US properties for sale

Sounds fair, I always assume the best about me.

I have to eat a bit of my hat too I supose. I had a lengthy chat with our Corps Law solicitor over a beer this afternoon. This is what I could gather.

1. If your carefull and keep excellent records then you should be fine.
2. By 'carefull', he means 'carefull' to not provide advice. By saying you'll find people properties with x% yield, it could be construed as advice regarding the expected future performance of an asset. What might be better is to not mention the return but have a list of available properties with the financial details of each, (which could be provided by a foreign 3rd party). You are merely passing on the details to prospective purchasors. The investor then chooses which property they would like to purchase. You should be free to take a spotters fee. The fee would need to be accounted for properly, invoice and receipt etc.

So, full steam ahead.

I probably won't be back to the forum for a while so, take care and best of luck.

Highlander
 
Thanks for that. That was my understanding as well,although I'll take note of the future performance part (not that anyone actually seems interested in taking up the offer).

It is a shame you're 'moving on' - you appear to have a lot to offer in an area that is not well understood but is very likely to become more and more important.

Best of luck, and maybe we'll meet in Buffalo - that's me in the business suit and Akubra :)
 
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[/QUOTE]


Hi Highlander,
like Acey im more than interested to hear a bit about your reno blitzes in the USA if you would like to tell us about them.
 
G'day Quiggles,

I'd like to offer my initial feelings on your offer.
1. It seemed to come far too hot on the heels of your initial thread.
Which made me think that the initial one was a primer for your scouting assistance.
2. The old John West canned fish CM came to mind, " ... the fish JW that rejects ...".
I figure that going in March next year would be great, but why would I want the IP that you already rejected ?

I can see from those that know and support you that this is not a shoddy deal.
I don't know how many have accepted your offer.
I'm just sharing my feelings on the issue. Actually I may indeed seek your advice and/or use your service at a later date if that's ok.

Thanks for all the wonderful info thus far, i truly appreciate it.
 
Renovation in the US

Hello Acyducey and Beech,

You were both enquiring RE renovations in the US or rehabs as they are know over there.

I'm unaware of you personal situations, however, if you have the time then yes, there is still a market for renovations in the US.

Over the last couple of years we have developed relationships with people in the states who are in the real estate foreclosure business. They source properties for us under foreclosure which are in a fairly atrocious state. We are able to pick these properties up for ridiculous prices. Eg Baltimore - average neighborhood 4 bed, 2 bath, dining, lounge etc. USD$7000, required $22000 in rehab (complete incl flights, car, food and direct rehab costs) which took 2 1/2 weeks of very solid work. Sold for $68000 the following month.

This type of deal is common. However, you need to spend time over there and invest first in developing relationships with locals in the areas you would like to operate in.

Why do we do this? Tax Law. 1031 tax deferred exchange. We invested, $29000, in a two month turn around had $68000 with a tax deferred CG of $39000. We then take our $68K cash and purchase a duplex returning $1250 per month. We gear the property to 50% and take out our original stake. After 3 months work we have a duplex which has effectively cost us nothing but time and is providing positive cash. We then take our original 30K and do it all over again.

If we can get two properties close together, we'll do two properties in a month using contracted labor.

These figures are not to the dollar but are pretty close. This was 2 months ago. I have not worked out the return but it's ok I'm sure.

There are some excellent property investment courses for the US market available on the web. If you get a couple of you together and share then they are quite cheap and well worth the hundred bucks.

This is not for the faint hearted. You can and will become wealthy investing in OZ if you are on the ball. Many have and many more will. If that is what you are comfortable with, stick with it.

Please don't go running off overseas on my say so :mad: . This is just the path we take. Now it is just more for the fun of it. In addition, we are builders so we can really hook in and know what we are doing.

Regards
Highlander
 
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Patosan said:
G'day Quiggles,

I'd like to offer my initial feelings on your offer.
1. It seemed to come far too hot on the heels of your initial thread.
Which made me think that the initial one was a primer for your scouting assistance.
I can see that. I hadn't actually planned doing this at all except that several people in both the thread and in private conversations and PMs had made suggestions that I do this or something like it. I have information on a number of proeprties now, but the market there is not inactive - they wouldn't be on sale forever. I only wanted to recommend properties that I had walked through.

I figure that going in March next year would be great, but why would I want the IP that you already rejected ?
Some of the ones I rejected were not bought not because they were further down my list, but because the vendors or their agents were too slow in getting back to me. I deliberately put time pressures on them to respond. Then, as I noted, I ran out of money. If I had a $1million in equity to play with, I might not have come back with any spare.

That said, I'm not selling hard. I had an opportunity for others and wouldn't have minded making enough to buy myself another of the properties that I had 'rejected'.

Thanks for all the wonderful info thus far, i truly appreciate it.
Not a worry. I intend to go over at least annually so I'll probably always have some info on the market or maybe a lead or two.
 
As a short followup, I've had a few calls my services. One of the properties I had looked at hadn't responded to my lowball. so I didn't buy it. It is now listed with an asking price at only $1000 above my lowball offer. I would have loved it then and I still would. Can't have everything, I guess.

Obviously, someone is already considering it, so I won't be giving out details - I'm not setting up a business here, just a sideline to my own investments, and it's first come, first served. There are a couple more that I have seen and would buy myself, money permitting.

I am also going over there in April (leaving home on Good Friday). If you want me to scout for you on a no obligations basis let me know.
 
Hi Quiggles

Been reading all these posts with great interest. It sounds like great fun to me and I wish I was investing in the States.

I actually read about your adventures to the States on the NZ Property Investment forum, someone posted it there a while ago.

I can't remember all the exact details, but you have to obtain finance in the States, is that correct? I'm wondering how easy it would be for a NZ investor to get into it, I'm assuming the rules would be quite different here.

Are there any NZ investors out there investing in the States, I would be interested to know.

Cheers, QB
 
QB

You have 2 options.

1. You can get finance in the states, but not from a major bank becuase you have not credit history ("FICO Score"). Or you can borrow from a marginal lender at higher rates.

2. You can borrow against your NZ properties and pay cash - don't forget, you can get an entire property (duplex) for $NZ30000-45000.

Option 1 is a pain to go through and involves excessive taxes and upfront fees, option 2 exposes you so some level of exchange rate risk. Tends to be your own call, depending on circumstances.
 
Yeah, a duplex in Buffalo is usually two units in one house on one title. Generally they have separate street numbers if they are side-by-side facing the street (always assuming they started life as a duplex) or one street number if they are in an upstairs/downstairs configuration (the more normal option of the sample of a couple of hundred that I saw).

I'll let you guess what a triplex and a fourplex are. :)

If you are looking at the US, they also use the term 'efficiency'. An efficiency is comparable to what Aussies would call a bedsit, a tiny flat with a combined bedroom/living room and usually flowing into the kitchen as well. Really only two rooms (ie. 1. bathroom/toilet and 2. everything else), often only 30 square metres or so, can get up to 60, but that was rarer in my areas. Apartments with efficiencies tend to have the laundry in the basement.
 
It's on again, folks. Dr Quiggles and I are flying over in April to go shopping. As a result, we will be refilling our books. If you want us to look out for you as well, drop me a line and let me know what you are after.

To remind you, this is cashflow only, you should not count on any capital gains, and this should very definitely not be your first investment. Preferable if you have experience in remotely managed properties.

More details in the first post in this thread. If you want more facts and figures, and disucssions of the deal, well, that's what Caveat emptor is for.

To forestall any other thoughts, however, I will be perfectly happy if no-one else wants to take up the deal. If I have numbers in advance, though, I can assemble an appropriate sized portfolio to bring back. It really is up to you - that's as hard a sell as I'm going to make.

Oh, and if someone has a lazy half-mill that they'd like to earn advantageous rates of interest on, I'm in the market. :D
 
Good question. About 6 to 10% after all costs including debt servicing but excluding income tax - haven't paid tax yet and everyone's circumstance is different there. Call it an EBIT of 12.5% minimum
 
By EBIT you mean earnings before interest and tax of 12.5%. So if you are buying the US properties with Australian funds (say LOC) youre paying about 6.5-7% on the funds and then about 48% on tax? Is that about right?

btw..Im assuming your buying with Aussie dollars and not US dollars. Would it be more advantageous to borrow US dollars wand fix with the low rates they have over there or would the excahnge rate riskout weigh that?
 
As most of the income will funnel through to the income poorer member of clan Quiggles, the tax rate will be considerably lower. I don't have exact figures, sorry. If you were to undertake it, without any form of tax minimisation then yes, on 100% borrowings you could expect about 4% after tax.

Alternatively, if borrowing in Australia, you could negatively gear the interest component against Australian income which might be of more interest. It's very much dependent on personal circumstances, which is why I have at every stage discouraged newbies who don't have their team together from even inquiring.

Yes, I'm using $A borrowings. It would be far better to borrow over there if the upfront costs that I have so far found weren't prohibitive. By borrowing in US dollars and having expenses and revenues in US dollars, only the profit margin is subject to exchange risk (also the value of the proeprty if sold, but that's another story).
 
OK thanks. Sounds like fun but not for me. I can achieve ok returns from the stockmarket outside my property investing with reasonably little effort. And good idea to not recomend it for newbies. I admire your initiative and all the best over there. Experienced investors only need apply i'd say.
 
likewow said:
And good idea to not recomend it for newbies. I admire your initiative and all the best over there. Experienced investors only need apply i'd say.
Thanks. To repeat the caution, people should steer clear of anyone trying to market one of these to inexperienced investors. That would be like two tier marketing with an utter vengeance.
 
Loans for LLC's

Hi Quiggles

Thanks for all the great info on your experiences in the US. I recall that you've been using various LLC's for your business there and that you're still having some "challenges" getting finance. Just stumbled on a website for a company which profess that they specialise in loans for LLC's.

I've never dealt with them but it might be worth a try. Their website is at:
http://www.llcloannetwork.com/

I hope this helps.

Cheers, Paul
 
Investing in the US - Buffalo in particualar

Hi to all,

This is a cautionary tale to those who are considering investing in this market.

It has been a little while since I have visted this forum. I am currently in the US inspecting our investments and thought I might share some of current information.

Before anyone jumps in and accuses me of being a wet blanket to discourage others and keep it all for myself, I am not looking to purchase properties similar to those I will discuss below.

We have been investing in the US market for several years now. We have owned property in Buffalo for most of that time too. Feedback from our business partners here indicates there are substantial numbers of foreign investors looking at the area. Our insuarance manager told me yesterday their office receives up to a dozen emails per day enquiring about insurance coverage for investment properties.

It is like there is a frenzy of activity here as people blindly rush in and purchase properties. If you don't do your homework you are going to get burnt, guaranteed.

Following is a true and ongoing saga of one foreign investor, unfortunately he is an Aussie.

This Aussie guy purchased two properties without coming over to inspect them. The properties were sold for around 25K each, on the understanding they would each require around 6K worth of work to get them to a rentable state. The vendor claimed to have a contracting company which would take care of the work at that price. Once the purchase was finalised, the repair cost magically increased to over 25K per property.

Only one property was repaired initially due to the new cost. The total cost of this property was now over 50K. Houses in the area generally are selling for the high 20K to mid 30K range.

This property was subsequently rented for $650 per month.

This would have netted the owner around 10% before tax, however, the property manager decided that in addition to the two months letting fee, it would be better if he didn't transfer the landlord his rental income. The property has been rented for apporximately 6 months now and the owner still has not seen a cent.

I have to go out now (in the snow!!) but I will come back later and finish the tale.

Edit - Continued.

There is not much more to tell actually. I just thought I would post this info to highlight some of the problems you could run into if you don't have you systems and partners checked out.

I have been away for a while but I will be around for a bit. If anyone has any Q's of me please feel free to PM. I'll be off again by the end of April.


Regards
Highlander
 
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