Forum Replies Created
Cheeves,
I am up for your webinar…
gotomeeting works fine for the AU audiance
Although I could hardly understand any of them
freckle
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/04/10/BUET1O0RN2.DTL
With all the foriegners paying cash, and now US companies paying cash.. Our economy is at less risk going forward.
with the Foriegners and US IRA's all paying cash for properties,,,, the foreclosure mess will be a thing of the past.
I have commented on this before….
Even if you have a melt down of some degree… And say your properties rent went from 900 to 500.00 a month… your still positive geared or close too it…. since you have no debt…
Now if your borrowing money in OZ at 7 to 8% to buy US properties and expecting 15% return nets for the long haul I think there is a chink in that armour… However those that are truely paying cash are in no risk of losing their investments… just will not make the returns they were making in years past.
WI, has been commenting on this lately,,, the ship might have sailed for someone of his disipline that will not chase deals and has a set goal in mind…The good news is those that bought at the bottom might have a true exit quicker than they expected.
there is no where else in the US that I am aware of ( except ft. Meyers florida and other parts of florida) were you can buy houses that are as new as What WI and others have been buying for the price they paid for them over the last 18 months.. And then rent for what they rent for. this is what has driven the ATL market…and it created the herd mentality
You can buy older homes in other markets…
Or newer homes however they cost more than what has been enjoyed in ATL the last 12 months.
Hanju,
You sent me a PM on this site but your not accepting e mails…
if you would like to contact me personally you may do so at my company e mail
Frekle,
I think your warnings have merrit however I think your just a little too doomsdayish…..
From my perspective we have come through the worse of it.
there is no question certain areas had massive problems
Phoenix for example had rental price compression in the multi family arena.. and thousands of investors walked away from their duplexes and four plexes… 4 plexes sold in the 2004 era for 350k were trading at 100k and can be bought today at 120 to 150k no problem
what was epidemic in Phoenix though was 2 fold,, Huge Mexican work force and population that lived in these units…. The AZ government decided to come down hard on illegals, so the undocumented workers were booted out or afraid and they left.. then the contstruction workers all got laid off, so you had a reverse migration for the first time in History back to mexico.. So vacanies were enormous. and rents went down substantially,,,
these are all just regional events… Would the same thing happen in Atlanta which is soup de jour right now with investors.. Not really work force is not so heavily waited to hispanics… Can rents go down because of over supply of houses YES.
although a lot of the big money is coming into ATL market right now buying apartments, and those boys are smarter than me and so they see trends or market pressure that will stabalize the multi family arena.
I know with our portfolio in Atl… we have had to lower rents on a few houses to get them rented… what we thought we could get 950 for rented at 895.00 that type of thing…Can that house go to 500..00 any thing is possible but highly unlikly as thats the starting point for garden apartments.. And many apartments are as much if not more than the single family homes,
Gas prices have an impact in a market like GA… as its so spread out and commutes can be long and expensive.Those buying the lower end of the market in GA could definalty get stung as there is a lot of newer inventory,,, One needs to have really good product…
My last trip to GA my partner and I drove through some neighborhoods, were he pointed out houses that investors have tought a year ago and never rented, Ya you could buy them cheap but at the end of the day what do you have.
A Hedge 125 feet tall with trunks 3 to 5 foot at the butt.
Its nice there for sure, but its country living for sure… have to drive 90 minutes for Sushi
Lawsys
Go to Google earth..
Willamina Oregon,,, then follow the main road north out of town past the saw mill you will see on your left, 1 mile up on the right you will see our ranch… It has a nice valley running right up the middle and a nice elevation change from 500 to 1200 ft MSL. I want to put a little pond on it in the next few years and stock with trout. I subdivided 10 lots off and sold them for homesites and they are all built out. This paid for the remaining acreage. And you will see we have about 300 acres of 50 year old Douglas fir.. Whence the fir becomes 60 years old we start logging.. Bout 250k in NET revenue per 20 acres. so we will take about 15 years to harvest the timber and replant it all… This is my nest egg retirement and like Frekle likes to talk about my HEDGE…. Timber just keeps growing and if you can hit the peaks of the log market with mature stands its very profitable. At the end of the day we replant it all and My kids and grandkids will harvest timber to help in their retirement.. Its set up in a trust to never be sold.
I love the Timber business in the right market there is nothing more profitable in the US>
Timber Barrons were right up there with Railroad Barrons and Steel Barrons in their day.
frekle
I guess I just look at how my business is going from a macro level then micro level.
And things are just Soooo much better now than 2 years ago…
housing is a big driver in the US economy,, 2 years ago in the Portland Market that had been building 12,000 housing units a year, in 09 we built 700…. Total crash, I would say 90% of builders and small subcontractors went BK.. I might be exaggerating a little but it was a melt down
2010 saw 2400 permits pulled… 2011 3800… and 2012 will top 5,000, I personally have 7 Presold homes going right now for clients… I had not had a pre sold new construction home in almost 5 years.
US citizens with money in their IRA's and there are trillions residing there have access to it on demand either through loans and or cashing them out,,, however there is a penatly if you take it out early.
In our TWH model 8 out of 10 of our sales are US IRA's.
I am not an economist by any stretch just an investor and builder, who has lived through 3 of these cycles since 1980…
the GFC of course was the worse.
The transfer of wealth from the securitized Mortgage debacle is huge.. For all the investor that lost their money, you have new investors picking up their equity…
Take the average Aussie investor who has bought right,, I do not refer to the Aussie investor buying in the War zones or dead zones. Ones that are picking up the better properties.. They are buying them for 30 to 50% less than replacement costs.
And even if rents went down 30% they will still be positive cash flow,,, As long as they have a handle on management ( which is the trick)….
So as I saw my Real Estate portfolio that I amassed before the crash, come tumbling down in value,,, I set out to buy 100's of these properties so I could income average out my portfolio… So far so good.
I suppose if we have total devaluation and social melt down then, it will be about food and water… And I have that covered.
I will simply move out to my 500 acre Tree farm in Rural Oregon which has no debt, and live off the land I have a nice 3bd caretakers cabin on it with a big shop….. Set up a little portable saw mill, trade lumber for goods, grow my own food,,, Take Venison or the occasional Elk when I need meat that sort of thing, Salmon and Steelhead run in the rivers that I can ride a bike too as well…
JLH
JLH
Freckle, Trillions of cash in USA Ira,s. 401k,s dbp,s PP plans etc etc. Plus cash in pass book savings.
Can,t compare us. To spain. Unemployment is almost 20%. Us unemployment continues to fall in most markets
California. Will survive. Weather is just too good.. And huge diversification in jobs…
Motion pictures are not leaving. Silicon valley just produces massive wealth
No question there are dead and dying regions, by and large one pony economies
Texas is enjoying a run right now, back in the mid 80’s it saw huge crash like we see now in Florida
freckle,
The fed just came out 3 days ago with a position paper that allows banks to look at their portfolios and if it makes sense enter the rental business. heretofore the banks were required to liquidate the wisdom of the time from the Gov was that banks can't be in the real estate business… this is changing you will now see banks looking to partner with asset managers, and or provide take out financing for their inventory as oppossed to having to sell for cash… With financing avalaible for their REO's in house they will be able to sell their homes for more money than whats happened when you have to sell an asset for cash in a cash strapped environment…. Although the US is not that cash strapped per say… there are trillions of dollars in cash sitting in Mum's and Pops accounts earning exactly zero or 1% those investors are starting to jump in… this is why you see wholesale prices firming and or rising.. Even though you see reports were the market is suppose to go down another 3 to 5% nationwide… those are just averages and we have so so many 400 to 2 million dollar properties that will price compress that sqews the averages.
Your average dinger foreclosure in the better cash flow markets has bottomed.. and is rising. The days of just picking REO's off the MLS are long gone in the better markets. whats more common is 3 to 10 offers and bidding wars… So now to get the great deals one is going to have to buy in bulk.. or buy defaulted paper… I made my first offer on defaulted paper this week, and on Paper it looks pretty spectacular… Not really a play an investor that does not live and work this as a business could probably do.
To much work, and having to hire everything out would kill the discount.These were all sub prime loans that are in default.. All in the county that I like in Atlanta, I think WI likes this county as well. Prices were great about 10k per door… some of them are dumps some of them are the exact same homes WI has shared with us here on the site.
What I find interesting is how well the new home starts are coming back…. in most markets new starts are almost double what they were in the preceeding year and certainly 09… There is a robust new construction in Texas… Atlanta has the 10 largest new construction market, and even here in Portland we are number 20 nationwide.. we were are up 1.5 billion year over year.
And that does not include the 3 billion Intel is spending on their new D1X fab plant. Intel is going to build 2 more of these over the next 7 years. so thats 10 billion in new plants and 6k jobs into our local market here. Its within 1 mile of the 117 acres I optioned 2 years ago from the farmer.. We are hoping for 1000 plus doors and a commercial componant….I know we have talked about land before however with these building starts doing what they are doing I beleive for the more cash heavy investor land plays are something they should look at right now. Land has certainly bottomed.
JLH
http://www.hardwaresupercenter.com buy all your hardware and more at 20 to 80% less than the big box stores. No sales tax as well.
lawsjs,
Not a hanging offense just a "Event of Default"
And if you actually read all the fine print in a US Deed of Trust and promissory note or Mortgage and or like in Georgia a Deed to Secure Debt…
there are many Events of Default… Heres a few I can list just from memory.
1. as with the topic at hand providing adequate insurance.. The reason for this is the lender wants their loan paid off if the house is wiped out by fire, tornado, etc etc… Now you do not need wind insurance or earthquake insurance. All you need is fire. Although from a practical point of view earthquake is probably smart in certain areas… Like CA.
2. Failure to make any agreed upon payment within the grace period of the Note.
3. Committing waste ( a lender can call a loan all due and payable if the owner is devaluing the security by creating their own personal pig stie,,, Although this is very very uncommon.
4. Failure to pay properties tax's…
5. Alienation of title… thats where the orginal owner or borrower who first got the loan sells the property subject too the exisiting debt. in this case the lender is entitled to and will call the loan due and payable.
6. Condemnation either voluntary or involuntary
7. Failure to make balloon payment,, Now in CA the lender must give you a written notice of said balloon payment 90 days prior to the payment being due… Failuire to do so and the Balloon payment can be pushed out until this 90 day notice is received.
8. Failure to keep adequate reserves in your escrow account,, again this is what happened to Mark.. When the insurance got cancelled and force placed insurance was put on the property there was not enough money in the escrow account to pay this and the additional is added to the payment and neither were paid, thats a default.
9. Failure to pay the new payment on an adjustable rate mortgage IE rate and payment go up but you keep making the original teaser payment… This is what happened in the sub prime melt down.. The borrowers who unfortuatly are not the sharpest tools in the US shed.. just sign up for a loan and really do not understand what a variable rate is. what 2 basis points over libour means.. they just sign the docs and away you go.
10. Insolvency either volentary or involuntary…
Now remember some investor bought the loan from the bank and expected a return on investment… they are not going to be very accomodating to investors who get in a flux because they claim the bank is screwing them over… Just the way it is.
And thats just off the top of my head before I go watch the Masters Golf tournement…
bottom line in the US lending world there is no defense to I did not know or they did not notify me… And foreclosures there has to be an attempt to contact the debtor and the default must be published in the legal publication of the county were the property is.
The banks have form letters and they are sent to what ever address you usually put on the loan app… Or the property its self… These loans are sold to servicing companies that are just robotic by nature… virtually no bank keeps there own loans on SFR type properties. World Savings was one of the last and was really a great bank and probably the largest Portfolio lender.
On last comment on subprime…. I bid yesterday on a bulk package of defaulted loans in my markets in Georgia…and the lowest interest rate I saw was 7.8 and the highest ws 12.3 and these were all owner occuppied loans… Now we have to buy the package as is and do the foreclosures ourselves. but my average purchase for these homes will be under 10k each.. In my markets and in the ares of Georgia I like and have been buildling my portfolio in. It will be hard work.. As some will go BK on me and I will have to deal through the court systems… Some I will give cash for keys.. and it will be easy… Some I will rewrite their note and be the New bank ( Love being the bank) others we will foreclose evict and will rehab rent and bring into our TWH model…
And maybe a few I will wholesale off to some of you folks and let you take a swing at them.
JLH
I have bought property in a few countries with mortgages and this has always been the case.
I bought a home in British Columbia and not only did I need insurance,,,, When I was in the states they needed a company checking on the house every week other wise insurance was cancelled..
Its was because of cold weather and broken pipes and flooding of the house.
JLH
Freckle,,
the US is so vast and diverse,, One area can be in the tank and others are thriving.
ITS Called foreclosure clusters….70% or more of the problem housing debt is in 6 markets.
We do though have a shortage of engineers and higher educated work force.
I invite you to travel to the US… land in San Francisico…. Drive through Silicon valley,,,,, Stop at Apple headquarters in Cupertino,, then go to any shopping center or resturant within 5 miles of apple and you will see 80% population is chinese, and Indian.. thats were are engineers are coming from,, When I graduated from Cupertino High School in 1974 the demographics were 97% caucasian.. maybe 2% hispanice 2 black kids… and 5 asians… and there were 2500 of us…..
So its a world wide social scene and economy…for many parts of the US.
Your crash's occured in:
Phoenix
Vegas
central CA… ( too many chinese engineers speculating on housing in the Central valley and got stung bad)
Florida
Georgia
Inland Empire of Southern CA.Foreclosures have always been a part of our real estate cycle. some of my best years buying foreclosures were in 2003 2004.
And there will always be foreclosures as long as people die intestate and people divorce and job market ebbs and flows.. Not to mention just some folks can't handle credit no matter what they do.
DO You not have any foreclosures in OZ??? Does every single borrower pay as agreed, does no one get divorced? Or die Intestate???
JLH
Too All..
You can try to cast stones at the US and how stupid we are etc etc… Fact is Mark CANCELLED his insurance which is a cause for default on any US loan document.. The lender has the right to Place what is called FORCE PLACED insurance. At 4 times what regular insurance costs. I know as a hard money lender I have force placed insurance on many a borrower.
In addition mark got pissed because he bought a property in an area and or did not have the property team on the ground to preclude the damage that a bad tenant can and will do in a lower end rental.. then when he expects the Insurance company come to his rescue most likely he did not have the proper coverage for vandilism.. Been there done that.
Now on the flip side, I go through this every year with all of my rentals that have big bank loans… Invariably they will not get 1 or 2 of the proof of insurances or they f it up… I get the letter about the force placed insurance hand over to my insurance agent, he shows proof of insurance and I get a check back from lender.
Now this is not an issue with most of the off shore investors as they are paying cash…. My suggestion is if you get a loan, do not allow the insurance to be paid from your escrow account, Pay the insurance yourself and have your insurance agent provide proof annually,,
what the big banks do though is ( sell you on if you let us impound your insurance and property tax's the interest rate will be 1/2 point less) you agree to that and then you end up with these nightmares sometimes better to pay higher rate and pay tax's and insurance yourself.
In addition you lose track of your escrow accounts… I sold one of my personal residences a few years. then checking with state of oregon there were monies at the state that were in my name…. In further checking when my loan paid off… I had over 9k in my escrow account, the bank and postal service did not forward to me and the funds sat there for 5 years. At 7 years the funds would have Escheated to the state,,,fill out a few forms have them notorized and I got the 9k back, but it was a close call.
On whether to keep the property or walk,,,, Probably best to walk your just throwing good money after bad… it will allow another wholesaler to come in and snag it for 20 to 30k at foreclosure and start the process all over,,, its a never ending cycle here in the US.
WI,,,
One thing US investor do not take into consideration often is the currency exchange. In my lending days I was lending up in BC Cnd… exhange rate was terribly in favor of the US dollar… So I would 64 cents of BC currency for one us dollar. So when i brought a couple hundred thousand over into BC I had a pretty significant sum. I then lent out those funds as hard money loans at 5 ponts and 15% itnerest… by the time I got paid off the exchange rate was in the 90S so my income and gain on the exchange was very good in deed.. Only problem was Canadian tax authority withheld 25% of the gross until I filed a tax return the I got my money return minus what I owed them in tax… Canadian tax is onerous by the by.. US tax is mellow in comparison.
be well
JLHhttp://www.hardwaresupercenter.com buy all your rehab hardware needs at distributor prices.
Pat007 wrote:on google maps you get a fantastic view of a massive substation with many high voltage towers only a stones throw away.
i for one would be relieved if i couldnt purchase it, many more fish in the ocean no need to settle for that.High tension wires in the rear of a house is not a deal killer in any manner at the price range of these houses.
million dollar homes maybe…… Just google earth Los Altos Hills in the San Francisco bay area and see all the houses snuggled up to Hiway 280. ( which by the way was not there when I was a youth) and you will see 5 million dollar homes with worse noise impedements than just high tensions utility wires.
there was a time when US peeps thought the High tensions wires caused cancer.. then we figured out everything causes cancer. latest was 60 Mintues last night and Sugar is the culpret and toxic to all humans
sounds like a grand adventure and your strapping on the contractors belt.
Inventory is market specific… however as we all have been posting,,, inventory is way down,, and the free run of US properties at least right now is not as easy as it was a few years back…
those that can only source houses once they get to RE agents will find the buying much tougher… There are still deals to be had just have to know how to source them and have the conduits in place for those deals.
JLH
http://www.hardwaresupercenter.com buy all your rehab items for 20 to 80% off big box prices.pmack wrote:has anyone had anything to with the st louis or memphis markets?We buy in Memphis,,, St. Luis I had bad lending experiences its akin to the roughest parts of Detroit if you go for low end stock.
there is one US company in particular that I have seen that works Memphis and they REALLY Puff there Net yields in their advertising..
Like 30 to 40% net yields. So I personally dismiss them out of hand.
Memphis I know very well have done a lot of business there,,, You just have to be very careful of the Aussie Spruiker working in areas like Frazer and Southhaven.. Again I had loans on properties there took them back.. And could never collect more than 4 to 6 months rent in any one year.. constant evictions etc.. So total money loser those are. Get out to the East side of town and pay 60 to 100k and you will get some decent homes.
Xdrew
good post…
every market has its good and bad,
What your seeing right now is the US investor stepping back into the game… Off shore investors had a nice run with little to no competition in some of the better markets you mention. And from my perspective if I look just at my company we were chugging a long at 7 to 10 deals a month.. Now remember we keep them all…
Inventory is low in the better markets.. With Fannie and Freddie selling big packages to Hedge funds. .Who for the first time ever have decided to buy and hold single family residences. There is a package of 600 homes that Colony capital is bidding on in Metro Atlanta right now I expect they will get them…We have been approached to help them with about 10% of them…So thats 600 homes that heretofore would have been let out on the open market… Phoenix is experincing the same thing. The Columbia endowment just closed on 500 homes. And Aussies can’t compete with these companies they bought them for 80 cents on the dollar and a 6% cap… Hard to compete when most Aussie’s want 15% plus…So to get those 15% plus an investor is going to have to go into the less desirable areas, because they cannot compete with bigger US players that have decided to enter the fray.
And it was like a light bulb switched FEB 1st. I had about 22 houses in my inventory and I matched each of them up to a partner investor in about 10 days and I have demand for 20 plus a month right now…I have to spread that between our markets, so we keep pace with rental absorption…And I have to say I have some of the best guys in the industry on the ground as our equity partners… I wish I had thought up this model years ago I would not have gone through all the rental hell that comes with land lording from Portland Oregon….Give some equity and spread the wealth around let your team members on the ground make some up side and overnight your properties are performing far superior than what you would expect… I love having this huge portfolio and never once in a week dealing with a tenant issue.
At the end of the day good bad or whatever if your 6,000 miles away from your asset you need a great team on the ground.
I have been to lake como..
And actually stayed on the lake that is just to the West of Lake Como,,, can't recall the name.. There is very few places that rival that scenery here in the US.
Yosemite National park…….. Lake Chelan in Washington…
The Gorge were we live here in Oregon is very pretty however nothing like Northern Italy… And of course the VINO is no where near as good as N> Italy.
Good news is you will be able to buy replacement units from us and save hundreds of bucks an no sale tax.
Jay hirnichs
http://www.harewaresupercenter.com for the price conciencse rehabber
