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  • Profile photo of jayhinrichsjayhinrichs
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    March 9, 2012 - 10:15 pm

    I went back and saw that the houses were in Pheniox.. And were new constructions circa 2008… and purchase price was about 40k a property and they were model homes.

    On the surface that seems like a great deal… Although Pheniox market has real issues with vacancy factors given the down turn in building and political influences that sent the Mexican labour pool flooding back to mexico.

    There are large developments of 4 plex’s that housed a good number of these folks. And at the peak Linda Gercheck was selling them to CA investors for 350k per 4 plex those same units saw mass vacancy and fell to under 100k no rent no value.

    I have looked closely at Pheniox for my TWH model and most of the properties I would consider buying are 75k and up… So for a 40k purchase you most likely got sold something in the Pheniox version of a war zone high crime area.

    JLH

    Profile photo of jayhinrichsjayhinrichs
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    March 9, 2012 - 10:09 pm

    cheeves.

    simple math is 30% net on 25k investment is 7500 a year or about 650 a month net cash flow.

    So…

    If tax’s insurance are 150 a month
    management 10%

    lease fee one months rent.

    100 a month for maintenance

    And 100% performance

    Rent would be about 1050 or better per door…. to achieve that kind of net yield and actually use. And since the poster talked about evictions and other reno’s the purchase price after repairs is probably greater than 25k purchase price or maybe not maybe he bought the 7k house and put 18k into it that could very well be…. However evictions cost money and their is lost rent.. etc etc.

    So really all we need to know to figure out return is what the rent is… We know the running costs and he divulged purchase price…
    I would find it hard to believe that low end rentals in Rochester are averaging over 1000 a month in rental income I guess would be my position.

    Profile photo of jayhinrichsjayhinrichs
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    March 9, 2012 - 10:00 pm

    what an unfortunate set of circumstances and thank you for sharing even though it sounds like this has been a tough learning curve.

    What market did you buy in ???

    These kind of experince’s make it tough for the good operators….

    these on line valuations really are not what you should be looking at for value and rent stats they are either way too high or way too low rarely do they reflect market conditions… They are nice to get stats like sq ft. and see the google earth view.

    And of course the higher the returns that you think your going to make the HIGHER the risk in all aspects of the transaction.

    Just like the quotes of the one poster of 30% in Rochester… If you were to use the same method you described to purchase there you would have the same experience and with a known low end market like Rochester, Detroit (city proper) bad parts of Memphis and or really any larger city, your results will be the same unfortunately.

    Its why I comment on Kylers low end KC properties he can pull it off because he works it… No way a contractor is going to decamp with his money… Most likely Kyler does what we all do small deposit up front draw payments as work is done and verified by KYLER not some inspector, then final payment when all is completed.

    And even in higher end US properties you cannot just hire contractors from 6k miles away, some will be fine as they have good morals but you will PAY for their CHaracter and Morals…. Cheapest bids will rip you off big time in the long run..

    JLH

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    March 9, 2012 - 2:01 am

    unfortunately i had a flare up and they are a little crispy but I saved most of them, got the corn and pineapple going now.

    Profile photo of jayhinrichsjayhinrichs
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    March 9, 2012 - 1:29 am

    no worries mate I will just go throw another shrimp on the barbie…

    Actually doing ribs here at my kids house in Vegas tonight yummo

    Profile photo of jayhinrichsjayhinrichs
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    March 9, 2012 - 1:25 am

    My thoughts on LLC’s as they relate to the Off shore investor…

    my answer is it Depends!!!

    If your buying low end cheapy properties. your chances of getting sued by a tenant are remote to the extreme. And its better to just get an umbrella insurance policy they are cheap and they will step in and Pay in the event of some calamity…

    NO CREDITOR in the US is going to go after any AUSSIE unless your talking large money,,,,and again the umbrella policy will protect you there.

    Just a data point I have never been sued in 37 years and owning well over 300 rentals in the US… Had battles on evictions but never sued for the dreaded slip fall or other negligent type claims.. And if I was I would turn it over to my insurance company ( see comment on umbrella policy)

    Although I do hold most of my properties in LLC.. I have 20 or so in my name as US banks will not loan to LLC’s, only commercial banks will do that.

    I echo Cheeves comments on the rates quoted for non owner Occ loans, and Non recourse to boot….

    what I see actually closing is 50% down 8 to 10%… I was at a RE investors function in LA Wed. Night and my co panelist was doing these loans.. Although his capacity is limited.

    And of course my last comment is in my humble opinion super low priced real estate in the states is a very risky adventure
    for any investor other than one Like Kyler who lives and works it… It is my opinion that out of area investors should look at higher value ergo better tenant properties

    JLH

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    March 9, 2012 - 12:55 am

    I think I answered this one a while back. and Kudo’s to any 25 year old that has done that well in the RE bizz.

    FHA is a little to no money down program and the repairs if called out by FHA appraisal need to be done by someone.

    JLH

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    March 8, 2012 - 3:13 am

    to clarify… investor buys with LLC… does not transfer title however just sells LLC interest. thats a non recorded transaction and will circumvent the flipping deed restrictions. Title remains the same does not transfer.

    The incident that Lawys talks about is just flat out felonious activity… Investor buys a share of LLC, LLC is suppose to own asset A howeever does not…. and investor has bought into a shell with no assets.

    Profile photo of jayhinrichsjayhinrichs
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    March 8, 2012 - 12:07 am

    Lawys,

    Your points are valid about rental home concentrations however it’s reality in virtually all markets in the US

    Think you missed cheeves point somewhat

    Not to put words in his mouth, but when your a liecened RE agent there is a high3r standard, and most US wholesalers are not liecened
    And skirt the laws (no pun intended) the Aussie companies that have opened up in the US by and large just do whatever they want vis a vi license issue,s

    Profile photo of jayhinrichsjayhinrichs
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    March 7, 2012 - 11:58 pm

    One of the reason flipper or wholesalers use LLC is to circumvent the deed restrictions that certain gov agencies put on their REO properties.

    Lawys scenario is simply a thief setting up a scam….

    Profile photo of jayhinrichsjayhinrichs
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    March 7, 2012 - 11:33 pm

    Is that bigger pockets? If so have never done anything with them, although frankly our product is so well received by the IRA investor we have a waiting list

    Profile photo of jayhinrichsjayhinrichs
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    March 7, 2012 - 11:19 pm

    Been on the road at investor seminars, letting the US investor in on the fact that the Aussies are kicking their butts picking off all these cash flow properties

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    March 4, 2012 - 7:45 pm

    All spelling errors in my posts are intentional

    Profile photo of jayhinrichsjayhinrichs
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    March 4, 2012 - 4:16 pm

    30 to 40% of all US single family homes have no debt. And with tHe US IRA investor paying cash for rentals plus all the foreign cash purchase,s the fed Fannie Freddie become less of a factor

    As well as what I am seeing with my new construction sales in the last year. We are seeing many cash sales and or 20% down very few FHA . Could just be our particular projects. However thenbottom line in my mind is the market will stabilize and in a very positive manner

    Profile photo of jayhinrichsjayhinrichs
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    March 3, 2012 - 1:56 pm

    I was at a RE conference last week firm was Keller Williams….. the subject of bubbles came up and they were targeting Canada.

    factors included price run up and cost to purchase as it relates to average income… same statics that the US looked like before the crash.

    Although having bought and owned a home in BC… qualifying for a home was much harder than US.. and it could have been I was a foreigner. Although once approved the process is SO much better than US… No where near the amount of paper work, closing costs etc.
    Bank that lends you the money keeps the loan.

    In the US virtually all loans are sold off in the secondary market and that function adds all sorts of requirements to the mortgage packages. Not to mention all the HUD required disclosures that no one reads. And for sure our sub prime borrowers do not understand even if they read them or more likely had them read to them.

    JLH

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    February 29, 2012 - 5:34 am

    No rental income however you sell for 5 to 10 times what you paid for it

    I just bought 7 lots premeir Henry county location. Houses are in today’s market. 300k plus we snagged them for under 5k each. Will sell within 3 years at 30k plus each. Nice alternative investment. And no land lording which is worth a bunch

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    February 29, 2012 - 5:28 am

    Hoods. Every city has them. Need to be there at night or sat…

    Profile photo of jayhinrichsjayhinrichs
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    February 28, 2012 - 6:00 am

    there was an article in the USA today or better known as Useless Today::

    Anyway front page of 2 investors talking about the rental in Chicago they bought and how its better than bank rates etc.

    Now with the Gov.. and Buffet  look out…..

    Here is my prediction… better popular markets will start to see bidding wars… Its already happening in Atlanta, Although How low could those prices go Cricky ( or how ever  you spell it)

    Pheniox central Cal  probably the better parts of Florida ( sorry Cheeves:) I am thinking major world class towns and real estate for Florida…

    For any of my US buddies that will listen I started my TWH buy and Hold program 18 months ago,, and so for once in my life I was a head of the Oracle from Omaha.. ( just wish I had his capital to impliment)

    Now is the time to start finding under the radar markets that are not over heated but still have good metrix, and I am not talking about 5 to 20k houses. I mean markets that have potential to grow in value, anyone here in the US can buy lemons and squeeze them for drips of cash flow ,, the real returns are buying in markets that rebound or have a chance too….

    My prediction the 900 dollar cash flow rental in Atlanta will cost 25% or more wholesale this time next year if not double.
    Too much world pressure and the market there got unrealistically low….

    I am buying lots like a mad dog right now.. closing everything I can get within my price point… I will be building come this time next year if not sooner…

    Come on Aussies keep your dollars flowing, with the exchange and the rise in US values which are certain to come, and the potential of the lowering of the Aussie dollar to market norms you folks stand to cash in in a huge way…..And lord knows we need and love the cash investment and the money spent when you travel here…

    OK off to ATlanta tomorrow myself… I guess to glimps at what was and probably what can never be… Real estate bought in the last 6 months price wise in ATL.
    <br /:)” title=”>:)” class=”bbcode_smiley” />   JLH

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    Profile photo of jayhinrichsjayhinrichs
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    February 27, 2012 - 4:55 am

    Labradore

    I think I can shed some light on this.

    1. when you in the US to someone using FHA financing the following is what happens

       Since the US government EG the FHA is guranteeing the loan the house must meet minimum standards. If you paid cash for the house as an unsuspecting investor too bad.. And for sure will not approve a loan above value.. this is whats killing the US market, you buy for cash and think  you get a great deal but there are plently of other houses that sell for the same or less. Appraisers pick up these sales and your stuck… happens to all of us.

    You will need to fix these items for the Appraiser to sign off on the apprasial.. If you do not wish to fix these items then you need to sell to another cash investor. Which is probably another off shore investor who does not know values.

    Its a moot point that your realtor quit on  you.. plenty of realtors in the world…..

    Who sold you this in the first place and how does a 25 year old get into a positon to be where you are… 99% of 25 year olds in the states could never buy a home…. UNLESS they are in the BAY AREA and work for Google and facebook and if so they are looking at 2 million dollar properties

    Profile photo of jayhinrichsjayhinrichs
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    February 27, 2012 - 2:40 am

    To turn key or not turn key that is the question…..

    Shoot its a tough go when your doing it on your own from across the globe…

    Of course the price of these homes if you lose all your money its no big deal right.

    I really think the inner city US properties can only be successfuly run by those that live and work it.

    No way it can work trying to build a so called "team"  but prove me wrong.

    At the end of the day we ( the United States of Amercia) love all this cash influx into our HOODS… Lord knows the US investor will not set foot.

    JLH

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