Forum Replies Created
Alex my thoughts are the same as they always have been//
The majority not all but the majority of the marketing companies selling off shore investments in SFR's are only in the business for one thing and that is to maximize thier profits period.
They do not take the clients interest first… If they did they would never market 3/4's of these ghetto properties that they market.
And or its a combination of the above and the fact that they just do not know any better and beleive that the tenant pool in these areas are going to pay as agreed… which we know is anything but reality.
SE Florida is pretty hot from what I understand,
Its a melting pot… US investors… SA investors Germans GB Canadians…
When i was there in 09 there was 11 Years thats right 11 years of standing condo inventory… I think a big dent has been made in that.
JLH
Ah but i have a new one here in Portland that is even Better
160k cash up front no personal exposure 250k return net in 18 months…
4 miles from Intels new 10 billion dollar 6 thousand new worker fab plant and RD.
the little town I bought the lots in already has 10% of the town works for Intel..
My daughter works for Intel one of the top companies and stable companies in the US and probably the world.
Send your sheckels over and lets get to building some houses and making some money forget about these long term rentals headaches
Of course have to have those 2.Nigel,,, commercial deals are apples and oranges to the SFR which si the soup de jour… Anyone in the world if the have the down stroke can get commercial loans in the US..
but we are not talking 100k properties or 50k properties, we are talking 500k to 10 mil and above.
I just close a big one with a Russion investor 8 million and he put 25% down… He could not speak the language, but could prove assets past the 25% down.
All the folks buy SFR's that think things are going to change and they will refi out will as I say have a rude awakening and If I was them I would be paying whatever I need a month to pay those houses off before the balloon even if it means negative gearing.
especially if you have private loans… Private lenders will just as soon take your property back if they think its in good conditon rented and they can get the next rube to pay half down and finance…
I echo WI 's post
I doubt in Florida your going to be able to get any financing for non owner occuppied or a home that is not a second home..
I see a lot of talk from off shore investors thinking they will get short term owner financing then refi out when the banking gets better here.
WELL heres a news flash for you its very very unlikly that any Non US citizen is going to get any kind of financing on anything other than owner occ.. or second home period.
And especially the low end..
One little tidbit to think about many lenders will not make loans for less than 100k and certianly not less than 50k…
so when your buying a 60k prop. with 30k down there is no chance in a blue moon for a refi ever… Even in the old market…
I know I got stuck with a bunch as a hardmoney lender… You can basically shame a US bank into a lower than 50k loan if your a US citizen for owner occ… but no way no how for non owner occ…
So for all you folks thinking your going to refi when things get better here… Your going to have a rude awaking,, and i would be getting myself in a positon to pay those balloons off when they come.. due..
Of course you will have the chance to borrow hard money again like WI points out 4 to 5 points 12% plus fees for 12 to 24 months.
From my very very conservative perspective,,, pay cash or be prepared to pay cash… Its a double edge sword everyone is excited to by all this cheap real estate,, but no one in the US is going to mess with such low loan amounts…
For one just think about it rationally,,, What mortage broker that makes 1 or 2% commission ( remember yield spread kick backs are dead by and large) so your asking some mortgage broker to jump through all the paper work time and effort to close your 30k loan that they may make 300 to 600 dollars on… GET REAL no one worth their salt in the mortgage business is going to waste 5 mintues on that kind of loan request..
Then you have the problem that no one can have more than 4 mortgages on their credit… Rules say 10 but 4 is reality…
Its just not going to happen and this is why our market cratered so bad its really is. IF you folks could get credit prices would jump right back up much quicker same with US borrowers.. But no… In the good ole days us US investors could have 20 to 25 loans on our credit reports before we got cut off. its 4 now.
When I give my presentations in front of financial consultants and their clients I leed off with this:"
YOU WANT TO KNOW WHAT HAPPENED TO RE VALUES: here is what happend.
WHAT IF there was NO Fiancing for GM, FORD CHRYSLER< MB< BMW> TOYOTA> Honda Etc.. And all cars had to be paid for in cash…
Well I can tell you what In the US your 70k Cadallac escalade would be worth about 10kk… The whole auto industry would implode.. Well thats whats happened to us in the RE industry..
The financing that is out their is really only set up for owner occs and those that have stellar credit and or down payment or both.
The investor has been shut out by and large now there are still pockets Like Texas Cash cows stuff in his market but by and large no financing for Non owner occs… Take the Mid west and Deep south along with the inner cities of the northwest that have HUGE % of rentals in the SFR space and then provide no fiancing to buy these homes, have countless millions of landlords just rip rents and walk away because of PM problems and tenant problems… And you really had what the US guys advertise"THE PERFECT STORM" for price devaluation..
Now I do not have to be a Harvard trained economist to figure this out,,, And or as smart as the frekle but this is what reality is and has happened.
So for all those like WI and others than have some jingle to make cash purchase we are all benefiting from the cards that were delt us…Now this is also why its important not to buy Hood properties… Because the exit will be retail for the big dollars and you need houses that can sell retail,, if your buying cheapy inner city houses they are just what we affectionally call TRASHFLOW never more never less super high maintenance. If you ever really want your money back you need to look to properties that have retail potential…
Intersted if anyone has any comments about the above pro or con.
Ilovehouses wrote:Might put him out of action for a couple years though.llovehouses..
Other than the internet,,, the rip off report, and other things on line there is nothing your going to do in your situation that will prevent him from moving to the next victim unfortunatly.
JLH
llovehouses.
Short Answer is NO… not on a private mortgage.
If a lender is going to report to the credit agencies, they first have to:
1. sign up and get approved.
2. it cost money these agencies charge for this. And knowing how frugal lenders are on Ozzies are (think property mangement) no way they are going to pay to report. Just pulling your leg there but not really.
3. Once your signed up 100% of your loans have to be reported no selective reporting.
So basically for this discussion the only mortgage lenders that report, are Federally charter and state Chartered banks that are selling their loans in the secondary market or to FHA. And are doing long term consumer home owner loans… No commercial bank that is doing commercial loans will report. Its the beauty of using those banks. And of course when I do business I provide letters from my banks stating my credit facilities and our cash positions.
As a private lender no chance no how to affect this guys credit. As I posted before the BIGGEST club in your bag IE the Driver is the 1099C discharge of Debt that you can file with the IRS… I have used this very successfully in the past.. 1099C you can get on line from the IRS fill it in and send it in to the IRS… Of course when you made the loan you got this borrowers TIN number or personal SOS Right ??? with that you can really foul his day. The 1099C will be ordinary income.. And you get 100% write off on your US tax return. Now me I like write on's but write offs work if you must.
Emma,
its very possible that llovehouses is not properly secured in this loan.. IE his loan far exceeds the value… So add in foreclosure costs, costs to change locks turn off water, winterize the house ( emma knows what this means) in KC were this house is located if you don't winterize your house will be ruined…… This is a clear cut case of a lender making a loan to someone who borrowed on false pretenses, I have no first hand knowledge of what this borrower represented to the Lender, However the little I know looks like a very classic case of lender not really knowing what to look for in the way of security and documentation and a borrower who is just an outright crook…Add to this the small amount of the loan and lender lets their guard down… I doubt very seriously that this borrower could have passed any kind of due diligence sniff test past a nice post on the internet and a few nice phone calls and a promise of a very high return.. Remember con men are great salemen.And Because of the waste ( this what we call trashing of a home) a lender that has a defaulted mortgage or deed of trust has the right within 30 days of default to enter a vacant home change the locks and winterize it an secure it… the debtor has abonded the property,, plus what borrower in default is going to sue you … this is just popy cock BS that has investors thinking everyone sues everyone in the US there can be nothing farther from the truth… Not in the concept of what the average OZ investor is doing.. YOur dealing with wage earners the last thing they have is money to hire and attorney… Now you run your property like a slumlord and do not fix things that need fixing and someone gets hurt thats another story.. Negligence is wrong.. However again there is no attorney in the US that will take any case like this without being paid or has a very good indication that there is a US insurance company they can tag for a money judgement… And if you have proper insurance you just sit back and let the insurance company duke it out.
Lastly on Credit reporting and one of the reason I stick to commercial banks… Commercial banks by and large do not report to credit agencies…. And even the bigger banks if they are deemed commercial loans those are not reported.
At my venith I had close to 30 million dollar worth of credit with 5 banks.. .. Can you imagine the car dealer pulling my Credit and and seeing high credit limit of 30 plus million.. In additon commecial banks do not want to report credit.. if they have to do a work out they do not want to be compelled to report to the agencies in fear that the borrower could not get credit elsewhere to pay exisiting bank off.. Even as it is with all my rentals that have Chase wells citigroup mortgages I think my report comes back at close to 4 mil… Like I said its really funny when consumer credit folks pull credit and read that ,,, And really thats only car dealers because its the only credit I have…. other than my mortgages.
2nd remedy is to sue on the note every RE loan in the US can be brought to superior court and a money judgement awarded. Banks do not do this because of time and expense and the very unlikley event of ever collecting anything… So even the banks have resorted to the 1099C threats… its a good one trust me.
Kyler for sure,,
A few of our oz friends have sent me potential deals in Memphis and sure enough they were in Fraiser… which is the ghetto and the spruikers were probably making 20k plus per house,, the buyer will be lucky to get 3 to 5 months of rent in any one year end up doing evictions 2 times a year and rehabs at every tenant turn over… will get frustrated and walk away…
The next wave in 3 to 5 years is not going to be Foreclosures its going to be tax sales… See you at the tax sale post 2015.
Ziv Emma
I think the major cultural difference's in the demograpghy of the tenant base is what makes the japanese investment something folks would want to look at… From what I have read other than the major cities these little cities really offer no up side so they are more like buying and annuity policy.
Now lets take 2 natural disasters and compare what the demographics of the populace did vis a vi Japan, and US.
Lets Compare Hurricane Katrina and the Japanse Tsunami:
Flash back to New Oreleans which has the same demography as Atlanta and most of the neighborhoods that the low end rentals that OZ folks are buying in…..
In New Oreleans when the law broke down , the citizens went native… And this is going to sound shocking to OZ folks but there were over 4 thousand murders in New Oreleans post Katrina… the looting was off the charts the local gangs had open warefare if you remember the cops left the city because they were getting shot at… The rescuers coming in were getting shot at total law less free for all,,, more like what happens in Soweto SA every night that in the US… Then you had the citizens led by their Major blaming the US federal government ( where were you to help us)… Many people ended up in the Superdome (US football stadium downtown New Oreleans) there was 30 murders there and hundreds of rapes as they rode out the flooding.
All this happening in the 90% plus African American population, which is 80% plus of the tenant base in most of the cities OZ investors buy in.. thats just a fact and reality.Now lets look at the Japanese how they act in a disaster like the earthquake tsunami.
No looting,,, no killing one another…. no gangs roaming raping and pillaging… nice tidy lines of people waiting pateintly and politely to get their water bottles filled.
This is the major issue with the tenant.. Base,,, you may not be able to directly communicate… with a Japanese tenant,, But you will not have the out and out disrespect, cunning, caniving lieing cheating US tenant to deal with.
And I remember in one post from and Aussie who said they had what they felt was an irrational fear of Black people in the US..
this is not irrational.. its very smart and one needs to keep at all times there head about them when your in a black neighborhood.. Everyone of my property managers east of the Rockies goes into the field with a Glock or 9mm every one…And for reason…Now don't get me wrong I have 100's of black tenants and they are many the sweetest people on the planet…However by and large your talking the Black Female,,, its the unemployed never employed Late teen to 40 year black male that is a dangerous weapon in the wrong environments… And there is a huge difference between the black populations in the North.. IE Detroit , INDY, Chicago, New York, Pittsburgh, Philly, WA DC.. than the south… the south is the bible belt and 90% of these Black folks have had the Babtist church doctorine pounded into them from birth… Its these females that are god fearing that you stand the best chance. with.. In the North they are not nearly as bible based and its all bets off female to male… You really need to understand how these people live their lives we all live in the same country follow the same laws. However they have a culture that is far different than the White culture , the Mexican culture,,, The asian culture… Every one is different.
If I look at my rent rolls 90% thats right 90% of my tenants of AF folks the lease is only in the females name… the men just come and go.
So in Japan this is just not the case,,, I am not saying everyone should run and invest there, but I do think the PM issues are so far apart as to not be comparing apples and oranges…..
Emma what do you mean no rain in Vegas.
I was there this winter and there was rain storm and the 10 pm news had live crews at the big intersections where a puddle had just occured and was causing water to be sprayed up into traffic… big news… cars barreling into 3 inch deep puddles unawares.
The southeast sure has its share of big storms.
And this year they were early,,, I was in Mississippi in March and big thunderbumper came through with tornado warnings.. I was walking from my hotel through the Home depot parking lot to dinner and thought hey I better start jogging this does not look good… then all hell broke loose.. really something… I suspect AU gets it share of thunderstroms as well.
A year or two ago there was a huge cyclone I was following on the Weather news that slammed into AU it was at least as big as Katrina.
JLH
Emma
I only put carpet in the bedrooms… everything else gets Ceramic tiles the really big ones….Like you would see in Vegas.
The tiles although a little more will last 2 to 5 client turn overs… Carpet will be replaced every 1 to 3 max.
As you can probably attest unless you have been to a third world country no one is tougher on carpet than the US renter in the houses we are dealing in…
go high end and thats different but these sub 1000 a month homes carpet gets trashed.. I used to buy it by the roll… The carpet supplier would store it for me and we just cut off what we needed… this help keep cost down as we would get a great price and if price increased we had ours paid for…
but after replacing thousands of sq ft of carpet I went to tiles and lamanate wood… much tougher… Let the tenant bring in their own throw rugs.
JLH
emma,
My Commercial bank in Oregon charges me 10 dollars per wire to AU…. I have to send them all at once to our AU investors. they get their wires on the 15th of each month.. same amount same day without fail
Austin,,, is like a West coast or upper east coast town… Not at all like the rest of Texas..
i think all the texas lovers on this site will agree
mattsa,
this is really old news… for OZ expectation of Cash flow returns of 15% or higher yes your correct.
But then again 15% and higher is an illusive imaginary figure anywhere as well.
many Memphis folks.
Just make sure you buy in the right area I would not buy anything sub 60k in memphis pesonally
most US banks do not charge if you have a nominal amount of money in the account say 5k or so.
Emma,
why are you in a bank waiting to deposit a check..
Just order a Micker reader for your office… checques post instantly when you slide them through.
I have not gone to a bank other than when I want to in years…
And you definalty should be with a small commercial bank..
My personal banker calls me or I call her.. Most of all my transfers are done with her verbally.
Your in big banking hell…
Emma,
We have 2 currently and sold one about 3 years ago.. The one I sold was a 44 unit.. that I picked up for 1.2 the average rent per space was 250… over the course of 3 years I raised that to market of 420. and sold for 1.765,000… Minus fee’s 500k gain. that was the good ole days for sure…
Mobile home parks on the west coast by and large are one of the most valuable assets one can have bar none.
And that is why a class A and B park will sell at 4 to 6 cap rates…
Danger in buying a park is getting sucked into buying one that is half vacant,,, the absorption rate can kill an investor, or buy low end mid west deep south and they are just the worse of the worse vis a vi trailer trash,,,, Hence the world famous phrase…”trailer Trash” But like all things low end in the mid west and deep south… one can be a slumlord and do fine with them.. Just need to be there to ride herd on them daily no possible way it works with vendor PM..One would get killed financially speaking.
Frankly I do not need a web site to tell me about crime,,, I can feel it… and basically crime in the US follows values in the large cities… lowest values highest crime… In small rural towns not the case.
But in all the citys that OZ investors would be looking at its real simple…. cheapest property highest crime rate…
No need for any further in depth anaylsis from my point of view.
I have now started to buy in what I call satillite cities that are by large metro areas but 30 to 60 mintue drives away..these have lower price points,,, no crime to speak of and are cash flow cows… No real capital growth but cash flow positive with minimal mnagement issues….Vs a Vi inner city thugs beating the crap out of your homes.
JLH
And the Pebble beach transaction.
was sale to Japanese for 1.5 billion.
bought back 5 years later by a group including Arnold Palmer and Clint Eastwood.. for 800 million … net loss 700 million.
Kind of like buying in the wrong zip code for 50 to 60k in Detroit having your housed trashed not being able to collect rent then wholesaling it off for 5 to 7k to the local guy who bought it and sold it to you in the first place through your marketing companies.
Same theory being presented here… And someone will dig into this bad side of the Off shore investor… Probably already happened with news groups in OZ
