USA investment properties for an Aussie

[Emma171]

I couldn’t agree with Karina more on fun times to have in Atlanta....with Vegas tight and upward pressure, this is a cheaper alternative no question (with all the caveats of wet, wood, termites, damp, rot, composition shingle roofs, lawns to be mowed etc versus bone dry, desert rock that doesn't grow and not a termite to be vaguely worried about....aaaah the joys of minimal ongoing maintenance... sorry, still love love love Vegas)

For those who like the thrill of the hunt and are considering Atlanta I just have to say it beats the HECK out of Vegas for freedom of information - it just completely ROCKS by comparison to Alaska or Vegas... Tools I couldn’t live without here that will become your best friend....

1) Listingbook.com <http://Listingbook.com>
2) GeorgiaMLS.com <http://GeorgiaMLS.com>
3) Usual – Gosection8.com and Zillow (Go section 8 to see section 8 rents in the area closest to your house)

What is BRILLIANT is that the GeorgiaMLS (multiple listing service) is available to us as investors..
(unfortunately one of 2 MLS services - they aren't linked sadly and some agents list only on one or the other - FMLS - or Fusion MLS- that we can’t get to but just ask any real estate agent to set you up)

GeorgiaMLS though...Just GENIUS....- download the iPad or mobile app... Just so much fun to play with. I can literally be sitting in any town I love and click on the “locate properties near me” and it pops up with everything for sale. I have a favourite sushi place I have adopted and just had to bid on the house walking distance to it.... Try it..... So so so cool... otherwise just from desktop use the main GeorgiaMLS.

Listingbook is even better in some respects because (after you randomly select a real estate agent to help you), you can click on a zip, narrow the search by an area, and ALL THE PAST SALES FOR THE SUBDIVISION pop up.... In Vegas the best we have is Zillow and the MLS, over here in ATL, Listingbook deserves pride of place in your shopping arsenal!

SAMPLE LIVE PROPERTY AND STEPPING THROUGH THE PROCESS FOR HOW TO LEARN ATL PROPERTIES

This is random – it is a Marietta property that I saw a couple of days back....this is not picked for any reason other than random and a bit high in price (so a cash lowball by 15k might be a fun try!)... anyhooo the point is to play with any property whatsoever just pick one from the 9,000.... So there are 50k properties, 35k properties, 150k properties etc...choose whatever strikes your fancy:
1470 Chamirey Drive, Marietta 30008
MLS# = 4306104
List Price: $74,900
Zesstimate: $94,000
Rent Zesstimate: $1124 - $1300
HOA: $130 (sigh, you know my feelings on that ... I haven’t seen a huge difference in rental yields either but this is a cheap HOA)

About:
Eyeball rough Repair Estimate = under 5k (great shape – paint/carpet, some laminate floor fittings, appliances, missing a downstairs mirror, 2 sheetrock patches etc.. Electrical was on a/c present, water heater, no signs of termites etc)
Marrietta – home of an AFB and Lockheed Martin for employment
3 bedroom, 2.5 bath (would rather 4 br) but pretty!
Sq foot: 1985
Year Built: 1996 (NO signs thank goodness of munching damage on this property – ie wood or termites etc - none of the usual dank smell either)
Taxes: $1034 per annum
Oh yes, did I mention A/C unit in tact – only one (more likely in “better” areas that the a/c unit is still there)
Siding: Hardiplank - http://architecture.about.com/od/sidingconstruction/g/hardiplank.htm*

******* versus press board siding or composition board siding which you don't want so much******
http://www.usinspect.com/resources-...s-home/exterior-surfaces-cladding/composition

Think cardboard when wet!
********

Roof: Composition Shingle

ALL properties are postcard cute so get over that.... However this did have excellent flow...and I mean, give me a Christmas tree, a US flag and call it good!

How to find....

1) GeorgiaMLS... LOVE it.... Www.georgiamls.com <http://Www.georgiamls.com> – type in the address or zip and see everything available ACTIVE AND TODAY.... not zillow timing! THIS IS ALSO WHERE YOU CAN GO TO SEE WHAT IS LISTED FOR RENTS AND COMPARE FOR YOURSELF WHAT IS LISTED IN THE MLS (well at least those that the agent lists on GAMLS) for your area.

And now, my favourite toy....

2) Listingbook....www.listingbook.com - set up a free account, choose any random real estate agent and go play!

TO FIND SUBJECT PROPERTY
Also called “why I love listingbook”:
Click on Homefinder – this brings up EVERY property I have in “my criteria”... Knock your socks out!!! There are only about 91 pages of them....
Click on “Quick Search”... Just LOOK at all the options (but ignore them for now, you can play later)
Under Search Criteria type in the MLS number of this property: 4306104
NOW this is COOL..... Click on the actual address above the picture 1470 Chamirey Dr
NOW...drum roll.... Love love love this... Usual stuff so far but wait, there’s more... Now, click on the tab “Area Sales”... Okay now HOW COOL IS THAT – List versus Sales Price etc???
From this we can see that this subdivision – called Wilmington has had 3 other recent sales... $116,900, $115,000 and $72,000 within 6 months...(oooooh, guess which one of these was a cash buyer, quick, quick!), so how would you feel with that news if you bid 60 - 66k cash and won!? Heck lowball and bid 50k.... You never know (might get RSI but what is the worst that could happen – they say no?)
BUT WAIT, there’s more..... What if you have NEVER been to Atlanta and want to know what your tenant would look like – who would they be, what would they earn.....? Go back to the tab labelled “Community Information” and knock your socks off...60% owned – incredibly low vacancy for Atlanta (under 10)... But yes, even the weather risks – SERIOUSLY!?! For those who love to research this is just amazing.....demographic data like that normally has to be paid for!

LOVE IT.

Happy hunting everyone....

 

[Heatseekers]

Hi Emma

Getting a bit late now to check (some reason not getting updates when people post) but will check it out tomorrow. Thanks for all the details.

Candice

P.S still need to find a way of getting loans pref. in USA but know this is unlikely...

 

[MTR]

I'm seriously thinking of investing in USA so am interested in the product that you are offering. Any chance that you may be able to come to Brisbane as there are a number of others that I know who may be interested.

I'll send you a private message as well.

Hi Nth Brisbane
For your informtion..... I have purchased many properties with Karina (Select American Homes) and can highly recommend her service. I have posted links on ss of my properties. Feel free to PM me if you require specific details on property addresses, yields etc.

Cheers, MTR

 

[Emma171]

MTR...that is great and I am so happy that Karina has done so well in the few months..... she buys properties very well and is just starting her own business in Atlanta after she bought through another forumite for her first IP here a few years back. She will, I am sure, do very well. We looked at collaboration and I did forward her name to my list but our methods are just entirely different and ultimately it just didnt pan out... I fall into the "what else is out there" and "yummy, candy store... Let's try them all!!!"

It is confusing and I apologize to those who have PM'd me asking... When Karina told me she had loved the word "select" from my company and used it all I could say is that it is FANTASTIC word....and although awkward as i was just heading over to Atlanta, if we could've collaborated it would have been a logical on flow. I first used "select" for business over (gasp) 10 years ago in Alaska.... Lol I spent an epic time going through the dictionary with a girlfriend of mine to do so ( beverages involved.. "choice" sounded like dog food to me at the time type thing).,,, It is just a word, a great word (yep, pretty proud of it!)

So we are just different methods bound by one word out of 3!

Different, not wrong, not right, just different. I help people learn how to do this themselves, to buy off the open market just as every spruiker, wholesaler, homeowner and investor does....we kill jungles in writing contracts, get RSI as needed, go through up to a million properties as needed but ultimately everyone chooses their own properties based on their own investment criteria with all the fun of the hunt. If their gut says no, move on. But what i do is so so so not instant gratification..The toughest side is saying "no" but i will be with your property forever so it really matters to me. We personally oversee every repair and rent the property for you (I know every faucet in every property). Our property manager is in house working under our brokerage firms, hand trained to Oz standards and is why we only charge 7% of gross and no reletting or renewal fees. BUT ONLY WORKS FOR OUR CLIENTS..our project manager is an Austrralian Master Builders association winning project manager... And included in the fee. I could not stand someone with 100 properties coming near one of mine! We do the inspections, the christmas presents and i know every tenant and their kids. Project oversight and renting are included in my fee and property management is in house. Then again I am a US resident with 13 years of lessons to protect people from so I have that luxury.. I do handle the 2 am calls... It is just the way I started... Heck in 10 years time we will probably all be doing flipping highrise developments! Most of my clients can bid against me on the repair estimates but that is just how I work.

I don't and won't post properties because if my clients want to low ball every property, go for it ...their privacy also binds me and I promised Karina we wouldn't do that... Public forum rules on spruiking aside. If my clients want to just secure the property they love it because it has garden gnomes out the front, go for it... Although it would still have to meet their yield criteria or hopes for capital gain etc. I am the last person with the crystal ball... I give my clients everything i know and hope we all make millions. If you lowball you may have RSI but in Atlanta you can lowball the heck out of and stand a devilish good chance of winning.... Market rents are market rents, they will be whatever supply and demand ultimately dictate... Although I am an advocate of getting the RIGHT tenant, not just any tenant... There are no guarantees but I do like to eyeball.

DIFFERENT
Karina is fantastic.. instant gratification- half the time i think i am a glutton for punishment! She sources the properties, secures them at great low ball prices and on sells them via an LLC without mark up (other than the facilitation fee). From what I remember repairs and property management are outsourced to reliable people but of course you pay separately for them.

We are just two companies that offer totally different products.

I will leave it at that and wish, as always, the best of FUN... There is a Caribbean island somewhere in 5 years time that has our names on it and everyone is invited....


Goooooooo somersofters!!!!!
Have fun!!!!

 

[Rolf Latham]

There is a Caribbean island somewhere in 5 years time that has our names on it and everyone is invited....

Yeah !

Disney has Castaway Cay

De Vos and Van Andel have Peter Island

Branson Has Necker

Johny Depp and Nicolas Cage have theirs



What are we going to name ours ?



ta

rolf

 

[Heatseekers]

Emma and Karina: Are either of you going to look at helping your clients seek finance in the USA in the future, or something you will never get into?

 

[Emma171]

I didn't post it earlier..... We have sourced a hard cash lender at 8% with 50% LTV. But it is only for my clients in Vegas and these particular people won't touch Atlanta only CA and Vegas.

 

[Heatseekers]

cool, what are the conditions?
What are the reasons for investing in California atm? Have you got any examples?

 

[Heatseekers]

cool, what are the conditions?
What are the reasons for investing in California atm? Have you got any examples?

or do you ONLY do Vegas?

 

[Emma171]

La .....

Aaaaaahhhhh, LA is where the fun can begin and the game is different (or can be). Remember - LA is BIG...individual counties have populations almost the same size as the whole population of Australia.

SO, again a COMPLETELY different market (and I love the choice - each market has its own strengths and weaknesses)!

Ultimately this is where you could play really hard.

Forget applying for a loan....Our broker (literal god of R/E - author of best sellers etc) in LA is the god of structuring deals and this is the time that sellers are more flexible - ie the banks aren't lending to their traditional purchasers and MFRs in LA is deemed a very very safe bet. IN fact, they haven't built working class MFR's in southern LA for more than 30 years!

Without spruiking the deal looks like this:

Example:
You have 40 - 70k and you put it down on a property that an owner wants to offload. This is commercial - 5 units plus. You take on someone else's loan at their interest rate (this is called assuming the loan). If you default you lose the building. Object of the exercise? go in, renovate them with reliable people, appreciate the property, LA has held firm and that will continue. These will mostly be fully occupied and tenanted buildings so even the renovating is case specific.

This is commercial stuff blue collar accommodation - do NOT expect Atlanta chocolate box pretty... this is rolling up your sleeves ownership.... but can't qualify for a loan.. this is the way to play.

The LA property market played right is only limited by imagination - you will see terms like OWC (owner will carry), Wrap, Assumable, 2nd or 3rd on (ie 2 or 3 different owners with notes on the building) - ie $100,000 at 7% interest only for 5 years etc - all negotiable.

You must obviously be careful on areas, this isn’t a blanket endorsement and this is why it is not on my website but these deals are there for those who this appeals to.

If you are interested, please PM me....

 

[Heatseekers]

If they are a safe bet how come they haven't built anymore? Wouldn't that suggest that there isn't much demand for them or are they that good that they have lasted and they don't need anymore?
So do you also to SF?

 

[Player]

Some ATO links

WRT an earlier post of mine, I have done some digging and still more to do, however here is a link from the ATO that is worth navigating for those, who like me, need some more certaintly to the taxing process here:

http://www.ato.gov.au/content/65779.htm

......................I am not sure whether (if we quarantine the rental income there) we actually need to lodge Oz tax returns each and every year or only when the money comes back (physically transfered) here.

It appears that even if leaving funds there, the income that was earnt needs to be declared in your Aus tax return (whether personal if person member of LLC or family trust if member of LLC)

If it's the latter I am uncertain how the ATO measures the net pre-tax rental income, viz do they use the closing currency price of the exhange rate of the day (say 30 June) or the exhange rate for EOFY for each of the years it was left over in the US?

Apparently it is the earlier of the time derived or received:

http://www.ato.gov.au/businesses/content.aspx?doc=/content/34749.htm

So, for each and every rent period (monthly) and each and every time an expense is incurred (interest, repairs, PM fees, taxes paid, insurrance, etc) the prevailing conversion rate of the day needs to be used........sounds a little complex and involved...............Do others who are invested already from here know if this is the case? It's how I read the info from that link on forex translation



Obviously tax will be paid not only on the income but also the currency gain. Nothing wrong with this as the currency play adds to the sweetness of this endeavour.

.................................. I, for one, will be keen to hear of how their first tax returns go with the IRS and ATO as relevant.

I have more to read and uncover as I navigate that ATO site. Just wanted to add some content as I follow up on my earlier questions. Happy to hear other's experiences also.

 

[handyandy]

Hi Player

As per the ATO site

"As a taxpayer you can translate an amount into Australian currency using an exchange rate that is an average of the exchange rates applicable during a period (which may be less than, but not exceeding, 12 months) chosen by you."

It goes on to give a table of average exchange rates that can be applied.

So relatively simple to apply the one average rate to all transactions for the year (actual or financial)

Although I have no personal experience at this stage, I have heard that the whole foreign tax credit and income as determined by doing a tax return in the US then needs to be repeated for the ATO and it is not a given that the deduction that the US allowed will be allowed in Aust.

In other words the figures that make up the foreign earning are gross figures rather than net figures and all figures need to be scrutinized by the ATO.

This would have a major impact on those people who are expecting to claim travel expenses against LLC's (where it's not regarded as a C-Corp) in the US and then have to justify those same expenses to the ATO.

Cheers

 

[Player]

Thanks HA.

Was reading deeper into the page and links when I realised that.

I think I am not alone in saying that quite a few folk here on SS are looking to the experiences of your good self, MTR, Karina, etc., as the pioneers of this game from this forum and, all the experiences and info you share.

 

[Heatseekers]

Thanks for the ATO link. Funny how they don't give definates. You may be able to offset.... Of course you should be able to the greedy *****.

IF you set up a LLC before you buy a house and travel over there can you claim travel expenses for looking? Or is that not really possible because you have to setup the LLC in the city you will be buying?

 

[DEC]

I found this comment interesting
I know nothing of Otton, I just stumbled across this while having a look online today and it made me second think.

Pitfalls Revealed
Otton has for years been sought out to rescue investors who have been lured into US property investing by slick presenters who speak of huge returns on minimal investment. He understands how people can be attracted by the proposition of buying a house in the US for a few thousand dollars.
“What they just don’t understand,” he says, “is that it will likely cost thousands of dollars every year to maintain those properties.”
One of the biggest differences is a result of the American fear of being sued. Tenants call their property manager when something as simple as a light bulb needs replacing. Rather than having a handyman come in, the agent will call in an expensive licensed electrician instead - just so they are covered if any problems occur.
The same applies to other maintenance - air conditioning, ice makers, ‘winterizing’ pipes, blocked sewers (and beware: US sewer pipes are just 2” in diameter) and so on.
“US property investors should be prepared to completely re-carpet and re-paint their properties every two years, at least. Anything less would be unacceptable in the US rental market,” continues Mr. Otton.
Management Monitoring
Because they are living offshore, Otton knows from experience that monitoring the expenses claimed by management agents is challenging. Verifying whether a property is vacant or occupied, or that it is being well maintained is impossible when the owner is thousands of miles away.

More in a free ebook here
http://www.rickotton.com/the-truth-about-buying-property-in-the-united-states

Probably also worth looking at these us vacancy rates stats from the US census bureau

http://search.census.gov/search?ent...site=census&q=vacancy+rates&btnG.x=0&btnG.y=0

 

[Emma171]

I have personally averaged about every 5 years - but Otton brings up a great point of tile in Vegas, wood floors in Atlanta. However I paint to make the place shine and I think that if you consider it is under $1k to repaint the house - if you average a 2-3 year tenancy, it isn't an exorbitant price to pay to give someone a new fresh look.

Yes, tenants are more demanding than back home in Oz (mind you I am still being demanded on my Cairns property to pay $75 for smoke detector battery) - but mostly I find because they aren't practical! 4 of our tenants are tradies and do everything... the single mothers?? Not so much! However it is why you make sure the property is set up properly to start with. Go through it with a fine tooth comb and on day one of the tenant moving in, do a walk through, outline PRECISELY what their obligations are under the lease. When you eyeball someone and say "This house is in perfect order and you, by law, are responsible for "x"", they get it.

Do regular inspections to stay on top of things... a stitch in time...I am always having excuses to say "hi" to our tenants.

 

[handyandy]

Thanks for the ATO link. Funny how they don't give definates. You may be able to offset.... Of course you should be able to the greedy *****.

IF you set up a LLC before you buy a house and travel over there can you claim travel expenses for looking? Or is that not really possible because you have to setup the LLC in the city you will be buying?

That's the point I am making.

Under US rules you can claim for the travel to locate properties.

Under Aust ATO rules you can't.

Your US tax return would claim it and the tax withheld accordingly, get to Aust and the ATO say's no and you need to pay more tax.

It is just something that has come up on another forum (locked so can't link) with no actual answer as such.

Cheers

 

[Emma171]

Re SoCal and lack of workers accommodation... Simple... No room! Land values have gone up so much that to build, those that are new will be for a different demographic. Only way the numbers work! It also means that you can "gentrify" if the bone structure of the building permits.

 

[karina]

Heatseekers,

Just responding to your question on finance.

"Are either of you going to look at helping your clients seek finance in the USA in the future, or something you will never get into"

I have been looking into finance options but right now have not been able to secure any finance for foreign investors to purchase Atlanta foreclosures. The finance market is very tight at the moment even for American´s with social security numbers. I hope that in the future when the finance markets free up we will be able to get equity out of these homes and bring those $ back to Australia or use them to invest in more US properties.

On the bright side the reason we are able to secure such amazing deals is because we offer cash. Cash offers are favourable to the banks and we have a much higher probability of getting an acceptance if bidding against a financed offer. Offering cash can mean getting some great discounts off the asking price and in many instances we are achieving the lowest sale price ever recorded in a subdivision.

All of our clients are using cash or lines of credit from Australia to purchase.

My personal view is that when the finance markets free up we will see prices rise. Anyone in a position with cash right now that does their homework and purchases well should do very well long term. I stress this is just my opinion and how I am reading this market (this is not advice). I am investing my own money into Atlanta and have purchased multiple properties.

I have seen examples of some buyers agents offering up to 50% finance (in Atlanta) . Most of these deals are turn key properties, already renovated and tenanted and some come with rental guarantees and in many instances its the wholesaler offering the finance. Some in inferior locations where I would not even consider buying.

I would strongly recommend anyone considering these deals do their due diligence and work out what the mark ups on these properties are. Having researched a few of these deals, some have been bought for substantially less than the asking price so its always important to check www.zillow.com or county records to see what the person selling you that property paid for it. I have seen some mark ups as high as 100%, If you cant find the information on zillow or county records, just google the address and you may be able to see the original listing and list price.

I would like to share a story of a property we inspected in Atlanta. I walked into a property worth around 29k and met an agent in the home. Got to talking mentioned we are from Australia and have set up Select American Homes to facilitate the purchasing , renovating and tenanting of homes for the international investors. The agent mentioned he had an offer in on the townhouse we were inspecting for his client. His client is from memphis and has been buying up to 20 properties a month to sell to international investors including Australians, He mentioned his client was currently in Australia doing some presentations and that a buyers agent in Australia was selling his properties.

I asked him what he thought the property would rent for , he said we can get this rented for $895 a month, great return on a 29k property!

He said that they would be doing a small renovation and that his client would be selling it to his Australian clients on a 12% NET yield. He pulled out his calculator and worked out that the sale price would be 55k.

I just wanted to illustrate this example to highlight that some properties being targeted towards Australians are being priced based on what the property can return in rent , not on its true value or comparable sales of surrounding properties. There is no way if the end buyer tried to sell that property that they would be able to recover what they paid for it.

If anyone is considering any of these turn key properties in Atlanta feel free to email me (contact details below). I would be more than happy to run some comparable sales reports for you and help you determine what the last sale price was.