USA – Where to buy?

Sounds like your doing some serious due dilligence there. 
Have you compiled a list of areas to avoid?
Sounds like you've examined all the buyers agents as well. Any of them appear to be a little……………..suss (for want of a better word).
Personally I'm focusing on Cleveland, Kansas City and Atlanta. The latest 'Your Investment Property' magazine (Jun 2011) also lists Phoenix and Orlando in the top 4.
I look forward to reading your report when you get back.

Hey just be aware that TX is a non disclosure state so sites like Zillow & Trulia do not work as well as other states
Zillow actually states this if you dig into their sites. I am actually in Dallas right now and getting a couple of deals
done this week

It's a big call to say Dallas is the place to be, you are aware how big the US is?

Morpheusbushy, I felt exactly the same way.  I recently completed TLD International's Mastermind training in Florida and I now have a greater understanding of the whole buying process in Florida if not the states, as every state is slightly different.  While over there I picked up 3 properties in Fort Myers and can't be happier with them.

I read somewhere that if you seek capital growth then Texas is a really good price to seek it. 
But your entry cost is substantially higher since a lot more people are competing for the properties. 
If you seek positive cash flow then you seek outside Texas.
Perhaps a good balanced strategy is one property in Texas and two cheapies in Kansas City or Atlanta. 

morpheus – Congrats on the blog, I really look forward to reading and signing up to your blog too. Do you know of any other blogs anyone else has done? I’m on the information hunt….Also why have you called it usapropertynightmare? just wondering….

I too am thinking of doing the same thing but am probably a lot further behind you in the scheme of things?
3 questions (well a load more really but start with these 3)

1. have you completely discounted vegas?
2. are you going to get finance?
3. are you going to use a broker firm in oz or fly solo?

speedy – your right. and furthermore apparently “The following states are considered non-disclosure: Alaska, Idaho, Kansas, Louisiana, Mississippi, Missouri (some counties), Montana, New Mexico, North Dakota, Texas, Utah, and Wyoming.”

Hi,
I think it is great that you have actively made the decision to invest in the US, or anywhere, for that matter. It probably does'nt matter where you go in the US because there will be genuine bargains everywhere. There will be fabulous areas and then there will be the areas to avoid. You need to go where you have a genuine interest and can set up a TEAM on the ground in the US. The most important thing, in my opinion, is to have a great team you can trust. This includes a property manager, realtor, bank manager, accountant. Without these people, invsting will be difficult and problems can occur.
A good realtor can give you insight, drive you around, show you first hand a variety of properties and set you up on the internet with your personlised real estate alerts to suit your criteria. You must have a good property manger who can organise your rehabs, tennant your property, collect your rent (cash or checks) and deposit into your bank. (Usually in person). Then you have to have a bank manager who answers all of your emails and can set you up in the US. Banks are run completely differently in the US compared to Australia (and you have to learn the lingo). This is just the beginning and I am still sorting things out in the US as far as banks go.
I hope this helps a little!!!
 S Shillabeer

Mr Morpheusbushy

Do you feel comfortable drawing a conclusion on each city you research? Perhaps a small summary with dot points revealing the positives and negatives. There's massive junks of information on each city and it becomes difficult to interpret what that information actually means for the average investor from Australia. Especially against other potential USA cities. 

I have done extensive research on the USA and just getting my head around it all makes my head hurt.

Information such as:

There are approx 6 million delinquent loans in the USA right now.
Over 1 million houses were seized by the banks last year (2010). This is expected to rise each year for the next 3 years (minimum).
Some real estate commentators predict this to peak in 2013 with 6 million foreclosures in the USA in that one year alone.
9% of all properties in Nevada have been foreclosed (AVOID Las Vegas)
51% of all foreclosures are confined to 5 states (California/Florida/Arizona/Illinois/Michigan in that order)  
Forbes & CNBC state there are 18.4 – 20 million empty houses in the USA (2011). The largest stock of untenanted / derelict houses ever seen in the hisory of mankind.
The best city? Honolulu. Rental demand is tight and any foreclosed property is quickly snapped up at market value.
The US sub-prime is mostly over
Many Americans can afford to pay their mortgage but choose not to.
It takes approx 17 months for the bank to kick out the non-paying home owners. So the homeowner lives rent/mortgage free for 17 months. Some economists have stated this behaviour has actually helped the USA avoid a double dip recession since these non-paying home owners are spending their mortgage money in the retail/service sector thus stimulating the economy!!!!!!
It is estimated that 23% to 28% of all properties in the USA that have a mortgage are in negative equity territory.
It is estimated that 68% of all mortgages in Nevada are in negative equity.
I read one economic report stating that one reason for this was a massive campaign by the banks back in early 2000's. They encouraged home owners to come in and unlock the equity in their houses. Push out their mortgage by $50K to $100K based on the theory that property values would go up soon and this equity would be replaced. Economists state this avoided a USA recession then as millions of home owners took out this equity and stimulated the economy. Of course, when the GFC hit and house prices tanked, many properties went into negative equity.
I remember in Australia banks doing this advertising campaign with Greg Chappell (cricketer) encouraging Australians to unlock the equity in their homes and spend the money to improve their quality of life. Thankfully most Australians saw this for what it was and ignored it. It was an advertising failure.
US interest rates are vital.
I've read economic reports showing that the interest rates MUST go up. Inflationary pressure. 
What impact will this have on the US economy and people wanting to take out a mortgage to buy a house??
The 3 most dangerous cities in the USA according to the FBI? Try 1. Detroit, 2. Memphis, 3. Miami
But this changes from year to year. I'm told Memphis wasn't in the top 20 about three years ago.

I could go on and on and on…………………………..

Then you factor in biased information. Old informaton. Innaccurate information. Changing variables. Changing trends. Natural disasters.
 
In the end we went with Cleveland, Ohio. I can give you five reasons why this was a terrible decision. And five reasons why its an excellent decisioin.

Next is Kansas City or Atlanta.

Keep up the research………………….

Cleveland Ohio

+ Excellent rental market
+ High income to price ratio = Excellent Cash flow straight up
+ Cleveland Clinic. Massive health employer and it's going nowhere.
+ Cleveland is pushing really hard to grow its technology based industries and research centres. Its going from strength to strength. 
+ It's on a lake (Lake Erie). I think most cities with a water feature will do ok in the long term. Just a gut feeling.

– Lots and lots of houses for sale in Cleveland
– Capital gains is highly unlikely in the short term. Even medium term I suspect.
– Manufacturing is still a big part of the Ohio economy and like any developed country, counts as a BIG negative. 
– Against the other states, it ranks 7th as having the most individuals living in poverty
– It has an ageing population. This may put a big burden on the Cleveland economy in years to come as the baby boomers retire.