Forum Replies Created
Hi Liz
I've lived in Adelaide since 1996 and in South Australia since 1984.
If someone in the street came up to me and asked "what is the worst suburb in Adelaide?" I would immediately say: "Davoren Park".
I wouldn't need to consider it, think about it, or reflect on it. It's "Davoren Park".I have several investment properties around Adelaide and would NEVER consider Davoren Park.
Its also a part of the outer mortgage belt. If interest rates go up and this flood levy empties peoples pockets then this WILL negatively impact on this mortgage belt.I think its fantastic your considering an investment property for your financial future but methinks this one will give you lots of trouble and stress. I'm actually dissappointed the Emergy Group would even consider such a suburb.
Just my thoughts anyway.
Thanks for your input Craig.
I think the way you have done it is probably the best way to do things with the highest return. Not just the hightest return but the most rewarding experience.
Time.
It all comes down to time. Cut out the middle man and do most of it yourself.
Me? I had to use a buyers agent otherwise I simply wouldn't have done it. I just can't give it the time to do all the necessary research. What I had done so far was doing my head in.
The way I look at is stamp duty. The last investment property I bought in Australia I had to pay $17,000 stamp duty. The US buyers agent slugged me $4,000. But they did do all the hard work for me and I'm all setup and it appears to be going well.
Atlanta!! Well done.
I think My USA Property has ceased functioning under its current name.
Name change: US Property Sales Australia
Trawling through the old forums on night shift.
Love this post.
cheersjayhinrichs wrote:Highincome,when you establish an LLC you have to have a registered agent for Service that is located in the state of your LLC. If you get sued its your resident agent that gets served. And you will get sued personally as well no lawyer just sues the LLC.
The reality there is next to no litigation involving single family rentals and for instance I have a 3 mil umbrella policy for liablity which cost me 300 bucks a year. LLC will cost more each year filing a tax return. I can see using LLC if there are multiple partners however not for a single person unless you have a really large portfolio. there are attorneys in the states that will recommend you have a different LLC for each address or property. And yes it would add a layer of protection but protection from What. In 33 years of owning up wards of 200 units I have never had one lawsuit by a tenant. The only time you will see a court room is in the event of an eviction. There is just too much paranoia… The caveot being if your very very wealthy.. The other reason to have insurance is that is where a sueing attorney will focus their attention in the unlikely event of a water landing>
However the insurance company pays for 100% of your defense and they are masters at defending litigation its what they do.Hi Property Scout
An enquiry if I may.
Do you not also need an ITIN (Individual Taxpayer Identification Number)???
Or by setting up the property under an LLC avoids the ITIN application and you simply need an EIN (Employer Identification Number)?
Thanks for the heads up on the LLC setup.
When I was in Fiji last year I did a little research on buying a freehold property near the beach.
Some good. Mostly bad.
+ Exchange rate was fantastic.
+ Free hold property was in fact near the beach and Nadi airport and thus enticing
+ Beach looked beautiful
– Some parts near the area had a real 3rd world feel about it. You know, steel bars over windows, stray dogs, rubbish scattered by the road side, roads in serious disrepair.
– Seriously……….how was I going to keep a shrewd eye on the property in the South Pacific?
– I got the feeling that if the government suddenly decided freehold property to foriegners was a bad idea then they would simply take the property back and a "Bad luck to you sir. Come again".
– Cyclones have been known to sweep through Fiji. Insurance was difficult interpret.
– Skilled property manager issues- No bank in Australia was going to borrow me money to buy the house. So cash sale only.
– From memory it was still going to cost about F$300,000 to buy a house there.
– Tax implications I simply didn't understand.
– I read the paper over there daily and in the employment section, wages were terrible. Even professionals were being offered very low incomes. Who's going to rent your property out at a decent rate to cover your holding costs?????
– Touted as the "Next Hawaii". But I just couldn't see it.
Sorry. Too many negatives for me. I appreciate different geographical area but there would be similar international issues to overcome. Good luck.
Interesting question.
I used Ozforex as well and they were excellent.
No chance you can use them again to return the rent money back into your Australian bank account???
Which bank in the USA are you with??
We ended up using Wachovia. So far so good. Although I notice they will slug me $40 everytime I transfer money out internationally.
More bloody research……………….Yes. There are bargains in Cleveland. Increased foreclosures have placed pressure on the rental sector as people are looking to rent a home instead of purchasing one. I read somewhere that over 50% of all properties in Cleveland are rentals. So there's high demand to rent your property.
Cleveland's largest employer is the Cleveland Clinic which consistently ranks as the nation’s top cardiac care centre.
Cleveland is (supposedly) an emerging area for biotechnology and fuel cell research with a huge emphasis on health and technology.I read that since January 2010, Northeast Ohio has seen employment growth in its two largest sectors. Manufacturing employment which grew by approximately 8,000 jobs between January and June of 2010, while the service sector employment grew by nearly 48,000 jobs.
Eventually you get to the stage where you just have to bite the bullet or forget about it.
My proof reading needs working on!!!!
In a previous post I said "There's massive junks of information on each city……"
FAIL
I should of said "There's massive chunks of information on each city….."
None of the information is junk. It's all important. It's really a matter of what you place more importance on.
Thanks.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.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………………….
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.Well put together Anthony.
It's like using a funnel.
You find the country: USA
You find a state: Texas
You find a city: Dallas
You find a neighbourhood:??? Or perhaps a section of the city that is acceptable. Just as important, a section of the city that is not acceptable.
Dallas doesn't appeal to me and I'm not sure why.
But I'll keep reading your research.
Excellent workSounds 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.Hi Rory.
Buy and hold strategy.
If I dont want to hold it for 10 years, I wont hold it for 10 minutes.
Cash flow positive. Middle class area. House must be rehabbed. Increased insurance for peace of mind.
You wil be very lucky to get equity in any property in the USA in the next 1-3 years. Possibly even 5 years. Theres just too much stock.So if you want to get more money out of the Aussie bank to invest in USA property you need to show the bank good incoming cash flow. They will hopefully view that as another source of income. No Australian bank will borrow you money against a US house you have.
Hope that helps
GaryBuy and hold strategy. 10 years.
In 10 years I may never even see the house.
I expect no capital growth for at least the first 3 years. Perhaps 5 years.
That's ok. The cash flow is excellent.
I read somewhere the 50 year average is US$0.80 per aussie dollar.
Do I expect the last superpower's economy to bounce back???
Sure. Why not??
Agree with RickH. It may become a huge issue if it goes beyond US$1.30 and looks like staying there.
On the other hand, Australia has gotten into bed with China. If the Chinese economy tanks then you can expect investors to abandon the Australian dollar and look to safer currencies.Some gloom and doom pundits are claiming the Chinese economy will tank. "It's simply too hot"
Lots of variables to consider……….Enjoy reading everyones input.
Who can really say???
I notice its just regained 2 cents in the past 3 hours back up to US$1.0730
It's one of those apps on my phone that I just can't help but click several times a day to see where we are at against the green back.
Hi RickH.
You say you were "advised" to set up an LLC.
Did you actually setup an LLC or buy in your own name?
How are you going to get your tax done???We went with My USA Property. On the surface they seem fairly pricey with the setup costs (about $4,000) but they do take all the stress out of buying. They head hunt you a good property manager, get appropriate insurances and they got me some really good tenants. Their houses I looked at were all rehabbed.
I don't have the time or the inclination to go there, find the right suburb / neighborhoods then find a team to rehab the place then find suitable tenants……..then a property manager who is International friendly. etc etc.
We ended up buying in Cleveland, Ohio. I still have my reservations about Cleveland but the house has good positive cash flow. Neighborhood appears satisfactory. it ticks a lot of boxes……but not all of them.
To buy another investment house in Adelaide I would expect to pay A$400,000 for a decent house in middle class suburb. This does not include the $15,000 approx govt taxes and stamp duty. Which is why I'm not too worried about paying My USA Property some money to do the work for me.
But I can get a decent house in the USA for US$50,000 thats been fully rehabbed, tenanted and fully insured. I can't be bothered setting up an LLC at this stage. I asked the property manager to get me quotes with increased "liability insurance"…..= "no problems at all"
Forget Detroit and all the rust belt. I can't ever see Detroit ticking enough boxes to feel fully comfortable there. I think its the most violent city in the US according to the FBI. Famous city saying "you probably wont get shot in Detroit"…….
I hear poor things about Phoenix.
Memphis is 3rd most dangerous but showing signs of growth.
Kansas City. Fairly poor but doing ok. My next one might be there.
Las Vegas……..hahahahaahhahahahaaaaa…………..Good luck to everyone.
I look forward to everyone continuing there input here.
Exchange rates
I'm finding the Australian exchange rate progress interesting to follow.
You can actually pay a subscription to exchange rate "experts" online who will predict with where the Australian dollar will go against the Greenback. They input all sorts of data to come up with a prediction.
About 3 months ago they predicted with 91% certainty that the Australian dollar will go to about $1.03 before falling under parity then down to US0.90 by mid year (2011).
Epic FAIL
I think one of the major banks have just said they anticipate the Aussie dollar to rise to about US$1.12 by September before sliding back to parity early next year then down to US$0.92 by May 2012. Sorry I cant remember where I read it so no link.
Personally I think there are too many unknowns to give a strong prediction of where we will end up against the Greenback over the coming 12 months to several years. I remember at work about 5 years ago someone boldly predicting we would hit parity with the US dollar. Everyone stopped what they were doing, looked at him, then laughed out loud.
Of particular interest to me is the Chinese economy and their continued willingness to pay top dollar for our resources.Just my thoughts anyway.
Hi Max
Best bet is to start a new thread. Most people will only open this thread to read about the exchange rate.
