Forum Replies Created
- spritecat wrote:Hi Steve, I have been reading your posts and found them quite interesting. I too profited from the ever-rising Real estate market in SH and now I'm looking to shift some investments to US as the entry cost in either Aus or SH is too high, ESP in Aus positive cash flow is pretty much unheard of these days, and in the latter policy plays a imp part and it's associated with uncertainly. I'm looking to go to US in a few months time and gather some first hand info, I too have a 2 yr old which makes planning the trip a bit harder.My choices are the southern states like Florida, Arizona, maybe California, where there's nice weather and tourist attraction such as the beach.. I'd be interested to find out how your trip to Miami goes and your opinion of Miami. I am still unsure whether to look at property that are priced at the low end of scale or more premium ones. The return works out to be better on the cheaper ones but I'm not sure of future outlook or volatility on them, and if I hold many of them there might be management issues. On the other hand i can put all my money on one property, the return is less but it's easier to for me to manage. I'm interested to know what are ur thoughts on this. I noticed that you mentioned drawing $ out of Mainland could be a difficulty. PM me if u would like to know my way of doing it. Well, keep us posted of any news from Miami. Take care.
Hi Spritecat
It's my 4th day in Miami, and I'm loving it. It is a hundred times nicer than I'd expected. I'm staying on South Beach, which is a very mellow paradise, teeming with beautiful people in their beautiful cars, but there's also a hippy/traveller/hobo element just to add a bit of variation.
This place is somewhere I'm going to be very happy to own a home or condo in, whether it appreciates in price or not, and whether I get a good rental return or not.
Sadly, it's the weekend, and people in Miami take their leisure seriously, so I haven't been able to visit lenders or even see properties these past 2 days. But I'm spending my time driving around, and the more I see the happier I am.
I really like this whole stretch of island from South Beach up to Surfside/Bal Harbour. It's all rich, touristy, with bridges spanning beautiful stretches of water, and parks along the uninterrupted beach.
I should add 2 interesting observations about this "island" that sits east of Miami downtown:
1. seems to be crime-free, probably due to it being a tourist mecca, but also because criminals would be wary of coming here as they wouldn't be able to escape easily since there are only 3 bridges back to the mainland
2. the spoken language is Spanish more than English. I often make the mistake of trying to communicate with people (even blonde haired blue-eyed ones like myself) to be politely told that they can't speak English. This doesn't worry me from an investing point of view, since these are all wealthy South Americans of European descent, and I feel that it adds an exotic element to the place.
I'm now really divided between buying a single-family home (I like the idea of the privacy, plus no HOA fees) or a condo, since condo prices have been beaten down for 2 important reasons:
A. there was too much overbuilding in the boom years, and many condos only came on the market after the crash, which has meant they've struggled to find buyers, which in turn sometimes led to bankruptcy of the builder, giving the whole condo market a bad name
B. because of the aforementioned bad name given to condos since the crash, banks won't lend to buyers of condos. That's why you always hear: Cash Is King!. Because buyers must pay cash, and since most US citizens have no money, there just aren't many buyers, so the prices have crashed.
Having said that, there are still banks who'll lend on condos, but they want 30% down (for foreigners) and they are picky on which condos they'll lend on. So most foreign buyers are just paying cash, thereby getting a better bargain, and then trying to get a mortgage afterwards.
The condo prices I've seen advertised on Trulia are very cheap compared to China (about 25% of Sanya on Hainan Island). It now remains to be seen whether the prices advertised on Trulia are for real, or whether these estate agent sharks just write fantasy numbers to attract your attention.
cheers
StevenToday I met with a third bank willing to lend to foreigners. I should explain that I found all of these banks prior to coming to Miami, all through doing internet searches (not Googling, but reading extensively on forums of various property sites, and chasing up clues).
So I believe that finding lenders in Miami isn't overly difficult, especially because Miami is such an international city. In fact, all these lenders seem to have set up their foreign lender programs due to so many Brazilians, Venezualians etc. wanting to buy in Miami, not because of Aussies and Brits.
These lenders all have established Foreign Lender Programs, meaning that they've got specific people in their banks dealing only with loans to foreigners, and they have tons of documents which they send to you with all the info.
The minimum they are willing to lend on is a single family home purchased for $145K. This means you must have 44K for downpayment (30% of 145), and then about another 5K for closing costs = 49K, plus about 8K in cash as proof of ability to service your loan, so total required is about 57K (although the 8K only needs to be shown once, and can then be used for other purposes).
The estate agent I met with today assures me he can find nice single family homes for about 150K, in good areas with tenants willing and able to rent for $1,500 to 2,000 per month.
I want to add one more observation/warning.
It's been tough at times. Right now I'm in high spirits, because the weather is great, I'm near the beach, I'm in a nice area.
But there have been times on this trip that I've been feeling particularly low. Firstly, the flight was very long. I had to catch 4 different planes, with a stopover in Shanghai for the night. And it's nearly broken my heart being away from my 2 year-old son, since he's old enough to really feel my absence, yet not old enough to understand why I'm gone. I just had my first Skype interaction with him, which was nice, but nothing like a good hug.
I was particularly down in spirits in New York, because I got hassled a lot by immigration for not applying for a visa waiver online prior to coming. I just wanted to tell the idiotic NY gun-toting immigration bone-heads to F-off, but luckily I held my tongue.
Then my plane to Miami was cancelled due to bad weather, so I spent ages waiting for another flight. This meant that I arrived at Miami airport very late (2am). Everything was closed (my car rental company, cell phone shops etc.) so all I could do was sit up all night reading, waiting for daybreak.
A second low was in Wallmart after buying my cell phone. I went through the activation steps, but it didn't get activated for 2 hours, which was really annoying because I needed it to call several numbers I had for landlords on South Beach. As I had no phone I had to use a public phone booth outside in the rain. I had collected 5 numbers of landlords whose apartments I wanted to see, but the first 3 I called turned out to be liars: either it wasn't available anymore, or it was twice the advertised price, or there wasn't any parking.
So by mid-day yesterday I was VERY DOWN. But then everything came together. My phone got activated, I found a landlady who wasn't lying (although she was the last person on my list to call because her ad stated clearly there wasn't any parking, but luckily when I came here to check out the place she told me I can rent a private spot for $100, which I was very happy to pay considering how tight parking is here in South Beach).
Anyway, here's the warning. If you want to go to the US to buy property on your own, be prepared for the harshness of travel that always comes when you're not on a package tour. I am a traveller by nature, so I'm up for it. If you're not sure about yourself, do better planning than I did.
Hi from Miami
I arrived very early yesterday morning (my flight was delayed in New York).
Some things I learnt on the trip: if you come from a country that has a visa waiver with the US, you must go online before coming, and apply for permission. My travel agent didn't tell me this, so I spent an extra hour in immigration in New York filling in forms.
To rent a cheap car in Miami, use Kayak to compare all car companies. When you get off the airplane, you catch a free Car Rental Bus to the car rental centre about 5 minutes from the airport. It's an enormous 4 story building, the same size as the airport. All the expensive car rental companies have their offices inside this building. The cheaper companies are in the streets surrounding the building. So if you've booked a car on Kayak, call them when you arrive at the building, and they'll come and fetch you.
Beware, because the cheap rental companies will then try to talk you out of your cheap deal that you booked on Kayak. I booked a Kia for $675 (through Advantage), but then they wanted to deduct $1500 from my credit card. I only noticed this when given a form to sign. What they'd done is thrown in an extra $25 per day for extra insurance. I told them I was fine with the minimum insurance required, and they eventually agreed to give me the car for the original price of $675 for the month.
I then drove from Miami airport to Wallmart (near the airport) and had an amazing McDonalds breakfast for $3 (amazing to me because I live on an island in China where there isn't McD's) and bought a cell phone for $15 without any airtime, and then bought 310 minutes of airtime for $20. Not a bad deal, I reckon. Cheaper even than China.
From Wallmart I drove back past the airport, through downtown Miami, and onto the causeway going to the island where South Beach is. My impressions: Miami city downtown (from the highway) looks rich, beautiful, and modern. Lovely glass skyscrapers make for an impressive skyline. The causeway gives you a view of lots of multi-million dollar playboy waterside mansions with yachts parked outside. The cars on the road are often soft-top Ferraris, Mercedes etc.
I have rented a one-bedroom apartment for a month, one block from South Beach. This beach is stunning: the color of the sand, the cleanliness of the water, the infrastructure, all give off a taste of international elegance. The streets are teeming with rich tourists, international models, body builders etc. Amazing (but expensive) restaurants are everywhere. In a nutshell, I like it here, though I reckon property near this beach must be very expensive.
Yesterday afternoon I opened a Bank of America account. It was easy, and immediate. I opened a Preferred Customer Savings account, plus a checking account, since there are no fees for most of the kinds of transactions I shall be doing. The advantage of renting an apartment for a month is that you have a US address. The reason you need an address is because they need to send you your check book and debit card after 10 days, unlike in China where they'd issue it in person on the spot.
I immediately sent my account number to my accountant so that she can start wiring money, which will take a week to arrive.
That was yesterday. This morning I had an amazing 2km swim before daybreak (it was so nice in the water, surrounded by fish, with seagulls and pelicans overhead, that I swam much futher than I usually do). Now it's time to start thinking about getting financing, seeing property etc.
jeff2tract wrote:British buyer, Were did you get the idea that a tenant can with hold rent, you would have a management company that would be renting the property out, no tenant would have the right to withhold rent. I would consider that breaking the lease. How would the tenant know that you were an overseas investor I own a number of properties here in Australia and just settled on one in the USA, the management company will deposit the rent on a monthly basis You need to speak with a US tax accountant I have spoken to 2 tax accountants here on setting up an LLC and no one has said the things you are saying….perhaps because you will be borrowing money…..most of the people that I am dealing with are cashed up. If you lived here in Australia I could put you in touch with a couple of very switched on Tax guys…. JeffHI JEFF
I'm sure I read it on the IRS website. I don't have time to look it up right now, but as far as I know that's the law. Having said that, you are absolutely correct that you do not need to let your tenant know you are a foreigner, so they wouldn't be able to withhold. But when you file your tax returns…?
TO GUILLOTEMI AND MINIMAN (JASON)
(I'm writing this from a Shanghai Airport hotel room, where I'm overnighting before my early morning flight to Miami via Detroit).
It seems like we're all on the same page, going by gut feel as opposed to following the herd.
I'm not sure if you know, but the Holy Grail of housing statistics just came out: the Case-Shiller Index (always comes out on the last Tuesday of every month).
At first it sounds depressing (or at least that's how the journalists spin the story). In a nut-shell, there is as yet NO SIGN OF A HEARTBEAT in the US housing market. It's still declining, although at a very slow rate. One could say that it's "bouncing along the bottom". The big question is, for how much longer will it bounce for?
One can read this as a bad sign (ie. it may not improve for ages, or may drop much further) or as a good sign (now we all have more time to get our finances in order and build up bigger portfolios before it starts rising).
But these are my own thoughts entirely, so check out the stats for yourself after reading the article:
http://www.bloomberg.com/news/2010-10-26/home-prices-in-20-u-s-cities-rose-less-than-forecast-case-shiller-says.htmlS&P/Case-Shiller Table
============================================================
1-months 3-months 1-year 2-years 3-years
earlier earlier earlier earlier earlier
============================================================
US Composite-20 -0.21% 1.45% 1.70% -9.75% -24.72%
Detroit 0.52% 4.68% -0.07% -22.61% -35.89%
Chicago 0.42% 3.94% -2.95% -15.23% -23.57%
Washington DC 0.26% 3.08% 4.84% -3.03% -18.22%
New York 0.17% 2.81% 0.08% -9.41% -15.40%
Las Vegas 0.12% -1.29% -4.49% -33.06% -53.41%
Denver -0.12% 0.26% -1.15% -3.06% -7.98%
Miami -0.28% 0.78% -0.97% -19.63% -42.23%
San Francisco -0.28% 0.47% 7.82% -5.67% -31.38%
Cleveland -0.29% 1.09% -0.39% -3.20% -9.60%
Minneapolis -0.29% 3.09% 2.89% -11.00% -23.16%
Boston -0.30% 1.54% 1.55% -2.69% -7.31%
Charlotte -0.37% 0.18% -3.41% -11.73% -14.19%
Los Angeles -0.41% 0.50% 5.36% -7.20% -31.98%
Tampa -0.51% -0.55% -4.11% -21.10% -35.41%
San Diego -0.62% 0.54% 6.95% -2.52% -27.67%
Seattle -0.75% -0.61% -2.41% -16.73% -24.05%
Atlanta -0.85% 1.13% -1.96% -12.25% -20.05%
Portland -0.88% -0.65% -2.29% -14.49% -20.96%
Dallas -1.13% -0.47% -1.72% -2.93% -5.46%
Phoenix -1.32% -1.95% 0.40% -24.85% -47.89%
============================================================I've underlined Miami, showing that it has dropped the third most (after Las Vegas and Phoenix), a whopping 42% in the last 3 years. Note that the whole crash took place between 3 years ago and 1 year ago, and in the last year it's just gone sideways.
Looks like the bottom to me.
Miniman wrote:Hi SteveSome awesome information you have posted in this thread, well done. I have just purchased my 1st property in Orlando and will be heading over around the 15th of next month to close the deal. I know it could be done from here (Perth) but we want to snap up a few more when we go over.
We used our line of credit here in oz to finance everything. 1st property was $205K – my sister in law will rent this property from us. We plan to purchase a condo for about $100K in cocoa beach and grab a few single family homes in orlando around the $50k mark.
We chose Orlando based on the fact thats where the sister in law lives, We have read some shocking stories of useless management agents and maintenance people. By purchasing here we can have the sister in law manage the properties and her husband do all the maintenance.
Not particuarly fussed about positive cashflow as our plan is to make the money in capital growth. Plus as we have everything financed here in oz when the $AUS drops and the $US rises we will be getting more for our rental dollar. In the meantime some negative gearing wont go amiss.
I know you are keen on Miami (and we may even grab some down there too) but hopefully when we get back we will have some usefull information on Florida in general to share with fellow posters regaring reputable accountants, setting up LLC's, registering with the IRS etc.
Once we have exhausted the cash we will then look into borrowing to purchase more. We have the option of selling investment properties here in Perth and tapping into the SMSF but I feel 6 or so properties in the US will add a nice balance to our investments wiithout throwing all our eggs in one basket.
Good luck with your purchases
JasonHi Jason
Sounds like you're already sold on the Florida idea.
Can you give me (and any other readers) an idea of what you perceived the Orlando market to be like. Ie. how cheap did things look? Did you feel it was bottoming?
I'm leaving China tomorrow, and will be in Miami on Wednesday. I have no idea what to expect, other than a lot of self-interested estate agents and mortgage brokers.
I've failed to open a US bank account from overseas, so the first thing I'll be doing is that.
I will then make the rounds of a few lenders I've been talking to. However, I will probably just submit my application and then start looking at property to buy with cash (ie. cheaper houses or condos). If/when my pre-approval comes through I will consider buying a more expensive single-family home (about $400K).
freerenterprise wrote:I have watched the US market fairly closely since 2004 when the overbuilding began (and coincidentally, the lending standards became more lax). Resisted the opportunity to buy multi family a homeunit block in Texas when the weakness in US housing was becoming apparent (I thought the market had bottomed in 2006 and still wondering if we are there yet!) . Glad that I didn't jump in when there was much further falls to happen. Big differences between the US and Aus ppty market persist. Largely around management (Aus ppty mgrs are more active and effective) , use of non-recourse loans (less commitment to hang on to the house and owners find it to easy to walk away creating a snowball effect, with falling ppty prices) and static population growth. 'Bargains' can prove be expensive in the long run. These days I stick to fundamentals and recommend the same for my clientsHI FREERENTERPRISE
Thanks for sharing your story and advice.
Had you bought that Texas multihome in 2006, how much do you think it would have fallen by now? According to the Case-Shiller graphs for Dallas, prices never crashed in Texas.
You mentioned 2 differences between the Aus and US property markets. Surely the 2nd one (the ability of borrowers to dump houses so easily when they're underwater) won't recur? Surely next time lenders will have learnt their lesson?
But then again, maybe not. I see that Fannie Mae is still offering loans with only 3% downpayment. At least prices are so low there's a good chance prices will not drop too much. The problem will recur if they're still offering these kinds of ridiculous loans when the market is high and in danger of falling.
ANOTHER COMPLICATING FACTOR (as if buying US property were not already complicated enough)
I just found out from one of the lenders I'm talking to in Miami that it's difficult to transfer the property to a LLC. I quote:
"Yes, you can buy a property under an LLC under the following terms:
LLC in the USA and established for 2yrs
Articles of Organization (Must be registered to you)
Business must be registered and appear on http://www.sunbiz.org
Operating Statement
Corporate Resolutions
2yrs Business and Personal Tax Returns
And the same is needed in order to buy under your own name and then transfer to an LLC. "HERE'S A REMINDER OF WHY FOREIGNERS LIKE TO PUT THEIR US PROPERTIES IN AN LLC:
1. can't get personally sued by your tenant should he/she suffer an injury on your property
2. LLC's don't suffer from rent-withholding, in other words your tenant can't keep 30% of your rent, and give it to the government
3. When you sell, the buyer can't withhold 15% of the selling price on behalf of the government.I seem to recall the above 2 withholding figures as being 30% and 15%, but I stand to be corrected
[/quote]
Hi Steve,
The bank was Wachovia, however I am not "banking" on it. I have since spoken to a Mortgage Broker in the US, he has said that Fannie Mae changed there lending criteria this year to exclude loans to foreign nationals who were not legally resident in the US. As a result banks are not lending to this group as they can't sell on the Mortgage to Fannie Mae.
He said that at this time he only knows of a couple of lenders in Florida who will offer non conforming portfolio loans (Portfolio loans are mortgages that are held as an investment by the lender. Usually they hold on to the loan because it doesn't fit the underwriting criteria) These lenders will offer facilities to buyers of second homes which are normally quite expensive homes in specific areas which would not be good cash flow investments.
As I already have a second home I could not use this facility if I wanted to.
I will continue to refinance UK assets, however I am am not going to give up on US finance as the rates are so good. If you have any luck let me know.
Kind regards
Gary
[/quote]
EVERYONE NEEDS TO READ WITH GREAT CARE WHAT GARY HAS WRITTEN ABOVE
What he has provided is an explanation of why banks don't want to provide an equity release (which is what they call it if you buy a property with cash, and then at a later date try to get a bank to loan you money by using that house as collateral).
If you didn't follow what Gary wrote (and thanks for going into such detail Gary), basically the banks can't easily sell an equity release loan to another bigger lender (such as the government, or as mortgage-backed securities on the stock exchange). This means that if a lender were to give you an equity release from a home you purchased in cash, that money comes out of the lender's pocket. WHICH EXPLAINS WHY THE INTEREST RATES ON AN EQUITY RELEASE WILL BE MUCH HIGHER.
And another very interesting bit of info gleaned from Gary's post is this:
If you buy your first purchase with cash, and even if you do manage to get an equity release on that purchase, you will only be able to buy one more purchase with a loan (as a "second home"), and the bank will be very discriminatory concerning the price and location of that second home.TO SUMMARIZE:
Here is the best strategy for buying in the US (for people in my situation at least):1. Don't rush into a cash purchase thinking you are going to easily get an equity release.
2. Take your time, find a suitable lender, and while you're waiting for pre-approval for a loan, start your "window shopping", looking at single-family homes prices $150K to 350K. They'll give you lower rental return, but because you'll be buying with a loan you can get greater leverage when prices rise, and you'll only need about 50K to 100K as a deposit.
3. Be prepared to have to do a second trip to the US, because you'll probably just end up making lots of offers on your first trip, and you may have to fly back to close on a deal (assuming one of your offers is accepted).
4. On your second trip, start shopping for your second purchase (assuming your funds are in order, and once again looking for single-family homes prices $150K to 350K), because you are still able to apply for your second (and final) loan
5. If you still have cash to buy after your second purchase, use your wife/partner, since they can get up to 2 loans.
6. If you STILL have cash, use cash to buy small apartments (50K), and then after 6 months get equity releases on them.
anelxander wrote:Hi all,
I just wanted to share this article with you , pay attention:
http://www.wharton.universia.net/index.cfm?fa=viewArticle&id=1960&language=english
Cheers
Alex
HI ALEX
As an academic theory, it's very interesting (and if I were Obama I'd definitely adopt it as policy, namely for banks or the government to provide a cash prize of about 20% of a mortgage to all those who eventually end up paying off their mortgage in full).
It seems amazing that the only thing Americans lose when they walk away from a mortgage is their credit history plus the 3% deposit they paid. They get to keep their cars, sofas, TVs, computers, and just dump the house on the bank.
But that's the price the country has to pay for being overly capitalistic and having no checks and balances in place.
Thankfully that professor's ideas have about 0% chance of being adopted as policy, because if they were prices would start shooting up before we have a chance to buy.
James2118 wrote:Does anyone know of a good mortgage broker in the Miami area? I was looking at the Flordia Association of Mortgage Brokers website, and I found a whole list (about 155 in total) of mortgage brokers in the Miami area, but there was no rating or anything, so I am not sure who is good or not, who would be useful for purchasing as a non-resident and things like that. So if any of you know anyone that you have had a good experience with (or even someone who you have had bad experience with so I can stay away) if you could let me know that would be great. Thanks.
HI JAMES
I'm currently talking to 2 banks in Miami about getting a loan. I don't wish to divulge the names yet, since I don't know what the outcome will be. I'll be talking to them in person at the end of next week, and as soon as I have more news (either good or bad) I can let you know (ie. the name of the bank plus the loan officer). I should mention that these two banks may only wish to lend to people buying homes over $200K, and offer LTV ratios of 70% to 60%.
I've also made contact with a broker, and he says he's looking for a lender for me.
Perhaps you should write down your particular needs for a loan and e-mail it to all those brokers. I'm sure a good percentage will jump at the chance of helping you. Never put your eggs in one basket.
It seems like REO's might start returning to the market earlier than I'd predicted.
Here's an article from Bloomberg News last night:
Oct 19 (Reuters Legal) – The White House warned banks on Tuesday it would pursue them for any mortgage practices that violated the law, piling pressure on the financial sector after two institutions lifted their freezes on home foreclosures.
Bank of America said on Monday it was partially lifting its foreclosure suspension, and GMAC Mortgage, one of the largest servicers of U.S. residential loans, followed suit.
The moves followed two weeks of damaging accusations that financial institutions' use of shoddy paperwork caused some borrowers to be illegally evicted from their homes
gmproperty wrote:Steve,Working with the banks to get financing as a non resident is very frustrating at the moment!!
I believe you can get a better deal as a cash buyer, however we will not be able to get the same interest rate on an equity release. The deals at the moment are incredible. My manager said once approved I could get 5.5% fixed for 30 years, which compared to UK buy to let rates is fantastic.I am flying over again early November to close on a Property, when I am there I am going to speak with a couple of Mortgage Brokers and see what they can do for me, I would like to find a bank who will lend to an LLC for a start.
Kind regards
Gary
Hi Gary
Thanks for sharing all that info. Great stuff.
Which bank has offered you an equity lease on property purchased with cash? Wachovia? And has that lender specified an interest rate? And what do you think the LTV ratio would be?
Where are you going in November?
cheers
jeff2tract wrote:Hi all, I just joined today and have found all the comments most interesting. I am in the process of setting up a business called invest USA, it is designed to advise locals on the ins and outs of property investment. I have spent many months looking at various markets and Florida was on of them, I was concerned at the vacancy rates and unemployment figures. I was in Orlando early this year and could see why so many people would be attracted to Florida. My research concludes that one should be very careful about investing in Florida, there are other area's that have a better potential for positive cash low and capital gains.Also the HOA fee's that are associated with apartment purchases can eat away at any investment. Single family homes to me are a better investment. There is a glut of property available in Florida so be careful.Hi Jeff
What other areas of the country do you think may offer higher cash flow and price increases?
I will be very happy to get a 10% return on a rental investment in Miami (ie. after paying taxes and HOA fees if it's a condo). I think 10% is a phenomenal return to get in a developed country these days.
What kind of returns have you seen/heard of in the US?
cheers
SteveJames2118 wrote:Step 1) Set up a US bank account. I know this from the above posts from Steve. However also refer to Step 2 about whether I set it up in my own name or an LLC.
Step 2) Set up a LLC and a bank account in the LLC's name. I am not sure I am going into this alone or with a (trustworthy) friend. I believe an LLC would be best for this arrangement, so do I need to set up a bank account in my own name or just using the LLC?
Step 3a) Find a mortgage broke who can talk to banks about finding a mortgage over there, as well as a solictor and an accountant to help with tax and the like.
Step 3b) Talk to banks over there who provide mortgages to overseas investors, or non-US residents and see how much we can borrow.
Step 4) Find a solictor and accountant to help with the legal forms and inspections and tax etc etc. As well as insurances.
Step 5) Talk to real estate agents and start looking at houses and find one you like and purchase it.
Step 6) Enlist a property manager to look after the property, sort out maintenance and repairs, and find tennants and whatnot.
Thanks
James
HI JAMES
I like the way your brain works. Step-by-step and logical. Mine does too, at the outset of a problem, but then I just focus on immediate problems and put off the others until they demand attention. For example, I've been told that LLC's are easy to set up (even over the internet) and that taxes are easy to do yourself (using turbotax). I've also been told something very interesting by a UK property investor in the US: he has never paid any tax on his rental income, mainly by claiming depreciation and expenses on his tax returns.
Thanks for reminding us all of the existence of steps 2 through 6. They have all received less attention from me up till now. But I guess time is getting tight, so I'll be working on them in the coming weeks, and will let you know what I find out.
The lenders I've spoken to will only lend between 60 and 70% of the total price, and will let you buy up to 2 properties in total in the US. They haven't yet mentioned a minimum amount (ie. lowest purchase price) they are willing to lend on, but I get the feeling it must definitely be over $100K.
cheers
Stevejasperjonsson wrote:I am a newbie here but have read and re read all of British Buyers recommendations – so interesting! Like NEWINVESTOR2 – I am from Australia, and have some cash to invest in US market. I have set up the bank account, and have cash in it. I have the same questions as NewINvestor2 – do we need a US solicitor to complete the deal/make sure the property checks out? Also – what is the best and safest way to purchase property to make sure that we get the best deal, and most importantly – everything is legal? As I am a new overseas investor I am scared of getting caught up in any scams. Is it better to purchase at auction ? or from a real estate ? or from a 3rd party real estate who has done the rehab, but of course the property will be more expensive no doubt. Really, what is the best way to go? British Buyer – since you are travelling to check out properties, would you be interested in taking some commission or $$ for coming back with some shortlisted great value properties that you find?HI JASPER
So as not to be taken for a ride, I've decided to stick with buying Short Sales, REOs (you buy them direct from the bank, so they have been "cleaned up" ie. they've checked that there aren't any outstanding debts on the property) or from homeowners. I've decided to steer clear of auctions. I once purchased a car at an auction and I can tell you it's for the experienced buyer only.
I feel that as long as you go with a real estate agent, but keep your wits about you, you probably don't need a solicitor.
Also, so many mandatory checks are required at closing (especially if you're buying with a mortgage) that will serve to double-check that everything is in order (eg. checks on the title of the property, the flood-level, etc.)
I don't feel I am knowledgeable enough to accept any money for providing a service, but feel free to contact me regularly when I'm there and I'll keep an eye out for whatever it is you're looking for.
gmproperty wrote:Hi Steve,Many thanks for your regular posts, they are very informative and interesting.
Re: "Seasoning"
I have purchased a few Properties in Florida and Atlanta, I have been transferring funds back and forth since 2004 and have never come across "seasoning" I bank with HSBC here in the UK, but with Wachovia in Florida. The last Property I purchased I sent funds directly from my UK HSBC account directly to the Title Companies client account.
I am a premier customer with HSBC in the UK, when I approached HSBC in the US for the same facility If I remember correctly they required me to maintain quite a considerable balance in the account, I decided against this as I would rather my money in a Property than in a bank account earning next to nothing. I have found Wachovia very easy to deal with. Whilst I was in Florida last month I opened a new checking account in the name of a new LLC I have registered and the whole process took less than 30 minutes, and all i put in the account to open it was $100.
Have a safe trip to Miami, the weather is normally just right this time of year.
Regards,
Gary
Hi Gary
Thanks for joining our discussion, and for sharing your personal experience and hard-earned information.
SEASONING is currently my major concern, since it seems there's no way around it for me. I only came across this problem a few days ago, and wanted to double-check the information I received from a Miami lender, so I posted several questions on Trulia and Zillow forums and the information has been repeatedly confirmed.
Let me add that this problem is something that most other buyers won't experience. It is a problem for me because I'm using several people to assist me to get my money out of China (due to restrictive foreign currency controls here). If you send money from yourself (eg. from your UK or Australian bank account) to your US account, and as long as you've owned that money for 3 or more months, then you don't need to season it.
Also, if you're buying with cash you don't need to season it.
I'm now considering making my first purchase with cash, not only because I won't need to season the money but also because closing costs are far lower, and in addition it's easier to get a better deal on the purchase price.
But I don't like buying with cash simply because you don't get any leverage. Furthermore, from what I've heard you can't get refinancing (I borrow against your cash purchase) for a year after you bought it.
Have you heard the same?
WHY CASH IS KING
If you follow Trulia and Zillow forums you will hear the phrase "cash is king" over and over.
Here's a great explanation of why (quoted from a realtor's blog on Zillow)
Contrary to other opinions, CASH does talk, LOUDLY, with a distress sale. Banks (REO) especially do not want to have a house off the market for 30 days or more only to find out the buyer didn't qualify or the appraiser picked it apart and killed the deal. I have seen numerous deals where they took the lower cash offer over a financed full price offer.
If you've been reading my recent posts you'll know how worried I am about the Foreclosure Fiasco / Moratorium
There's something I've been reading a lot about recently, which might be very relevant to anyone considering buying an REO (assuming you can still find any REO's on the market now that most of the major banks have temporarily stopped selling them).
If you want to buy a property with a mortgage from a bank you will need TITLE INSURANCE.
This insurance is unique to the US. If you want to read up more on it, check Wikipedia. Basically, it exists in case a lawsuit should arise on a property you've just purchased, with a previous owner of the property coming out of the woodwork to say that he/she is still the rightful owner (eg. the person can claim the property was illegally sold without his/her knowledge via Identity Theft). Should such a lawsuit arise, you may lose the property or at least have huge legal expenses, which is why you need Title Insurance to cover any losses during such litigation.
Due to the Foreclosure Fiasco now unfolding, it's transpiring that the banks illegally foreclosed on thousands (maybe even hundreds of thousands) of properties in the past 4 years (through falsifying documents). There are now going to be innumerable court cases from all those people who lost their homes through bank fraud.
And this is why Title Insurance companies don't want to sell Title Insurance on REO homes. At the very least, they will demand to see very very tight paperwork to show the home was correctly foreclosed. So if you try to buy any REO properties, be very sure their histories are watertight.
