USA investment properties for an Aussie

H

Heatseekers

I have heard from http://www.21stcenturyeducation.com.au/ and a real estate agent www.slvrstream.com in the USA that Kansas City, Atlanta, Indianapolis are good areas to buy a $30-$75K home because of low unemployment, taxes, infrastructure etc with deals giving you 13-20% net return, most I'm looking at are 18%. I thought this was great and then have been told and looking on the net that there are some people that flip you a property and they are the ones that make the money. So I don't know if these companies are reliable or not? 21st Century is a group that you have to buy a membership into also. Has anyone dealt with either of these and heard any good/bad stories?

So I have had a few properties one of them have sent me and I looked it up and they wanted $75k and when I had a look on trulia.com all the surrounding houses were going for around 20-40k and a suburb over they were around $80k. Then I saw that this particular property had a house next to it with a boarded up door and smashed windows and parts falling off it. Now Im thinking this RE agent isn't really helping me. Although I did read comments underneath the property that the neighbourhood is quiet and that the boarded up homes are done nicely etc.

I really would like to get 1 or 2 or 3 properties with this sort of return but I don't want to get ripped off and buy into an area with lots of abandoned houses or too much supply where no one will want to rent it. Anyone got any thoughts on this or any good sites to do more research from? What do you think about these cities? They seem to be quite "cheap" and I'm wondering how "bad" they might be.
I'm looking for cash flow not really capital gains
Thanks
 
yes. I haven't bought investment properties before. I know you are pulling the **** but this company sounded like they do help you as they want you to keep buying off them. I know to be wary but I thought they were ok at the start as they try and look for properties in good growth,employment returns etc. The only thing is I dont know what websites give a true current price indicator. I got sent through some more, One he was selling for 58k. On one website they said they are all around $20k then another listed them all around $55k. I know he is obviously going to add on a bit more but I don't want 20-30k added on! Plus there has been a lot of price fluctuation during the last 3 years.

I was going to buy something here in Oz but the returns are terrible and you would forever be shelling out money with no return until you sell.

So I also know there are a few spruiker companies which is why I wanted to know if anyone had worked with either of these organisations before?
 
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Look up the company owner before you commit - initials JM - and then an ASIC search (don't want to get in trouble saying malicious things).

I almost signed up a few years ago when I was 15 after watching their 3 hour intro DVD (was going to spend $10k on their program) - but didn't in the end after my parents wouldn't let me - and thank god! They teach you the commonsense basics most books will teach you and not actually how to make money (in my experience).
 
Yeah I got it 5 yrs ago and then returned the stuff for my $ back because $10k is a lot of money. The property thing is less I think $3995 but have been reading stuff that other people have done with similar organisations and they "try" to help you but in the end you don't end up very far.
I thought that if you were getting 18-20% returns then it was worth the $ but didnt commit even though they were trying to push me and saying that they dont want me to be upset by missing out on the special offer.

I just did the ASIC search, which part am I supposed to be looking at? It doesnt give you too much info.
Thanks for your insight.
 
Maybe use Zillow to look up the properties.

In zillow (about 1/2 way down) you can see the sales and previous sales history of the house. You will be surprised how little the people who are now selling the property actually paid for the house.

No doubt you have heard of 2 tier marketing here in Aust particularly regarding GC property when here its 2 tier marketing but for just about the whole of the USA.

Whatever you do don't buy anything in the US without first getting educated about the market and maybe don't buy if you have never bought IP's in Aust.

Cheers
 
Do you honestly think that if you need to come onto a forum like this for assurance, you're not going to get positively pumped up the jacksie overseas for your obvious amateurism?
 
handyandy said:
Maybe use Zillow to look up the properties.

In zillow (about 1/2 way down) you can see the sales and previous sales history of the house. You will be surprised how little the people who are now selling the property actually paid for the house.

No doubt you have heard of 2 tier marketing here in Aust particularly regarding GC property when here its 2 tier marketing but for just about the whole of the USA.

Whatever you do don't buy anything in the US without first getting educated about the market and maybe don't buy if you have never bought IP's in Aust.

Cheers
Click to expand...
Thanks Handy Andy. Zillow was one of the sites I was looking at and there can be a huge difference in a few months!

Yes thanks I am just at the beginning of my research when I bumped into this forum. Im just not overly excited about the returns on AU property and the huge outlay which is why I was considering the USA. You have to start somewhere and I was thinking for under $100k that it might be a good choice. I'm actually wanting to go on holidays there next year so thought I could start researching now and then check out some of the areas whilst Im over there.
 
I'm resident in Canada, wife is Canadian, we get these offers regularly

There is NO prospective tenant
There is NO job within 50 miles to employ anyone
There is NO value in the purchase
There is HUGE unending maintainence costs as the property is vandalised and the county requires you to return it to standard, or does it and charges you. Then the property is trashed again when the repair is completed.
If you are offered at 70k, a local prob. could buy for 15k, and doesnt that is the state of the local market
The US is bankrupt, collapsed, STILL,
 
AlmostBob said:
I'm resident in Canada, wife is Canadian, we get these offers regularly

There is NO prospective tenant
There is NO job within 50 miles to employ anyone
There is NO value in the purchase
There is HUGE unending maintainence costs as the property is vandalised and the county requires you to return it to standard, or does it and charges you. Then the property is trashed again when the repair is completed.
If you are offered at 70k, a local prob. could buy for 15k, and doesnt that is the state of the local market
The US is bankrupt, collapsed, STILL,
Click to expand...

Thanks.
Some of these properties came with a 3-12 month guaranteed tenant and they both say that they choose cities that have good employment and growth and the homes are rehabbed. This is what was giving me confidence but understand that things can still go wrong.

Obviously I dont know about these particular areas as I haven't been there before. Are you talking about all states/suburbs or the ones I mentioned in my first post? I know the US is in a bad way and will be for quite sometime, but don't people that have lost their homes still need somewhere to live and will rent?
I have also heard that property managers can be dodgy and that it is hard to find a good one.

Do you think that better areas (currently around $300k - was over 1 million) worth looking at or they are just going to drop further. I'm sure there will be a bottom sometime soon and that the only way to go is up? I know I'm an amateur at this but am just trying to learn by talking to people that have more experience in this than me and have been there, done that....
I'm not going to jump in but just want to hear both sides of the story.
 
Heatseekers,

Handy Andy has given good advice about using zillow. Its crucial that you are able to determine what the true value of a property is. Stay clear off any companies buying off flippers, you want to buy direct from the foreclosure market not from US investors that are marking up the properties.

I have been investing in the Atlanta market for almost 2 years now and set up my own business to facilitate the purchase, renovation and tenanting of properties for international investors.

We purchase good quality properties in nice areas and steer clear of areas that are known as trouble spots.

We offer the real deal to our clients and pass on properties at exactly the same price we were able to negotiate with the banks plus a facilitation fee .
 
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Heatseekers said:
Thanks.
Some of these properties came with a 3-12 month guaranteed tenant and they both say that they choose cities that have good employment and growth and the homes are rehabbed. This is what was giving me confidence but understand that things can still go wrong.

Obviously I dont know about these particular areas as I haven't been there before. Are you talking about all states/suburbs or the ones I mentioned in my first post? I know the US is in a bad way and will be for quite sometime, but don't people that have lost their homes still need somewhere to live and will rent?
I have also heard that property managers can be dodgy and that it is hard to find a good one.

Do you think that better areas (currently around $300k - was over 1 million) worth looking at or they are just going to drop further. I'm sure there will be a bottom sometime soon and that the only way to go is up? I know I'm an amateur at this but am just trying to learn by talking to people that have more experience in this than me and have been there, done that....
I'm not going to jump in but just want to hear both sides of the story.
Click to expand...

1. 3-12 month guaranteed tenant is sucker bait, $7k to make a sucker spend $70k for a $20k property,
after 3 months the tenant disappears,
the mortgage doesnt,
nopay
house repos,
they sell it to another sucker

Replying & considering Karina's post above
Huge areas in the US were company towns, either the company bought built and subsidised the residential area directly to entice employees,
or
by 'osmosis' large areas became populated by the employees of large companies

those companies are bust, moved offshore, simply ceased to exist
the demand to live there is 0 there is no other employer
the existing residents are departing in droves, looking for alternate employment
those large residential areas near former large companies, are offered to suckers, as IP,

there are areas where alternate employers exist concurrent with failed employers. In those areas failed company employees are exiting looking for employment suiting their skillset, new company employees are moving in from other failed company areas, houses are available from the departing residents, and in demand from arriving residents, investment gold

It is difficult for an Aussie to separate the type of area, and avoid being a sucker, to know the demographic, wikipedia is wrong by 1-2 years,
getting it wrong by a few miles is enough to be failably(real word? dunno) wrong

It is difficult for anyone

I dont have a reliable Crystal ball, I keep to areas I(well Kathryn) can eyeball, hence the reference to Karina's post, she may be good to talk to. Not a reccommendation, I do not know her, also not suggesting anything bad, if she knows the biz & the areas to look, then it is 70k -gold, not 70k of lemons
due dilligence, examine everything believe no-one or nothing without proof
 
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A few questions to answer...

1. If the deals are so good, why aren't the US investors snapping them up?

2. Why is the house so cheap if it's in a good area with good employment?

3. How do you know you'll get a tenant, or if the tenant leaves you'll get another one

4. How can you be sure the property will be looked after?

5. Are house prices rising or still falling?
 
A few questions to answer...

1. If the deals are so good, why aren't the US investors snapping them up?

None of them can get loans because the financing is so tight there. Plus anyone that might be able to probably wouldn't be too trusting in RE as their current investments/homes have dropped so much and they have lost too much already they probably arent even considering investing.

2. Why is the house so cheap if it's in a good area with good employment?

I don't know but once again people probably lost their jobs before and their houses but still need somewhere to rent.

3. How do you know you'll get a tenant, or if the tenant leaves you'll get another one

I don't same as here. Which is why Im asking if anyone knows about these particular areas since a few companies are promoting them. With the companies, spruikers, investment clubs..whatever you want to call them they actually guaranteed a tenant for 3-12 months.

4. How can you be sure the property will be looked after?

You can't same as here

5. Are house prices rising or still falling?

Probably falling but this is something Im looking at towards the end of next year after my trip there and Im not looking for capital gains I was looking for cash flow. If you can get a tenant for 1 yr you are looking at about 12,000 net income from the property. If this happens for 5-7 years you have paid it off and are forever getting an income from it.

Look I'm no expert and just asking if anyone has had luck on it or knows about any of these areas or companies?
 
karina said:
Heatseekers,

Handy Andy has given good advice about using zillow. Its crucial that you are able to determine what the true value of a property is. Stay clear off any companies buying off flippers, you want to buy direct from the foreclosure market not from US investors that are marking up the properties.

I have been investing in the Atlanta market for almost 2 years now and set up my own business to facilitate the purchase, renovation and tenanting of properties for international investors.

We purchase good quality properties in nice areas and steer clear of areas that are known as trouble spots.

We offer the real deal to our clients and pass on properties at exactly the same price we were able to negotiate with the banks plus a facilitation fee .
Click to expand...

Hi Karina

Im not having a dig at you and dont know anything about what you are offering but if the others are warning me out these other places, then what makes your company different. The others also suggest Atlanta, rehab the houses, offer them and tenant them for you? How much is your fee? Maybe that is the difference as one adds theirs to the property, one charges a membership and you charge a fee per property. It all sounds the same to me?
 
Last edited by a moderator:
AlmostBob said:
1. 3-12 month guaranteed tenant is sucker bait, $7k to make a sucker spend $70k for a $20k property,
after 3 months the tenant disappears,
the mortgage doesnt,
nopay
house repos,
they sell it to another sucker

Replying & considering Karina's post above
Huge areas in the US were company towns, either the company bought built and subsidised the residential area directly to entice employees,
or
by 'osmosis' large areas became populated by the employees of large companies

those companies are bust, moved offshore, simply ceased to exist
the demand to live there is 0 there is no other employer
the existing residents are departing in droves, looking for alternate employment
those large residential areas near former large companies, are offered to suckers, as IP,

there are areas where alternate employers exist concurrent with failed employers. In those areas failed company employees are exiting looking for employment suiting their skillset, new company employees are moving in from other failed company areas, houses are available from the departing residents, and in demand from arriving residents, investment gold

It is difficult for an Aussie to separate the type of area, and avoid being a sucker, to know the demographic, wikipedia is wrong by 1-2 years,
getting it wrong by a few miles is enough to be failably(real word? dunno) wrong

It is difficult for anyone

I dont have a reliable Crystal ball, I keep to areas I(well Kathryn) can eyeball, hence the reference to Karina's post, she may be good to talk to. Not a reccommendation, I do not know her, also not suggesting anything bad, if she knows the biz & the areas to look, then it is 70k -gold, not 70k of lemons
due dilligence, examine everything believe no-one or nothing without proof
Click to expand...

Thanks.
Yes. These are obviously the areas I would want to stay away from. So do you know if Atlanta, Kansas City are good areas or not? I might not have to necessarily use these companies but I can learn info from them. Just don't know where to check the info against.
 
tubs said:
A few questions to answer...

1. If the deals are so good, why aren't the US investors snapping them up?

2. Why is the house so cheap if it's in a good area with good employment?

3. How do you know you'll get a tenant, or if the tenant leaves you'll get another one

4. How can you be sure the property will be looked after?

5. Are house prices rising or still falling?
Click to expand...

Tubs,

I will do my best to answer your questions.

1. If the deals are so good, why aren't the US investors snapping them up?
They are snapping them up , the one´s that have access to cash, as are investors from all over the world.

2. Why is the house so cheap if it's in a good area with good employment?
Property prices have fallen across the board in good and bad neighbourhoods due to the GFC. We look for properties in normal surburbia with average rents. We also submit up to 100 offers a month and move forward with only the very best deals in terms of street appeal, price, condition etc.

3. How do you know you'll get a tenant, or if the tenant leaves you'll get another one
That question could be asked of any property in any rental market across the world including Australia. The key to getting it rented in Atlanta is very straight forward. Firstly the property needs to be in a reasonable area (not a ghetto), it needs to present well and it needs to be priced properly. Its all about property selection, presentation and being real in terms of what rent is achievable. We also run reports of rental statistics for any area. Every property we put forward is assessed by our management company before we show it to clients.

4. How can you be sure the property will be looked after?
Again that question could be asked of any property in any rental market across the world including Australia. It all comes down to good management.


5. Are house prices rising or still falling?
The market we are targeting 30-60k price point is very competitive at the moment. To give you an example we submitted an offer on friday of full price on a 45k property only to be advised we need to submit our highest and best offer as there are 13 offers on the table.
 
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Heatseekers,

In answer to your question

"Hi Karina

Im not having a dig at you and dont know anything about what you are offering but if the others are warning me out these other places, then what makes your company different. The others also suggest Atlanta, rehab the houses, offer them and tenant them for you? How much is your fee? Maybe that is the difference as one adds theirs to the property, one charges a membership and you charge a fee per property. It all sounds the same to me? "

Heatseekers, my facilitation fee is $4500 per property. I do not charge any membership fees, upfront fees or anything like that. The difference is that my clients get the properties at a wholesale price not an inflated price. You can certainly go it alone and go over to the city you choose , spend some time on the ground , research the areas and set up a team and try and do it all yourself. If you plan to do that though you need to invest considerable time and money to get the local knowledge you need to make good decisions. I have invested that time and have been purchasing in Atlanta for over 2 years now. US investing is not all good and not all bad, but it can be very lucrative if you get it right. Thats the key, if you want to make money you need to buy at the right price, not some inflated price being sold to foreigners and you need to buy in areas that everyday people feel safe and are happy to live in.
 
Thanks Karina.
See the problem is you all say the same thing and sound so helpful and trustworthy that it is hard to spot if anyone is trying to rip me off.
The one in the USA I actually contacted and they haven't dealt with international investors before so the prices they are showing me is the same as their clients in the US. They dont charge a fee but add it to the property price as that is how they said they get paid, how much I dont know?
The other company is Aus based and you pay a one off $4000 fee and then they say you get all the properties off them at wholesale.

I just thought it was good because of what you have said above and all the groundwork is done for you. since I want a holiday there anyway then I can always check on what I have been recommended before I commit althought I do know some are selling fast, but im sure there are many more deals to be had.
Do you have a website I could look at?
 
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