US real estate market

Anyone looking to invest in the US market? It seems to be a good opportunity now: high A$, slump house price, economy is getting out of recession...

Quiggles's thread is certainly inspiring as well!

Cheers. Jacky
 
yes i am - but i don't see recovery for a long time.

i'll look to buy when the AUD goes above 105c US.

that way i can take advantage of the dollar falling against the US and make double the money. no US hedge fund will stand for the AUD being higher than the USD for long - ride to 112c US likely but then a big sell down IMO to 80-85c.
 
Some USA friends of ours were saying - and this is anecdotal - that over half the houses in the US are worth less than the loans against them currently. I don't know where they heard this - most likely the news.

Based on this, and in line with what Blue Card says, the recovery could be a while off yet.

But, this is the "winter" so it's a good time to buy "straw hats" if you can afford to, I'd say.

As Ozperp has mentioned in her US thread, you'd want to be buying into at least a whole apartment building and have it professionally managed, because there are bugger-all individual residence managers over there.
 
There are certainly pockets which look like incredible value now. I don't care much about the exchange rate because I'm planning on putting in no $A. ;) So I borrow US$ and make profit in US$, in which case I actually prefer the exchange rate to be weaker, as it ends up being more $A that I end up with. :cool:

You can buy single houses over there, and I know people who do it, but your number 1, 2, and 3 obstacles will be getting somebody on the ground to manage it properly.

If you buy a complex of apartments, you have on-site staff and your due diligence - with respect to management - primarily revolves around selecting and managing that staff.

I also like commercial (ie complexes) because the lenders view risk the opposite to Australia; LVRs are higher for commercial than residential. There are logical reasons for this which I'm happy to elaborate on if anybody's interested. It helps get your head around their lending mindset.
 
I also like commercial (ie complexes) because the lenders view risk the opposite to Australia; LVRs are higher for commercial than residential. There are logical reasons for this which I'm happy to elaborate on if anybody's interested. It helps get your head around their lending mindset.
We're all interested :).
 
We're all interested :).
OK, here we go...

When lenders give you money, they want to know how they'll be repaid.

In Australia, property is generally cashflow negative, so the money to pay back the loan has to come from a source other than rental income, ie it comes from the income of the borrower.

In the USA, most property is cashflow positive, so the money to pay back the loan comes primarily from the rental income. Therefore the financial status of the borrower is of less importance than the stability of the rental income stream of the asset.

If you buy a house with one tenant, there's a chance that the one tenant will go bad and the loan can't be repaid, at least at some time during the loan's lifetime. If you buy a complex of 50 apartments and the rent on, say, 35 of them is sufficient to cover the mortgage, the chances that the loan can't be repaid are minimal.

Therefore, it's easier to borrow $1M to buy an apartment complex than to borrow $50K for a single house. The LVR on an apartment complex is 80% as a standard, and 90% if you have a particularly good deal; the LVR on a house is 70% as a standard (for US citizens with FICO scores etc), and 80% if your finances and/or the deal are particularly strong.

When you factor in non-US citizens such as ourselves, the difference in LVR is exacerbated. They'll still lend 80% for an apartment complex, because the loan's repaid by the asset, not by the backer. For a single house, though, they'll need to know that they can rely on the backer's income if the rental income is lost, so LVR drops to only about 50% for foreign nationals wanting to buy houses.
 
yes i have also heard comm in the US is a great way to increase cashflow - but i'm still a comm n00b.

multiple income streams - bring it on.
 
Anyone looking to invest in the US market? It seems to be a good opportunity now: high A$, slump house price, economy is getting out of recession...

Quiggles's thread is certainly inspiring as well!

Cheers. Jacky
Before you start or book the airline,spend the time and watch this movie.. even if he is only 24% right then they still have a long way to go before the turn around starts to happen..imho..
willair
http://www.youtube.com/watch?v=hfnmCOUieLw

Capitalism: A Love Story ,by Micheal Moore..
 
How to find a good property manager

Thanks all for the info.

My wife and I actually lived in the states for a few years before relocating to Australia. We owned (and then sold) a house there before, so have some experience dealling with banks and realtors (could be more difficult now, given that we don't live there now). But finding a good property manager will be a challenge. Any tips?

Ozperp, would you mind sharing any areas that you're interested in?

Cheers.

Jacky
 
I think if your planning on looking at US property investment then spend some time on the Peter Schiff channel at youtube, he gets a lot of things right and as things stand today he's not investing in US real estate anytime soon. Sobering stuff.

youtube.com/SchiffReport
 
Peter Schiff's podcasts are always interesting, and have some good points. But in my opponion, he sometimes over-simplified the issues.

Anyway, I still think it is an attractive market, especially if I can find some properties with good rental return, hopefully...

Tried to engage a realtor there through Internet, and she claimed she couldn't reach me on my mobile number. I suspect she didn't know how to dial an Australian phone number. I found quite a few people never made phone call outside US during my time there... Well, the first small hurdle I guess.
 
This is an interesting thread.
Would like to know if anyone has had any success in investing in the US market resi/commerical.

Cheers, MTR
 
hi blue card
don't jump on that plane yet for the comm
the us comm is about to tail spin
they are running at about 11% cap rate our run on about 8.5 to 9 at the moment so they are high and they have 15 year net net leases which make them look even better
the issue is that they have not corrected yet the rei has but not the comm
there is alot of news around that the vacancy's will rise so you hav eto make sue taht you are buying into an area that will not correct
my idea and its only an idea at this stage but it works here
is that you find niche markets that will not fall.
these are brothels, chemists, beer, or clubs, and find then in areas that are falling
the value drops with all around them but they usually stand
you need to find what type of comm you want and aim at that.
the multi tennants are not for me as they are two much work
but the shopping strips they have gone from a 9% 6 months ago to 11% now and will go to 15% returns
and thats when you go in.
there are alot of sites that are already taking overs
so you seed at 15% now they won't take it
but if they correct and I think thery will then they maywell depending how deep this goes
the word on the street is that the comm is going to go back deeper then the resi
so alot of product is aiming for the new year
 
Thinking there may be many who got burnt purchasing cheapies in Buffalo some years back and not too many eager to jump into the US market.
 
A little of topic but save starting new thread....

If you were to purchase say a place in LA can u claim.. come end of yr tax the travel to and from ? SO BASICALLY THE FLIGHTS?
 
you can claim the flight, accom, all meals, travel for yourself and your PRE_EXISTING dependants - in other words, your new girlfriend/boyfriend isnt a dependant.

one flight, once a year still raises eyebrows. one every 3 years probably won't though.

thanks for the advice Lawrence - i'll watch as wait.

the biggest killer for those that bought buffalo cheapies a while ago is the currency move.
 
hahah yeah thats awesome Blue Card meet a smoking chick in september while in Hawaii and she lives in LA so was going to visit her and maybe look at property.... if everything went good
 
the issue is that they have not corrected yet the rei has but not the comm
there is alot of news around that the vacancy's will rise so you hav eto make sue taht you are buying into an area that will not correct
The areas that I'm looking at have had huge corrections and increases in vacancy over the past year or two, but in my perception, have bottomed and are looking up again.
grossreal said:
the multi tennants are not for me as they are two much work
I have gone down this road, too. I've ruled out resi, but had to decide whether to go multi-family or "true commercial". Yes, multi-family can be a little more hassle, but with on-site management, not much, and I believe the stability of the multi-family income stream is a reasonable trade-off for the extra hassle. If you buy a shopping strip and your anchor tenant vacates, even if they keep paying the rent for another 5 years, it's going to affect the remainder of the strip, and other tenants whose leases come up may not renew, etc. Plus it's still uncertain what the outlook is like for small business in the coming years. So I don't dispute your decision to focus on commercial, and there are certainly some great deals to be done, but for me, multi-family is "more boring but also more predictable". ;) Horses for courses!
grossreal said:
the word on the street is that the comm is going to go back deeper then the resi
so alot of product is aiming for the new year
It already has gone back more than resi in many areas. Which markets are you looking at, which you think have significant falls still to come? (You may be right, I'm just curious.)
 
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