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I attended a couple of Public Trustee auctions last week and had time to discuss common strategies often encountered at auctions with the auctioneer. I have attended more auctions than I can remember covering many different categories including Property. So here are a couple of tips.
1. ALWAYS attend at least a couple of Property auctions as an observer before you get involved. You will learn a heap, power bidding, lazy/weak bidding, first bid strategies and much more.
2. Establish your maximum bid price and STICK TO IT!!!
3. For many auctions are an emotional rollercoaster, you are an investor (I think) this is business, leave emotions at home!
4. Due you due diligence first, auctions are FINAL, you can’t pull out and get your deposit back.
5. If have a second call and the price is WELL within your limit, reopen the bidding with a jump bid just before the hammer. This unsettles bidders as there is a new player, this is particularly good if you haven’t bid yet as they don’t know your strategy. If the responding bid is weak, say $500, reply immediately with a strong/power bid, I do this with a simple hand bid (don’t worry the auctioneer will be looking straight at you for a response) say 2 fingers meaning $2,000 this often rattles other bidders as you have taken control. The essence at this stage is speed to freeze out competition. You just have to hope there isn’t someone playing the same game.
6. Read (1.) againGood luck
Probably the first thing to consider is what your overall goal is for investing in the US then what structure are you going to invest under, an LLC or what, from here you need to get the structure set up first.
Let’s say you are going to use and LLC.
1. What State are you going to register it in?
2. What are the State taxes for companies?
3. Are you going to look for a Tax Free state like Nevada or Delaware?
4. If you are buying out of the LLC’s state of registration, does the state you are buying property in require you to have ‘Foreign Entity’ registration?
5. What bank are you going to use for your accounts? Forget Wells Fargo as they don’t cope with foreigners running LLCs.Now you have watched anything up to a year go by, and the property market has moved, so you research is down the tubes.
Don’t get me wrong, I am not trying to put a dampener on things, just bring a bit of reality to the venture. It took us about a year to get everything in place before we really started looking at property and because we have everything set up properly, asset protection is in place and everything works better.
Finally I have heard so horror stories of investors working with “All-in-one” companies, and I personally know of two people who purchased property this way, looked great on paper, but that was all. They can’t rent them except to ‘trailer trash’ and they are worth nothing on the real market.
Before you send money over you will need to have somewhere to send it to, ie a bank account, as for which and where.. I will not make any recommendations that one you will have to sort out with your partner.
On transferring funds, we used AFEX, http://www.afex.com very helpful and seriously competitive rates, much better than any bank and you are going to have to watch your exchange rate as the AUS$ is bloody terrible currently. Might be worth waiting for QE4 as this could soften the US$ a bit, but no guarantees.
Hi Jayman, we have found it difficult to open a bank account in the US without actually setting foot on US soil. Apparently it can be done by having documents witnessed by an attorney in a US consulate. Unfortunately, we live 200ks from our nearest consulate. Are you saying you can organise it differently?
Yes it is difficult and most of the big banks which have retail banking centers in a wide range of states will require you to front up with all your documents.
We managed to open with Suntrust in Florida, but had to get all documents notarised by an approved Notary. They have limited reach and are mainly represented in the south east. There are still a few frustrating limitations which we have to deal with such as no wire transfers until we do our first one in one of their branches!!! Everything is checks and mail!
We’ve developed ways of working with the archaic US banking system, but it still frustrates the hell out of us!
If you are thinking of buying in Detroit, visit and do on ground research and set up an account with a major bank while you are there, I would suggest looking at Chase, they have been very helpful for us and we plan to move to them next time we are in the US. Forget Wells Fargo, Citi is mainly ATMs with limited retail representation and don’t think “they have a branch in Aus” will be of help, it won’t!
Freedom, impatience can be costly as it is an irrational emotion and there is no place for emotion when investing in property. Property is a business, nothing more, nothing less and all decisions have to be made on sound due diligence and grounded reason.
Before you buy anything you have to know what you are going to do with it, rent, rehab and rent, flip, demo and rebuild.. there are plenty of options, then if it goes pear shaped what is your ‘Out’?
When I started I attended a Commissioners Sale for 13,000 properties. I had spent the previous 3 months researching and ended up with a short list of around 75 properties. I hit town and started driving, after 2 days the list was down to about 20, had photos of each and a description, I knew if they were vacant or lived in and I had price ceilings for every one. I ended up bidding on 6 and won 2, the others broke my price limit.
This is what ‘due diligence’ is all about, it takes time, money and a lot of work on the internet.
For us it was 2 years before we bought anything and even doing everything right, one went wrong. Included in that 2 years was getting our structure in the US right. Now, having put in the time we can move on what ever market we want to. Look at it like a degree… 3-4 yrs of graft before you even draw a juniors wage.
There is a very old saying: “Fools rush in where Angels fear to tread” and the Fool and his money are easily parted.
There are quite a few people on this forum that can give guidance, use then to your benefit and invest wisely, knowing why, how and with whom
We have been buying redeemable deeds in Indiana. First year turned into a bit of a disaster, one was redeemed so made a good return, the other we received the deed and started planning the rehab. One day our property manager went to the house and there was a “For Sale” sign out front!!! Turns out the house should never have been auctioned as it was in receivership. We are getting our money back from the county, but all the other gas, water and contractor fees and deposits, plus material purchased, well we are kind of kissing that good by!
There is a way round though as the contractor will be rolling over the material and deposit into the new rehab, for which we are currently awaiting the deed, plus another which is already rented, so not all lost!
We are now exploring Detroit… and before any one asks “WHY!!’… we are targeting very specific areas with strong communities, architectural history and a big push from the locals to rebuild. These will be rehab to rent.
Indiana I like, it is growing and has one of the better economies where individual states are concerned, we now have all our ‘people’ and I know the area after spending plenty of time driving around.
Detroit… well we will see. Heaps of due diligence and we are now comfortable about getting our feet wet.
Where Aussies actively investing in the US is concerned… Yes there are plenty. They cover all areas form Liens & Deeds through Foreclosures and straight property purchases. As for groups, I am not sure, I would certainly be nice to find a group in my area, Hope Island on the Gold Coast, so one can share ideas and discuss with like minds.
If there is a group in my area please PM me.
Yep, that’s pretty much what one of the paragraphs on the web page stated.
Tax differences between states is complex, so one must be circumspect as to how one expresses oneself, blanket statements which can mislead people are not well advised.
This forum is read by many and they have varying degrees of experience, so as far as I am concerned we are duty bound to provide information that is as accurate as possible. From there it is up to the individual to do their own due diligence.
It took us over a year to get our US structure set up correctly and even now there are elements we need to improve, primarily banking.
It is all dependent on where you are operating and what you are doing; buying to rent, flip, liens or deeds. All have have factors that must be considered when establishing you business structure in the US.
This is incorrect, all corporations have to pay income tax in Florida. I am not going to go into details but if you check this link to Florida Dept of Revenue, you will discover all the details: http://dor.myflorida.com/dor/taxes/corporate.html
Currently to my knowledge the only states that are tax free are Nevada and Delaware
It does seem more difficult than expected to get views of US Invest. Usually I can pick up reviews, comments or whatever for most topics via google searches, but US Invest just does not raise any reviews or comments.
No reviews or comments!!… that should scare the hell out of you!!
Have a talk to your CPA, ours does it for us, for a small fee or course. The big boys won’t be interested, but a single operator probably will be.
There are some important area of setting up an LLC which have been overlooked in this discussion but need to be considered.
1. What state are you going to set your LLC up in? Most states tax, except for Nevada and Delaware
2. If you have property in several different states and all within one LLC, the LLC is considered a “Foreign Entity” in all states bar the state of registration. You have to apply for and comply with “Foreign Entity” registration in all states in which you own property bar the state of registration.
3. How is your LLC going to trade, as a corporation, as a partnership etc? If as a partnership you have to have not only and EIN but also ITINs for each member, getting these takes time. We forced the IRS’s hand to get ours as they were taking so long… we sent in tax returns, then they had to issue ITINs
4. You are going to need a US mailing address. Your CPA might be a possible solution for this, particularly if they are not a big company.No it’s not as simple as a few people have made out, my best suggestion is; get a good CPA in the state you are going to set up your LLC, you going to need one anyway, and they can advise you on the best way to go.
It took us about a year to get all the ducks lined up properly, including the bank account. Yep we also went through the Wells Fargo fiasco but still haven’t got the right bank as ours is only east coast and we need one that and cover all states with shop front banking.
If your working out of an Australian Trust, like a Family Trust, expect tings to get even more difficult!
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This reply was modified 10 years, 1 month ago by
HuMungus.
In general things have been going well and apart from some CFDs which we are allowing to run for an upturn in the market, we have consistently returned a profit on our options each month.
On average, based on capital exposed in our options trades, we have returned arounf 6% per month, so very happy, beats what the banks offer!
We have now completed both the Advance and the Masters course, so are stepping up a grade but still treating our exposure very cautiously due the the overall bear marketplace.
We have diversified further and are now investing in US tax liens as well, but this has taken a long time to get the US structures set up, certainly longer than we expected.
It was an incredible weekend, sorry you had to pospone Steve. I think you missed out on a heap of incredible content that Daniel does not normally discuss in this course but is reserved for the Masters course, but he felt that due to the significant nature of the current market, we should be aware and have a better understanding.
I wish I had met Daniel years ago, my life might look a bit different now but that's another story. I'm just glad I am now part of this system!
Heard a comment on the ABC this morning that the IMF is now telling the RB to raise interest rates! It's a real worry when the IMF starts telling one of the worlds most stable economies what to do! Think I'll switch to Gold….
With the US increasing it's debt ceiling and carrying a total debt in excess of $100 trillion, Federal, state and personal debt, it's little wonder significant US investors like China, ($1T+ in US Bonds) are getting nervous and looking to reduce their exposure in favour of more stable economies. There is a feeling in the FX markets that the AUS$ could go as high as $1.15 US, and the impact of that on our economy will be very significant.
I'm no economist either, but the high interest rates are elevating the value of the AUS$ which is severely damaging our export economy. Since interest rates are low almost everywhere else in the world, it is also causing other countries to purchase our dollar, which is seen as a stable currency, this also assists the high $ value.
Everytime the Reserve Bank increases rates, this causes businesses to pass on these costs to the consumer, which bumps the price of everyday goods, toughens the already struggling retail market and inflates the CPI so the RB is their own worst enemy. Kitchen table economics would indicate that a drop in rates would improve the flow of money, helping retailers, ease the value of the $ and improve our exports. Seems to me the RB control freaks don't like fluid economies!!
Yes my wife and I signed up and are also doing the Gold Coast course, my daughter is following up and doing the course in October. Got Daniels game 'Call Up – Put Down" as well, need some time to play but has us totally hooked! It's well worth playing before going as it gives an excellent overview of the options process.
We are now seriously hungry to get going.
Semi and duplex are pretty much the same, one building, could be single or 2 levels, with two dwellings and a common or party wall. They are usually a reflection of each other and could be independent (torrens) title, strata title or community title, the latter will tend to be several duplexs on one block. For villas read townhouses, much the same thing.
You've had some great advice here from a number of contributors, but someting I have not seen mentioned which needs to be considered if you are entering the IP market for the first time is 'structures'. You mentioned you have a new bub and a single income which makes establishing the right investment structure even more important so you can protect your investment for the future.
Before you jump in boots and all, you need to look for advice on how to protect your impending investment, this could be by placing it into your super fund, it might be setting up a family or testamentary trust, there are a myriad of ways, but the bottom line is get this set up first as it can be costly transferring property to a pretective structure after the event. You may already have sometning set up which is great, but if not get some advice on how to keep your IP at "arms length".
We made this mistake ourselves in the early days and have property in personal names, so it is totally unprotected if some 'gold digger' decides to sue for what ever reason. Transferring to protect our property after purchase can be an expensive business.
I'm new here so have'nt had a chance to see what's around relating to protecting asets, there is bound to be something somewhere… I hope.
Hope your first IP goes well.
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This reply was modified 10 years, 1 month ago by
