Peter how much down on these loans… Just curious…

B/C   Us banks make the majoirty of their money on simple transaction fees.

ATM's etc.

I am one of probably less than 100 US citizens that does not have an ATM card .. does not use one.. I still walk into my local comminuty bank have a cup of coffee with my branch manager,, bring flowers and cards to the ladies behind the counter. and then ask for cash …

I have never used an ATM….. I only use credit card  ( Air miles Junkie) or cash period.

All of my mortgage payments though are auto pays, and I have a very large number of them over 50… I just assumed they were ACh transfers. However I am learning that they could be just bank cheques

JLh

My little commercial bank here in Oregon is going to set up transfers for our clients at no cost.

Of course its helps to be the largest single borrower at the bank  

Zmagen,

I hear ya but just not reality in the US landlording market especially the low end rentals that so many foriengers are buying. the tenants are very difficult… Again if you buy A quality 5 to 8 cap properties your theisis is sound. You buy low end rentals in the US and there is no way your going to be able to relate to these life long renters. they hop scotch around from house to house. Living their life in a fasion you just cannot really comprehend… Matter of fact most of these tenants

When they talk about where they live the comment is:   ( I's stays over there) they do not live anywhere they stay!!!! its in the culture and lexicon…. This leads to wholy transient tenant pools.

AND your dead on about property management no one is aurging that. its the make or break.. The point I am making it does not matter how great your management is if your tenant pool is bascially unmanagable..

On another note I am in the process of brokering a nice bit of business for a Tokyo developement company they are listed front page Tokyo stock exchange… I brokered the owners sister a few Multi's in Portland OR. 6 or 7 years ago and they are going to make their first investments in the US… West coast   Portland,,, SF,,, and LA… The deals we did here in Oregon were fabulous they rolled out of Vegas on 1031 exchanges before the market there cratered and Multi in the NW is about as strong as any investment in the World… Cap rates are 5 to 6 with a super heated market demand…

Would like to hear more about what you do in Japan…. As you know Japanese were big in the 80's on the west coast over paid by a fair sum then kind of retreated in fact where I lived for 10 plus years Silverado Country club in the Napa Valley CA.. the owner of Sega systems bought our club in 91 for 120 million basically paid 3 times what it was worth if not more his son who ran the club lived next to me until Dad bought him a big estate up valley…… based on this one company buying US assets it looks like they could be entering the market again… they plan to move 5% of their cash here which is a huge number no matter where you are in the world….
they could buy most of Detroit with this investment dollars… and have enough left over to buy most of Rochester:)

Its amazing in the US how divergent the properties and the values are….. There is cash flow then there is properties that you can buy and will always hold  value… IE A class… the D and lower well thats really for those in the know and owner operators. I really personally beleive its not suitable for out of area investors.  Lost of folks will try it most that play in that sandbox will end up walking from the properties like the last wave of investors did.

JLH

The 80's I was in California bay area, and the Califorinia market was a market unto itself.. Alot like the Aussies are experincing the last 5 years.  Houses we bought for 200k in 82 were 750k by 87…. I bought a lot in Palo Alto to build my personal residence in 86 for get this 705k 1/4 acre scrapped an old 20's house..

Anyway early 80's saw us coming out of a deep recession in the 70's that was post vietnam lack of production, had nothing to do with housing., you could buy a house in Cupertino for 40k in the last 70's and maybe 100k until 82 or so… Then Apple and HP hit and well if anyone knows Bay Area Pennisula real estate the rest is history… housing there is basically $1,000.00 a sq ft and up.
Not to be confused with a nice Atlanta buy for $30.00 a foot. or the low end stuff in Kc at well Five bucks a foot or whatever you pay for that product.

So prices peaked in 89 then we had the big earth quake and the first Iraq war and the market came to a screaching halt. And you saw a lot of out migration or brain drain not to be compared with White Flight… And a lot of that brain drain came up to Portland and Seattle ( think Intel in Portland) and Microsoft in Seattle. This cause the Nw market especially in seattle to climb in the early 90s. Prior to Microsoft the Seattle market followed whatever Boing was doing. And in the 80's it was dead in Seattle.

The CA market 89 to 93 saw price compression even in the pennisula and it was brutal 50% or more defaltion on the high end.
I was in Palo Alto and our prices held. It was the 4 to 8 million dollar houses up in Los Altos Hills and Woodside that got hammered. My brother in law bought a house that originally sold for 4.2 for 1.3 in 93. I sold palo Alto and Moved to the Napa Valley and bought a foreclosure at Silverado Country Club.. At that time Homesavings and Loan was the largest owner of homes in CA… Then market stablized. But you still could not sell a home you bought at the peak in 89 for what you paid for it until the .COM craze took off in 97 prices in the Bay area doubled in 3 years. and those that bought at the bottom are the US versions of our friends from OZ right now that have seen these big equity gains in their real estate.   911 saw a 18 month blip then the housing market became soup de jour all over the US. ramapant speculation in places like Florida Vegas Pheniox.. Investor were creating false markets. And when the GFC hit well we all know what happened.

So bottom line Prices falling like they have is not unprecedented it happened in CA cira 89 to 93.. And prices going up as markets turn is not unprecented either. Its about Jobs ( Silicon Valley)  Land supply created by either zoning codes ( Portland) or by physicality of the area ( Bay Area surrounded by water and mountains) Seattle same thing.

As oppossed to the Mid west and texas unexhaustable land supply, You will always have pockets in those areas were the weathly will congregate,, But the general housing stock will follow replacement value pricing with a little profit margin for builders.

One of the Aussie posters on this site talks about he looks at construction cost heavily to determine what is a good buy.
And generally in a market like charlotte ( alex home town) and Atlanta  AZ LV  Is see the same scenerio…Buying fairly new homes at 1/3 of what it cost to build them….

As oppossed to a market like Texas that has not suffered a big down turn but does not go up in any apprecable manner.. I personally think the markets that are off the highs by 75% and are established state capitals will do better over time than a Texas market that remains stable because of jobs and  growth.. And the primary reason I beleive this is there is just too much land and builders can throw houses up in 60 days that will compete well with rental stock.. We see it today there are builders building and selling whole subdivision in Texas to investors.  Same thing happened in Atlanta 5 to 7 years ago.. The investors that bought then of course have serious negative equity.

OK thats about it for now

And if you have a need to buy some crap hole 10k property in the Hood, I would advise you to  not do that deal save your money and have a first class experince at Vegas.. because you will most likly loss all your money buying super low end. and that Mate is the best advice I can give you,,,,Go live it up in vegas….No investing in the cheap hoods. they will jsut frustraite you

Well you can do all the Texas towns…fly direct sydny to dallas I beleive.. I think they fly the 380 on that route and that would be a treat in of it self.

Kc and Memphis are fairly close.. but cleveland is a poke up north.

form Memphis  you could head to tampa 2 day drive, however you could go through jackson MS were we have a nice protfolio.
then head down to Destin and follow the coast.

JLH

I have that on my forehead… circa 1993… then it got removed around 2001…. then I thought put it back on circa 2006… only to have it removed in 2008….

now might not make 2011 but 2012 I am already picking my colors and where it should go.

Lawsys,

I think there have been some really good points of view brought up on this site since I first found it a year ago. and I see the OZ investor now considering Net returns that are a little more realistic than best case scenario… It took us a year however we just closed our first set of transactions 7 Notes ( properties) to a group of medical professionals in Perth… I really liked the way the transaction went together.

The accountant found us on the http://WWW... we then sent our Credentials package first off, which it still amaze's me the amount of uncredentialed companies out their doing this.  Any way that was first make sure who they were doing business was licensed to do it.. Background checks on the principals… Need to make sure we are not Lebanese Terroist   Bank Letters speaking to capacity and capability etc etc.

Then we went into the investments themselves we fully went over what true NET yeild was and is… And how EQUITY share works in the US… Once accountant had all those facts together he presented to his clients who then made buying decisions within a day.  We have a very small marketing fee that we pay for referrals. it was offered to the accountant he refused and wanted us to credit the buyers which we did. Their main concern and the topic John kept coming back to is.. Ya we can buy a house thats rented now but we do not want to deal with it when  the tenant moves in a year. and or have a vacant house, just do not want to deal with the Risk's associate with management.  ( of course music to our ears as thats who we are and what we are about)

So bottom line. these Buyers spent some money on a Aussie professional to do their due diligence for them. found our product determined between risk and reward they would go with safe bet.. No up front fee was paid to look at inventory.. The inventory was hand picked for each investors needs… And there you have it .  A very business like transaction without all the sale hyperbole' of invest with my company you can get 18% net and 40% gross and my property manager is the best etc etc.

Our next exciting news is that we are being considered as a exclusive agent for our product at one of the largest RE firms in NZ and AU they have over 350 offices. and have no presense in US… AGain they have been doing due diligence even have a front man over here in the states who is US based and is a RE broker….We came referred… So again NO LOAD to look at inventory then a fully managed investment with predicatable cash flow..

This is were our US business comes from IFC s  Independant financial consultants that refer clients to us.. Again for predictable returns and safety. Most us investors unless they really like to work on the 3 T's tenants trash and toilets , are really resignating with what we are doing.

One of the big powerful US endowments has just stepped in… the Columbia Endowment just put 50mil out in Pheniox and are buying up to 400 SFR's  80% ltv 6% caps…..

So this buying opp we are seeing may not last as long as everyone originally thought,  Up until now you had all us little guys doing a 100 a year etc…. We have put our package in to get the FNMA investor homes direct from FNMA.. So hopefully those will be coming our way as well..

JLH

USA

I could not agree with you more and that is why I have taken the contrarion position so many times on this site… When you add in all the true cost of management maintenance vacancy excetra

The PIE in the SKY BLUE sky numbers that so many of these property selling companies advertise are just not reality.

AS we know we are not going to change what the property managers charge here,, So your right 20% of your income comes right off the top and most OZ investors just do not realize this or are sold on non realistic really low numbers..

And of course have no experince in owning rentals like you and I do… WE NEVER make what we think we SHOULD make right.Stuff happens. You will get the odd one..

Again its why I say the US market when you have to hire everything out,, is a 7 to 12% return market if everything goes right period.

We can pay 9% in our program and absorb all costs because we do not pay any letting fee's management fee's or up charge on repairs..And we bring the asset in at a realistic price we do not take our big profit up front.  Make for a more secure investment all around… We do get 50% of the equity but we get it at the END and the property has to perform otherwise its out of our pocket.

We basically sell everything we get to US clients just had our first 7 go to Perth…. But our US investors already have experince in the US market and Know what the real returns are.. Can they do a point of 2 better maybe… But do they want to deal with property managers NO… Our cleints just like checks and no drama and no calls for more cash etc. And we like it becasue we are in full control of the asset I have seen way to many investors who really should not be in the rental business and just cannot get out of their own way and end up managing their asset right into the ground all by theirselves.