Just wanted to post about my experience with my first American House Purchase:
Backstory
I am a Financial Planner and had a decent amount of money invested in the stock-market, but became disillusioned with the day-to-day volatility in August/September, so started looking at property as an alternative. I have a positively geared studio that I rent out as a serviced apartment, so was looking for something similar as I prefer investing for cash-flow to speculating on capital growth.
After researching Australian property and coming to the conclusion that it was quite difficult to find more positively geared properties (at 90% LVR, with no renovation experience or interest), I came across Emma's thread on this forum and read all 80-90 pages of it. I then did some research on American property and decided that it was something I'd like to get interested in.
I initially contacted Emma about it, who was really helpful and forthcoming with the information, which I really appreciated. Unfortunately, my experience was that it seemed as though the Vegas market had gotten a bit tighter by that point, so found it difficult to find properties that still presented a good deal in Vegas. Emma found one property that had potential, so I put an offer in on it, but it was unfortunately rejected - It was about this time that Emma introduced me to her friend, Karina, who was operating in a similar capacity in Atlanta, and so I contacted her and went from there.
The house
About a month later, Karina emailed me with a great house in Gwinnett County (
http://www.zillow.com/homedetails/1346-Timber-Way-Cv-Loganville-GA-30052/14729934_zpid/) and I did a bit of research, spoke to her about it, got some quotes and decided to jump in.
The experience
Karina was fantastic in helping me through the process and extremely quick and reliable in answering any queries I had and acting upon any work that needed to be done or requests I made. She introduced me to a good american based accountant for tax return queries/forms, put me in contact with a good law firm for the LLC setup, and worked with the real estate company/renovation company to get the outcome I wanted.
Unfortunately, because it was over the Christmas break, the renovations took around 2 months to complete, rather than 3-4 weeks as I had expected. They also came in slightly above the original quote, as there was some work that needed to be done that could not be anticipated until the sale had gone through, so that utilities could be activated.
On the plus side, the house rented for $195 / month more than we expected/planned for, so this offset the opportunity cost of the extended renovations.
The numbers
Cost: Approximately $74 - $75k US
(including everything - from property purchase & facilitation fee, to renovations, LLC establishment, initial termite treatment, one month's rent as letting fee, initial insurance, initial property tax and accountant fees).
Gross Rent: $1295 US pm // $15,540 US pa
Gross Yield: ~21%
Annual Expenses: ~$5.3k US pa
[made up of ~$1250 property management, ~$2k tax, $750 insurance, $280 Termite Treatment, ~$1k increased administration/tax costs (Preparation of annual US tax return, increased cost on AU tax return, LLC ongoing administration/compliance requirements)]
Net rent: Lets be conservative and say ~$10k
Net Yield: 13.76%
Note that this yield does not account for future letting fees or adhoc property management - If we allow $2,000 for these expenses, the net yield drops to around 11%, which I still think is great.
Overall I couldn't be happier with the outcome and can't wait to get another US property into my portfolio asap. Let me know if you have any questions or just want to speak to someone who has just been through the process.
Cheers,
Chris
