Forum Replies Created
Leonard,
Just as an FYI, I tried your website also and it doesn't seem to work other than the "Home" page.
We supply most (not all) of the Australian agents with properties as an asset manager/wholeseller, and most of the successful ones have a pretty simple structure A-B-C that shows the properties, all costs, and how the process works, and aren't as heavy on pictures and background (for better or worse?) just to make them easy to navigate.Hi Dennis,
That's a valid question, and I think you'll get as many different opinions on here as you will find number of investors…
Personally (as well as us as a firm) I like it, IF you are able to buy the right property in the right area, and make use of the generous Section 8 rental program.
Detroit really isn't all it's made out to be – it has a lot of very bad areas (like most major US cities) and the loss of population is certainly happening, although not all of them leave the metro area – they leave the City of Detroit, but might relocate to the more attractive suburbs. I wouldn't buy real estate (as a general rule) in the downtown area, and also some sections of the fringes of the city. However, many of the suburbs are great, and make for fantastic cash flow properties.
The Section 8 program, as earlier mentioned, pays better in Michigan (and has longer waiting lists) than anywhere else in the country, and we put relatively large number of investors into our properties there, and management is also of a better quality there than in other parts of the country, as many of the managers are used to working with out of state investors.
As for value, yes that is a concern in Detroit, but you will find that all across the Midwestern states, as well as many of the cheaper properties in places like Atlanta, Memphis, and even Florida. Taxes are also very high in Michigan, and must be taken into account. All taxes have to be paid one year in advance now, which will add a bit to the amount of funds you need to bring to be able to close.
However, you should also be aware that the State of Michigan is actively trying to attract "new" businesses (not just manufacturing) so house prices MAY NOT fall much further, if at all, as there are still a lot of very good areas of metro Detroit where you can invest – it's literally like a different world from what you might have seen and heard.
Feel free to get in touch – think I better now mention more about our business here, or the moderators will delete it!Troy
That sounds like an interesting, albeit very unusual, product.
As Jay stated, we also work with both US- and non-US buyers, and even our American clients don't get 90% loans.
What is the lender looking for, in rough terms, both from the investor and the deal itself? We would probably have clients that would be interested in knowing more about the product.HankieRich,
The only real reason (in my experience, although I'm no accountant) is that a Corporation is "capped" in the amount of tax it pays (whatever the Corp tax rate is in its home state) although the paperwork is a lot heavier, so it usually only makes sense for larger deals, most likely not for just a few properties.
An LLC goes against your personal income tax, and while there are ways to minimise/reduce your taxes, there is no cap as such, other than once you're in the highest tax bracket, that's the highest you will go.
A downside of the Corporation (unless you elect to be taxed as an S-Corp, which I don't think you can as a non-US citizen) is that you first pay corporate taxes on the profits, then you need to pay income tax (personal) on whatever money you take out.
RickH,
Thanks
I'm interested in learning more about Kansas City, as I believe it's very similar to other cities we operate in, and it looks to have worked well for you.Jay,
I will check out the link, however, I don't share your views on the Florida land opportunities. Partially yes, there's a ton of land inland (pretty much any county not on the coast) where land isn't worth anything at all.
The Cape Coral (I think that's what you meant when you said Coral Gables, which is an area in Miami) area still has very few lots selling for anywhere near $5K. The average sale now in Cape Coral (I'm talking the incorporated city and not including Lehigh Acres, and not including the swamp lands outside it) for a vacant building lot is $51.000, with the average in 2006 being $415.000.You're right that if you are working on "the inside" of this business, you can ind SFH in the area, especially in Ft Myers for $20-$30K on occassion, although that'd be the exception and not the rule. We don't do a lot of stuff in FL still as we're focused on the high income properties, but I think for a long term investor, Cape Coral and FL in general present excellent opportunity.
We only need to look at where people are moving when it comes to retirement, and also now with the cost of homes so low, it'll take a while for land prices to go up, but I think over a 5-10 year period, it'd be hard to not make money.
Off course, if you buy a property with a 10-15% net income, you'll have been paid back all your initial money after 7-10 years, but a lot of investors prefer the multiple exit strategies and low maintenance that a land investment offers.
Just a quick note here – as far as I know (and we sell large quantities of renovated homes to first time (American) buyers every month, all lenders will require a minimum of 90 days seasoning. We've heard of banks that say they'll start waiveing it now and there's no law/rule that mandates the seasoning, but the lenders themselves usually impose it.
The only way around it is usually getting two appraisals done that "proves" the new value, but if that doesn't come thru at a good value, it sticks with the property for 6 months, so it's a bit like Russian roulette.
For non-first time buyer mortgages, there are generally more lose requirements.I think the choice between a buyers agent vs. going "on your own" is going to come down to how much time you want to/is able to spend on the property purchase. When using an OZ agent, you just want to make sure that all info is disclosed upfront, and that you don't get "pushed" into paying a huge premium for a property. I don't want to hang out specific companies, but we have spoken/dealt with most of them, and they don't all have the clients' interest first. That is however also true for many US based brokers, who see foreign investors as an easy way to make money.
It's also worth taking into account that a trip from Oz over here for a week or two will run you between $4-$5K, so if you're only going to buy one property, you would spend 10%+ of the purchase price on an inspection, money that it might take you a year or more to earn back.
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Cheryl,
We are not really active in Tennessee, but we have a lot of Australian and other international investors that seem to run into this.
It seems that the trick is to give the name of your LLC and the registered address in the US + the EIN number, which should get you set up. Sometimes if you tell them you're not based here, they'll automatically assume that you own in your personal name and then the rate will be higher because of the (supposedly) higher costs of processing claims etc.I have been away from the forum or quite a while, always find it interesting to check in every now and then.
The scheme Jay is talking about, although I'm not familiar with the particulars (never even been to Oregon, one of the few states I haven't) is something that sophisticated investors might want to look at.We've had a decent number of Australians invest with us in residential land lots in planned communities across the country, although when investing with us, the difference (I think) is that you would get individual title to the land, and could sell at will. Lots in some communities across the country are off by as much as 85-90%, those of you on here that follow Lee County, FL will know what I am talking about.
DetroitDan is right on Detroit, we've put most our investors in there with net yields north of 15%, and I know I sound like a broken record, but NOT all of Detroit is bad. We have done deals on the "fringes" like Warren, Dearborn, Oak Park, Eastpointe, and these are all good areas. We're an asset manager, not a broker, so we LITEARALLY have to invest in these places ourselves, and if we can't sell the property on once we have finished the rehabs, then we will hang on to them. Section 8 in michigan is fantastic as well compared to the rest of the country.
Kansas City is interesting – we are very big on Indianapolis as well, it's got a very strong rental market, low purchase prices, the "bad" areas are very isloated, consistent yields north of 15% net, and is slowly transforming from a manufacturing/rust belt type of economy to an economy focused on services and Government.
There are deals everywhere, it's just very important to decide what YOU want – if growth is what you want but no need for income, then either land (long term) or a property in Florida (higher HOA so low yields, but great groeth prospects) or parts of Texas, Cali etc would be good, but if you want cash flow then my vote is still 100% for the Midwest, and our clients seem to second that, but as always – look at what you are buying, and at what price.
Hi trhia,
Sorry I did not respond to your post – hope it hasn't been on here for long. I only checked in because I saw that Detroit Dan had made a recent post.
As far as "is this the time" – absolutely, with the AUD very strong compared to the USD and with some incredible yields – you bet this is the time.We can recommend accountants, are you looking for one based in the US that can help you with your returns, or for an Australian one? Feel free to drop me an email, as I am quicker to respond on there.
Message sent:-)
Wow, it didn't take much to trigger the <Delete Advertising> on that one! All I was saying is what we do and where, but fair enough.
I would say, from the mid $30'S, you can get a property with a yield of 12% net P/A in those cities, better I say nothing morehey,
Which link are you referring to – the one from Yahoo real Estate to the house on Campbelltown Rd? It's the same thing – also a monthly rental amount. The MLS allows for listings of both rentals and sales!As for buying into the United States – you bet it's a good time. <moderator: delete advertising>
Hi Wobbly,
First of all, I need to point out that I do this for a living, so I've probably been able to spend a lot more time on it than the "average" investor ever would. Finding the right management takes time, but when it happens – it just makes your life so much easier.A good management company assist us in finding tenants, collecting- and distributing rents, inspecting the property, as well as being on call pretty much 24/7 – they are also able to advise us on acquisitions, based on current rental demand.
It also takes a lot of time to find a company that's BOTH good with the tenants and also able to communicate with foreign investors – it's a huge difference for them too, dealing with local buyers vs. international buyers, as obviously the requirements are different.
It's a common (mis)conception (in my opinion) that the bigger firms are always better. In some cases, it will make sense to use a larger firm – but for personal attention and instant service, I find that I'm happier with smaller firms a lot of the time.
A good firm might charge you 8-10% of rental income, while the smaller will do less, but this is an expense where I would advise spending just a little bit more, and make potentially huge savings in the long run!
I might be pointing out the obvious here, but the first link referenced in the original post is for a one-month rental. While prices have fallen nationwide, it's certainly never going to get that bad:-)
To initial poster:
I'm sorry – I didn't realise you were just copying the article – so my response is really just general feedback to the writer, and not to you – I should've looked a bit closer:-/
Hey,
I haven't been on here in a while, but I just feel like I need to reply to this post….
I can fully understand that everyone's experience when investing in the US is different, however, it seems that you have had a lot of very unusual things happen to you, that would not be the norm for any international investor.We have worked with MANY Australian investors that have successfully made money investing in the US, and none of the above things apply to the general investor.
If you are having such issues with the management of your properties, why did you not change your management company? Especially as it appears as if they are stealing from you, I would not have allowed that to continue, but would rather have changed them a long time ago. We put a lot of time and effort into selecting an established company – you also got it wrong in that the management company works for the tenant – that is incorrect, they work for you as the owner.
You might also want to comment on how you/they scanned your tenants, as you seem to have a lot of problems. Only you can determine who you accept as a tenant, and there appears to be a lot of work to do there for you guys.
The fact that most Americans "do not pay rent" is simply not true, however, on the rare occassion that it doesn't get paid on time, did you and the manager agree a process to collect the unpaid rent?Again, I think you need to select a management company a bit more carefully…. Also, the tenancy agreement can be used to outline what the tenants are responsible for, such as maintaining the a/c unit etc.
The fact that our mentality is based on "I win – you lose" is not true either in my experience, and I think many people might agree with me… We wouldn't be where we are business wise if we didn't have an environment where two companies/individuals could work together and both benefit from a deal.
The story about the woman from NY doesn't sound right to me either – if the realtor is producing bogus offers, why are you still with him? Why don't you/she report him, and go with another broker?
Don't get me wrong, but it sounds like you might have had some really bad experiences/bad decisions, and now you're trying to scare people away from investing at what might be the best time ever to do so. Sure investors need to be very careful, but you make it sound like there's some sort of "conspiracy" against foreign investors (you in particular) by management companies, brokers etc, which is certainly not the case. I think we're one of the countries where it is the easiest to invest as a non-resident or citizen.
We know companies who will look after your US and Aussie tax returns for a fraction of what you paid, maybe some more research would help you there as well.
As far as your comments regarding blacks/hispanics etc, those are your opinions, however, I do not agree with you that "all these people carry guns" and "they like to sit and drink and shoot in the yard", and I think you might be a little out of touch with reality. Sure we have bad areas, but it's not nearly that bad.
Also, drink driving is very heavily enforced in all fifty states and carry heavy penalties.
To sum it up, investors need to do their research and if they're not happy – do something about it, rather than try to scare people away from investing at what is the best time in history.
Fully agree with previous poster – there's A LOT of that going on in Australia, some companies seem to do it more than others.
Just do your homework would be my advise alsoI think they're two different assets entirely, and it shouldn't neccessarily be one or the other. Keeping a diverse portfolio is always a wise idea, to hedge against market swings etc.
I have to agree with what Anthony is saying above, that both:
a) The U.S. market usually always recovers, although it might not reach the levels we were at in 06/07 for a long time
b) The AUD is very strong right now against the USDAlso, keep in mind that with a strong rental property you can have your money back in 6-7 years thru rental – regardless of where the market is headed. I'm no expert when it comes to gold, and yes I'm biased – but there's my 2 cents:-)
