Forum Replies Created
Dundas, Carlingford etc is not the best place to live if you want good transportation, I grew up in Carlingford and it took at least an hour just to get to the city, unless you are close to the M2 bus as the train station there is pretty hopeless.
Eventually it should be upgraded with the North-West metro so by around 2020 hopefully it would be good, also assume this would increase property value in this area. Whether it ever gets built or not is another question.
I live in Seven Hills now and the transport is pretty good, train to the city is only about 30 minutes so cannot really complain with that. Parramatta would be better still with regards to transport into the city.
$600k would probably be able to get you something liveable in the innerwest as well, maybe around Dulwich Hill area, although whether you could get a free standing brick veneer home is another question. But since you do not mind renovating inner west is not a bad option.
Heaps of areas in Sydney basically so don't try and lock yourself into one straight away. If you can afford it I would highly recommend North Shore, around Chatswood, St Ives area, it is a very nice area and relatively close to the city and trains, and not far from the beaches either.
Interesting opinions there Steve,
Although they may sound fairly negative about the future of property in USA, I must say I am pretty excited to hear news like this. I am looking to start investing over in the USA in the next few months, hopefully get a property when I am over there in May/June this year. Nothing too major, maybe just a $40,000 condo or something like that.
My main desire is to have a good cash flow, and would rather not focus on capital gains. Also I am hoping that if we get started now, we can slowly build a solid credit rating over there so that in a years time or so we can start to obtain finance, the first property we are looking at purchasing with cash. So if prices do not rise or in fact fall over the next 12 months or so, then that is fine with me, as long as the properties I have are rented out I will be happy.
And hopefully once the credit rating is established, can start to significantly increase the portfolio right behind the prices start to rise, all sounds nice in theory at least.
Good luck on your return journey over there, I hope you find something you like.
Hello all,
I pretty much agree with most of the comments, I have personally never enlisted the help of these companies or similar ones. In principal it all sounds very nice, they do all the hardwork and you pay a little bit extra for piece of mind. But unfortunately like any organisation, greed can become a factor and in the end all they care about is getting their commissions rather than satisfying the customer, it is a shame really. If one company decided to do it properly, maybe make a bit less money but completely satisfy the customer as best as they could, then you think it would involve a lot of repeat business, as well as them referring them to friends.
Anyway, a couple friends and I are looking at investing in USA, we decided to do as much of it ourselves, mainly to save money, but also we think if we do a lot of the research and legwork ourselves, it will give us a better understanding of the American marketplace, and will allow us to do future deals. We are in the process of setting up our LLC now, and from there we will look at getting our EIN and setting up our bank accounts, and then have a list of contacts such as real estate agents in areas we are keen to look at, hopefully having it all ready by the time we go over to the USA in May this year.
Happy New Year Fredo,
Capital gains tax as I believe is just added to your taxable income so you fall into a tax bracket. I think I have made up a quick spreadsheet with this before, where you simply enter your taxable income, and your capital gains, as well as ticking a box if you had the property for over a year or not to reduce the capital gains by 50%.
One question, when you reduce it by 50%, do you reduce the tax paid by 50%, or is the actual capital gain reduced by 50%. It may sound confusing but I am not sure if you pay half the tax at the potentially higher tax bracket, or you get taxed on a lower capital gains. Hope that makes sense.
Anyway Fredo just send me a message with your email I can flick it on to you
Thank you for all your advice so far,
Just a quick question, I understand you set up the LLC in America and then pay company tax with that. But when do you pay the Tax as an individual in Australia, is it only when you bring the money back into this country, and if that is the case, theoretically do you not have to pay it at all if you leave it over there?
It just seems to me that you leave the money with the company and since it is a separate entity to the individual then I am not sure if the individual would get taxed even if the company is in the individuals name. At least not until the money from the company is transferred to the individuals bank account, then the ATO might start asking questions as to where them oney came from.
Hi Liv,
I am in a similar position to you, trying to figure out how to make as much money as I can to try and set myself up for the future to hopefully have a comfortable and financially secure life.
I have been looking a lot at the US property market due to the low level entry prices, as well as high rental yields and potential for high capital gains, if they reach the prices they were just 4 years ago saw one property for sale for $40,000 which was sold for $180,000 in 2007. The property is exactly the same as it was 3 years ago. Seeing this sort of thing gets me very interested over there.
As for capital gains regarding buying off the plan, seeing as you do not settle on the property until the project is complete, unless the completion date gets pushed back, I would assume that you do not hold the asset so the 12 month concession period would not start until the settlement date, which most of the time is the project completion date.
Spreadsheets and dicussions with accountants and financial planners are always good, accoutants and financial planners are normally able to tell you what you can and can't do, whether obtaining finance in a certain position, or paying certain taxes etc. And spreadsheets are obviously good so you can compare different scenarios and see what expected returns you can achieve, I know myself I make a whole lot of spreadsheets regarding my investment future, and I am getting excited about putting them into practice.
Hope everything works out well for you
Cheers
James
I keep hearing that it is very difficult to obtain finance through an LLC. Why is this the case? Is it harder to get a decent credit rating as a company, if so why would this be the case.
Lplate101
Properties for $40,000 and under are abundant across USA. Just look on http://www.trulia.com or http://www.realtor.com and you will see plenty of properties across USA at very low prices. But remember just because it is low price does not mean it is necessarily even worth that, a vacant property that will not increase in value is worthless to an investor.
Thanks white_goodman
I did think maybe it was just due to more people living under one roof, and also the issues of too many houses before the GFC led to an over supply in the current market place. Just was not sure exactly how it all worked, unfortunately economics has never been my strong point.
I suppose is increased population exceeds the number of houses completed (divided by a suitable occupants per household number) then eventually the vacancys will come down, that would at least make the area look a lot less scary.
One of my main concerns with Florida is the vacancy rates. I have a query and to be honest I am afraid of looking a bit idiotic asking it, because I am sure the answer is very obvious.
But nonetheless, my main query is, where have all the people gone that used to live in all the houses that are now vacant, not just necessarily the rental ones without tennants, but all the other ones which have been left and foreclosed on.
I had a look at the population growth and although it has not been overly strong, it still sits at over 0.5% in Florida (Australia is at about 1.0%). The number of new houses is at its lowest that I can see on the records (new housing units at 800,000) , which date back to 1968.
Speaking USA in general, the growth rate was around 0.9%, which leads to 2.76 million more people a year (Population of 307,000,000). That would lead to 3.4 people per housing unit. I would assume the average number would be around the 3 mark, so just looking at those simple numbers, it would seem to me that the vacancy rates of properties would be decreasing as oppose to increasing.
I saw an article (link below) that stated 1 in 9 housing units are vacant across USA and also I was just thinking where have all the people gone.
Like I said I am sure there is a simple explanation to this but if someone could explain it to me that would be greatly appreciated.
http://www.usatoday.com/money/economy/housing/2009-02-12-vacancy12_N.htm
Thanks
James
Thanks alot Terryw,
That is how I thought it would work, just wanted confirmation.
I am hoping to get to America around May next year, and will try and talk to a tax consultant and/or solictor person to hopefully help me set something up, however I think I would rather it set up before I go over there so everything is ready
Hello all,
I believe purchasing as an LLC is the way to go for my situation (a couple friends and I going together to pool our money together) but I am not sure if it is best to have the LLC set up as Australian based or US based? Are there any particular disadvantages with either one?
Thanks
James
Hey white,
I am in a similar boat to you at the moment, started looking into the US a couple months ago, similar age to you, just a bit older, and also seems that we have similar goals and ideas in that we both want to achieve some financial independence for the future, and see the US as a great oppurtunity to do so.
Unfortunately I cannot answer all of your questions, but I will do my best
– FHOG only applies on property purchased in Australia, so purchasing an investment property in USA would not stop you getting this.
– US vs Aus Loan depends on alot of things, mainly the interest rates you can get, and how you think the USD will go against the AUD in the long term future. I made a quick spreadsheet which compares the two scenarios so you can see which is the best for you. Feel free to PM me to have a look at it. Keep in mind it is difficult sometimes to get a loan from a US Bank as a non-resident, not impossible, just difficult.
– From what I have seen you do not physically have to go over there to sign documents or anything, everything can be done from this side of the world, however depending on the size of your investment it may be worth the trip. For example if you are going to spend 150k on a property, you may want to spent 2k on a holiday to check it out.
– US Bank account is essential and should be the first thing you get organised, even if you do not use it right away. I recently just signed up with HSBC in Sydney and once that account is set up I will talk to them about getting a US account set up, HSBC is useful because they have branches in both countries.
– Tax implications are pretty similar to Australia, I am not 100% sure on how it works, but basically you pay around 30% tax on any income earned from an investment property, but you can claim deductions such as interest repayments, maintenance, advertising etc to minimise the tax paid. Also note you have to put the rental income made on your Australian tax return as well, but you can claim some offset thing which should allow you to claim just about all of it back. There are some forms which calculate how much you can claim, it is normally all of it, stops you getting taxed twice at least.
– I believe HOA (home owner association) fees are just like strata fees here. When looking into purchasing a place which has a body corportate, you should be able to see what sorts of fees these are. There is also property tax you have to be careful of, once again you should be able to know what it was in the past couple years and it does not vary too much, but sometimes it can be a significant amount. Note that property tax varies between the states and counties.
– As for an LLC, I do not think it is essential, at least not at the start, but further down the line you may want to create one and put the properties under that title, it should not be too difficult to transfer them across.
Anyway, do not take everything I say as 100% truth, I have not done it before, and what I told you I have only got from researching and these forums basically. If anyone reading this could point out any mistakes I make then that would be greatly appreciated.
If you wanted to discuss this further then feel free to PM me and we could talk through some things
Cheers
James
British Buyer wrote:Someone asked whether they should borrow in Aus $ or US$.Assuming you were offered the same rates (eg. 30 year fixed at 6%) in both countries, then you should definitely borrow in Aus.
I say that because the current commodity cycle will end at some point (let's say 8 years from now), since:
1. China will slow down it's infrastructure investment and residential property development
2. African and South American countries will get their acts together and bring on line more and more mines and farms, resulting in a glut.
When commodity prices crash, the US $ will go down to 0.65. That's when you get a cash-out refininance on your US property, and use the cash to pay off your Aus loan.
But if you are offered an Aus loan at 9% but a US loan at 5.5 for 30 year fixed, perhaps go for the US loan. At least you're dealing with certainty, and a 5.5 fixed is going to look very cheap one day when the US economy is humming and everyone else who didn't lock in their rates now are all paying 10%.
Further to this, I was a little bored one day and made a quick spreadsheet which compares the difference between taking a loan out in Australia or USA. Obviously you have to make some predictions about what the currency exchange rate will be in the future, but most seem to think it will go back down to around the AUD = 0.65-0.75 USD mark.
Anyway the spreadsheet basically compares how much the total cost will be with a fixed rate loan over different loan terms and different exchange rates so you can see which is more preferable, it is mainly common sense I suppose. But sometimes the right decision can save you tens or even hundreds of thousands of dollars in the long run.
If anyone wanted to use the spreadsheet just send me a personal message with your email and I guess I could shoot it across to you.
As was said above just do your own little checks. I know it might seem nice to have that money in your hand like that. But given what I assume your interest rate would be, obviously just guessing, but would think it would be around 6.5% (that is what mine is around) you would save yourself around $2400 after 9 months in tax, the only difference is that instead of getting this money in your hand, it is more of an intrinsic saving.
At the end of the day, just look at the interest rates, your mortgage vs the term deposit rates, chances are the mortgage interest rate is higher, and as it looks to be increasing, you will be better off with it in the offset account. This does not even take into account paying tax on the interest earned. There could be benefits somewhere, but you would still be better off with the offset account 95% of the time.
jeff2tract wrote:Steve, Don't get me wrong 10% minimum is great, I am about to close on a deal that will give me 26% net. There are plenty of deals like this. If one is happy with 10% thats fine no problem. I know that there are better deals that will give one better than 10% more like 15-25%. I know it sounds to good to be true, these deals are out there you need to know were these deals are these properties are not REO or foreclosed, you will not find these properties on any MLS listings. If you are interested you can contact me if seriousHi Jeff,
I am interested in some more information about perhaps some recommendations you have. Could you please let me know where I could contact you. Alternatively you could contact me on [email protected]
Thanks
James
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
Also, I posted earlier about Property Tax not always being taken into consideration, and I was just looking at properties, I saw one, a $68,000 unit which listed its 2007 property tax as $683 a year or so, about 1% or so, quite a good rate. Then looking at another one, I saw a $60,000 townhouse which had $4,117 property tax in 2008, a whopping 6.87%. I am not sure but I believe property tax paid previously should be available to people, and definitely something you should be asking for as it can make a huge difference on the expected profits.
First of all thanks to everyone for all the useful advice, and I do not want to appear like an idiot asking this. But like a couple others on this board I am new to investing and am very keen on getting a place in America, and Miami seems like a good place to start.
I was hoping to get some advice from people who have done it before on more of a step by step procedure on how to go about purchasing a property. I realise there are probably many different ways of going about things, but if I could at least get a basic example of how to go about it, I am sure it would help me, and a couple others, out greatly.
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.
Also I do not have enough to do a cash sale, unless I acquired a personal loan from a bank in Australia, this is an option, however I already have a mortgage, and as such am not sure if I would be able to afford to add more debt. And the rental income received from the investment property, I was hoping to be able to leave in the US to avoid all the fees with currency transfer.
The following steps I am just assuming, please let me know if you know I have missed something or done something around the wrong way.
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. We used a mortgage broker for our property in Australia, and it definitely made it alot easier as we did not have to find people ourselves with these expertise. And being on the other side of the world, hopefully that would be a great help. Also if we are able to find a good mortgage broker, that would eliminate Step 3b and Step 4.
Step 3b) Talk to banks over there who provide mortgages to overseas investors, or non-US residents and see how much we can borrow. I was talking to someone I work with and said they only did it if they had a 25% deposit, but this way they could set it up so they did not have to pay any tax in US, refer to Step 4 about this.
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.
This is all I can think of at the moment, like I said I know I have probably missed a lot and got things in the wrong order and a fair few things I have not taken into account. But like I said at the start, if I could just receive some guidance on how to generally go about things, that would be a great assistance.
Thanks
James
The link above is meant to take you to download the spreadsheet I was talking about earlier, unfortunately I am not sure if that link works or not. I could not find a good place to upload spreadsheets where people could access them easily, and I could not be bothered making my own website either.
http://www.wiziq.com/james-hutchinson935561 – That is the link to my profile on the site, I just made it and I am not sure how the site works, the spreadsheet should be uploaded in my content, but I am not sure how you can find that on peoples profiles.
I guess if you were really keen you could give me your details in a personal message and I could send you an email with the spreadsheet. That would not be much of a problem. Hopefully the links above would work though.
Very exciting to hear Steve, I cannot wait to hear about how it all goes for you and also I want to say thank you for being so open and willing to help others as well, it is very refreshing to see such honest and genuinely nice people .
On an unrelated note, does anyone know of a way you can upload a spreadsheet to show people and get their opinions and possible suggested improvements? I have been working on one the last couple weeks about property investment and curious if it is accurate, useful and if people would find it interesting perhaps.
