USA Guide to finding a good buy in SFR Market Today

I sent this to my list but have had a few people who are in all sorts of markets asking me if you can find a good buy in today's market in a market you may not physically be in. It is a fantastic game to play.

Bit of a refresher as well...

So - how do I find a good/great buy today? Where to start? Is it possible - can you even buy well below list price on a property?

Example by Answer: In Vegas we just did that on a 79k listed single family property.. it is under contract now at 67,500 - who'd have thunk that (I REALLY didn't think they would go below 69k which was the actual sales price for the property in 1997 but they did).

Odds are on your side if you are a cash buyer still - the rest of America are borrowing up a storm....foreigners included now with the opening up on FNAP loans...

Remember - you are ONE person trying to find a great deal (or 10) - either way, you aren't bulk buying, you just need ONE gem at a time...it may take some time but you will find it or them....all the principles are the same as before.

This is the definition of Real Estate FUN if you enjoy analyzing!

Your goal is to find a good property that if you sold tomorrow you would make $$ on. Could you do it in a market you don't know...? Yes, absolutely.

So this email is simply steps to find a good BUY.. Due Diligence is a WHOLE other ballgame and may well end up being the time you find out WHY the property was a "good" buy in the first place (however, you can always re-enter negotiations if worth it).

Caveat: "good" doesn't mean gang and generally if you get a "great" deal and you are buying in a decreasing market, you may be buying into tomorrow's prices etc so do also check area prices.

Steps:

1) Pick ANY location within your market of choice and where house prices meet your budget. Google Drive streets to check for calibre of that - obviously the one with grafitti is to be veered clear of - but look at the type of cars, the cleanliness etc. Is their pride of ownership evident?
If you do not know a city - start in sections - pull EVERY house that meets your base criteria in one of the sites - Realtor.com is great ... For instance - you want SFR Detached (ie eliminating town homes) younger than 1990, 3 br/2 ba, minimum of 1200 sq ft under 120k but higher than 60k (gets rid of mobile homes)... if that produces too many then start reducing further - if it produces too few (Vegas would have almost zero in that criteria), maybe you look at 2 bedders and 2 baths or go older etc.
Once you have a "feel" for quantity within your bracket then step 2.
2) Ask ANY real estate agent to set you up on an automatic email list of EVERY property that comes onto the market in that location meeting your honed in criteria - in Eastern states, sign up for Listing Report (love, love)... AND also to sign you up for every RENTAL property that comes onto the market in that area - use the same criteria - even at cursory glance you will be able to work out broad brush rental yields... that might end your search immediately - DO try to consider taxes, insurance and holding costs (again, East Coast properties are crazy higher in maintenance, taxes etc) when comparing markets...Use GoSection8.com and type in the zip for rental comps - pretend you are leasing a property with your criteria - is there a glut or only a few etc etc... That is what the government will pay, that is a GREAT start for calculations.
3) The next and most important aspect for any property that you are interested in (ie close to schools, shops and transport) - WHO are you buying from...???
4) So - ask for and discover the history of specific properties that tweak your interest... go to the assessor's website- look at the deed itself... Your MOST critical question is WHO are you buying this from and WHEN did they buy and WHAT did they pay (so what are they looking for out of the sale and what margin do you have) - also glean - are you in an investor only neighborhood (if too many, and too many on the market, it is a very good sign neighborhood turned into uncaring neighborhood)

WHY
Your best bet is to buy from an investor who bought in 2010 - 2012 in a fairly solid owner occupied area at dirt cheap prices and wants OUT - and it doesn't matter why - if they are selling only 2-3 years after buying, they are wanting out.....(bad experience or just wanting to play rehabs in the Bahamas...)

5) Look for tell tale signs like "traditional sale", "Equity Seller", "quick close" etc...MOST importantly - DO consider a property that, under "finance considered" reads "cash only" - that means THIS PROPERTY WON'T QUALIFY FOR A TRADITIONAL LOAN... yay! Probably has an illegal addition (but that could be as simple as a covered patio which will cause an FHA loan to be denied),it could have been trashed etc and the seller can't be bothered to fix or is out of money to try. EVEN better - find out if it has already been under contract and fallen out of contract. Price drops are another really, really good indication.

6) Ask the real estate agent to show you what the RENTAL history has been on the property... my DREAM property would be something that was listed at a high rent in 2011, lower in 2012 and now the property is for sale/lease right now...that would be a KILLER for a new investor.... 2 or 3 tenant change overs in as many years? Not taking delight in that but it is a GREAT indicator someone is fed up!

Another favourite indicator is a property where it is tenanted for a ridiculously low amount compared to market - it will always say in an MLS listing how much a property is rented for ... if you have average rents in the area at $1000 and you are seeing $650, they have a grossly underperforming property. Yes, there will be a reason for this and you can find that out in Due Diligence.

7) If you have someone who is an investor wanting out right now, you are also going to bet that if it has sat on the market for longer than 20-30 days, they will be even more eager to take a low ball, quick close cash offer.....the LAST thing they want is to have to wait another 6 weeks for a traditional financed sale to "possibly" go through. They are you. You would want the $$ and to run. Properties either sell in the first 7-10 days or they almost seem "stale" to the market - which leads to...

8) DOM - Days on market - how long has this property been listed... has it bounced on and off market - has it been under contract and fallen out? HISTORY of property will show that - ask your agent to pull that history. Clever agents will remove a property from the market after 2 weeks so it doesn't seem to have sat... so again, ask for the history - that will show if the property was withdrawn....

KNOW EVERYTHING about that property and 20 others if needs be! Call the agent and ask directly - "what is up with this property"?... they would be stupid to tell you but never, ever underestimate stupidity!

Bottom line - if you like a property, find an investor who bought in 2011 or 2012 and is selling, they aren't normally that greedy - lowball with a QUICK close date - offer to take "as is" (you can pull out still during due diligence) - make it as tempting for them as you can ... BE THE DREAM BUYER.

Wiggle room bidding options:

- Quick close - normally a property closes in 30 -45 days.. make yours 10 or even 7 - let the seller taste the money about to come in!

- Shorter Due Diligence instead of 7 or 10 days, why not 5 days or 3 on a good property? It really only takes 1 day to get inspections - and if they have forgotten to have utilities on etc, you are going to be extending anyway!

- "As is/where is" - offer to buy without any fixes to the property

- Lower commission rate your side... if you use the same agent that is selling the property and aren't tied into a specific agent, this could be a winnner - the seller is up for 6% commission otherwise.

What to Offer?
Know what they bought the property for, factor in they got ripped off on repairs (so add 10-15k to that list price) and then ask yourself how much you would feel comfortable to walk away with if you were in their shoes.... answer to that is the precise dollar value that you can probably be accepted for....then offer just below that... if they counter, you are in with a VERY good shot at countering the counter.

AGAIN - remember that most investors in the market place today are borrowers now - there aren't many full cash buyers out there who are willing to do the research.

ASIDE - if any of you want financing, basically just remember 2 years of full documentation of income, 35% down and then you can get a 30 year loan at about 6.5%.....

BIGGEST LESSON YOU CAN LEARN IS THIS: I will place my hand on heart and say that each person reading this knows more than 90% of the real estate agents you will contact. Take the lead and be specific on what you want and find the eager agent to help you.

Hope this helps those of you I have spoken to in the last few weeks....!
 
Thanks :)

The game has just changed for SFR in the US and it is SO much easier for an Oz investor these days. This is armchair investing at it's finest because EVERYTHING in the US is online, researchable and accessible and unlike 2010 or 2011, you have TIME to research and bid and most of the properties are fully rehabbed (as they are pitched to US borrowers and have to meet specific lending guidelines).

Pick a property that meets your investment needs, not someone else's sales quota. Bid what YOU want to bid - not someone else's predetermined notion.

3 years ago the market moved SO quickly, 2 hours and if you weren't under contract in the US, you missed out. Now? Turnkey properties are sitting on the open market at least 10 - 20 days.

Another tactic for lowballing - ask your agent to pull your criteria ONLY for properties that have sat longer than 30 days on the market - still do all the other due diligence and check it beats close comparisons but offer 30% less on something there, they will be up for a lowball I bet!

Get a great agent that you will never have to pay a cent to (SELLER PAYS ALL COMMISSION - at least in this phase they do) representing only you on the buying side in the market of your choice and do your own research - when crunch time comes, get them to do the driving for you once you narrow down your list. Interview agents to find your match.

Worth emphasizing: The only expense to you to buy a property here are closing costs. Closing costs for buyers pretty much across the whole of the US will come to under $3k and that is probably padded. That is ALL you should pay to buy a property....

It was a very different game in 2010 and 2011..? now is a slower pace, easier and GREAT for individual buyers - again, if a property meets your investing needs.

Repairs
If it isn't completely rehabbed (90% are in today's market), your real estate agent will happily get you multiple quotes to repair any inspection issues and your real estate agent will also go into bat for you for the seller to pay those repairs if you wish or get a price reduction to compensate while you are in due diligence?(slight variance on above tactic of "taking as/is")

Research
It is fun. Did I mention that? This is fun. I know people who have spent thousands and months on day trading courses and currency exchange trading courses - forget courses - if you love property as your investing "thing" and spent even just 2 weeks seriously researching any US market you would be able to find some GREAT real estate buys.

A whole other phase comes to play once you own. That is where you learn how to manage a US property manager.
 
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Hi Emma,

Its great to see such a detailed post on the US market.

I check in here and there to see of there is any US activity on the Aussie rE forums and finally I can see some action.

We have been working the Ohio market for over a year now and feel like kids in a candy store.

Mum and dad investors and hedge funds are on the sidelines due to the media pumping "High" unemployment and "declining" populations.

I hope they don't smell the roses for at least another 3-5 years lol

I also always like to stress that the most important thing for investors looking at buying out of state or country is to focus more on the people and relationships the establish rather than the stats and demographics of a particular.

Too many investors have been burnt by shady operators.

Its crazy stuff and most days I feel like the red cross due to emails from investors all over the world asking for help.

Thanks again and have a great day.
 
Holy Toledo! Lol? Can't say I would ever be able to be persuaded back to buying somewhere where it snows/melts or you have to pay for heating fuel to prevent pipes freezing etc but as over ??200 odd million live in those environments it shows there are bargains everywhere. After the battle scars of 14 years in Alaska investing I just avoid snow like the plague ...however, for a flip, if it were good enough???

Main thing Engelo, is, as you say, no need for middle people. Hasn't been for over 2 years.

Use a good real estate agent seller pays for (i.e. not you as buyer). If you want, buy a nice turnkey unit and get to know the US market. Or, take a month off work, buy a rehab (tougher to find so don't book ticket until you close on something) and come and do it yourself - or anything in between but just don't pay someone when there is zero need.

http://www.realtor.org/designations-and-certifications/cips-designation/overview-of-cips-classes

Worried? FIND SOMEONE WITH THE ABOVE CERTIFICATION.

This course literally covers FIRPTA to FNAP loan programs to currency certification for loan programs all at ZERO cost to the buyer and the complete backing of US law enforcement and litigation if anything went wrong?.! National Association of Realtors doesn't mess around.

EVERY day in every state I go to I listen to the commercials "Learn the 3 step program to flipping a property"? good grief. If you want to flip houses use the attached!

HOW TO FLIP HOUSES & COSTS TO PAY FOR TRADES?
Please adjust to your specific market.

Here you go - save a fortune on how to flip properties! No secret to it. Once you find your property, buy the book "Home Depot 123" and do it yourself or, use the attached as a guide as to how much you may have to pay someone (sometimes cheaper to pay but more fun to learn!).. Which, is astonishingly all legal as an owner/builder. From the moment you own you want to rent your property (or for a flip list it for sale) follow this guide if you want.

1) Process hasn't changed to the attached for the last 20 years I have been doing this myself regardless of market and yes, the day 5-7 rented is normally closer to 3 weeks (contingent on when you close in the month as everyone moves on the 1st pretty much in the US) as good people give 30 days notice but the point remains that time is a cost factor and this has to be EVERYONE's goal. Keeping a system to what you are doing is essential for my own yield calculations.
2) This is just to help anyone out there wondering "what do I pay someone" .. a question I am facing again as a newbie buying and rehabbing in the Bahamas?..I WISH I had the attached from someone for Long Island Bahamas ….however, once you know this you can adjust…Attached costs are for labour only unless specified and probably have increased so add 20% or even 30% if you wish, it would still be a very very good yardstick. If you wanted gold plated lights, you simply go to Home Depot and add in the price of the parts.

Remember to use the attached for amusement?and are intended as such.. the rates come literally as a punch list for flipping houses or turning them for rental. Use as you wish or ignore entirely...no liability accepted but this is a pretty big fundamental to knowing if you invest in the US.
 

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Holy Toledo! Lol? Can't say I would ever be able to be persuaded back to buying somewhere where it snows/melts or you have to pay for heating fuel to prevent pipes freezing etc but as over ??200 odd million live in those environments it shows there are bargains everywhere. After the battle scars of 14 years in Alaska investing I just avoid snow like the plague ...however, for a flip, if it were good enough???

Main thing Engelo, is, as you say, no need for middle people. Hasn't been for over 2 years.

Use a good real estate agent seller pays for (i.e. not you as buyer). If you want, buy a nice turnkey unit and get to know the US market. Or, take a month off work, buy a rehab (tougher to find so don't book ticket until you close on something) and come and do it yourself - or anything in between but just don't pay someone when there is zero need.

http://www.realtor.org/designations-and-certifications/cips-designation/overview-of-cips-classes

Worried? FIND SOMEONE WITH THE ABOVE CERTIFICATION.

This course literally covers FIRPTA to FNAP loan programs to currency certification for loan programs all at ZERO cost to the buyer and the complete backing of US law enforcement and litigation if anything went wrong?.! National Association of Realtors doesn't mess around.

EVERY day in every state I go to I listen to the commercials "Learn the 3 step program to flipping a property"? good grief. If you want to flip houses use the attached!

HOW TO FLIP HOUSES & COSTS TO PAY FOR TRADES?
Please adjust to your specific market.

Here you go - save a fortune on how to flip properties! No secret to it. Once you find your property, buy the book "Home Depot 123" and do it yourself or, use the attached as a guide as to how much you may have to pay someone (sometimes cheaper to pay but more fun to learn!).. Which, is astonishingly all legal as an owner/builder. From the moment you own you want to rent your property (or for a flip list it for sale) follow this guide if you want.

1) Process hasn't changed to the attached for the last 20 years I have been doing this myself regardless of market and yes, the day 5-7 rented is normally closer to 3 weeks (contingent on when you close in the month as everyone moves on the 1st pretty much in the US) as good people give 30 days notice but the point remains that time is a cost factor and this has to be EVERYONE's goal. Keeping a system to what you are doing is essential for my own yield calculations.
2) This is just to help anyone out there wondering "what do I pay someone" .. a question I am facing again as a newbie buying and rehabbing in the Bahamas?..I WISH I had the attached from someone for Long Island Bahamas ?.however, once you know this you can adjust?Attached costs are for labour only unless specified and probably have increased so add 20% or even 30% if you wish, it would still be a very very good yardstick. If you wanted gold plated lights, you simply go to Home Depot and add in the price of the parts.

Remember to use the attached for amusement?and are intended as such.. the rates come literally as a punch list for flipping houses or turning them for rental. Use as you wish or ignore entirely...no liability accepted but this is a pretty big fundamental to knowing if you invest in the US.

lol,

Its sure is cold but the numbers definitely work so its worth the sacrifice.

To be honest with you, I don't know of many investors that have successfully completed rehabs here in the US from another state or country.

I like what your saying regarding taking a month off to visit but I would recommend doing so more for the purpose of meeting and building relationships with key people. Once the trust and relationship has been established, then rehabbing from afar could come into consideration.

We do 3-5 rehabs per month and find it difficult enough sorting out all the daily BS as it lol

I wouldn't even want to imagine trying to do the same from another time zone lol

Thanks :)
 
Anything we can do???

Never underestimate Somersofters ;)

Legalities of US Immigration aside, I happen to have worked alongside a great many fabulous owner/investors rehabbing over here and supported them only with beer/wine or moral support - or Skype help as needs be!

EVERYTHING in the US is bolt on/bolt off. The first thing I give to any investor who wants to play here is their own copy of "Home Depot 1-2-3" (google it?.) and then show them how to use Sharkbite plumbing (go Oz!). Mind you, anything you don't want to do yourself, ask your real estate agent to refer you to an "excellent" whomever or Redbeacon (site for trades with references and background checks)… (HVAC etc).

No, it isn't for everyone or even most, but for that small percentage who want to be hands on, this is easier than Lego, 1/10th the price to play as it is in Oz and legal to do it yourself! While here you will figure out pretty quickly who you want your network to be….!

If you and I figured it out I can guarantee anyone else reading this can too. 20 odd years ago I got into rehabbing in the US because I just didn't think I had a lower IQ than anyone else swinging a hammer. Still don't.

IN PRACTICE
I can guarantee this from personal experience because I flew down to the Bahamas after oodles of research, was physically on the island 48 hours, bought a house for 85k and am now rehabbing it - all through and with the great help of the advice and network a licensed real estate agent gave me - all for free…..she is worth her weight in gold but will have more sales as a result and I have some investor friends who will also buy from her as properties there are 50% off rebuild costs… But she has helped from how to set up a bank account to shipping costs to buying cars/boats.

NOT HARD JUST DO IT - don't be "would have, could have, should have but didn't".
 
Thanks for posting, interesting.

I really have to wonder whether there is any point in Aussies investing in USA now that the Au$ is at 78 and sliding, I would expect the next level will be 75.

I can understand the attraction when Aussie $ was parity with US$ and above.... but now??? practically losing 25-30% when buying.

Also, someone mentioned some time ago .... what if the Hedge funds pull out?? surely they want to manage this.

Renovating well that's another story, I know I paid too much for this, but at the time there was little choice. I guess at the end of the day the numbers still stacked up so it made it much easier to just do it.

MTR:)
 
MTR. Simple answer- No. I agree 40000% if not more with the below.

With the exchange rate now, unless you are using your USD kitty to put a 35% down payment for an FNAP loan on US properties and are able to be comfortable with the 6 - 6.5% interest while gambling on Capital Growth (which I don't), you would have to REALLY persuade me. I have seriously questioned investors who approach me. BOY would the deal have to leap beyond leaping. Someone said it brilliantly on another thread - you could probably buy better in your own backyard (definitely any backyard with no snow!)

US SFR only made sense for the merest hint of a whisper of a time and the world leapt because the numbers, for that time made sense - even to US investors! No US Investor I know would touch below 9% ROI.

Obviously a great deal is a great deal and they are out there but the trick is to know how to find it yourself (no matter WHICH country that is) or someone like me with all my super duper real estate agency knowledge will have already bought it using a ZERO down, 4% fixed for 30 years USD loan with USD to buy it. I have a 30% currency advantage right there
 
Agreed
I know some investors who purchased US properties 3 years ago have been using the rental income to buy more, at least they have the US$, otherwise its a tough gig.

MTR:)
 
Never underestimate Somersofters ;)

Legalities of US Immigration aside, I happen to have worked alongside a great many fabulous owner/investors rehabbing over here and supported them only with beer/wine or moral support - or Skype help as needs be!

EVERYTHING in the US is bolt on/bolt off. The first thing I give to any investor who wants to play here is their own copy of "Home Depot 1-2-3" (google it?.) and then show them how to use Sharkbite plumbing (go Oz!). Mind you, anything you don't want to do yourself, ask your real estate agent to refer you to an "excellent" whomever or Redbeacon (site for trades with references and background checks)? (HVAC etc).

No, it isn't for everyone or even most, but for that small percentage who want to be hands on, this is easier than Lego, 1/10th the price to play as it is in Oz and legal to do it yourself! While here you will figure out pretty quickly who you want your network to be?.!

If you and I figured it out I can guarantee anyone else reading this can too. 20 odd years ago I got into rehabbing in the US because I just didn't think I had a lower IQ than anyone else swinging a hammer. Still don't.

IN PRACTICE
I can guarantee this from personal experience because I flew down to the Bahamas after oodles of research, was physically on the island 48 hours, bought a house for 85k and am now rehabbing it - all through and with the great help of the advice and network a licensed real estate agent gave me - all for free?..she is worth her weight in gold but will have more sales as a result and I have some investor friends who will also buy from her as properties there are 50% off rebuild costs? But she has helped from how to set up a bank account to shipping costs to buying cars/boats.

NOT HARD JUST DO IT - don't be "would have, could have, should have but didn't".


I haven't been to the Bahamas in too long. I am actually looking for a nice little 1-2 bed condo there so i can visit more often lol

Don't even get me started on US immigration. I have come to a conclusion that its a coin toss. A coin toss that I definitely won on at least 4 occassions haha

Thanks Emma ;)
 
Do you quarantine your income for tax purposes? Leave it inside your LLC?

Good questions Aaron,

Keeping all the $$$ in the US for now but looking forward to one day moving it all back home to OZ lol

Especially if the AUD stays this way hehe.

I moved all funds to the US late 2012.

Not a bad timing at all ;)

Thanks
 
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Dual Citizen

Hate to say it, I get the benefits of both worlds and US tax laws are very pro investor in the viewpoint that that will spur the economy. However to sum up my personal stance on this is (and yes, I blaspheme)

I don't have LLC's in the main part (Nevada allows serial LLC's which are a godsend) but?

My asset protection (and yield maximizer) is summed up as:
1) Prevention - repair promptly
2) Top insurance for the property
3) Umbrella insurance

Too many people I know own 5 or 6 properties under one LLC with zero thought that if you do that and someone sues you, all of those properties are up for grabs.. me, sue my property, rip through that, you hit my umbrella insurance. I sleep very very very well at night.

I think there is a finite number of properties that beyond which, LLC's and staying on top of them for me is just nonsensical but that is me..., filing above 8 LLC stacks of paperwork on private properties in x number of states beyond whatever corporate and syndicated commercial LLC filings you are doing destroys Christmas/New Year contingent on your tax years! 1099's - I hope everyone is sending theirs out (if you paid anyone over $600 last year who isn't incorporated, you need to issue a 1099 and you too will hate January) I HATE this time of the year? and thus minimize my pain as much as possible. Even under family Trust I don't keep LLC's. Also, having an amazing attorney as one of by best friends, I have heard 20 years of how easy it is for someone to pierce the corporate veil that LLC's are meant to afford and I am not delusional enough to say that I would even want to risk it.


My personal (NOTE NOT ADVICE JUST ME) tax strategy could be summed as:
Keep countries/states incomes as separate as possible - transfer funds only if currency bets make sense but keep a 6 moth contingency. When I invest in a new state or country they have to survive on their own after initial cash injection. If they are NOT self income generating, rethink strategy. 3 year time limit or out. Cut your losses if you have any.

Once cash positive:
1) Keep buying properties (preferably in the Bahamas) - US tax deductions are more generous than elsewhere
2) Visit your properties - don't complain about the repair bill - go visit with the family and do it right with the tax deductions
3) US - learn to love 1031 exchanges - never underestimate this as a long term exit strategy .. I will probably keep a constant of 20 odd "play/base rent" properties (i.e. if worth selling would trade etc), a few extra "lifestyle properties (i.e. I stay in when in that part of the world) but in ?? 10 years time, maybe 6 of these will be rolled into some fabulous property that I will try to rent but if it doesn't and sits languishing, I may have no option but to convert it into my own private residence that 2 years later I sell if I don't live there which may avoid capital gains tax.

Don't co mingle funds, and don't allow anyone to be able to pierce the corporate veil whatever you do!

Side note...Engelo - seriously - if you are interested, come down to Long Island - I am there from Feb 28 through April 3rd - you will be required to help with something but if you want a really GOOD deal and can rehab, this island is below replacement cost and the undiscovered Bahamian island - all whilst working in paradise! Beach photo attached for incentive? don't get a condo? buy a house and offer 50 cents on the dollar? 85k for a rehab... just saying' it beats Toledo in Winter ;)
 

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Hate to say it, I get the benefits of both worlds and US tax laws are very pro investor in the viewpoint that that will spur the economy. However to sum up my personal stance on this is (and yes, I blaspheme)

I don't have LLC's in the main part (Nevada allows serial LLC's which are a godsend) but?

My asset protection (and yield maximizer) is summed up as:
1) Prevention - repair promptly
2) Top insurance for the property
3) Umbrella insurance

Too many people I know own 5 or 6 properties under one LLC with zero thought that if you do that and someone sues you, all of those properties are up for grabs.. me, sue my property, rip through that, you hit my umbrella insurance. I sleep very very very well at night.

I think there is a finite number of properties that beyond which, LLC's and staying on top of them for me is just nonsensical but that is me..., filing above 8 LLC stacks of paperwork on private properties in x number of states beyond whatever corporate and syndicated commercial LLC filings you are doing destroys Christmas/New Year contingent on your tax years! 1099's - I hope everyone is sending theirs out (if you paid anyone over $600 last year who isn't incorporated, you need to issue a 1099 and you too will hate January) I HATE this time of the year? and thus minimize my pain as much as possible. Even under family Trust I don't keep LLC's. Also, having an amazing attorney as one of by best friends, I have heard 20 years of how easy it is for someone to pierce the corporate veil that LLC's are meant to afford and I am not delusional enough to say that I would even want to risk it.


My personal (NOTE NOT ADVICE JUST ME) tax strategy could be summed as:
Keep countries/states incomes as separate as possible - transfer funds only if currency bets make sense but keep a 6 moth contingency. When I invest in a new state or country they have to survive on their own after initial cash injection. If they are NOT self income generating, rethink strategy. 3 year time limit or out. Cut your losses if you have any.

Once cash positive:
1) Keep buying properties (preferably in the Bahamas) - US tax deductions are more generous than elsewhere
2) Visit your properties - don't complain about the repair bill - go visit with the family and do it right with the tax deductions
3) US - learn to love 1031 exchanges - never underestimate this as a long term exit strategy .. I will probably keep a constant of 20 odd "play/base rent" properties (i.e. if worth selling would trade etc), a few extra "lifestyle properties (i.e. I stay in when in that part of the world) but in ?? 10 years time, maybe 6 of these will be rolled into some fabulous property that I will try to rent but if it doesn't and sits languishing, I may have no option but to convert it into my own private residence that 2 years later I sell if I don't live there which may avoid capital gains tax.

Don't co mingle funds, and don't allow anyone to be able to pierce the corporate veil whatever you do!

Side note...Engelo - seriously - if you are interested, come down to Long Island - I am there from Feb 28 through April 3rd - you will be required to help with something but if you want a really GOOD deal and can rehab, this island is below replacement cost and the undiscovered Bahamian island - all whilst working in paradise! Beach photo attached for incentive? don't get a condo? buy a house and offer 50 cents on the dollar? 85k for a rehab... just saying' it beats Toledo in Winter ;)


Thanks Emma,

Was actually planning a trip down around early March.

Just to add to what you posted.

3 properties per LLC max and how about this one. My attorney is the statutory agent on all of my LLCs so no one even knows who owns the LLC.

How can they sue you for something they don't even know what you own? lol

Good luck suing the law firm to find out the true owner :)

50+ in houses attorneys and paralegals lol

Thanks and please shoot me an email if possible about Long Island.

engelo@ohiocashflow.com

You definitely got me interested :)

Grazie Mile
 
There is a separate thread I have put info on Bahamas on for those interested - search Bahamas - I will email.

Asset protection - I apologize if I sound flippant on this. everyone needs to do what they feel comfortable with. Add as many layers as you want - spend a fortune on it if you want... BUT, asset protection discussions just tend to end up forgetting the most critical thing. It all starts and stops in my mind with "LOOK AFTER YOUR PROPERTY AND TENANTS". If you don't have a reason for someone to sue you, you can probably rest easy and save a LOT of money.

In Australia, what sort of asset protection do you use? How comfortable are you with that? Over here you can use any combination of Trust/LLC/Home Owner Insurance/Umbrella Insurance?.if you have 3 houses in each LLC then great, someone can potentially go after 3 houses and hopefully not pierce any corporate veil etc.. but what on EARTH did you NOT do in the first place to be sued to the point of having such negligence directly attributable to you and why on earth didn't you do something about it? Trust me, they will find the owner of the LLC if they want.

I have had a lot of people worried about being sued so far beyond the home owner insurance of 500k, piercing corporate veils that someone could get access to assets back in Australia. Could they? Yes of course - anyone can sue for anything but google this, ask ANY international lawyer.. seriously - and, caveat, I am not an attorney but given that there just isn't a Treaty between US and Australia, you LITERALLY have to apply through the Hague to get the judgment recognized in Oz? On a house worth 200k? Who would bother? they would take the house but ask any lawyer if they would even try chasing that? This is one I know from a guy who has literally LOST - as in directly LOST - gone and vanished $500k (actually there is a Lamborghini that was bought with it). This was an Australian who I helped here who was just blatantly ripped off by another Australian on a property deal over here in the US - a smart guy as well? . Long story short, jurisdiction was in the US (VERY CLEVER), got a judgment and is still trying to fight to get that recognized in Australia. In the interim ripoff has offloaded all Australian assets to family members "just in case". The cost for attorneys has exceeded any chance of getting any money back and we are 2.5 years into this story.

Another reason why dealing with an Australian middle person on property in the US is something I am vehemently against. Someone can sue me here in the US and it means something.

Which gets me back to the fact that I am VERY aware I can be sued over here and have appropriate coverage in that very very unlikely scenario. But I urge you that if you are in the US, please explore umbrella insurance. I have 5 million coverage (I think) for about $300 a year of the top of my head (would have to look it up) and that covers ME as a person and anything that happens to ME including being sued for pretty much any reason - car accident, house fire, fist fight in a bar?.. anything anyone could sue YOU for.
 
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There is a separate thread I have put info on Bahamas on for those interested - search Bahamas - I will email.

Asset protection - I apologize if I sound flippant on this. everyone needs to do what they feel comfortable with. Add as many layers as you want - spend a fortune on it if you want... BUT, asset protection discussions just tend to end up forgetting the most critical thing. It all starts and stops in my mind with "LOOK AFTER YOUR PROPERTY AND TENANTS". If you don't have a reason for someone to sue you, you can probably rest easy and save a LOT of money.

In Australia, what sort of asset protection do you use? How comfortable are you with that? Over here you can use any combination of Trust/LLC/Home Owner Insurance/Umbrella Insurance?.if you have 3 houses in each LLC then great, someone can potentially go after 3 houses and hopefully not pierce any corporate veil etc.. but what on EARTH did you NOT do in the first place to be sued to the point of having such negligence directly attributable to you and why on earth didn't you do something about it? Trust me, they will find the owner of the LLC if they want.

I have had a lot of people worried about being sued so far beyond the home owner insurance of 500k, piercing corporate veils that someone could get access to assets back in Australia. Could they? Yes of course - anyone can sue for anything but google this, ask ANY international lawyer.. seriously - and, caveat, I am not an attorney but given that there just isn't a Treaty between US and Australia, you LITERALLY have to apply through the Hague to get the judgment recognized in Oz? On a house worth 200k? Who would bother? they would take the house but ask any lawyer if they would even try chasing that? This is one I know from a guy who has literally LOST - as in directly LOST - gone and vanished $500k (actually there is a Lamborghini that was bought with it). This was an Australian who I helped here who was just blatantly ripped off by another Australian on a property deal over here in the US - a smart guy as well? . Long story short, jurisdiction was in the US (VERY CLEVER), got a judgment and is still trying to fight to get that recognized in Australia. In the interim ripoff has offloaded all Australian assets to family members "just in case". The cost for attorneys has exceeded any chance of getting any money back and we are 2.5 years into this story.

Another reason why dealing with an Australian middle person on property in the US is something I am vehemently against. Someone can sue me here in the US and it means something.

Which gets me back to the fact that I am VERY aware I can be sued over here and have appropriate coverage in that very very unlikely scenario. But I urge you that if you are in the US, please explore umbrella insurance. I have 5 million coverage (I think) for about $300 a year of the top of my head (would have to look it up) and that covers ME as a person and anything that happens to ME including being sued for pretty much any reason - car accident, house fire, fist fight in a bar?.. anything anyone could sue YOU for.

Ill check out your Bahamas thread now :)

Thanks
 
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