Hi Dale, thankyou for your question. Dean is right, property taxes can take a huge bite out of an investor’s returns. So how do I get around it? Simple. I avoid residential property and only do commercial real estate (larger apartment buildings, retail, office industrial etc). That’s because commercial real estate is sold NET of property taxes, insurance, maintenance, property management, staffing, advertising etc etc.

The cap rate these properties are sold at is after all these expenses have been paid. Coupled with the scale commercial property affords, it’s muuuuuch easier to project future cashflows for commercial real estate than residential, where you have to guestimate these expenses yourself.

Hope that helps

Hi Engelo, sorry, have we met? Were we meant to meet up sometime? :)
Are you Zach’s friend?

@caesar, the only I’d say would be such a post might run you afoul of the SEC. I see from your website that you’re soliciting funds and promising a return. You are therefore issuing a security- and assuming Americans can see this post and your website, you will come under the jurisdiction of the Securities and Exchange Commission.

Again, I don’t know what type of investor you’re trying to target, but under SEC Regulation D 506(b) you can’t do a general solicitation. So you can’t adertise on this forum or on your website. However under 506(c) you can do general advertisements, but you’ll have to make clear on your website that the deal is only open to Accredited Investors.

I say this because if you don’t check all the boxes, the SEC could force a sale of your assets, and/or your investors have grounds to sue. Again, I’m not an attorney, but that’s my understanding of the law. So I recommend you speak to a securities attorney to keep you safe.

Good luck & I wish you success :)

• This reply was modified 7 years, 5 months ago by  dhillon2.

@Sydney99- wow, that’s alot of questions. I’ll do my best. But I must say, your questions are very transactional in nature, which is a little too granular for me. I’ve got attorneys that handle the transactional side of things. My job is to make sure the deal underwrites, and then implementing the business plan. If you have questions of that nature I can be more useful.
Anyway, here it goes-

1) To open up a US bank account you gotta essentially do it in person in the US. Unless you’re an HSBC Premier customer. I’ve got a third method that involves a personal contact of mine, but I have to get to know you first :)

2) Yeah I guess.

3) It depends on your strategy- what kind of asset protection and structures you want in place. But from a purely transactional perspective, no, you do not NEED to setup an LLC first.

4) LLC’s are state based. Accordingly the rules governing each are different. This is beyond my scope.

5) You can source property yourself or you could pay someone to do it for you. Within each category there’s a whole constellation of service providers at all different prices ranges, depending on how much work you want to do and how much you want to pay.

6) Yes, you can get a building inspector to do that.

7) I deal with Commercial property (Apartment buildings) attorneys essentially draw up all the documents.

8) Direct this question to an attorney

9) In Commercial property, its whatever agreement you can come to between you and the seller.

10) No

11) I use wire transfers

12) Yes

13) In my experience, everything is electronic, then when you close you get a very very thick
wad of papers.

14) You are missing many steps. Get in touch with an attorney you trust. If you need help in this, I can refer you to people I’ve used.

Hope that helps Sydney99 :)

It seems that I will be traveling back to Melbourne after all! Just for a week to attend a friend’s wedding and my mum’s birthday.

I’ll be inviting some friends to my place to talk US property investing on Thursday night June 22nd. If any of you feel like coming over, please PM me and I’ll send you the details. Melbourne SE suburbs.

Take care and good investing :)

@ DeanCollins – I think I might have misunderstood your original question. I’ve taken out loans amortized for 30years, but I don’t know of any non-recourse loan that has a 30 yr fixed term. The loan i referenced in my previous answer was a Freddie Mac loan.

I’ve never transacted in Michigan, and I don’t think I know anyone that’s currently based there. So I can’t really say.

What’s your thinking behind your interest?

For starters, I’d say you gotta hop on a plane and build real relationships.

I know this is a forum, so its weird to recommend another forum but the US based https://www.biggerpockets.com/ community is really vibrant. Maybe reach out to someone based there? However be careful, the US is full of sharks and conmen, so like I said, hop on a plane and eyeball anyone you intend to do business with.

Sorry I cant be of more help.

Hi Jack,

Congratulations on your plans! Austin and DFW are great markets. We were in DFW 3 weeks ago, and Austin in June. Some thoughts:

– Generally US zoning and planning rules are much less restrictive than Aussie planning regs, hence US urban sprawl. Consequently areas don’t really ‘gentrify’, as developers would rather rebuild in a totally brand new area. As opposed to Australia where greenbelts around cities are much more heavily enforced hence the relative density of Australian cities and the support for areas to gentrify. What I’m saying is go to areas where there is infrastructure, job and population growth.

So the southern states are a generally good bet. See –
https://houstonagentmagazine.com/2016/12/21/texas-no-1-population-growth-will-real-estate-markets-follow/

– Market Cycles,
DFW & Austin have had HUGE price growth in the past 3 years. There are really sound fundamental reasons for this, but there is some concern about ‘frothiness’ in the market. If you’re flipping you really want to pay attention to that, as the end sales price is where all your profit is. Cashflow will see you through these times, so guess I’m suggesting my strategy. Then again, I’m biased. I’ve never flipped anything. Regarding market cycles check out this-

https://www.realestateconsulting.com/the-housing-cycle-market-by-market/
The reason I’m in Houston is because that’s the counter-cyclical play.

– If you’re doing an active strategy such as flipping, you essentially have to be there. Otherwise it’ll be a coinflip as to whether the people working on your behalf are diligent or not (most aren’t). Myself and 4 other friends invested back in the US in 2011. The ones that made serious money (2) were the once that moved there; the other 3 eventually sold up having mixed outcomes because management was too troublesome.

– I know two other Aussie’s flipping houses kinda around Kansas City, and another in San Antonio. I can put you in touch with em if you wish.

Good luck!

btw- I’m doing sharing a talk with close family and friends about our work tomorrow night Fri Dec 30th, 6:30pm in Scoresby. Its at my mother in law’s house so I won’t publish the address here, but PM me if you’d like the details.

• This reply was modified 7 years, 11 months ago by  dhillon2.