Markets. Are adjusting and rising US investors coming back in for appreciation
Return to what got us in this mess…..or still long way to go
Rents do not rise with values by and large
So as values rise yield falls.
Will OZ investor. Continue with 3 to 6% or less net yields. Thinking they will double there money in 3 to 5 years
I personally have no doubt that certain markets will rise massively over next 3 to 5 years….
What say you Mr. and. Ms. OZ investor. Would love to know what you are thinking
We invested in the US market purely for cash flow, and if there were any capital gains then that would simply be a bonus for us.
If the yields do fall to the 6% net return, then that will definitely make it less appealing for a lot of investors from Australia. But if the interest rates are still only around 4%, then it is still positively geared property, so there will still be a big attraction from investors over here.
It will be very interesting to see what happens in the next 3 to 5 years over in the US. All I know is that we are trying to get as much property as we can in the next couple of years to build up our portfolio as best as we can over there.
streamlineinvesting wrote:…we are trying to get as much property as we can in the next couple of years to build up our portfolio as best as we can over there.Agree, that seems to be the way – jump in when that gap is nice and juicy, jump out (or at least stop purchasing for a while) when it shrinks, repeat to taste and satisfaction, throw in some cap gains properties in other areas for good measure, and yum, no matter where it is you're cooking up your portfolio. I doubt it's a "YES" or "NO", "Here" or "There" as a permanent commitment, more a "Where and what RIGHT NOW" kinda mix…
Ziv Nakajima-Magen | Nippon Tradings International (NTI)
http://www.nippontradings.com
Email Me | Phone MeZiv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property
I am hoping that people will not lower their criteria to still chase the 15% + returns in less fundamentally attractive areas.
This is where the herd will get slaughtered in my opinion.
There are 3 phases in any new bull market, and I think we are entering phase number 2 as we speak. The smart investors have all positioned themselves in well in phase 1.
Phoenix, florida and parts of Atlanta are beginning to dry up. The amazing deals are getting harder to come by.
As long as Aussies realise they have probably missed the extreme value buys, and are prepared to take a small hit on yield, it will be ok for maybe another 12-18 months
The smart investors have all positioned themselves in well in phase 1. Phoenix, florida and parts of Atlanta are beginning to dry up. The amazing deals are getting harder to come by. As long as Aussies realise they have probably missed the extreme value buys, and are prepared to take a small hit on yield, it will be ok for maybe another 12-18 months [/quote]
Agree with that pretty much 100 % the next phase is mostly funds now coming in and buying up large tracts of homes.
We spoke with a group out of LA Today that are aligning them selves in Florida, Charlotte, Dallas. Looking for teams to find the buy and hold funds.
Seeing alot more of the large guys coming out now.
I think that even if rent yields drop a percent or two in the next year capital gains are defiantly on the horizon. The market is already starting to recover with the median prices rising 4.9% from a year ago and new home sales increasing in April 3.3%. Of course, there is the slight possibility I am being over optimistic. I tend to be sometimes! lol
Liam
Net yields which by and large are overstated by the sellers in the first place
Prices in a lot of cash flow markets could double,,,,,rents will stay static or could even decline as the big players move into sfr
Supply demand. Big volume owners will be looking at 3 to 5% true net yields and. Paying accordingly..
Great for us who bought at the bottom,,,,going to put a big squeeze on the turn key 20% yield players that are strictly marketing companies, it will be good tom weed some of those out is my thought
As stated above this will drive the unknowing into some pretty poor areas and properties.
AREIJoel wrote:I am hoping that people will not lower their criteria to still chase the 15% + returns in less fundamentally attractive areas.This is where the herd will get slaughtered in my opinion.
There are 3 phases in any new bull market, and I think we are entering phase number 2 as we speak. The smart investors have all positioned themselves in well in phase 1.
Phoenix, florida and parts of Atlanta are beginning to dry up. The amazing deals are getting harder to come by.
As long as Aussies realise they have probably missed the extreme value buys, and are prepared to take a small hit on yield, it will be ok for maybe another 12-18 months
Joel,
A lot of whats happening is the bigger wholesalers are rebooting their business and holding instead of flipping,,, the light build has gone off, the largest wholesaler in Atlanta Key properties last month stopped their entire flipping operation, they got an institutional investor that came in and allows them to hold,,, its takes obviously a very large bank roll to hold properties when their is no financing. But with the big hedge funds moving in this is a reality,
Colony Capital, for one The Columbia endowment ( 500 homes Pheniox) Colony is looking at Atlanta,,, Another fund larger than Colony out of Silicon Valley is hot on it,,, I have had extensive talks with them….
And all these companies will buy for 3 to 6% Net Yields which will allow for some move up in price…Will they buy Detroit NO,, Will they buy Rochester NO,,,reason being there is no real hope of upside in those markets. Like there is in others.
they will concentrate on the big 10,,,,, CA being number 1,, then Florida, Pheniox , Vegas ( because they all like to go there) Atlanta is on some radars, CA, is really 3 markets,,, So Cal the inland empire and Sacramento and San Juaquin valley,
As a hard money lender in every market your company works in, I have had a pretty special view of the business, and came to the realization 24 months ago that we need to hold not flip, I fully understand brokering houses like you do and the flipping business..
All though in my ever it to be humble opinion here is whats going to happen,
1. PHx like you said hard to generate deals there where you guys make money the wholesaler makes money and the investor gets the nice gross yield the turn key guys advertise… so that market will need retooling or be retired for OZ marketing companies.
2. Atlanta not quite as hot as PHX but a lot of pressure we are still getting our deals but we are 2 players closer to the deal than any buyer and or marketing company , I bought 8 homes last week all great deals just like last year sub 40k for 10 year or newer,, Would I flip them heck no I am keeping them to hard to get.
3. Memphis,,, will always be a market there, tough town to collect rent,, will always be the investor that walks away,
4, KC same if your buying in 25% gross yield areas your buying in the low blue collar rental areas of that I am positive. So this market will be there for years to come.. as the landlords fail investors pick up the houses and cycle repeats.
5. ST. LUis very rough and tuff town,,, in the high yield areas can be as dangerous as detroit. Ditto KC
6. South chicago same thing,,,,
California has and will always be super popular with the Chinese, they invest completely different than OZ investor OZ investor cannot compete with chinese because of different buying reasons and emotions,,, Chinese its status,,, OZ its all about Yeild, thats why they will invest in the worst of the worst US cities not worried about status and style points.
INdy is a tweener I have done hundreds of deals in Indy and am loading up on my hold properties but I have a partner there that is really really sharp,, we are not neighborhood specific we are street specific a lot of re gentrification going on…. But buy in the wrong neighborhood and its just like Detroit..
then you have the Pacific Northwest were I live,
completly under the radar,,,,Smaller markets but probably the closes to OZ in the way the property management runs… As in no headaches tenants stay for long periods,, they take care of the houses many times my Portland houses are better than when I rented them out… But realize Portland is 92% white,,, there are no hoods or pockets of ethnic anything,,, the only ethnic are chinese and Indians that work for INtel or Nike….
Seattle is upper crust CA prices,,, Microsoft and Amazon land, and a faboulus place to visit in the summer.
JLH
It is all going to come down to credit availability. When you see Americans able to purchase easily again as the banks loosen the purse strings, then property prices can take off again, especially with the low long term rates available. Hopefully financing also opens up for international investors at the same time, so we can ride the wave up. Until credit unfreezes, prices can’t move.
mattnz wrote:It is all going to come down to credit availability. When you see Americans able to purchase easily again as the banks loosen the purse strings, then property prices can take off again, especially with the low long term rates available. Hopefully financing also opens up for international investors at the same time, so we can ride the wave up. Until credit unfreezes, prices can't move.This is just for Charlotte NC but we sold 3 properties locally to investors who received financing .Currently two LA investors getting loans but process very slow for clients not located in Charlotte. Not sure why this is taking longer. These are the first loans my company has done for USA investors in a couple years. So things are changing for all of us. The USA investor is slowly moving towards the higher priced properties , less returns but future appreciation being taken into consideration.
Alex,
investor financing is there for US investors.
the major difference is underwriting the files.
the borrower needs to be much stronger than in the past, not only with credit score but with substantial cash reserves.
If we recall people in the US were buying houses that had for all intense and purposes NO cash and NO reserves.
Add in the marketing companies in LA and the wholesalers touting the turn key aspects like we all talk about,,, These investors just thought they could buy these houses as investments and the first time they had an upset, like trashed houses or vacancies they did not have the cash to carry through… then the foreclosure cycle started… Lenders got crushed and we all know the rest of the story,
So now the lenders want to see experince, a lot of times they will not lend if the borrower lives more than 100 miles from the property,
and enough provable cash reserves to carry all the investment properties for 6 to 12 months…. Because the banks know from experience that rental income is anything but reliable in these investor areas.Then there are banks making loans on these properties but will not loan to anyone buying from any kind of turn key company,
And these bank know who they are; they just will rattle them off
Marshall Reddick
Memphis Invest
Jacksonville investors.
Detroit urban wholesalersAnd anyone buying from any UK or AU company by and large….. caveat the lending that apparently is happening in parts of texas…………
KC same if your buying in 25% gross yield areas your buying in the low blue collar rental areas of that I am positive. So this market will be there for years to come.. as the landlords fail investors pick up the houses and cycle returns.
25% percent is common for A and B. Your not doing something right if C is that low.
Alex,
Thought you might be interested in this link….
http://blogs.wsj.com/developments/2012/06/12/builder-branches-out-sets-course-for-charlotte/
Texas Cash Cow Investments Australia wrote:Alex,Thought you might be interested in this link….
http://blogs.wsj.com/developments/2012/06/12/builder-branches-out-sets-course-for-charlotte/
Peter how are you? just landing in Malaysia well landed and got to hotel about 1 am. Here for 4 days then 3 days in Singapore .
Thanks again.
Alex
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