Alex,

would the world not be a better place if everyone invested in the TWH model…. These issues would never arise,, ,You and I work them out… Investor gets there check same day same amount every month.

I can tell the US investors love it.

And the big boys are moving in to the arena.

Key properties in Atlanta the biggest wholesale buyer there just cut off all there resale companies… and are keeping all the units in house….

WI,

You will see over time that there is just going to be on going maintanence in any home in the US… Renters are tough on them… You can get very lucky and get one that treats the home as there own and is neat as a pin…. But the tenants know they are tenants and instead of checking little items out that can be easily fixed will call the Service line and next thing you know you have a weekend call to fix a flicker light because the tenant did not know how to use a dimmer switch… Now your 150 dollars in the whole for nothing.

JLH

Lawjs:,,

I am pretty sure I am the only one on the site that owns property in Kokomo Ind… I was there last week… its great little town 45 minutes N. of Indy…. Chrysler transmission plant and headquarters for Delphi,,,, GM's electronics. I closed a little flip there… bout it for 10 put 12 in it and sold it to a cash flow investor from LA for 31k… rents 600…. Rents can be spotty there though. I still have one left that I own there…

Its resurging with the rebound of the US government bail out of the Auto industry. But 5 years ago I lent on 12 homes and ended up owning 8 of them… Came out of them OK though.

And Indiana as a whole is a decent state  one of the only states in the US in the Black fiscally,,,, Same thing though have to pic your areas and your teams.

Selling the LLC ownership interest for the US purveyors is a way of getting around the Deed restrictions on flipping….

Takes a criminal mind to realize they can sell and LLC interest and not have any property actually owned the by the LLC… And a very trusting buyer…. Those are just criminal activities… We move investors in and our of our LLCs as a matter of course, However we always retain operational control and are the managing members.

For Instance Alex and I are going to do a few homes in his area in Charlotte in the TWH model… So Alex and I are the managing members of that LLC… We are the ones responsible for taking care of the investors… The Investor however will come in as the bank as always in our model.

My pet peave is really and has always been on this site,,, the sharing of information IE suppositions of Yeilds with no actuals to back them up… Your buying a property that has no rental history, whos to know what it will do… Some will do as advertised others will not. And 805 of them will do somewhere in between.. Most people do not know after 2 years really what there return is.. At least US investors I think you Aussies are much more annual about getting % returns down to a decimal point:).. Which Lawys leads me to the first time I flew my plane into Canadian Airspace and was talking to Vancouver center… I will send you a private e mail on a few of my follies with them… I got it down now… but first 3 or 4 times up there I violated some airspace or rules:)… Biggest one was being above 12k and not realizing you had to be IFR…… US its 18k.  And or Kelowna tower clearing me to the threshold… But not cleared to land… My buddy flying with me that day was a 35 year veteran of AA and he had not heard that one either… Any way back to real estate.

I had very interesting conversations last week with the CFO from Professionals REalty group in OZ… And the whole real estate business is far different than it is here….he went on to explain the nuts and bolts…. As a former Real Estate company owner with 100 agents I do know that end of it.

His comments were this.

In OZ

1. Agencies are small  5 to 15 agents per office.
2. Agents are paid a salary  ( this never happens in the US)
3. Property mangement is a huge part of the bizzness and very valuable to the OZ RE broker franchisee owner.

In the US.

1. Agencies if they are to be profitable and valuable for resale need hundreds of agents and if not thousands.
2. No one EVER makes a Salary its well known you need a year put away to start in the bizz… Its why our industry here is dominated by Women,,, Many are married to successful husbands and they can afford the start up time it takes to make a living. It actually costs you money to start to be an agent, in the US.

I am going to digress a bit as I can't figure out how to cut and paste on this sight,,, however next paragraph relates to PM in the US> and how it relates to a Real Estate company.

3. Property management by and large is a seperate business from the RE brokerage activities.  Some Brokerages will get into it when commission income goes down.. And that is prevelent in say a Atlanta market where rentals are listed on the MLS… This never happens here in Portland… And even the leasing of property is simply a one time shot in Atlanta pay an agent for a tenant then hand it over to the companies that manage. This is why you will almost always have a letting fee in that market, because the property manager many times is not finding the tenant a real estate agent expecting a commission is.

4. Property management companies unless they are huge and running Multi family and commercial properties have no real value on the open market because its such a fractionalized business… managing single families.

Glyn in our conversation last week was talking about one of his franchisee's in Brisbane that just sold a 700 home rental book of business for 3.5 mil…. That would never happen  in the states, not a tenth of that. From what Glyn was saying is that landlords in OZ will own the same properties for years,,, rents always come in, maintenance is not as huge of issue… You just do not deal with the turn over and abuse of our 1000 a month and under properties.

I found it very interesting and he gave that talk infront of 100 US Turn Key guys….From all over the country.

PS… I am closing end of this month a 25 home subdivision deal in Oregon… And will be building it out, I was out with my banker yesterday and it will be the first construction land acquasition loan they have done in 4 years…. Lots were valued in the good ole days at 75k each we are buying them from a bank for 25k… And putting 50% down so the bank is loaning us a whopping 12.5k per lot…These on lots that cost 30k to build…. We will build smaller starter housing 1200 to 1600 sq ft. that cost us about 65 a foot to build turn key… Sell 149 to 179k… We will sell 2 to 3  a month… Man it feels so good to get back to business.

I am bringing an investor in on this deal because of my ability to borrow… IE we get 100% financing on the vertical…Cash out of pocket total will be 350k… And profit 1.2 or there abouts. So my partner investor will put in 150k and make 400k in 18 months.
Now thats what I call a solid investment.

And when I talk about other LLC's that is what we are doing we are putting small groups of investors together and buying these type of opps… Whilst we continue to build our long term cash flow TWH model all through the country….

JLH

wow!!!

One week of this site and a lot has occured…

Alex is being far to generous in my behalf… Yes Alex and his partner Kevin and I have had many in depth conversations about the US market…

My main goal on this site was to try to keep nice honest hard working folks from being taken advantage of by those selling properties either for far more than they were worth, or in areas that are not sustainable as a rental property ( unless you live there and work it like Kyler).. there is a place for all investments in the US.  Although some markets are beyond salvage.

Its a hard concept to think that in Detroit 40,000 homes could be bulldozed and there would still be enough housing for all.

Our big cities in the US are going through funcitional obsolensense.. And those not educated enough or chasing some rainbow will get caught up in buying in these areas, thats just a fact. And plenty of US buyers buy in lowend no chance areas as well.

From my point of view given whats happen in the last 4 years in the US… no one has a crystal ball…

If you want a sure thing investment invest like you would in OZ… 2 to 5 % return and a pretty good chance of capital presurvation and capital gain…

where are those areas… LA the better parts… SF the better parts… NY the better parts… Boston the Better parts.  Seattle the better parts… Perhaps Vegas in a few years… Some parts of Florida,,,, got to like Charlotte home of B of A…. Even here in my home town of portland, I am pretty certain if you bought at the bottom you will make money on capital appreciation… Then throw in your currency exchange and your really in for it….

I do think those who got in on the bottom of the better parts of Atlanta metro will see a capital return of some amount. except If your buying 70 and 80s built inner Atlanta your done, no capital growth for you ever in my opinion.

However for the OZ investor the idea that whole swaths of houses could be excess inventory and just bulldozed down and have no real functional value is probably hard to accept.. You would not bull doze anything in the SF bay area. or La proper.. Although there are war zones in both….

The really major issue for OZ investors in my mind is that the US investor has emerged from their hibernation… there was so much hording of cash, that allowed off shore investors to come in and snatch up our properties at all time lows… Good for you   but that ride in my opinonion is coming to an end.. .the US investor is far more concerned about capital preservation than net or gross yeilds that the OZ investor that demands some rediculous ( by us standards return) is going to be relagated to only the high risk properties….. And by high risk I mean that literally 100% of you that invest in these props will walk away from them in the next 10 years just like the litiany of US investors that preceded you.

end of the day there are far more opportunities than just buying SFR rentals… From what I see there is a lot of cash in OZ that wants to do something out of OZ for whatever reason… There are plenty of good US builder developers that would love to have capital partners… ( of course this is highly risky as well so please do not just jump into bed with any builder developer) however if you can get with good credential folks there will be good opps for you in the coming years.

construction is coming back… prior to this year I had not had a presold new construction since 08 we personally have 7 right now… And there is nice margin… enough to allow a cash investor to make a No risk investment that will give a great yeild and short term pay back ….

I think Alex is on to that track

lastly,,,,  alot of the US companies are holding their inventory they are ALL CoPYING ME!!!! LOL……As in forget flipping to investors keep the properties and bring the investor in as a partner,,, much better for us and way better for the investor, not nearly the risk

So to that End KEY properties in Atlanta one of the biggest providers of inventory to the OZ and other wholesalers ( 100 props a month) got some long term financing and they cut off all their OZ resellers and others…… they are keeping them.. .Just like my program….. We have opened in 2 more markets so we are in 5 now … closed 19 in april and will shoot for 20 to 30 a month going forward… And if I can ever get alex on board that will grow farther…… And all perfectly legal no selling a security and or guranteeing rent which is illegal in the US.. major securities vioaltions that one… .

Nighty night.

I think I have maybe a few more post in me then I am going to sign off of this site….I think we have done a nice job helping folks and hopefully keeping some from making a big boo boo……

I will let Lawys et al carry the torch… Just from my perspective this audiance is lucky to have him informing you on the contrarian view point. and as he and I have conversed I can assure you his assets in the US are top notch and the envy of any investor,,any one would be proud to own his portfolio….I have conversed with Emma,,,, she can help you as well as she speaks your language regarding prop managment……At least for those who frequent this site and hopefully get enough info to take pause and try to do their own due diligence,,,,,, many small investors have been saved from a bad day.

Best to all of you

Jay Hinrichs
Portland Oregon

JLH

Alex,

I agree with you on values. you can look at it a few ways.

Rental areas will be sold by cap rate. With the US investors happy with a smaller cap rates..

As we all know local investors that buy in rental areas will always pay less than an out of state or area investor.

One of the main issues I see is when the OZ investor goes to sell and they have figured their returns on unsustainable vacancy rates and maintenance figures, they will either be underwater for what they paid or will be disappointed….

Anyone with any experience here in the US.. Would not use 200 or 500 a year for vacancy or maintenance and I see this common on turn key sights so they can force the yields as high as possible by giving running cost that are just a figment of ones imagination.

The other issues is home owner neighborhoods are systematically becoming rental areas just by the sheer volume of defaults. And of course you take many of the mid west cities that are already at 40 to 50% rentals city wide and you have a hard time finding those owner occ only areas… Those neighborhoods will only be the ones where the price to buy is like OZ with negative gearing….or brake even at best. Just like here on the west coast… Time will tell…

All spelling is intentional I do not have time to spell check when my wisdom gets flowingf

Portland Oregon being the exception. No hoods here, however low end rentals start at 125k. Not bay area prices but higher than the mid west.

As to the Memphis comments. The poster is mistaken about property tax probably meant income tax

Kyler the good news is I could afford to lose it and live to fight another day… Hate to see some mum and pop OZ investor buy the same and maybe that kind of lose would be devastating to them…. And that’s all I am advocating is for these mum and pops too understand that they need to be careful….Kyler you live and work your market and you can handle the hi maintenance and high risk properties,,,,
Out of area investors have been wiped out with these type of properties and that is a fact. What’s good for you is in my humble opinion not suitable for investors who do not live in that city….. There is a huge swath of LA investors that learned this..

I personally foreclosed on over 150 of them and ending up owning all of these..lost about 3 million plus in cash…so yes I am sensitive to the low end rental pot of gold…. You can keep preaching it and I have no dought you will do fine personally, because you live it and work it..

At the end of the day though if you sell to others your. It going to hake care of any lost rent or trashed houses that’s A fact

You will be one of my go to companies as your full disclosure

Too focused on high yields, blinds investors to the risk of Capitol loss….

I doubt many Aussies. Walk away from their rentals,,,, from the sound of your market it’s probably as rare as hens teeth.

Like I havw said repeatly on this site,,, these foreclosures on the low end are from us landlords that walk away…these are not home owners losing their home……

Rentals in the us from 100k down in price are by and large tougher props then say a nice garden apartment you buy on the west coast at a 6 cap….

30% net yeilds at least for then first few months then it’s 30% loss,s

In reality you can buy nicer property well out of Detroit proper,,however inner city low end is in my mind only for professionals that livenand work the properties absentee landlords will have their hands full..

Also could be that I had two nice brick homes that I put 25 k into and they were trashed inside 6 months I let them go for tax,s so 100k cash loss on two props puts a pretty bad taste in your mouth for anything in Wayne County Mi.