USA investment properties for an Aussie

[DEC]

From a PDF I was reading and mentioned earlier
Any comment?

I will also give words of warning to Australians contemplating buying semiexpensive properties in America as these houses come with a whole set of different problems.
If you purchase your property with mostly cash, there is a very good chance that you will have difficulty getting your cash out of the deal later.
US mortgage companies won’t lend money if property a is valued for less than $50,000.
This seems fine in theory but what if you happen to have a house worth $40,000 and you are trying to sell?
Your potential American buyer can’t get a loan to buy the property because the minimum loan size is $40,000.
So people won’t be able to buy your house, the families from the poor neighbourhoods are unable to save $40,000 and they can’t get a loan so you are left with a house that you can’t sell to get your cash out.
Now the only person who is going to save you and cash you out is the investor but the investor is not going to cash out for $40,000; he’s going to take you out at $20,000.

Also, for those contemplating finance in the US, just be wary what would happen if the AUD crashed back to its normal rate.

Your $50,000 usd loan could now be worth $90,000 aud worth of debt and the deal will not be quite as sweet as you thought. ( I think I got that right)

 

[Player]

..........Also, for those contemplating finance in the US, just be wary what would happen if the AUD crashed back to its normal rate.

Your $50,000 usd loan could now be worth $90,000 aud worth of debt and the deal will not be quite as sweet as you thought. ( I think I got that right)

Hi DEC,

IMO, you wouldn't be paying the loan back until it was time to exit.......having sold for a profit, paying tax and upon bringing funds back, you would actually make money on our AUD weakening. You wouldn't be paying off that loan with AUD from here.

Let's assume a worse scenario, that no growth (however cashflow has been good especially if leveraged by being able to borrow their USD), you would still make money on the currency swap back to AUS. Assuming of course that USD will gain again one day. It's the assumption many are working on.

 

[MTR]

Hi DEC,

IMO, you wouldn't be paying the loan back until it was time to exit.......having sold for a profit, paying tax and upon bringing funds back, you would actually make money on our AUD weakening. You wouldn't be paying off that loan with AUD from here.

Let's assume a worse scenario, that no growth (however cashflow has been good especially if leveraged by being able to borrow their USD), you would still make money on the currency swap back to AUS. Assuming of course that USD will gain again one day. It's the assumption many are working on.

Hi Player
That's correct.

I am also using rental income to reduce the debt or alternatively purchase more properties.

MTR

 

[crc_error]

great thread.. thanks for the info..

To me this deal seems to good to be true.. you buy a house, and it pays for itself in 5 years in rent? How can you go wrong with this?

vs buying the most expensive property in the world (in OZ) where your negatively geared to the tune of $15k per year, and now seeing falling property prices...

To me the risk buying a $50k house cash in US, is far less than buying a house in OZ for $500,000 @ 90% LVR.

 

[Heatseekers]

Thanks Karina that is how I was thinking which is why I thought it would be hard to find funding there.

Also thanks for the info on the Atlanta property, just goes to show and which is why I'm finding it hard to trust anyone but don't want to do it completely on my own.

This is what I'm thinking....
I want to get a loan for about $50k to buy a property and renovate and if any money left to keep in an account for repairs,costs etc on the house.
I would not be looking at selling this property in the future and would just use it for cash flow hopefully for the rest of my life as well as adding more properties to my portfolio each year.

I am thinking that in a bit of time that the USD will be worth more than the AUD again. So if this is right am I correct in thinking that a US loan would've been better if I'm paying it off each month from the rent? Just double checking cos it can easily be confused which way it works better.

 

[Heatseekers]

i agree CRC Error. That is exactly what I'm thinking and trying to explain to everyone that are so negative and keep suggesting the AU market

 

[lawsjs]

Don't forget you pay CGT on currency gains as well.

 

[crc_error]

yep, I dont know why so many are so tunnel visioned to AU property.. I think that the next decade there will be no growth in AU, so why would you invest here? Look at the AU stock market vs US stock market, US market has done well and gained over the last 12 months, the AU market is down 15% vs positive 5%..

 

[Heatseekers]

Anyone know of any private lenders in WA? Or non traditional lenders that aren't as strict on their criteria?

 

[Rixter]

Anyone know of any private lenders in WA? Or non traditional lenders that aren't as strict on their criteria?

How much do you want to lend?

 

[buzzlightyear]

Given the prices for the homes we are talking about (ie between $30k to $50k), wouldn't you just pay cash out of a LOC or cash reserves?

 

[Heatseekers]

i only have about 20k in cash and wanted to get at least 2 properties around 40-50k. Dont have much in my super and to get it out and turn it into a smsf would cost more than its worth. So would want to borrow around 60-80k.
I wish I had $100k just laying around in a reserve!

 

[Click_It]

Hi guys, I've been reading through these forums recently and thought I should finally say a hello.

Thanks to these forums my partner and I met up with Karina in Sydney last Wednesday and had a very relaxed informal chat about Atlanta investment opportunities, we both found her to be very down to earth and pleasant to speak with.

I feel I've only just scratched the surface on this adventure but already seeing the potential that can come from it. I'll plan to keep researching for the next few months and hopefully then get things started. I have equity of approx $220k to work with and so far the idea of picking up 3 properties in the 1700-2000sqf size looks appealing though I'm always happy to hear what other people are doing, thoughts, suggestions and what not. I haven't decided Atlanta to be the best/only option for me at this stage but I will be honest in saying it's the front runner right now. Vegas interested me too although there are some concerns which others have already mentioned here. I also have a friend living with us from Vegas who would get along very well with Emma17.

Still very early days for me but I'm very excited about opening the door to something I didn't think possible just a few years ago.

Well anyhow just taking this opportunity to use my first post to say hello rather than asking for help which is probably what I'll be doing more of in the coming weeks/months

 

[Heatseekers]

Hi guys, I've been reading through these forums recently and thought I should finally say a hello.

Thanks to these forums my partner and I met up with Karina in Sydney last Wednesday and had a very relaxed informal chat about Atlanta investment opportunities, we both found her to be very down to earth and pleasant to speak with.

I feel I've only just scratched the surface on this adventure but already seeing the potential that can come from it. I'll plan to keep researching for the next few months and hopefully then get things started. I have equity of approx $220k to work with and so far the idea of picking up 3 properties in the 1700-2000sqf size looks appealing though I'm always happy to hear what other people are doing, thoughts, suggestions and what not. I haven't decided Atlanta to be the best/only option for me at this stage but I will be honest in saying it's the front runner right now. Vegas interested me too although there are some concerns which others have already mentioned here. I also have a friend living with us from Vegas who would get along very well with Emma17.

Still very early days for me but I'm very excited about opening the door to something I didn't think possible just a few years ago.

Well anyhow just taking this opportunity to use my first post to say hello rather than asking for help which is probably what I'll be doing more of in the coming weeks/months

Hi and welcome. Im new to this forum and this investing also. Please keep us updated on what you are doing.

 

[Click_It]

Hi and welcome. Im new to this forum and this investing also. Please keep us updated on what you are doing.

Thanks Heatseekers, as I get my head around things better I expect to make some moves hopefully mid year but gotta learn to walk before I can run I'll happily give progress updates.

 

[Heatseekers]

Cool thats my plan atm too. I'm actually hoping to go to the USA around July, so may wait until then to make my first move.

 

[spooky]

Hi Karina

Will you be visiting Melbourne in the near future as I would like to have a chat as my LOC is burning a hole in my pocket

 

[karina]

Hi Spooky,

I may be in Melbourne at some stage this year. Would be happy to schedule a quick trip if their was enough interest.

We have just launched our website so feel free to take a look.

 

[twh]

Hi guys, I've been reading through these forums recently and thought I should finally say a hello.

Thanks to these forums my partner and I met up with Karina in Sydney last Wednesday and had a very relaxed informal chat about Atlanta investment opportunities, we both found her to be very down to earth and pleasant to speak with.

I feel I've only just scratched the surface on this adventure but already seeing the potential that can come from it. I'll plan to keep researching for the next few months and hopefully then get things started. I have equity of approx $220k to work with and so far the idea of picking up 3 properties in the 1700-2000sqf size looks appealing though I'm always happy to hear what other people are doing, thoughts, suggestions and what not. I haven't decided Atlanta to be the best/only option for me at this stage but I will be honest in saying it's the front runner right now. Vegas interested me too although there are some concerns which others have already mentioned here. I also have a friend living with us from Vegas who would get along very well with Emma17.

Still very early days for me but I'm very excited about opening the door to something I didn't think possible just a few years ago.

Well anyhow just taking this opportunity to use my first post to say hello rather than asking for help which is probably what I'll be doing more of in the coming weeks/months

hey all, being a US based investor and active in the Atlanta market, I do want to send up a caution flag..... The Atanta market has been hard hit by every turn key company in the US plus the Aussie marketing companies, yes the product looks great, We call them Vinyl villages with the Vinyl siding and all... However there is such a glut of foreclosures the rental market is going to take a hit... So just be cautious of claims of really high rents. You will always be able to rent a house but the rental amount could very well be 10 to 30% less than what is represented given the supply and demand. Especially if your in the inner city or Lithonia and other Foreclosure clusters.
I continue to buy 2 to 3 properties a month for myself and my investors However just very very cautious of what and where we buy... Wrong street or subidvision and chances of a bit let down could be reality. there are many Aussie investors that have bought atlanta with less than reputable companies that have seen their properties sit for 4 to 6 months or more, and or the be vandalized. Be cautious my friends.

 

[karina]

Totally agree with you TWH, that investors need to be cautious.

Turn key operators (some) are in my opinion ripping people off. I had secured 2 properties in Atlanta that we ended up not proceeding with.

One we secured for 45k and I ended up letting it go as I did not have a buyer lined up on that one. Its turned up on a Australian buyers agents site for $83k

Another I had under offer at 36k, walked away from it as the subdivision was too scruffy looking for my liking. Its on the same buyers agents site advertised for 69k and they advertise that they don´t mark up the properties. Well maybe they don´t buy their wholesalers certainly do.

Another property I tried to secure for a client and was outbid on, sold for 36k and the turn key company has it listed for $79,900.

The mark ups of some of these companies are HUGE!

In regards to rents I like to be very conservative and would prefer to under quote not over quote. We recently purchased 2 properties in Lithonia and rented them both within 30 days for $100 and $200 per month more than what I had quoted.

Its absolutly essential that you buy in a nice subdivision, do not under any circumstances sacrifice quality for yield. You are unlikely to achieve the yield on a home in an undesirable subdivision. It´s not worth the risk.

Purchase the right property at the right price and direct from the wholesale market and not from the flippers and you will end up with a solid investment. Simple as that.