US Property thread - Are there lessons to be learnt?

I've always said, you should always buy in your own back yard.
As a Canadian, I would never buy any of the American properties, unless I lived there.
No one is ever going to look after your property better, than YOU.

Those houses are cheap, and for the residents living there, it could be a great opportunity.

Many Australians have made a boatload of money from buying in USA.
That's great, but a lot of things could have gone terribly wrong.

It is key to have the right people on the ground looking after your interests. I have been fortunate to find a genuine, honest and hard working team that truly have their clients best interests at heart. Hard to come by in the US. Good management is key to the longterm success of the investment. Its also important to take on manageable properties. Cheap is not always good. It needs to be a property most property managers are comfortable with and would be happy to manage.
 
I've always said, you should always buy in your own back yard.
As a Canadian, I would never buy any of the American properties, unless I lived there.
No one is ever going to look after your property better, than YOU.

Those houses are cheap, and for the residents living there, it could be a great opportunity.

Many Australians have made a boatload of money from buying in USA.
That's great, but a lot of things could have gone terribly wrong.

Kathryn
Of course so many things could have gone wrong and I do know some investors who purchased the wrong product in USA and paid too much and some did get burnt. I agree there will always be more risk.

However, for those who did OK my guess is they did lots of homework and analysed the deals and probably travelled to US and checked out the properties etc.

I also know investors who buy in their own backyard and have also purchased the wrong property and at the time in the cycle instead of making a profit they made losses.

IMO successful investing is probably more about the person and skill in determining/sourcing a good deal and understanding a particular market. I could be wrong, but somehow I don't think so.

I am from Perth, however I invest in many markets Melb, Syd, Qld, USA and NZ.
I am comfortable with this strategy as part of investing and have been able to jump into many rising markets. If I only played in my backyard my options would be limited and my profits reduced significantly.

There are quite a number of investors who play in lots of markets, perhaps with different results I can only go from my experience which has been positive..... and "if its not broke don't fix it":)
 
Karina and MTR,

I agree with you, there are some great deals out there.
Having the right people to care for them is a concern.
People come and go all the time, in companies.


Last year we found out our live in property supers were stealing from us.
We thought they could be trusted. He was a family member of the supers who had worked for us, for years.

Can you imagine, the temptation, for people you don't have any connection with.

Obviously, you are still making money, so you are happy.

But, when you can't always be there, that's the chance you take.
 
Kathryn - That is EXACTLY the point.

There is a very large side of me that says I couldn't agree more. 99% you could probably do as well if you hunted hard in Oz because prices in the US have indeed bounced. Right now, I will place a bet you are right - when the dust settles, you probably could find that gem as easily Oz as here. Prices are and always were bandied around with little understanding of purchase power parity. The lynch pin though that the spruikers tout to make money out of you is based on a reality - you can (and always have been able to) get a very very good positive return investing in the US. Something when I was growing up with Jan Somers in Australia and being pitched negative gearing was just like a kerching moment for me.

For a snippet of time though, the US was a hands down winner - currency, recession, US lending had dried up? Now? I know a LOT of people who have doubled investments in Oz in the last 2 years..who'd have thunk it.

Example: I was talking to one of my Oz investors who is in a commercial property syndication in Sydney - his yield was BRILLIANT - doubled his money in the same period we were holding one for with a 7% ROI (sorry I don't know who through)? investment was only 50k a head - great central location. Why NOT? That is a GREAT commercial investment no matter what.

The opportunity lies everywhere - to buy in your own backyard, Bahamas, Timbuktoo (Probably not the best) but anywhere that YOU are comfortable with. Personally, like MTR, I am exceedingly comfortable with investing - and do in Alaska, CA, Australia, Vegas, Bahamas, Florida… and I enjoy visiting them as well!

If there is a gem, it will leap. It will pass every single ounce of due diligence, it will run the test I always use - i.e. "prove why I SHOULD buy you"…. run your numbers 43 times, get 43 quotes and trust yourself. ONLY. I always think of Life of Brian at moments like that - "You can all think for yourselves", "No I can't"… (maybe a bit obtuse).

You nailed it.
 
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And yes, Oracle - to get back to the original question, I personally do think that it could happen in Oz. In real terms - it was as simple as affordability in the States and ditto at home. It is unbelievable. People were sold mortgages they could never afford. Even if there are tight mortgage controls it is this simple - I can't afford Sydney!

There are 2 parent households struggling to make mortgage repayments? How long before one person gets sick, the Chinese economy collapses and/or people just start walking away from the mortgage. Yes a bankruptcy will follow you but ultimately if enough do it that stigma is lost. I missed the factor of strategic default over here. Back home I know pilots who can't even get a place to rent as there is waiting list and to buy? Impossible. I always have thought the litmus paper test is country towns and I know friends hurting exceedingly badly.

Yes there are lessons to be learnt.
 
Emma, would be interested to hear about your positive investments in Vegas? it may be that you are based there, but I have struggled to find too many successful investments in vegas.

Cheers, Ivan
 
Vegas Historical Perspective

HAPPY NEW YEAR EVERYONE
I wasn't sure how to reply. I PM'd Ivan as such but here goes.

Attached to this:
1. MLS Summary Vegas October 2011.
2. Live MLS Listings today Same Criteria
3. Auction List for Vegas May 23, 2011 - FIRST 16 of 19 Pages (file too big) COURTESY OF NATIONAL TITLE - I was physically at the auctions daily then
4. Auction List for Vegas May 20, 2014 - All 20 properties in total. I didn't list 26 December as there were 8 properties and you need a "same time of year".

I only replied to this thread because it was listed under "Lessons to be learnt". I am not sure what is to be gained from looking too much to the past. I bet everyone reading this has a FABULOUS list of fabulous historical "wish you were there" examples. When I first invested in the US, I was told "you should have been here in 1989 - you would have made a killing". Made me laugh. I wasn't - so?? What is relevant is today and what can be done today and be ready for your next purchase. None of the properties that I bought, or anyone I know bought back in 2009-2012 could or even should be bought today because they wouldn't meet the investment criteria people have. Anyone who bought a good property back then, has pretty much doubled their money no matter which market they were in. By mid to end 2011, Vegas had already significantly "dried" up. It is and always was a great town to invest in (if you find the right property) and was never going to last because it is a boom bust cycle here. It is a MUCH smaller market than ATL and also thus spikes a lot faster as well - which was a great plus for me back then and that is indeed a cautionary note that makes history worth considering (in context).

However, if anything can be gleaned I am very happy for you to get something out of it. I will give one direct personal example and then about 200 below that I haven't even filtered through. My guess is that if you look up those same properties today, they have ALL done very well - but there are still areas that haven't "popped"?

What I was saying about "FORGET 2003-4"?
2201 Beverly Way Las Vegas NV 89104 Yr Built 1956
Bought 46k in 2010.

I couldn't find a 2003 example but if you want to see bubble prices (and please please note this is a working class 1/4 mile here):

2004 = 1913 Beverly Way (much lesser house to my Bev) SOLD $240,000
2005 = 2113 Santa Ynez LIST $270,00 SOLD $272,000
2006 = 2013 Santa Ynez LIST $319,000 SOLD $315,000

2113 Santa Ynez was foreclosed on - it was bought for 60k in 2012? It just resold 2014 for $131,000. This property wasn't even wired properly. They had originally listed it at LMAO - $184k.

In 2010 and 2011 I used to send out a daily email with every single property on the MLS that was "live" and my thoughts - people could buy or not buy whatever they wanted through whomever they wanted. There was a point to it - it was a FABULOUS buying time. By about June 2011, the email was once a month, by October 2011 (attached) I had deleted the requirement for it being younger than 1988 and increased the price to 90k from 80k. Properties were drying up faster than you could imagine. I am actually gutted my hard drive died and I lost my earlier ones. However, the email that attached to that list would look like this:

QUOTE FROM EMAIL TO EMAIL LIST OCTOBER 2011
Dear All
Please find attached a list of the 564 properties that are currently active on the Las Vegas market. These represent every property showing a status of "ER". They are listed regardless of age and include 2 bedders up with a cut off value of 90k. It was pulled the day before yesterday. I have managed to get through 200 of the properties and thus part 1 are my shortlist from the first 200 of this list. The properties that are short listed purely on a gut knowledge of location and the property type in general versus having been into them. Some I have seen and have tried to indicate where that is the case.

Part 2 will be completed over the next day or so but it is very difficult as this list is constantly changing and some may already have changed in status as they are sold... This is merely a one day snap shot. The status will be live when you click on the link though... Anything other than ?ER? that you aren?t sure about, ask. A lot of these properties have sat for a while and may be ripe for lowball bids.

I hope you find this useful. Please note this is for PERSONAL use only, stem from my personal opinion and you are receiving this for informational purposes only.

Happy hunting -
UNQUOTE


Attached to this is the list referred to?.

TODAYS LIST
I pulled the SAME list today for giggles but with the age criteria back in place. I kid you not, this is the ENTIRE list of propertied in the Vegas valley younger than 1988 2+ bedrooms with 2+ bathrooms. PLEASE note these are LIVE properties - if you wish to buy them, contact any real estate agent in Vegas and they can help you and they all have rehab teams. All 4 properties are attached and the below are just my personal thoughts on them and maybe something useful to help people on how to analyze what is NOW:

Balzar is a mobile home.
Paradise Skies & Clancy
Ha, rent shows as $650 a month - with an HOA fee of $72.00 per month??? This is a cookie cutter gated community and what happens when you cluster people in to something.This is a glut of rentals and you have no chance to differentiate yourself. What the lowest in this subdivision rents for is what you will have to rent at. This is a great example - renting these out would be tough at best above this price. It is a yield slaughter..

4581 East Van Buren
This is trashed and an REO - VERY rare it hasn't been rehabbed. Let's step through this but it is to prove the point. You CAN find individual buying opportunities in even today's market - I should point out that I view a good "buy" at this point not to mean anything other than can you buy below current market values without rehab eating that? Can you gain instant equity? and knowing that if, in worst case, you had to sell, you could leave with the $$ you walked in with. These properties won't be what they were even yesterday but if you were starting out, you start somewhere and below replacement value is a VERY good place to start. I can't (almost can but can't) build this house for that price. Nor in Vegas can I buy the land to do that. Whether you would personally buy this house is another matter. It gets a cautionary "hmmm" at this point to flag to investigate further and then it is ultimately something for you to decide..I wish it were a 3 bedder but it isn't.

Just get on a real estate agent's list in the market of your choice and ask anyone on this forum to help analyze it for you if you need help:

Okay BIG caveat:
This subdivision was where I used to drive all the investors to to demonstrate 2 streets in any direction in Vegas is a different market - this has a very very bad mobile home park backing on to this subdivision. It is funny to google drive that area (approach Van Buren from the corner of Lamb & Van Buren heading east). That being said this is at the other end of that block and this is CRAWLING distance to the elementary school in that area. It may yet be an absolute NO. It is probably awful but from the information that we have at hand and knowing the neighborhood for what it is, if this met my investing criteria it might be worth a drive by to investigate. It is lower middle class area (google drive and see if you can see graffiti, what type of cars are in the neighborhood… look up the zip etc) - ask other forum members. It would rent for about $825 a month on Section 8. There isn't a comp rent on Section 8. Just go to Section 8 (FAB website) www.gosection8.com , type in the zip and you get a very very good idea as to what a property would rent for.

Okay - haven't opened the door on it but the separate listing is here:
http://las.fusionmls.com/DotNet/Pub/EmailView.aspx?r=1794541799&s=LAS&t=LAS

The only comp active on the street is 114k. REO's generally don't get lowballed. They are sitting on this one so I doubt you could get it for less. I am surprised it hasn't gone through to completion so something is up.

First listed October 31, had offer accepted November 19 and went into contingent, re-listed December 3rd - why is THAT interesting? THAT is interesting because it was outside of the 10 days of due diligence that it went back onto the market - unless strategically done, that says financing couldn't be gained on it and yes, just checked, cash only. Must have dramas but that IS what due diligence is for.

Seller pays agents commission so you wouldn't have to pay any additional in commissions or buyers agent fees etc. Unless A/C is gone, budget about 5k for rehab from the photos (but again, once door is open - it is like a box of chocolates). That would be carpet/paint some plumbing, couple of $89 toilets etc. It is only a 2 bedder - 5k is a huge amount of $$.

COMP - BUT WAIT... in 2004 a comp property was worth $187,000 (1425 Helen Belle Drive).
HAHAHHHAHAHA. Okay - now let's look at a time that MAKES sense to look at - in 2001 (pre bubble Vegas), the properties in that enclave were $121,000. In my mind that would be about the right thing to look at to see what market corrected prices should be and will relatively rapidly probably get back to. But note, list price on the latest IS only 7k shy of that!

I love analyzing markets, I rip them to shreds and I rip properties to shreds etc. What you buy is entirely up to you but just don't look backwards - focus on finding your own bargains. Get on a few lists while you decide where you want to invest again, ANY international agent in the US today has a team to rehab, a property manager (whole other story) and understands foreign nationals peculiarities - America learns quickly. Just go and enjoy the US market.

Most agents however do NOT know how to analyze a market so don't expect them to. You are the investor - make sure you can answer those questions.

I am writing this as personal opinion and information only.
 

Attachments

  • MLS Listings October 1-200.pdf
    168.7 KB · Views: 37
  • NATIONAL TITLE 5-23-2011.pdf
    470.8 KB · Views: 21
  • 5-20-14 Auction List NTC[1].pdf
    228.6 KB · Views: 27
  • Under 90k 2+ Br Younger 1988.pdf
    3.7 KB · Views: 60
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