Forum Replies Created
- worldinvestor wrote:I would be keen on specifics on why you are investing in specific areas the pros and cons.
I mentioned in previous post that I am investing in Atlanta. I do believe however that prices may still fall back. Your thoughts would be appreciated.
Thanks WI
I only deal in Atlanta and Charlotte NC
My thoughts are the rents will need to come down in Atlanta. As the flood of foreclosures hit the market.Prices are still going down.
I say this because what we bid on 6 months ago to now.I offer less and start my offers way lower.Most of my old offers were in the $30k now in the $20k range.With that being said the later months in the USA banks are always more negotiable.Which could be the reason for the lower numbers.
Now in Charlotte there are not as many foreclosures.Well let me change that there are alot of the homes.Just not the prices I am willing to buy at. Rental market still holding strong but turning down more renters then normal. I try to take the time of year into consideration when buying and renting homes. Nov and Dec always bad months for rental income in the USA .With the holidays 2 in row ( thanksgiving and Christmas) At the same time the first of the year great time for rentals.With the most blue collar workers in the USA doing rapid tax refund.This is one time the average person will have lump sum of money. To pay deposit and first months rent. I have had alot of tenants pay me for 3 to 6 months .During this first month of the new year .
Alex
jayhinrichs wrote:Lawsjs,Its is Ironic, if you think about a sub prime situation were the borrower lost the house ( of course we have to remember the sub prime borrower 99% of the time) had NO CASH into the house and just made payments.( the low income areas in most rental markets make up our sub prime….buyers…now they are all subprime renters lets all be honest here.
The sub prime preditor lender ends up with the house( along with the banks that had no idea of what they had or how to handle this situation)Still think the lenders and wall street who sold the junk paper should all be in jail)
Sub prime borrower is now in the rental pool for the next 5 to7 years.( I see them renting for more then 5 to 7 years )there credit destroyed ,no cash reserves, weaker economy, most of these people are blue collar work force .Which in most area jobs are lost..
Sub prime lender gets taken over by the fed.Great one bone head being taking over by a bunch of bones heads..Sub prime house gets sold to investor looking for % returns that are not based on facts but performas( you mean 20 % returns and 12 months rental income are not the normal ) LOL Jay you know my out look.If done right there is money to be made but it has to be done right. With that said there will be head aches and problems .As with any business just be prepared
Some will work some will flame out and go the way of the doe doe bird.End othe Day Some European conglomerate bought our Sub prime paper and ended up with a worthless asset. ( yes one head ache passed to another person) sounds like low end rental and international clients ….hence Rochester NY and other low end markets ..
Strange that.
go figure
Alex
lawsjs wrote:Jay, Once again a really fascinating post. You have outdone yourself again. Alex, I can only speak second hand for LV (I don't own anything there, my sister does) but there are solid gains occurring. She started buying houses for $30-40k 2-3 years ago and those ones are now around the $60-70k mark. Not huge gains, but decent percentage returns. The rents are stable if not trending slightly up at around $1k per month. As Jay has alluded to, there is (I think) a very solid floor in markets in those areas as everything has been bought for cash and is therefore almost impervious to immediate cost pressures. The foreclosure market in LA has tightened a lot. The 'professional' flippers there a year to a year and a half ago were counting on 25% margins, now those margins have tightened to around 9%. Rule of thumb figures only, but indicative of market gains. And again, rents are increasing, from my perspective across the board. Jay's logic with tax liens seems a natural progression. I am very interested in almost anything he says, but this is especially interesting. You could almost foresee a widening of the 'class' gap based on derelict housing areas vs 'prime zones' – exacerbated by this rush of foreign capital into sub-prime and sub-sub prime housing. The irony is that you can probably bet your bottom dollar that by chance someone whose retirement fund lost huge amounts in subprime had actually invested and lost money in the exact same house that the person is now investing their own 'real' money in today! And they will almost certainly lose out again!! Quite strange how money moves around…LawSJS
How are you? Yes just go back from spending a few days with Jay and seeing his operation. Looking at putting our homes and his system to work. Rather keep 200 houses then sell 200 houses.
On the other hand I know of your sister and her homes i a round about way .One of the Clients I am dealing with in Australia knows both of you very well small world.
Now for the markets Vegas I would bet on it coming back .The Casino's are packed so employment is looking better there.As for prices their I don't feel this is appreciation factor. Instead I see it as investors pushing the pricing up. Bidding up the properties or the foreign buyers influencing the numbers spread there by buying inflated prices. We deal with one Client from Arcadia California.He invest in vegas , actually $2.6 million dollar real estate portfolio.I don't see the value going up at all .I see the cash flow be a positive factor for him there right now.
As for real money that is the only money in most USA real estate markets now with limited bank funds( no loans ). Don't want to say all will lose but for most who are gambling that all rental cash flow properties are golden. There are going to be some broke people down the road. At the same time some of the smart investors who can clean up today with cash deals if purchased correctly. If all works well and appreciation factor does come back while cash flowing .They would be sitting pretty down the road…
again just my two cents
Alex
This post are just opinions with all real estate make sure you are doing your own home work…
I pull and add these links just to show what others are saying or doing …
Thanks
Alex
worldinvestor wrote:CasaHunter wrote:I am planning to buy a property in Atlanta and I would like to know if you have had any experiences with any particular manangement company? good or bad.. Does anyone know Key property investing?
Thank you !I have not heard of them,
I have been purchasing in Atlanta for a while now and have used Select American Homes, Karina is a successful property investor in Australia and who has been purchasing in Atlanta for herself and her clients for 2 years now. She charges a fee, similar to buyers agent but you purchase direct from the bank, no 50-100% mark ups. The services include purchasing, renovating and property management services.
My last purchase was brilliant it was purchased/renovated/tenanted within 4 week timeframe and achieved $200 per month more rental income than what was originally quoted.
All costings from county taxes, rehab, setting up fees, rental esimates etc. are outlined and there are no hidden costs. Karina keeps her rental quotes real not like some companies which over state rental figures to make the net rental yields attractive.
I know where Karina is buying as I have visited these areas and can highly recommend her to anyone looking at purchasing in Atlanta.
Check this out
I have chatted with Karina and looked at some of her homes.I am in the USA and also deal in Atlanta.She does have a good eye for some solid deals. Nothing that I have seen of here deals. That I would not add to my own portfolio.
Solid nice homes , and seems to provide a great service…
Alex
So
Hey Guys just FYI not selling here but we do order C L 100 ( termite letter )per property and inspections reports. This is a no brainer. Make sure who ever, or where ever you buy this is included.If someone is not willing to provide either one of these..that should raise a big question mark.Again this is not rocket science but there are steps to use to protect your self and the investment property you are going to by.
Appraisal not to crazy about them as they are speculative value
Alex
The group in the USA we were using for International investors. I don't think they have the funds to keep things going.
For some one to come in and fund these types of deals , will have to be a heavy hitter or hedge fund. Being there are several markets in the USA that investors are scooping up properties .just my two cents..
Will update when I get some better information
Alex
aussiemika wrote:Thanks for the advice quickchick.From what I have read, I agree, having the LLC in the state you are buying in makes more sense, so for me, thats a Tennessee LLC!
Interesting to see the mention above of Charlotte. That was the other market I was looking at. My concern there would be the current financial situation in relation to BofA etc. Not sure how much of an impact that may have on the Charlotte economy if things really do go south?My office is based in Charlotte,so if you have any questions let me know if I can help answer them in any way.Charlotte like all markets good and bad. I sent a link out on this forum was a fox news report .Good things about Austin Texas and Charlotte NC …If you don"t see it let me know I can resend the link.
Sincerely
Alex
[email protected]Nigel Kibel wrote:Some markets in the United States are still falling. For instance Phoenex has fallen at least 8% and is expected to fall another 8% in the next 12 months, Atlanta 9.8%and Los Vegas 6.4%. Now there is a view that what does down has to come back up. In some cases I disagree. For instance Detroit prices are 30% less than they were in 2000. However market like Phoenex will improve. Most of my direct experience has been in Phoenix where the markets overall have been steady since 2006. So my question is are you an investor or speculator?Nigel for my self and my clients I buy , sell hold, raise capital , a little bit of every thing.
I feel Phoenix and Las Vegas as well Florida could take another hit and price drop( Detroit don't know enough about it) . Atlanta every time we think it has reached the bottom.I see the prices drop lower again.My offers used to be in the low 30K s for some deals.Same areas I am now bidding lows $20s ..
Speculate is what all investors do.We are betting on appreciation in some markets while counting on cash flow in others..
So being an investor I speculate every day.As the USA real estate game on a hole is changing daily..
Sincerely
AlexAmazing no responses ,….Like I said Jay give people time with the head aches of rentals and they will realize more then one way to win in this business..diversification….
Alex
jayhinrichs wrote:Red flag goes up for me in Atlanta when you hear of companies saying that they have the properties rented in a week or have a waiting list. ( I agree houses are coming on the market and being sold at alarming rate.I expects us as property owners are going to have to lower the rents to keep up with supply and demand factor)
Anyone can do that. However you will take a huge risk in placing a bad tenant. ( Here is an example of a rental property in Rock Hill SC. We have turned down 6 renters for one reason or another been vacant now for 28 days.)Guys buying properties is easy the other parts are the hard parts( rentals , vandalism , keeping tenants) I know prices are great but take these other factors into consideration)Oh property still vacant ..
So this investor just lost one year or more of any kind of return if you look at the numbers. and deduct non performing asset with trashed home as well… Most deductables on Rentals is 5k and if its less your paying far more than standard insurance rates and that will factor into your holding cost.( so where are the 20 % returns ) myths or legends I guess
Now as anyone who follows my post knows we retain ownership of the homes through a Morgage participation so we take responsibility for these types of issues on the financial side and our investor is never affected they always get their return each month. Its that invest well sleep well theory, I can't imagine someone sitting in Aussie making a what was probably a 200k investment only to be hearing these types of things from a property manager that has no vested interest. that has got to be frightning for sure.( Just got back from west coast trip.Met with Jay .I love buy, flip , or rent ,and hold for long term cash part of this business. His system makes total sense for the investor who wants hands off approach…( buying unfinished rentals is not hands off …)
That being said it takes us anywhere from day 1 which is very lucky to 45 days to fill a vacancy. On average we will get 4 to 7 applications before we take a tenant. Once we have a tenant we keep them at all cost. And we can do that because we own the house and are very very responsive to their needs.. No property manager can do what we do for our tenant pool, Unless the property manager is going to come out of his or her own pocket to do the things we do for tenant retention. This whole business starts and ends with tenant placement and retention. Anyone can fly over to Atlanta bid on foreclosures. buy one fix it up and flick it to a property manager. Thats easy , its the next 5 to 10 years that is the hard part and crucial to success.( Standard time for us is 20 to 55 days if we look at all rentals as a group.
Reading between the lines of whats happening in atlanta is there is a lot of buying going on, great buys, however a whole heck of a lot of rental stock being put on the market at the same time. Then add pressure from investors to the property manager to get a tenant in the house and get it cash flowing and now you have the above mentioned scenerios playing out.( Again I am no genius but I been saying this for some time. When the whole state is basically foreclosing there is going to be a major shift in rental and rental demand.) Common sense just last week I bid a total of 143 houses.I expect to pick up 10 to 15 more properties in next two weeks. I went through the listing of 278 homes and that was basically in Lithonia Atlanta .That was a two hr sitting near the computer with a glass or two of wine) Simple technique pull up zillow.com.Type in address see whats sold, whats for rent, what is for sale.) that's just my way…
There is an absorbtion issue with rentals just like there is selling new construction. Only rentals are worse you get 50% of your portfolio in trouble now your really not sleeping nights. The 2 properties that are having problems could be months away from getting a decent tenant again. ( Again greed will get you every time and not using common sense in this business both can and will bite you in the ass.Simple put.. Buy one property when it is finished rented and ready to go. Then search for the next one..NO rush there..and have reserve fund for each deal…) I like to have $2500 emergency fund on hand for what IF's per property..( yes that is low)
And or the properties in the first place were not in a the best location.. Although as Alex says it can happen to anyone. ( Jay we just spoke about this theft in America is growing problems. Thieves seems to be more brazen then ever before. Houses sitting empty are head ache to us property owners .But a gold mine for the thieves wanting the copper or any thing else they can steal) no it does not happen in Mayberry just kidding but most ever town is the USA..
I was in a very Nice town of Atlanta closing a few transactions last summer and asked my closing attorney why it was so hot in his office…….." He said Aircondioning Units were stolen the night before" While I was visiting Jay on the west coast.I had a duplex new ac units that some one walked away with.They were nice enough not to steal both of them .Again this is some thing to keep in mind when buying rental properties. Yes bad things do happen.Next thing that I am going to get rich on is coming up with a cheap way to put Condenser units on the Roof:) then put a lojac on them.( LOL already working on putting our ac units 5 ft off the ground or some thing to raise them)
So bottom line can you make 12 to 15% Noi from these rentals Absolutly in a perfect world, Do we live in a perfect world NO, Crap happens tenants are tenants. So true I base our income off 10 months for nicer homes ,and 8 months for smaller cash flow deals. Again been doing this for years and in a perfect world.You wont have any head aches ,and perfect tenants, and no vacancies. Some times you will luck up and have great renters , and few vacancies. I have been on both sides of the fence.Guess bottom line is take things slow don't rush…..These deals will be around for a bit the person selling is selling for a reason.They make money off volume .I know I am one of those guys…So be-careful taking on to much at one time.
Alex
AKNZ wrote:We own 4 properties which we acquired through Top Rental Returns which we acquired just over 12 months ago. Over this period, two properties have been fine, but the other two havent. We got tenants at one point in properties 3 and 4 but they never paid rent aside from the initial month and so both had to be evicted. We understand the third property has been rented again, but dont know yet when the tenant will move in. The 4th property was vandalised while vacant and we are waiting for the insurance company to come through with a cheque to repair – so far this has taken more than 3 months. In 12 months, the net cash yield, pre debt, across all 4 properties is essentially zero Interested to hear how others are going. We may have been unlucky and fingers crossed for a much better year next year!!!! We will update on progress.Again this is just my opinion but never buy a property until the rehab is complete. The rental market is the USA is hit or miss. Some homes rent right away and other don't. Don't buy your next property until property A is finished.Most people here are making the same mistakes USA investors made during the subprime market.Seeing pricing so low and jumping on many deals. To be in the cash flow rental business takes patience, and bit of common sense ( please don't take that the wrong way) With my company we build real estate portfolio's( email me directly so can explain and I do not get labeled as a spruiker )
As for the vandalism this is the norm even in decent areas of Atlanta. I buy quite a few properties their. Top rental with out them knowing , they are my competition( Spoke with Mike months ago was going to meet ( yes Mike you never returned out calls I was in Atlanta and we spoke early that day ) they do source very nice homes for you guys in Australia. We bid on alot of the same homes. Most here should realize that buying a turnkey product means rehabbed and rented ….This should cash flow from day one. There will always be evictions. Much safer way then buying an unfinished product.
We only sold turnkey deals months ago. With every one else selling unfinished products ,we had to follow the same path. Again when investing in rentals turn key product is a smart move to make.
You might pay a bit more upfront but you have the peace of mind that the property is rented and cash flowing. From day one.
The bottom line the cash flow rental house is a tough business. Some times greed takes over and people buy to many deals at one time. In Nov We purchased quite a bit of homes .Dec we have purchased very few. Since we are in the rehab and rental phase of the operation. Now our focus is fix , show and rent the properties. Then unload most of them. After this we will load up again.
I watch most of Mikes videos ( top rental ) he is right on with the rehab and the homes. So can't see any fault on there part. These are things that happen in the rehab business. The only fault I would find is buying to many homes. Listen this is not going to end over night in the USA with prices so cheap.So buy one or buy 10 but don't buy another one until those are complete. Hard to say no when some one dangles the carrot stick in front of your face. I under stand completely trust me.
just my two cents
Alex
When we met that what a investor in Orlando is doing. His cash flow is very low but he plans on paying off the homes in 5 to 7 years. Now then again there is the risk if vacancies. There are for sure going to be repairs . I am sure if this is taken into consideration.
vacancy
repair
taxes insuranceIf those factors are taken into consideration might not be such a bad product…
Alex
PS you never hit me back about my Atlanta home . For $28k I could not go wrong on that one…. Don't want to sell but keep for long term rental.
Yes Jay a 3 year balloon is risky even for a USA investor. I am thinking it has to be 5 years with a guarantee that the client can roll for another 2 to 3 years.With out incurring ridiculous fee's .
Alex
Nigel Kibel wrote:If you have the time to invest the time and money then yes do it for yourself. However finding quality contacts on the ground is a major problem. If you are going to use someone make sure that they have been around for more than 5 minutes and know what they are doing. Be wary of anyone dealing in a numbers of markets because they may well be dealing with so called wholesaler companies.Agree completely We deal in Atlanta and Charlotte..We wanted to set up shop in Florida ( logistic wise to far for us) Spreading yourself thin is not always best option. So we focus on the two markets .Easier to maintain and control.In real estate running a tight ship is half the battle
Property management , finding the right team to work , researching the markets you want to invest in, flying in to check things out
Just a few check list items before investing ..is the other half of the battle ….
again just simple version
Alex
We were introduced them to when we set up shop in Atlanta . So fairly new for us. One of the teams we use there have over 60 properties with them. They strictly use them , and so far we are happy… Right now we have just under 15 with them . We will have over 40 after the next batch of homes we finish the rehab on. They wont look or take on a house unless 100 % completed .
I for see us by mid march have close to 80 homes with them. We met several teams on trips to Atlanta and they seem to impress me .
Hope this helps..just my two cents
Alex
The interest was a mining project in San Antonio . That is what our client asked about.
Jay you know me happy to be in Charlotte ,with Atlanta our secondary market. Always curious to see how others see the Texas market and why…
Alex
Nigel Kibel wrote:Yes very interesting. It shows that what goes down does not come back up straight away. I deal in Texas because it is a very stable housing market. I think some of the markets mentioned will come up eventually. The question is to you want to invest or speculateNigel where in Texas do you deal in. One of our clients out of Perth has an interest there.We only deal in Atlanta and Charlotte Markets. I think all the markets that investors are buying ( except war zones areas ) we are all speculating on appreciation factor. So I look for cash flow today ,and what are the positive factors for the appreciation markets for tomorrow.
Not sure that any one in the USA can be an expert on when the values will come back.
Sincerely
AlexNot sure of the company never heard of them. Google them ,I did shows pretty good stuff . Just make sure you are asking the right questions. This is who we use in Atlanta for our deals http://www.ritanpropertygroup.com/
Hope that helps
Alex
Jay was just speaking about a the lower end homes that the USA investors tried to make work and lost out. Now these same deals are being sold to international clients . The hood is the hood for a reason and chances of changing it slim to none. A good friend of mine she is 76years old met her at the real estate groups a few years back. She had acquired low end homes in Memphis. That was 4 years ago.After flying there to view the deals for her My advice was walk away she was so upside down. I would bet that same property is now owned by an international client.
just my two cents and it did not work out for her…
Alex
