USA investment properties for an Aussie

[karina]

Heatseekers,

I understand it takes time to establish trust. At some point if you are planning on investing in another country you are going to have to trust someone, a realtor , a property manager a buyers agent, whoever you choose to work with. I would encourage you to do your own research and take your time to learn about the US market. You need to follow the same due diligence as if you were buying a property in Australia. In Australia would you buy a property for 75k when the one´s down the street are selling for 20k ? People are actually doing this , its insane.

I am not out to take advantage of anyone, there are certainly enough players in the market doing that. I believe in the product I am offering and am investing my own money in the same types of properties I am offering to my investors.

I am currently working on my website so its not available just yet but if you like I can email you some examples of properties we have sourced with cashflow reports and comparable sales data. I like to provide my clients with this information so they can make an informed decision. Just send me an email if you are interested and I can mail you some example properties.

 

[Rezix]

Heatseekers - If it counts for anything, I just bought this property through Karina's company/Select American Homes (http://www.zillow.com/homedetails/1346-Timber-Way-Cv-Loganville-GA-30052/14729934_zpid/) and can personally vouch that she has been extremely helpful & professional throughout the whole process.

The property is currently being renovated, and I am hoping to have a tenant in place in early January, so will post an update with the final numbers when everything is up and running.

After doing a substantial amount of research about the companies offering american property investment support, Karina & Emma171 are the only people that I would personally trust enough to buy through (Karina for Atlanta & Emma for Las Vegas). They charge a fixed, independent facilitation fee and that is it - beyond that they just try to get you the best possible price on bargain properties in areas with solid fundamentals only, and support you through every step of the process (setting up LLC, renovations, tenanting etc) with no conflict of interest - right up until you have a fully functional, renovated & rented investment property with solid fundamentals in a good area.

I have spoken at length to Emma over the phone, and met Karina in person for coffee whilst she was in Sydney and was quite impressed with both of their levels of knowledge, depth of property investment experience and genuine interest in the american real estate industry.

I believe that american real estate represents an amazing investment opportunity at the moment, and it is a shame that all it takes is a few sharks who flip bad quality properties at overinflated prices & take advantage of clients, to ruin the name of legitimate, fair, professional offerings, like those of Karina & Emma.

That said, I've noticed the same thing is rampant in my industry (Financial Planning), so it doesn't come as a surprise to me.

In any case, I would be more than happy to have a chat to you or anyone else further about my first-hand experience on american property investment through a facilitator (and Karina specifically).

Cheers,
Chris

 

[Heatseekers]

Thanks to both of you.
Chris I might take up that offer and have a chat with you after christmas.
Im sure it's not all doom & gloom and Im particularly interested in hearing from others that have done it.

 

[locksmithuk]

Greetings All

Like many others like Heatseeker, Perp & Dec (on another thread) I’ve been considering the merits an IP or two in the USA, and quietly reading through the doom merchants’ posts on this site and mainstream news. While I accept that the US is probably heading for double-dose pain, on the face of it – i.e. when one looks past the hysteria – the IP numbers seem to come out, well, far rosier than most Australian property propositions, and somewhat respectable against equities too. I should stress also that I'm looking at foreclosure properties.

Heatseeker, I don’t know if you’ve crunched any numbers yet, but I have an existing IP model which I tweaked & attached for some scenarios based on real life numbers I’ve obtained on a range of USA foreclosure properties: 1. $69.5k purchase price incl ALL acquisition costs; 2. annual rental income of $13.2k; 3. total outgoings of $8.2k; 4. calcs are pre-tax.

Further info & assumptions: 1. Pre-GFC sales values for this property price range were approx $160k, and I've assumed the investor holds the asset until it regains this value; 2. assume outright cash purchase (I accept that this can’t be directly compared to a typical mortgaged IP in Australia).

I then calc’d outcomes for 3 different investment terms (5, 10 and 15 years), with the assumption that prices would recover to pre-GFC values under each of these optimistic/pessimistic timescales. Therefore a 5-year recovery would be the most optimistic outcome, etc etc.

The results:
- average annual positive cashflow of $5k (7.1% on a $69.5k purchase price)
- across the 3 investment timescales the least optimistic average annual capital growth is around 9%, & the most optimistic is 26%
- most importantly the combined average return (i.e. income + capital) ranged from 16% to 33%.

That’s the easy bit. Now, the unknowns at a macro USA level: debt levels & defaults, high inflation, money-printers working overtime, increasing unemployment, a further fall in house prices.... who knows, really? At this point ANY asset class seems to be fair game for uncertainty. As for US house prices falling further over the next year or 2... maybe they will, but how much does it matter if your IP is already returning an overall ANNUAL 20% return over 10 years – how many other asset classes can offer that?

I appreciate that there’s much more to consider with an overseas IP (unreliable property managers, crappy tenants etc), but I’m still unconvinced that an IP in the US is a bad move. Or am I just missing something?

 

[MTR]

Hi there
This is my experience with "Select American Homes", I have purchased 4 properties from Karina and will be purchasing more.

I like Atlanta, I think it is a brilliant market which provides the right mix of cashflow and good family homes. I met up with Karina in Atlanta and I know where and what she is buying and am over the moon with the product.

My properties are in different stages, 2 have not settled and 1 is almost completed and the very first property I purchased was purchased/renovated and tenanted within a 4 week time frame, with an additional $200 per month above what I was quoted it would rent out at.

Karina is correct in stating the market is very competitive as I see properties that I am interested in purchasing that are getting snapped up a higher prices and multiple offers.

I posted these pictures somewhere else on SS, but this is my first purchase with Karina. This is a property that is over 2500 sq ft, built in 2001. Nice comfortable family home.


http://s1178.photobucket.com/albums.../Belmont Ridge renovated/?albumview=slideshow

 

[Heatseekers]

Greetings All

Like many others like Heatseeker, Perp & Dec (on another thread) I’ve been considering the merits an IP or two in the USA, and quietly reading through the doom merchants’ posts on this site and mainstream news. While I accept that the US is probably heading for double-dose pain, on the face of it – i.e. when one looks past the hysteria – the IP numbers seem to come out, well, far rosier than most Australian property propositions, and somewhat respectable against equities too. I should stress also that I'm looking at foreclosure properties.

Heatseeker, I don’t know if you’ve crunched any numbers yet, but I have an existing IP model which I tweaked & attached for some scenarios based on real life numbers I’ve obtained on a range of USA foreclosure properties: 1. $69.5k purchase price incl ALL acquisition costs; 2. annual rental income of $13.2k; 3. total outgoings of $8.2k; 4. calcs are pre-tax.

Further info & assumptions: 1. Pre-GFC sales values for this property price range were approx $160k, and I've assumed the investor holds the asset until it regains this value; 2. assume outright cash purchase (I accept that this can’t be directly compared to a typical mortgaged IP in Australia).

I then calc’d outcomes for 3 different investment terms (5, 10 and 15 years), with the assumption that prices would recover to pre-GFC values under each of these optimistic/pessimistic timescales. Therefore a 5-year recovery would be the most optimistic outcome, etc etc.

The results:
- average annual positive cashflow of $5k (7.1% on a $69.5k purchase price)
- across the 3 investment timescales the least optimistic average annual capital growth is around 9%, & the most optimistic is 26%
- most importantly the combined average return (i.e. income + capital) ranged from 16% to 33%.

That’s the easy bit. Now, the unknowns at a macro USA level: debt levels & defaults, high inflation, money-printers working overtime, increasing unemployment, a further fall in house prices.... who knows, really? At this point ANY asset class seems to be fair game for uncertainty. As for US house prices falling further over the next year or 2... maybe they will, but how much does it matter if your IP is already returning an overall ANNUAL 20% return over 10 years – how many other asset classes can offer that?

I appreciate that there’s much more to consider with an overseas IP (unreliable property managers, crappy tenants etc), but I’m still unconvinced that an IP in the US is a bad move. Or am I just missing something?

Thanks for your input. You are thinking exactly how I am. And I don't get why people keep suggesting the AU market when most of it is negatively geared, just doesn't make sense!

I have heard it is really hard to find good property managers and that would be one of the main concerns. I hope Karina knows of some good ones!

Most of the properties I have been sent have been coming out at around 16% net return- that is after insurance, fees etc.
I just think for such a small downpayment the returns are phenomenal. Just need to hear lots from others who have been there done that, not really all the naysayers. I still want to hear the bad things, but perhaps from people who have experienced it, rather than doubting it.

I did read a thread from Perp and Im sure commercial is even better, but I just want to start small - maybe 1 or 2 and see what happens.

Please keep the comments coming everyone.

 

[Heatseekers]

Hi there
This is my experience with "Select American Homes", I have purchased 4 properties from Karina and will be purchasing more.

I like Atlanta, I think it is a brilliant market which provides the right mix of cashflow and good family homes. I met up with Karina in Atlanta and I know where and what she is buying and am over the moon with the product.

My properties are in different stages, 2 have not settled and 1 is almost completed and the very first property I purchased was purchased/renovated and tenanted within a 4 week time frame, with an additional $200 per month above what I was quoted it would rent out at.

Karina is correct in stating the market is very competitive as I see properties that I am interested in purchasing that are getting snapped up a higher prices and multiple offers.

I posted these pictures somewhere else on SS, but this is my first purchase with Karina. This is a property that is over 2500 sq ft, built in 2001. Nice comfortable family home.


http://s1178.photobucket.com/albums.../Belmont Ridge renovated/?albumview=slideshow

Wow, beautiful home. What sort of demographic are your houses aimed at? How long does it usually take from taking an interest to closing a deal?
Have you done it all with one LLC?
What sort of net return are you expecting on these? Is insurance lots because of natural disasters over there?
Did you choose your own PM or did Karina suggest one?
Sorry for all the Q's but you are the sort of person who I want to hear from!

 

[locksmithuk]

Karina is correct in stating the market is very competitive as I see properties that I am interested in purchasing that are getting snapped up a higher prices and multiple offers.

MTR, are you buying outright or have you been fortunate to source any mortgage finance? Unfortunately my immediate cash reserves don't match my ambition, and I'm all too aware of extremely tight lending restrictions over the pond.

 

[AlmostBob]

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.

Talk to Karina Heatseeker, From what I have found looking to our southern neighbours,,
seems strange right now I'm in tennant creek,
the difference between untenable ghetto, and profitable, is down to about 5 miles
having local knowlege of what part of a city has a future, and what part only had a past,
nobody can guarantee a tenant, anywhere,
just like the off-the-plan
GoldCoast
PortOfMelbourne
Sydney
scams, you have to find a way to avoid being the one born every minute

 

[MTR]

Wow, beautiful home. What sort of demographic are your houses aimed at? How long does it usually take from taking an interest to closing a deal?
Have you done it all with one LLC?
What sort of net return are you expecting on these? Is insurance lots because of natural disasters over there?
Did you choose your own PM or did Karina suggest one?
Sorry for all the Q's but you are the sort of person who I want to hear from!

I am averaging $21% gross income and purchasing for approximately $60,000 per property this includes renovation, from purchase to completion 4 weeks.

Atlanta - building costs approximately $80-90 per sq ft, I am purchasing anywhere from $25-30 sq ft.

I buy in bread and butter areas, where your average family would like to live.

Atlanta projections - second fastest growing population in US, I have figures/report on this and will post soon.

The Au $ is making it all too attractive. Once we get back to the norm of around Au 87 then we are talking.

If you are considering US it will only be attractive if you are purchasing many properties due to costs involved in setting up structures etc.

Yes, I am using LLCs but am also setting up loans with each property and charging higher interest rate than what I would be paying in Aust.

I am still working through the accounts and best way to move forward which is challenging, that's another story.

I am very happy with my selection of properties and progress to date and I am loading up.

As part of the service Select American Home purchases, renovates and finds your tenant.

I have another property which has just been renovated and I will post this shortly for you all to view.

Cheers, MTR

 

[lawsjs]

I assumed you were working with Emma - I was very surprised to learn you just lifted the name.

Ethics?

 

[handyandy]

I assumed you were working with Emma - I was very surprised to learn you just lifted the name.

Ethics?

What name!!!!

Emma's - selectusaproperty

Karina's - selectamericanhomes

The only common word is 'select' hardly grounds for an accusation of lifting the 'name'

Or is that Emma has copyright on 'Select'?? wtf!!!

Or is it that you don't like the fact that we now have another of our longer term posters working in the US and advising the forum members of the opportunities available in locations other than Las Vegas.

Cheers

 

[Emma171]

Thought I would just say that Karina and I offer very different services and while we did look at trying to collaborate and I firmly support that she will NOT rip you off, I work with a model that means that people buy directly off the open market so people choose their own property to buy, what price to bid on it in consultation etc versus the "source and secure" LLC method.

It was therefore very difficult to merge the two notions and gets further complicated that I am on site for all the repairs - ie the one fee takes people through to a tenanted property etc.... versus one to buy, one to rent and one to repair....it is just the way I started and thus a model that works for me. I spent 10 years to some extent learning how not to get ripped off in the US on repairs and so call me a control freak!

Not right, not wrong, just different and a lot stems from my personal belief that repairs and tenanting are as equally difficult to avoid being ripped off (quality repairs, eyeball the tenant etc). Ultimately I like making sure that I am there for each stage and oversee the quality of the tradesmen (so no project management fee or mark up) - but i am also with the properties every day and have trained up the property manager to AUS standards.

Ha, I love shopping at Home Depot too much!

"Select" is an indication of "not bulk" and hand picked.

Best of luck to all...... It is a HUGE market and I am just delighted there are other people out there NOT ripping you off. I think "Select" sets us apart. I think I speak for both Karina and I when I say that we would scream if someone tried using "select" and WERE ripping people off.

 

[lawsjs]

No you are correct HA - it is just an incredible co-incidence.

Emma has been operating with that name for more than ten years.

It is hardly a case of copyright infringement, but of all the names you could choose, you choose one that is at the very least extraordinarily similar.

Why?

I have no issue with anyone helping anyone - long time poster or not, but why the name?

To Emma's credit she doesn't really have an opinion. Having dealt with a business 'competitor' for five years who played the same game as that (before they went broke) I find it utterly unethical. Not Emma's words and although I know the matter is legally questionable I say it purely as a matter of opinion, nothing more.


For the record I posted this before Emma's post above appeared.

 

[Player]

Thought I would just say that Karina and I offer very different services........................

............................Best of luck to all...... It is a HUGE market and I am just delighted there are other people out there NOT ripping you off. I think "Select" sets us apart. I think I speak for both Karina and I when I say that we would scream if someone tried using "select" and WERE ripping people off.

Emma understands there more then enough to go around. Very gracious post.

 

[Player]

When (at what point) do you buy USD?

I have a question on the logistics of funds.

For those who have purchased in the US from Australia, at what point have you bought US dollars?

Do you take pot luck on the rate just prior to settlement?

Do you buy on AUD strength and park it in anticipation of your potential purchase thereby locking in your currency?

Here's what I am anticipating on potentially buying in the US.

I may use ca$h or offset equity to loan to my family trust here in OZ. Then purchase USD using (for example) say, 100,000 AUD. If we see anything approaching $1.10 again, I would likely buy USD well before the fact. And if I don't proceed to a US property purchase, then sell it off on AUD weakness.

Do you set up an account here in Oz in the Trustee ATF family trust's name and park it, for example Citi or HSBC. Once property has been identified as a "buy" loan these USD to your LLC (set up prior to securing property).

Then upon purchase use funds for deposit, legals, inspections and so forth and balance from this account to pay for US property on settlement.......or, do you only start the currency exchange once you've got a property for sure.

I would be pleased to here the timeline and currency logistics that others have used in their purchases for US property

 

[handyandy]

I have a question on the logistics of funds.

For those who have purchased in the US from Australia, at what point have you bought US dollars?

Do you take pot luck on the rate just prior to settlement?

Do you buy on AUD strength and park it in anticipation of your potential purchase thereby locking in your currency?

Here's what I am anticipating on potentially buying in the US.

I may use ca$h or offset equity to loan to my family trust here in OZ. Then purchase USD using (for example) say, 100,000 AUD. If we see anything approaching $1.10 again, I would likely buy USD well before the fact. And if I don't proceed to a US property purchase, then sell it off on AUD weakness.

Do you set up an account here in Oz in the Trustee ATF family trust's name and park it, for example Citi or HSBC. Once property has been identified as a "buy" loan these USD to your LLC (set up prior to securing property).

Then upon purchase use funds for deposit, legals, inspections and so forth and balance from this account to pay for US property on settlement.......or, do you only start the currency exchange once you've got a property for sure.

I would be pleased to here the timeline and currency logistics that others have used in their purchases for US property

Personally, I have just bought USD's when required, but at times waiting for AUD $ weakness to recover (where possible). Am currently waiting to transfer funds for our current purchase.

To date I have exchanged at 1.01 through to 1.08 or thereabouts. Really only started buying in the USA once $ achieved >$1usd.

I use Ozforex and the more you exchange the better the exchange rate and also avoid their token fee. You can just experiment on their site and see the different results achieved given different amounts.

You can leave the money in Ozforex for extended periods without a final destination but this is risky as (I am sure ) it's not secured.

We are writing loans between ourselves and the LLC which will own the property. This loan is then used to establish a lien on the property similar to a mortgage in Aust. Originally we were trying to source loans via an entity in Aust but unfortunately this get caught up in the tax avoidance net. The personal tie up seems to get around this difficulty. The key word in this scenario is 'Portfolio Interest'

http://www.irs.gov/publications/p515/ar02.html

with the interest charge subject to a with holding tax but this ends up being credited to you as a foreign tax credit in Aust.

To date we have transferred funds for deposits (a number at the same time) or the full amount. In either case direct to the Attorneys trust account.

Cheers

 

[Player]

Thank you for the detail HA.

I need to read a little more. Thanks for the link.....some light summertime reading there.

It would be more optimal/flexible for our family trust to on-lend the funds to the LLC rather than us personally, however I appreciate your comments and also that you have, no doubt, investigated the tax avoidance net you allude to.

I have come across OzForex as a recommendation also, however as you state, holding funds there are unlikely to come under the Govt Guarantee and APRA regs. The banks that have foreign currency accounts will guarantee up to 250 K AUD per person/entity.

Obviously the LLC has an EIN. Do you also have a personal ITIN as the lender from Aust to pay witholding tax in US and then be credited the same figure against your Oz taxable income.?

I hope that makes sense.....getting my head around on-lending to LLC's and the exchange rate risk of the interest and the tax to pay depending on currency rate at the time is a little bamboozling.

 

[capitalist]

Handyandy, sorry if I missed something but are you and Karina working together at sourcing property in the US for investors? Just curious.

I also use and recommend Ozforex for sending money o'seas but have found I sometimes get a better rate from the destination bank as long as I send the currency in AU and let them convert once it's arrived. Bank fee with CBA is a flat $22 regardless of amount.

I'd like to transfer some more money soon.. any thoughts on what the AUD will do in the next few months? I hope it doesn't stay below par especially with interest rates dropping.

 

[Heatseekers]

Handyandy, sorry if I missed something but are you and Karina working together at sourcing property in the US for investors? Just curious.

I was also wondering this?