US properties for sale

As a result of my recent trip to the US I have a portfolio of properties that I currently don’t have the equity to buy. Here is the offer:

I will source for anyone with the available funds any number of properties with gross yields of between 20-30%. In all cases I will strive for over 25% which gives a comfortable safety margin. These yields are unattainable in Australia, at least at present and within my experience.

You should anticipate expenses (including debt servicing) of around 20% leaving a return before tax, before tax deductions and before capital growth of about 10%. The properties will be duplexes in the US$20,000 to $40,000 range. I will negotiate prices, provide a realtor who will act in your interest alone, provide contacts with an attorney, accountant, insurance broker and PM who I believe to be competent and reliable and organise contracts and property inspections. Legals will be extra, but probably below $1000 per property and if you wish to hold the properties in the name of a US entity, I will also organise an LLC (very like a discretionary trust) at cost. About $1000 to set up, plus ongoing registration costs (value for money only if you buy several properties, in my humble and unqualified opinion).

I will organise and interpret for you the property inspection (at which stage withdrawal from the deal is possible) and discuss with you any and all concerns you may have. I will not provide taxation, legal or financial advice – I am not qualified to do so.

All properties will be inspected by the realtor and I will have inspected most as well. All properties will be duplexes located in west Buffalo (not lower west), Riverside or in Niagara Falls. No property will require rehab, unless you ask for that (significant price reductions would apply) and you may specify whether you want a tenanted or clean and vacant property.

I will inform you of any success I have with loan brokers, but do not guarantee that you will be able to get US finance.

You may have to purchase fridges and/or stoves for the properties – if so, I will try to arrange a discount. The following is what I hope a typical investment would look like – note the 5% vacancy allowance and the 5% contingency allowance. Also, late fees are charged in the US and often form a significant part of income. I have not included these, so I trust my figures are conservative.

Price $34,000

Income
Rents $10,080
Less Vacancy (5%) -$504
Total $9,576

Expenses
Taxes $1,600
Management (8%) $806
Maintenance (5%) $504
Interest (Price * 7.0%) $2,380
Insurance $500
Water $170
Contingency (5%) $504
Total $6,464

Net operating income (NOI) $3,112

Return on investment (ROI) 9.15%

Cash on cash return. 26.15%
*assumes down payment is borrowed, rather than ‘free’ cash.

And you get tax deductible trips to the US. As I understand it, the ATO won’t let you, but the IRS will. :D

CAVEAT EMPTOR: Regarding the above figures, I am honest, but I can be wrong.

Other notes: see various threads about tax implications and consult professionals about implications for your particular circumstances. I will assist you to the best of my ability, but as in all investing there are no guarantees.

What can you expect to pay me? I will ask US$3000 or the first year’s expected net returns as calculated above (whichever is LESS) for the first property and US$2000 flat for every property thereafter. I will refund the fee in the case of an unsatisfactory building report, but do not propose to do so for any other reason, ESPECIALLY lack of finance. You must have your finances in place first. As always, I am open to discussion. You will still be liable for some legals expenses etc if you withdraw at this stage, but these will be reduced as some steps come after the building report, not before.

Finally, and please don’t think this unfair, I insist that you already own at least one IP and preferably more. This restriction is for your protection, not mine – this is not a starter’s proposition. Even better would be if you own IPs that are distant from where you live in order that you understand the problems of remote management. Many of the US bargains exist precisely because the present owners don’t understand how to deal with these problems. I don’t want to be the proximate cause of someone becoming a distressed seller. I do not intend to check anyone’s claims, but trust me and please do not apply if you are a newbie. There is time and I’ll be here for a while, as will the US.

Obviously, the more that are bought and the more time goes on, the fewer I will have personally inspected (until my next trip in March). However, as time and finance permits, I will also be continuing to buy through my realtor who knows what a cashflow-oriented investor wants.

You are free to search the site, but I don’t think you will find a better deal has ever been offered, in cashflow terms. I don't think I've left anything out, but if I have, let me know and I'll answer all questions.

Quiggles
 
HI

For what it is worth.....I have met Quiggles a number of times and know that he is an honest character with good intentions. A couple of my clients who are clever investors are now looking into working with him in this way and they can smell a crook from miles away.

Dale
 
DaleGG said:
HI

For what it is worth.....I have met Quiggles a number of times and know that he is an honest character with good intentions. A couple of my clients who are clever investors are now looking into working with him in this way and they can smell a crook from miles away.

Dale
Dale

Any thoughts on QUiggles' statement
And you get tax deductible trips to the US. As I understand it, the ATO won’t let you, but the IRS will.
That's not the same as my understanding. If it is positively geared, can you claim a US trip against the US income?

Quiggles

I had heard some very negative things about the economy in Buiffalo as a whole. Is that something you could comment on?


I'll back up Dale's very positive assessment of Quiggles. He has actually been in the forum a number of years, previously under another username which he could not resurrect. I've known him since 2000, when he organised Canberra's first Somersoft forum gathering. He was one of the particpants in the Cashflow game (along with "The Wife") which showed MrsW what this investing game was all about, in a way she could really relate to.
 
I read your thread with great interest and admire your get up & go to go over there and achieve what you have. Im not in the market for US properties but i was browsing a few international property websites (not for investing) on the weekend and one was for US property investors looking to invest OS. How ironic is that? If i can find the sites i'll put up a link.
 
Thank you for your character references guys. I wasn't expecting that!

Geoff, the easiest way to organise the travel deduction is to own the properties in a company structure and have your company (LLC) send you there. It becomes a company expense, against the US income. As you've noted, and as I didn't really make clear, no deduction on the US properties can be held against Australian income, to the best of my knowledge. But my belief is that you can travel to the US and claim the trip against income even if it is held in your personal name. My accountant in the US thought so, but I'm not an authority.

As for the Buffalo economy, it's not the pits but it is close to being there. They have a huge Chevy plant, but GM is in trouble. However, GM is now a finance firm in the US - they make their money from the loans on the cars they make and while they pursue that strategy, they have to keep making cars. The dockside has closed down to a large extent - airfreight is too cheap for them to compete and they are waking up to the fact that manufacturing is no longer a winner. Good news on the steel front - someone bought up most of the operating mills with the intent of keeping them going and shutting some down in other areas.

What does all this mean to me as an investor? Zip. Most of my tenants will be welfare tenants, meaning that the Government will be paying 90% or more of their rent, direct to me. Talk about a job you can't be fired from! My problem will be if depression leads to crime and expands the war zones. That's not a given - New York City's prosperity hasn't stopped that happening, but in Buffalo an economic turnaround could lead to a stronger policing presence. Unfortunately, some of the leading law enforcement positions are elected, not merit based, with all of the problems that that implies (corruption, short term views, nepotism etc).

It's not a risk free environment. Neither is the Gold Coast. I view it as higher risk than Sydney (with more than commensurate returns) and much lower risk than Broken Hill or Karratha with far higher returns. Anyone taking up the offer will need a risk tolerance that allows them to positively view the risk/reward ratio, I guess.

Happy to answer other questions.
 
likewow said:
I read your thread with great interest and admire your get up & go to go over there and achieve what you have. Im not in the market for US properties but i was browsing a few international property websites (not for investing) on the weekend and one was for US property investors looking to invest OS. How ironic is that? If i can find the sites i'll put up a link.
I guess, like me, they aren't finding the diamonds in their own backyard. ;)
 
Factors to consider

Hi Quiggles,

I have very much enjoyed your posts regarding you excursion to the US. I have a couple of points for your prospective clients.

One major expense not included in your analysis is Cost of Accountancy in the US. You don't say which accountant your are using; however, even a standard H&R Block return in the US can run to USD500. That would be just for an everyday return with no income other than a W9 wage earner.

Depending on the structure you use, (LLC is definitely the best vehicle to own property in the US in my opinion) accountancy could run easily up to several thousand dollars. If your prospective purchasers are going to purchase less than 3 or 4 properties then their overall returns may not recompense for the associated risk. If they are going to purchase more properties, then they may be skewing their risk profile way out the window.

Also, in regards to borrowing, in a previous post, you said you have secured finance at a LVR of 65% at 6% (from memory, anyway, close enough). What were the costs in setting up the loan? The mortgage market in the US is substantially different to here. In the US if you don't have a FICO score above 660 - 700 (which usually takes about 2 years to get) you will either find it impossible to obtain finance or pay an exorbitant price. I have spent quite a bit of time in the US and have several properties there. I had to purchase the properties outright until we built up our FICO score enough and had several years of cash flow records. If you have found a better deal or a faster way for new foreign investors to obtain US finance then please share it.

One more thing regarding closing costs for each property. In the US, just because someone sells you a house and your attorney passes you the Title, you may not actually have title. If you rely on the search provided by the seller (if they provide one) you could be in trouble. There are searches, and there are searches. You may only get say, a 2 year search. If, 3 years ago a lien was placed against the property, that lien will still be in effect. Depending on the search your attorney does, which depends on how much you are willing to pay, your attorney can search back a max of 80 years. Depending on the history of the property, you may still need title insurance. An 80 year search costs around USD 1200 and Title insurance around $350.

Also, another closing cost is the survey. Each property sold in Erie County (Buffalo) requires a property survey to close. Not a big expense but a couple hundred to add into the pot.

In addition, depending on who you purchase the property from, the buyer may be up for the sellers closing costs including title lodgment, solicitors fees etc. If you purchase a VA foreclosure for instance, the buyer pays the sellers legals but is given the current search and survey. If you buy a bank foreclosure, the seller pays the legals but you don’t get the search and survey. If is different in every instance almost. If you are only paying USD1000 in legals for each property, then you may not be entirely safe.

Also, in the US there is an almost paranoia level regarding lead based paint. Not an insurmountable issue but if the property is know to have lead paint then the county can require you to remove or seal it prior to being allowed to rent the property out. Each property sold will have a ‘lead based paint’ addendum if it was built prior to 19somthing or other. (Pretty much all of the properties with good yields are the old ones). If when you purchase the property, you tick the “I don’t have any knowledge of lead paint” box, and then the tenant subsequently finds some, you will be up for the costs to remove it.

One more; sorry! On the admin of your LLC or any corporate in the US, you are required to have a responsible agent in the state of incorporation. This is the person who all your lawsuits will be served on. For a basic service you can pay as little as USD 100, however, if you want them to forward you mail, (which there will be) you will need to pay about USD 500 per year.

Asset protection is another important point when investing in the US. Just to own the property in an LLC may not be adequate protection. We employ a multi corporate strategy. I would recomend this but again, more cost. If you are only going to have 1 or 2 properties, it will suck out more profit.

Just thought of another, TAX. Even though there is a taxation treaty between the US and Australia, it doesn’t always work. If you want to send your rent home to Aust on a monthly basis, you will need your accountant to lodge the requisite paperwork (which will add to your accountancy costs) and you will pay a provisional tax of 35% on the amount transferred out of the country. No worries, we have a tax treaty, yes BUT, if you are using a company here to hold the shares of your LLC or have another setup to limit you max tax level here to 30% you may think you will get the 5% difference back in a tax credit. This is how it is supposed to work but we have had instances where the ATO has disallowed the claim and we have lost that 5%. Not a big hit, but if you only hold a couple of properties it will take a wack out of the net return.

Oops, one more. The USD / AUD relationship. Cross currency investing brings with it another risk not associated with regular domestic investing. You can now loose money in AUD terms of capital value and net cash return as the AUD becomes stronger. It can and probably will go the other way when the US sorts out their 7.5 Trillion current account deficit. But in the short term, especially after Greenspans comments of a couple of days ago, the Greenback looks like it is in for a period of weakness.

I think that is it. Not trying to shoot you down and I commend you for trying to help others but please please please please, make sure you lay all the cards on the table prior to encouraging others to venture into what is a substantially more complex transaction than a domestic property purchase. I too help people purchase in the states but they are essentially hand picked investors who I am comfortable can handle the extra factors. Really, if someone is not prepared to get up spend the $2K and go look for themselves, they are probably not the right person to invest there. Would most investors buy a house in Port Headland if you had never been there? No different here. Different story if it was a completely managed investment but that just opens up an impossible large bag of worms.

Investing in the US is NOT like investing in NZ. Not to turn you off because I feel it is defiantly worth the effort but, do so with your eyes open.

That said, yes I invest in the States and yes I hold property in Buffalo as well as other states.

Also, one for you; you will need to be very careful not to fall foul of the ASIC licencing provisions now the Financial Services Reform Act has come into full effect. I don't know if you have done so yet but you should probably check out the requirements. Once you start to be paid to assit others to invest, you enter a whole new world of legislation. To merely say, Buyer Beware, does not cut the legal mustard anymore. If one of your purchasers were to lose money then I would hope you have your personal asset protection strategies up speed. Although, if you require a licence and don't have one, it may not really matter what your asset protection strategy is.

Highlander
 
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Highlander_0000 said:
Hi Quiggles,

I have very much enjoyed your posts regarding you excursion to the US. I have a couple of points for your prospective clients.
Thank you. You have made a powerful and considered reply which I take as a very high compliment, and which has been made in the best interests of those who may choose to invest. See below for my responses.

One major expense not included in your analysis is Cost of Accountancy in the US. You don't say which accountant your are using; however, even a standard H&R Block return in the US can run to USD500. That would be just for an everyday return with no income other than a W9 wage earner.

Depending on the structure you use, (LLC is definitely the best vehicle to own property in the US in my opinion) accountancy could run easily up to several thousand dollars. If your prospective purchasers are going to purchase less than 3 or 4 properties then their overall returns may not recompense for the associated risk. If they are going to purchase more properties, then they may be skewing their risk profile way out the window.
In part, fair enough. My accountant has nominated a fee of $600-$1000 per entity, which, given I've purchased 8 properties, will in all likelihood end up being 2. OTOH, Ernst and Young, when offered my business,asked a starting fee of $A20,000. I think you can shop around. More generally, my feeling is that 2 is the minimum you'd really want to make this worthwhile.

Also, in regards to borrowing, in a previous post, you said you have secured finance at a LVR of 65% at 6% (from memory, anyway, close enough). What were the costs in setting up the loan? The mortgage market in the US is substantially different to here. In the US if you don't have a FICO score above 660 - 700 (which usually takes about 2 years to get) you will either find it impossible to obtain finance or pay an exorbitant price. I have spent quite a bit of time in the US and have several properties there. I had to purchase the properties outright until we built up our FICO score enough and had several years of cash flow records. If you have found a better deal or a faster way for new foreign investors to obtain US finance then please share it.
Finance is a pain. I can get 4.5% variable for a considerable upfront fee or 6.99% fixed for low upfront fees without a FICO score (US credit rating). I'm still shopping for the best deal, but I have been offered those.

One more thing regarding closing costs for each property. In the US, just because someone sells you a house and your attorney passes you the Title, you may not actually have title. If you rely on the search provided by the seller (if they provide one) you could be in trouble. There are searches, and there are searches. You may only get say, a 2 year search. If, 3 years ago a lien was placed against the property, that lien will still be in effect. Depending on the search your attorney does, which depends on how much you are willing to pay, your attorney can search back a max of 80 years. Depending on the history of the property, you may still need title insurance. An 80 year search costs around USD 1200 and Title insurance around $350.
The legal cost I quoted included title search and title insurance. I take your point on the level of title search (I was unaware of the subtlety there and I'm happy to admit it) but the title insurance is full remedy - someone comes after your property and you are entitled to full refund of the purchase price.

Also, another closing cost is the survey. Each property sold in Erie County (Buffalo) requires a property survey to close. Not a big expense but a couple hundred to add into the pot.
Not really - the standard contract makes the survey cost the rseponsibility of the vendor. I would not accept that extra cost.

In addition, depending on who you purchase the property from, the buyer may be up for the sellers closing costs including title lodgment, solicitors fees etc. If you purchase a VA foreclosure for instance, the buyer pays the sellers legals but is given the current search and survey. If you buy a bank foreclosure, the seller pays the legals but you don’t get the search and survey. If is different in every instance almost. If you are only paying USD1000 in legals for each property, then you may not be entirely safe.
I would refuse to buy 'as is'. In the words of John Burley, "'As is' is the same as 'never was'." If I was expected to pay closing costs for the vendor, the price would have to justify it - I'd add that on before calculating the returns.

Also, in the US there is an almost paranoia level regarding lead based paint. Not an insurmountable issue but if the property is know to have lead paint then the county can require you to remove or seal it prior to being allowed to rent the property out. Each property sold will have a ‘lead based paint’ addendum if it was built prior to 19somthing or other. (Pretty much all of the properties with good yields are the old ones). If when you purchase the property, you tick the “I don’t have any knowledge of lead paint” box, and then the tenant subsequently finds some, you will be up for the costs to remove it.
Good point - the 'lead-based paint rider' on the contract is near useless. OTOH, my attorney informed me, backed up by the realtor and 2 PMs that the best proof against a lead based paint suit is if the building has been repainted within the last 28 (yes 28) years. 1976 was when they banned lead based paints. Also, if the tenant is over 6 years old, they are presumed to have enough sense not to lick the walls. Overall, I'm none too worried about that one.

One more; sorry! On the admin of your LLC or any corporate in the US, you are required to have a responsible agent in the state of incorporation. This is the person who all your lawsuits will be served on. For a basic service you can pay as little as USD 100, however, if you want them to forward you mail, (which there will be) you will need to pay about USD 500 per year.

Asset protection is another important point when investing in the US. Just to own the property in an LLC may not be adequate protection. We employ a multi corporate strategy. I would recomend this but again, more cost. If you are only going to have 1 or 2 properties, it will suck out more profit.
True. My tactic is to have a Nevada based LLC as the sole owner of New York based LLC which own the properties. This obviates some of the problems but still has licensing costs. As I noted in my original post - this would be more a proposition for multiple property holders. for the same reason as banks don't like foreigners - hard to grab their assets - it may be OK to hold one or two foreign properties in your own name.

Just thought of another, TAX. Even though there is a taxation treaty between the US and Australia, it doesn’t always work. If you want to send your rent home to Aust on a monthly basis, you will need your accountant to lodge the requisite paperwork (which will add to your accountancy costs) and you will pay a provisional tax of 35% on the amount transferred out of the country. No worries, we have a tax treaty, yes BUT, if you are using a company here to hold the shares of your LLC or have another setup to limit you max tax level here to 30% you may think you will get the 5% difference back in a tax credit. This is how it is supposed to work but we have had instances where the ATO has disallowed the claim and we have lost that 5%. Not a big hit, but if you only hold a couple of properties it will take a wack out of the net return.
I would not hold the LLC in a company name as the double taxation agreement only applies to personal tax not company tax, according to my advice. Repatriating the profits would therefore be taxed twice. Again, according to the advice I have recieved this would not arise as an issue, but you would pay the higher of the two taxation rates.

Oops, one more. The USD / AUD relationship. Cross currency investing brings with it another risk not associated with regular domestic investing. You can now loose money in AUD terms of capital value and net cash return as the AUD becomes stronger. It can and probably will go the other way when the US sorts out their 7.5 Trillion current account deficit. But in the short term, especially after Greenspans comments of a couple of days ago, the Greenback looks like it is in for a period of weakness.
Good point, and I perhaps should have raised it.

(bit snipped)Would most investors buy a house in Port Headland if you had never been there? No different here. Different story if it was a completely managed investment but that just opens up an impossible large bag of worms. Investing in the US is NOT like investing in NZ. Not to turn you off because I feel it is defiantly worth the effort but, do so with your eyes open.
Depends on risk tolerance. The actual answer to your question is that many have invested in places they haven't visited. I'm hoping to offer experienced investors a headstart in that area, in that someone has visited the area and the property.

Also, one for you; you will need to be very careful not to fall foul of the ASIC licencing provisions now the Financial Services Reform Act has come into full effect. I don't know if you have done so yet but you should probably check out the requirements.
I have on file a request to ASIC as to whether this falls foul of their guidelines and their response refusing to advise me. :mad: I might have been less than impressed by that, but I'd have to say I feel pretty safe.

Once again, I appreciate your post. It lays out details that others should be aware of, and one that I wasn't. As I said, and you reiterated, this is for experienced investors only. I don't agree that you have to go over there to do this, however - my first investment was done from here with local research and worked out well. Each to their own, and especially in regard to the risk/reward ratio.

Regards,

Quiggles
 
Hi,

Highlander, nice post, bought up quite a few issues that aussie investors probably wouldnt thought of. Most of those things can more than likely be avoided, as with the risks of investing here in Aus.

Quiggles, nice responses. The 6.99 finance that you mention without a FICO: What kinda LVR is that based on, and what kinda setup costs? What kinda servicability measures do they have (or is that a completely different thing there?).
 
Hi Quiggles,

I don't mean to be rude, but I have some issues with what you are proposing to do.

My major concern is the legality of an unlicensed person facilitating investors purchasing assets. You say you feel pretty safe in what you are proposing. Have you read the Financial Services Reform Act?

Now, (I'm no lawyer only 2/3 of the way through, and all law students think they know it all anyway, so if you disagree, hey that’s fine but....) after just having a quick look you may want to take a peek at Division 3, s762 - 770.

Eg

763A General definition of financial product
(1) For the purposes of this Chapter, a financial product is a facility
through which, or through the acquisition of which, a person does
one or more of the following:
(a) makes a financial investment (see section 763B);
(b) manages financial risk (see section 763C);
(c) makes non-cash payments (see section 763D).

As soon as a person purchases a property and then takes out insurance, they have managed a financial risk. Straight away, sub section (b) nails it. Sub section (a) is a bit dubious as the "clients" are not giving you the money to invest but doing it themselves.

Regardless, you need a license to be a wedding planner, you need a license to do more than a couple of grand’s worth of work to you own house, you need a license if you want to take a tap off and replace it.

Once you start to be paid to provide a service, especially in the finance game, odds on mate, you need a license. To operate without a license in today’s market invites all sorts of horrible consequences. You might like to check out the criminal provisions of the FSRA too.

The only way I could see you may have a chance of not needing a ticket is if you purchase each property and then on sell them to investors. However, downside is the extra costs to be recovered in the double closing costs. Also, if you do this more than a couple of times a year, guess what, It's a business and you know what that means? You need a license!

Don't let me stop you but you are playing with more than a little bit of fire, and so is anyone who purchases through you.

Also, if someone is planning on purchasing a property in the US soon, they should start to organise their Social Security number now as it can take a fair ol' time to get back.

You say in your reply you have purchased 8 properties, which will in all likelihood become 2. I'm more than a little curious as to why the drastic reduction?

I really wish you well but hope you go see a good FSRA lawyer before you do anything which may land you in hot water.

Regardless, for the $3000 or $2000 fee you are going to charge, pretty close to an airfare to the States. I'd recommend to anyone thinking of purchasing, spend your money on the plane ticket and go look.

Highlander
 
Highlander,

I think you'll find that ASIC will view what I'm doing as not covered by their Act. While I don't necessarily think that this is a good thing, it is certainly the reason that they were unable to act against certain property spruikers, except where that person/those people either (a) purported to give financial advice, which I do not and have specifically disclaimed or (b) more egregiously, have claimed ASIC endorsement (which again I have disclaimed).

The Act has a definition of financial products, which included securities, insurance and membership of registered schemes, derivatives, super, bonds, managed investments (some), forex contracts etc. Real estate is specifically exempted (physical structures) and advice relating to non-financial products is likewise not covered.

Regardless, I think that this is largely a red herring.

One misunderstanding - I am not reducing my property holding over there - I want more - I am holding the 8 properties within two entities (each NY based LLCs). There will be two entities with tax requirements.
 
dtraeger2k said:
Quiggles, nice responses. The 6.99 finance that you mention without a FICO: What kinda LVR is that based on, and what kinda setup costs? What kinda servicability measures do they have (or is that a completely different thing there?).
70% LVR (LTV as they call it over there). They generally want to see serviceability of a 1.2 ratio (ie. income from the property, and other sources they could control) is 1.2 times the debt repayments.
 
Quiggles,

Well you seem pretty certain that you are all clear to proceed. You don't work at ASIC do you? I am only questioning as I would not like to see anyone innocently do something to end up in trouble. Ignorance of a law is unfortunately no defence.

Judging by the number of views of previous posts regarding this topic, their is a substantail amount of interest.For anyone who is planning to purchase in the US, make sure you do it with eyes wide open, regardless of who you purchase through. If you purchase through a licenced operator, you have some degree of protection.

Having read back through my last posts it would seem as though I am quite against what you are doing for perhaps my own personal gain. Not true, I just felt I needed to speak up to perhaps highlight some other issues to potential investors and yourself.

Personally, it sounds like you have only been at the Buffalo investing scence for less than a year. Having been at it for a fair time longer than that, I would suggest you should maybe develop a little more experience in that market before you offer paid services to others, regardless of the legality of the activity.

Well, that was my 3 1/2 censt worth. Enough said on my part.

Best of luck to you, might see you in Buffalo next year and we can have a beer or two.

If you are there in March, take a jumper!

Regards

Highlander

PS Curious as to why you have two NY LLC's. Is it for asset protection? If so perhaps you shold look into a what is called a Nevada LLC (series). This allows you to have one entity for taxation and accounting purposes but separate each asset within it for asset protection purposes.

You can read a bit about them in the book Inc and Grow rich, which I would recommed to anyone looking to invest in the US.

Take care
Highlander
 
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Hi Highlander_0000,

Can you tell us a bit about yourself ?. You seem to have experience in the 'Buffalo' market.

Quote:
Having been at it for a fair time longer than that, I would suggest you should maybe develop a little more experience in that market before you offer paid services to others, regardless of the legality of the activity.
Unquote

Can you tell us more about 'Nevada LLC (series)' ?

Cheers
 
Hi WillyG,

Glad to oblige a bit. I am usually a very private person. Even though I have been reading various property forums for several years, this series of posts is the first I have ever made. Maybe an indication of how serious I consider Quiggles plans. I'm sure Quiggles has the best of intentions and I in no way mean to say he is on the road to disaster, I am just urging caution, a bit of restraint and maybe some more research. (s911 of the Corporations Act 2001 (Cth) would be a good place to look - Requirements for a Financial Services Licence)

I am a part owner of a successful building company and pretty much full time property investor (and part time mature age law student). For several reasons we are winding down our construction operations and moving into other areas. A major part of our investing activity is now in the US market. I have been traveling to the US regularly since 1995. Rather than purchase properties already rented, we conduct renovation blitzkrieg’s in the US and then rent the properties out.

An LLC(Limited Liability Company) is essentially a pass through vehicle, similar to a unit trust. The LLC is in itself a very new invention. The Series LLC is a relatively new invention designed almost specifically for property investors. A series LLC is one legal entity which can have an almost infinite number of sub entities. Each sub entity is completely separate in legal terms from the other sub entities.

So what does this mean, if you have a house in Nevada LLC (Series) A, and another in Nevada LLC (Series) B, if your tenant in house A has a slip and fall then proceeds into litigation against the LLC, only the assets in series A are available in the remedy.

There are a bunch of requirements which go along with operating a series LLC however they are all reasonable eg, separate internal accounting procedures for each. This setup costs substantially less than having two houses in two LLC's although it does cost more than having 2 houses in 1 LLC. Flip side is, your assets are segregated. Risk - Reward payoff.

Also, only having one entity makes the admin easier if you choose to employ stronger cash flow, tax minimization and asset protection strategies.
Regards

Highlander
 
Highlander,

I've had a fair amount to do with ASIC & have reported people in the past for breaches and to my understanding of the Corporations Act Quiggles is not doing anything illegal.

I do agree he should seek legal advice in case however :)

I can't speak for US laws.

Thanks for your comments on US investing. I understand you're a private person, however this forum is an ideal way to 'give back' to the community for all the value you've received from reading the posts of others.

I'd appreciate more information from you as to the renovation blitzes you've undertaken - why you chose that path, what they involved, what type of return did you get, whether there's still a market for it.

It would also be great to hear more about your property investing experience.

Cheers,

Aceyducey
 
I certainly don't intend to enter into any more ASIC discussions.

What I'm doing is essentially known as bird-dogging. Those doing it in Australia generally charge around $5000 per property, don't get into trouble with ASIC as they not are offering advice, advice relating to financial products nor financial products per se, and leave the risk assessment with the vendor.

I am simply value adding, by giving contacts for a complete and competent team, none of whom are offeriing me kickbacks. Moreover, the extra value and the lower price are in recognition that the risks are higher.

I'd have to say that despite Highlander's assurances, I have felt my credibility under attack. I've cerrtainly put my cards on the table in terms of exact dollars and cents and tried to present a warts-and-all picture.

In the end, it's caveat emptor as I emphasised in the initial thread. Do your own research, listen to Highlander's obviously seasoned advice, and if you are still interested, contact me. My future prosperity doesn't hang on this, (although I was hoping to pick up enough for an extra US property :D ) and this offer is only open to the educated, self aware and hopefully experienced investors hanging around here.
 
Whoa,

Getting a bit heavy. As I previously said, definitely not casting dispersions nor questioning your integrity and credibility Quiggles. I don't think I ever indicated you were intentionally setting out to act inappropriately. However, I had a fear you may find yourself in a position you don't want to be in. If you're sure, kick on. I'll be having a meeting with our company lawyers next week so I'll ask them what the story is. If I find out any bad news I'll let you know Quiggles. I'm truly sorry you feel slighted. I wish you well on your Endeavour.

Best of luck
Highlander
 
Highlander_0000 said:
As I previously said, definitely not casting dispersions nor questioning your integrity and credibility Quiggles.
OK, let's leave it at that. We'll assume the best about each other until proven otherwise.

I'll be having a meeting with our company lawyers next week so I'll ask them what the story is. If I find out any bad news I'll let you know Quiggles.
Real little ray of sunshine, you are. :D

BTW I checked with my attorney this morning and the title search included in the legals goes back 80 years at a minimum - most of mine actually go back to colonial days. Thanks for that heads up-I'll be sure to check that one in future.
 
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