Why NOT to buy in the USA?

I hope you're right, but doubt it based on what I have seen. The US is as deindustrialised as the rest of us - they shipped their jobs over to Chindia years ago, with an economy that relies on consumer spending and financial services for the most part.

Also I see the US dollar going a lot lower even in the short term - that's what happens when you counterfeit 2 trillion dollars out of thin air.


I don't think they have deindustrialised as nearly as much as Oz or Great Britain. Of course it doesn't matter how much we deindustrialise while the commodity boom continues, but other countries without commodity wealth are going to simply have to lower their standards of living.

The US has the big oil and gas companies like Exxonmobil and chevron.
Conglomerates like general electric.
Obviously the auto manufacturers are on their knees, General motors, Ford, Chrysler, but they are still there. Harley Davidson.
IT and computer companies like Hewlett-Packard, Apple, IBM, Dell and microsoft.
There is the big farming, truck and earthmoving companies like John Deere, Case IH, Caterpillar, Kenworth, Mack, Cummins deisel. The US is globally dominant in this area.
Agriculture companies like Cargil and Monsanto, and as I said before, the US accounts for over half the worlds exports in food.
Aerospace companies like Boeing, lockhead martin and a few others I can't think of right now.

The US are still industiallised way more than a lot of other countries. Way way more than Australia.



Anyway, China for example still has almost half the workforce employed in agriculture on tiny silly little plots. India is even worse and has over half it's workforce employed tilling the earth. This is a terrible waste of efficiency. These places won't get a high standard of living till they industrialise their agriculture, as half the workforce is employed in feeding themselves when in western countries it takes just a few percent to do the same thing and the workforce in the west is employed in more meaningfull and productive jobs.

The US has massive coal and gas wealth. Massive water and rich fertile farming lands. If the US goes under, there will be many places in a much worse situation I reckon.


See ya's.
 
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Perp,
Congrats on your upcoming purchase of the 80 unit.
We have nothing even close that big, only 2-11 units.
Depending on what state you are buying in, the heating bill may be very large. A lot of the older buildings have heat included.

If you ever get that point in time, pm me and we can offer you some suggestions to protect yourself.

Hopefully your staff is good, because it will be a fulltime job.
 
Hmmmm.....please see my responses in bold.....

I personally think the American standard of living will decrease over time due to their crippling debt levels....I also countries like Portugal, Spain, and Italy eventually becoming third world countries....Greece is already one.

The other Europeans countries will maintain okay standard of living but some of them will lag behind some Asian countries in the future.

We in Australia are lucky because of resource wealth and service industries. Our future is with Asia, South America, and Africa not Europe or America.

I don't think they have deindustrialised as nearly as much as Oz or Great Britain. Of course it doesn't matter how much we deindustrialise while the commodity boom continues, but other countries without commodity wealth are going to simply have to lower their standards of living.

The US has the big oil and gas companies like Exxonmobil and chevron.
Conglomerates like general electric. The two Oil companies are one trick ponies....watch what the Chinese, Israelis, and Indians are doing on the Solar and other alternative energy fronts
Obviously the auto manufacturers are on their knees, General motors, Ford, Chrysler, but they are still there. They will be bought out in the future by either Tata, Geely, or Chery. The future Toyota is Hyundai...the whole Dynamic is changing Harley Davidson.
IT and computer companies like Hewlett-Packard, Apple, IBM, Dell and microsoft.
There is the big farming, truck and earthmoving companies like John Deere, Case IH, Caterpillar, Kenworth, Mack, Cummins deisel. The US is globally dominant in this area. Not for long...people like Tata, Mahindra, Komatsu, Daewoo, Kia, and Chinese companies will be able to build at a better price point and quality
Agriculture companies like Cargil and Monsanto, and as I said before, the US accounts for over half the worlds exports in food. Again....Indians and Chinese companies are already in places in Africa...matter of time
Aerospace companies like Boeing, lockhead martin and a few others I can't think of right now. Chinese have built a commercial jetliner, next one could be bigger ones to rival B747, Airbus has the A380, Brazils Embraer is getting orders also, the Russians could also be players if they get their quality sorted.

The US are still industiallised way more than a lot of other countries. Way way more than Australia.



Anyway, China for example still has almost half the workforce employed in agriculture on tiny silly little plots. India is even worse and has over half it's workforce employed tilling the earth. This is a terrible waste of efficiency. These places won't get a high standard of living till they industrialise their agriculture, as half the workforce is employed in feeding themselves when in western countries it takes just a few percent to do the same thing and the workforce in the west is employed in more meaningfull and productive jobs.

The US has massive coal and gas wealth. Massive water and rich fertile farming lands. If the US goes under, there will be many places in a much worse situation I reckon.


See ya's.
 
Thanks Heaps for this thread Perp.

Its threads like this that make Somersoft such a valuable site, regardless of ones personal views of residential property in australia.

thanks again for the time and effort in posting.
 
Congrats on your upcoming purchase of the 80 unit.
We have nothing even close that big, only 2-11 units.
Depending on what state you are buying in, the heating bill may be very large. A lot of the older buildings have heat included.

If you ever get that point in time, pm me and we can offer you some suggestions to protect yourself.

Hopefully your staff is good, because it will be a fulltime job.
Thanks, kathryn d. This property is in the south precisely because I didn't want to deal with cold climate issues. ;) It has individual HVAC anyway. And yes, finding good staff (costs include provision for 4 full-time staff) is the absolute key. I've already got some candidates in the area identified.
Thanks Heaps for this thread Perp.

Its threads like this that make Somersoft such a valuable site, regardless of ones personal views of residential property in australia.

thanks again for the time and effort in posting.
+1. Well done and very informative.
Thanks!
 
Go get 'em tiger !!! Grrr...:D


I just had a flash thinking about inheriting 80 residential Tenants.....had a dizzy turn and had to sit down for a week or two. I'm OK now.
 
Don't worry too much Dazz - there are only 80 tenants if there is 100% occupancy:)

That's the challenge.

With our buildings we initially offered very low rent, just to get them filled.After that we kept increasing the rent as tenants were replaced.

Perp,
What is the composition of the building?
One bedroom units mostly?
 
About 40% 1 BR, 60% 2BR. Area vacancy rates around the national average of 9%.

Sounds like they should be easy to rent.
What is the vacancy rate for the past 3 years for this building?
We found out after we bought it, how bad of a reputation it had. (from the locals)

I know before we bought ours, the lender required a Fire Department Compliance because the previous owner didn't keep up with this stuff. Has your lender put these requirements on you? We also had to do an Environmental Assessment. Of course, most of this stuff was only told to us when we got close to settlement.
 
Still working this... I have found a hard money lender who's indicating that if my appraisal comes back at $1M+ - which I anticipate it will given that the current mortgage is $1.7M, and the taxable value is more than $1M - then they'll finance me 100%+, ie purchase plus closing and finance costs, plus rehab. :cool:

Cautiously optimistic, but first, off to find me a certified appraiser (registered valuer in our lingo)...
 
OK, I've found an appraiser, and whilst he can't guarantee anything prior to looking at the building, he specialises in this niche and believes that my logic about the tax value and previous mortgage are accurate, ie I can be confident of a $1M+ valuation.

He, along with several others, have cautioned me about the neighbourhood. Nobody's saying it's ghetto and that you need to pack a weapon, but there have been several comments from locals which sound like warnings. Given that "bad neighbourhood" has an extremely wide spectrum, what I really wanted to do was speak to somebody who lived locally.

Being the resourceful Perp that I am, I managed to speak to a lady who's lived across the road for 12 years. She says that the two main issues are domestic violence (couples quarrelling resulting in ambulance and/or police attendance quite frequently), and petty theft from unruly teenagers. But we're not talking guns / drugs / gangs / hookers, so I'm not overly concerned. I have thought of a few strategies for addressing these two problems and I'm still full-steam ahead.

I've decided not to head over just yet, as I'm getting good information and feel comfortable based on what I've heard from the various parties who I've got "on the job"; I have enough info to put in a bid, and then if my bid's successful, then I'll go over.

I had a great local buyers agent who toured the area with me when I was over there 2 years ago. He left real estate and went to Europe to study last year. :( I emailed and asked if he could refer me to a new agent, and as luck would have it, he's just quit his course and is headed home to get back into real estate. :cool: He's back in the USA next week. I love serendipity - both the word, and the experience. ;)
 
Still working this deal, making some awesome progress.

I've made contact with the local police officer whose full-time job it is to work with multi-family property owners on crime prevention, and he knows my property and is confident that the problems - which are of the nature I suspected - can easily be turned around. The local PD offers free criminal background checks of tenants, including checking for outstanding warrants (privacy schmivacy), site inspections to offer advice on lighting, cameras, etc, weekly report to landlord of all emergency services calls originating from the property, and weekly report of all crimes reported within a 1-mile radius. :cool: I can also get the cell phone number of, and an introduction to, the local patrol officer. The PD were incredibly helpful.

Appraisal has come in at $1.225M in current condition. :cool:

Finance, as always, is the big question mark... lenders keep saying they can finance it, and then changing their minds, for various reasons. Guess I just have to keep chasing it!
 
Finance is tighter than a fish's backside. :(

I suspect any cash offer is going to trump any non-cash offer on this property. Really frustrating as this is truly a beautiful deal, and gets better the more I look at it. I reckon $700K would get you in (with closing costs), current appraisal $1.2M, and net profit $170K pa. If you got a full mortgage @ 7%, deduct $50K for finance, and you're getting $120K pa after financing, plus instant equity. Sweeeeet. :cool:

Given the time constraints and a realistic assessment of my ability to raise $700K in the next 24 hours, I think my only option is to hope that nobody is able to make a cash offer, and see if I can negotiate something "outside the box". Options I'm considering include 1) lender agrees to a short sale (ie selling for less than the existing mortgage) and lets me assume the smaller mortgage, eg $700K, or 2) possibly an extended settlement (eg 6 months) with me having the right to manage in the meantime, giving me time to improve occupancy and increase my chances of obtaining commercial finance. Or achieve the latter via a lease option.

But I'm not optimistic that this deal's going to come together. If it doesn't, it's cost me a few more $K and some regret at missing another beautiful deal, but I won't be too upset; I've easily gained that much in terms of education. :cool:
 
Good luck.

Yes the PD's are good there. You can just go into any station and ask to see the files of registered sex offenders who live in your area and they open up a huge book with photos and addresses. (Bit of a shock though to find there's at least one in every street close by..:eek:)
 
Don't give up! It may happen.

My preferred strategy (which was arrived at because I couldn't get anything any other way) is to look for properties genuinely for sale with real vendors and offer them some cash with a lot of vendor financing - and maybe $50-100k above asking price. At least that way I didn't spend my time filling out endless reams of paperwork for no reason:)

I am 'cautiously optimistic' that any deal can happen, but in the end these 'great' deals need cash. If they don't, I have found there is usually a very good reason why they are willing to be 'given' away.

Catch-22: You can get low down financing on something you probably don't want, but not on something you DO want!

And of course, you learn a lot with every 'failed' deal.
 
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