Town & Country years ago and was then unofficially offered to speak about a position with a company related to Henry Kaye. I did not like his approach and that was the end of my involvement in the 'spruiking' world. And that was around 1995.

You are correct about the zillow estimate of $88k. I made an error (though I don't think it detracted from the point I was making) but if you note when I was discussing the _highly_ suspect finance packages being offered I had already corrected myself. I did later edit that comment to make a lighthearted note of your clear objection to my views, but that was the only editing.

Notwithstanding this: I do find it very odd that 'a major business person of some standing in the community ......in Australia and elsewhere' would accept $49k is 'reasonable' for a property advertised at $14k - but that gets back to my original point about being 'ripped off'. Using your undoubted business skills, would you offer someone $49k for a car worth $14k if they washed it and replaced the hubcaps?? If you would, give me a call, I can help you immediately! If you wouldn't, why is it so different with a house?
 
lawsjs I have a question for you. Why do you seem to think that a company that can provide finance in the US is suspect? Not everybody had $400,000 laying around to purchase a 'toy' as you describe it. It must be fantastic to be up there on the high pedistal looking down on all of us low lifes that take a chance and purchase investment properties taking a P&I loan to do this. An option that we never thought we would have. An option that will allow us to OWN our 4 properties within 5 years.

How sad that the tall poppy effect is taking place in a forum by a person who has never taken the time to make the call to the company he seems to take such delight in belittling.

Basically, when it comes down to it. We have done our maths. Even if our properties in Memphis dont increase hugley over the next 5 years, we dont care. We have rental coming in. If for some reason this stops for a short time, thats fine. We can easily cover our costs.

Your comment about the 14k car with new hub caps selling for 49K is fair. How on Zillow though do you know what work was actually done? Lets say this was a car. How do you know it wasnt resprayed, new tyres, new engine, new interior, new sound system? How do you know that the 14K car wasnt an insurance write off?

I think you need to trust who your dealing with. This is something we are doing.
 

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