Investing in USA

Hi,
After hearing of a previous sticky situation with a friend attempting to buy US property via an Australian buyers agent we thought that we would give them a call and assess what services are offered and what cost it involves.
Therefore based on our discoveries we have put together our findings on each of the major Australian buyer’s agents serving Aussies in purchasing American property. This is what we found:

A Summary of Australian Companies advertising as US property buyers advocates

There are about 5 companies in Australia which are offering access to US properties via a few different means. They are designed to take out the hard work for Australian investors but some impressed us less than others.

All state that they have “trained professionals” that can assist you with all facets of the property market, from setting up your LLC through to tenanting and ongoing property management. Each offer referrals to solicitors and tax agents (some Australian others American) also.

The one problem is not many actually offer to introduce you to the “professional US team” so unfortunately you really have no idea who is the US is actually looking after your offers, or property management.

There are 2 types of services that they offer:

1) Some offer a service which assists you to buy a bank owner property including putting in the offer, getting all the paperwork completed once the offer is accepted and taking it through to settlement. Then they do a rental appraisal and renovation quote for you before the offer period expires so you know what you are up for. Organise the renovation and put tenants in followed by managing the property.

For this service the average seem to be about $3,500 in upfront fees.

2) Others have a service where you are just buying one of their properties which they own and have already tenanted. Naturally if they own the property they have built in a margin between what they purchased the property for and what they are selling it to you for. It was difficult to obtain any transparency in these details. We do know hard it is to purchase property from Australia and have an agent even reply to your email. A little upfront honesty would not go astray here.

One other agent is currently offering to on sell a property that was purchased very recently for more than $60,000 above the recent sales price. A property next door is for sale for $34,000 this one was being sold for close to $100,000. I guess my biggest concern is that buyer’s agents do not know the market value of the properties they are pitching and that too many people have clipped the ticket on the way through.

The very high pressure sell of some agents has left me aghast. One poor sole was being pumped to make a decision by 9pm Sunday evening. I don’t understand how that works in either Australia or the US with either time scale.

The essence is DO YOUR RESEARCH. Although you have a full time job, massive demands, busy lives it takes 5 minutes to scour these deals for what they are. Research property sale prices in the area, recent sales, comparitable rents, taxes and other required holding costs. Find out who you are dealing with, there experience, how many US properties or Aussie properties they own and successfully manage and only go ahead if you are truly comfortable with who you are dealing with. There is always another deal around the corner.

We use http://www.zillow.com for quick background research on a property to qualify if a deal is right for us. This will show you the last sale price of almost any property in the US so just punch the details in there before buying anything.

So onto our findings:

USproperties.com.au

• Las Vegas and Miami property only
• States on their website that they purchase the property and then on-sell it to you with a tenant in place for 12 months. A margin is built into the price.
• Basic rehab is done – carpet and paint
• Net yield appears to be approx 7-8% nett.

Myusaproperty.com.au

• $375 initial fee to become a member
• $3750 once they have a deal which you are happy with
• They can recommend property or just be a buyers agent for you

Cashflowcapital.com.au

• Detroit properties
• Didn’t hear back from them after leaving a message
• Website shows an initial upfront fee of $660 to et premium service with new property listings
• A fee of 2.5% of the final purchase price

Housebuyerusa.com (US company)

$3000 fee initially upfront
$1000 LLC set up fee
$3000 fee per property you purchase through them

They offer 2 services,
1) Where they buy for you and organise a quote for renovation of the property. They have a real estate company which will rent the property for you.
2) You may buy one of their properties which they have purchased, renovated and have rented out currently.

Average 12-14% nett rental yield (not including $3K fee)

Properties located in Kansas Missouri and smaller town St Joseph 50 miles north

Cashflowgold.com.au

Small boutique company which on-sells properties it has renovated and tenanted
Properties in Detroit. Only 2 properties for sale at the moment with 3 more coming soon.
The owner Jason seems very genuine and is offering a service taking people over on a booked tour and introducing them to his contacts.

He may be able to offer a buyers agency service but does not at this time have a fee schedule. He has invested in Detroit for 12 months and is now offering to share contacts in his area to others.

As you can see the market is quite diverse.

If you have any further queries or wish to ask any questions on USA property please check out our blog at usaforeclosures.blogspot.com or email me below.
[email protected]

It depends on how good the people are on the ground. I have a great deal of faith in the accounting firm I am dealing with.

I am looking at a buying trip for July

The process seems similar to Australian property for tenant eviction. I have copied this off an American solicitors website:

“Can a landlord ever terminate a tenant’s right to use and possess the rental property?

Yes, in many cases. The more common reasons why a landlord may terminate a tenant’s right to use and possess residential rental property include:

(1) failure of the tenant to pay rent when due

(2) “waste” to the rental property caused by the tenant

(3) possession of pets in violation of the rental agreement

(4) occupancy of the rental property by persons not named on the lease or rental agreement

(5) material disturbances of other tenants (such as extreme noise disturbances)

Before a landlord forces a tenant out of residential rental property, the landlord must provide written notice to the tenant and provide a reasonable amount of time for the tenant to cure the default. If the tenant does not cure the default within a reasonable amount of time, and does not voluntarily vacate the rental property, the landlord must then initiate a formal eviction proceeding. In a court of law, it is commonly referred to as an “unlawful detainer action.” (An action in which the landlord alleges the tenant unlawfully continues to detain or have use and possession of the rental property). The law abhors “self-help” evictions, in which the landlord or the landlord’s agents show up and physically take the tenant and the tenant’s possessions out of the rental property, change the locks on the doors to the rental property, or shut off water/electricity in an effort to force the tenant to leave. Formal court orders are usually required to get a recalcitrant tenant out of residential rental property.”

For me investing in Amercian property is the same strategy I would use with my Australian property:
Buy in quality areas. I personally would not purchase a terrace in Everleigh St Redfern or in a town or 50 people. I want to know I have a good possible teancy pool with little chance of vacancy.
Although there are cheap areas to buy property in America spend the time finding a property that good quality tenants want to live in.

Your property amanger is integral to yout investment strategy. Buy 4 properties and use different PM for each. That way if the level of service you expect is less than brilliant you take your business to another manager. Your PM should be able to screen your tenants and their refernces. This is no different to owning Australian property.

In essence buy a quality property in demand in a good area and use strong property management services. You are just as likely to have grief in Australia.

Otherwise buy a block of land sit on it for years for capital growth pay your yealy taxes and avoid tenancy issues.
Property investor fears are the same the word over. The choice of our investment and team makes the difference between sucess and failure. Otherwise in the most litigous country in the world. Insure, insure, insure….

Depending on the area you will purchase there are seperate governing bodies for example that cover hurricane insurance in addition to your home and public liability insurance. Prior to purchasing find out your holding costs. If you are not comfortable with the adverse risk of tornado or hurricanes – invest in other state.

At the end of the day don’t let your hesitation stop you from moving forward. Do the research, mitigate your risk and go for it!

Hope this helps.

You may want to consider building your own ground team. I replied to another topic that covers some helpful hints.

https://www.propertyinvesting.com/forums/property-investing/overseas-deals/4331400?&page=1#comment-214470

Hope this is helpful.

Hi

Just wondering if anyone has purchased a property through My USA Property. I am thinking of becoming a member. Any feedback on them would be great!

Cheers

David

Is that because you receive part of the $4-5k in fees they charge? 

Hello Bronwyn and Michael,

My company also does US property – Florida only. We like to concentrate on Orlando, as prices are good, properties are fairly new and demand for rentals are good. We do not pressure people. I will be having a foreclosure tour in November if you are interested. Yes, there is a fee, but you get to see the properties and gain insights from professionals on the market there.

Regards,

Steve
http://www.usadreamhouse.com.au
Mob: 0433393688

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