Jane if you have assets there in Texas and a base to work from that is probably the best place for you.

Just make sure you double check the property tax’s before you settle on a property, and make sure the tax’s you are quoted are for non owner occuppied property not owner occ with the tax exemption that will only last a year then your tax’s will go up if you are in deed under the exemption.

We like the Suburbs of Atlanta, however our program is very different from anyone else in the US. Our investments are for a lack of better words partnerships where you invest in a single property and you partner it with us, we protect your down side IE you have NONE, and we pay a rate of return cash on cash then we split the equity, We do not take our profit up front as is traditional with any other company simply because thats how they make their money they sell you a house, we are not selling you a house, we are investing with you and staying in the deal for the life, We humbly beleive we can do it better long term being your owner partner than hiring vendors.

We have a waiting list of US investors and our program is not well understood with OZ investors although OZ marketing companies really like it. Our investors are mainly retired and do not want to deal with the day to day they would rather invest with a company that does that for them and has 30 plus years at it plus a very large portfolio to back it up.

Best to your investing future

jLH

this is whats fueling the USA market homes for exactly what you describe less than replacement cost and the land is free,

the difference here in the states and I have no idea about OZ is that there are always buyers willing to pay the price for NEW CONSTRUCTION. Buyers just do not want to live in someones flea trap, etc etc.

whats happening here is builders are snagging these cheap lots and building new construction then pricing it 100 to 150k lower than 5 years ago and people are buying them,

I know I am doing it in Oregon right now, Not in huge numbers but I will close 11 plus homes this year and make a nice profit on each more than if I was flipping foreclosures thats for sure without all the hassles and headaches of working on existing houses. Its what pays our bills, and allows us to build our rental portfolio with our investors. So at the end of the day we own everything we bring our investors into. Just a unique way of doing it. even by US standards.

YOur dead on with the land especially properties that are scattered in remote locations, The case Stu talks about in Lucerne valley is only relevant to something close to the LA basin, and there are 500k more lots sitting out there that will be another 50 years or more till they see there HBU (highest and best use) this is why the chinese buy a lot of these they thinking multi generational.

Your comments are exactly what I thought most Aussie investors would think of land plays.

Although Like Stu says some of the biggest returns are made on land plays in the path of progress you just need to be very diligent in finding that path. ONce you do it can be retirement on one deal.

Stu,

I grew up in the land business my dad was a an agent for Boise Cascade when they developed 27 subdivisions in CA in the 60’s.
Some of those subdivisions did well, ” Pine Mtn Lake, Lake Wildwood” and some like you say were and are stinkers. It was acceptable practice in the day to build out literally 5,000 lots and only put a water system in that would handle 500. And all on septic tanks as well.
The lots by and large are to small for onsite water and sewage.

So all these lots got sold, many were let go for tax’s some of the better ones were able to form municipal districts and eventually put sewer and water to each lot….

There is no question that time creates value it just depends on how much time… I remember in the late 60’s looking at brochures of 10 acre lots on Maui which are all now covered by resorts and thinking who would pay 200k for that, That was like 20 million today.

And since I grew up in the land business and my Dad developed well over 4 thousand lots in CA I am fully aware of how excited folks get when they buy their little piece of heaven.

But as you state with the resetting of price’s one can buy shovel ready lots for the price of what folks are selling san bernadino, Riverside, Modoc, Lake, Lassen , California lots. As well as Klamath County, and other way out their Oregon counties.

I just bought 7 lots in a great subdivision of 300k homes in a suburb of Atlanta 1/2 acre each sewer and water for under 5k each for example, Of course these are cash deals, and most of the people that are attracted to your type of invesmtents are the 500 down 100 a month types, My dad Sold thousands of them like I said, I even saw on your web site one parcel in Lake Co CA. that my Dad no doubt owned 40 years ago.

The big land guys in CA then went into the R ranch concepts and started selling memberships in big properties those were successful for a time as well. R ranch at the Klamath River another one out of Red Bluff…

Oh and another property I saw on your site was in Stoneyford CA very few people would know where that is, that was a 50’s 60
s development that went bust. Neat area though.

Like you said I could go on and on about the history of the land business and I might just write a book on it. Not that any one would buy it however I do have some pretty unique insight.

By and large I doubt from what I know of the Aussie buyers that they have any interest in these types of properties they want income producing, I am sure they can go to the out back and buy desert land for cheap all day long, Was it not Art Linkletter who bought millions of acres of the out back???

JLH

jane,

depending on where you are in Texas the property tax’s can be much higher than almost anywhere else in the country and by much higher I mean 2 to 3 times other areas with same purchase prices and rents. .

Like any of the investments you will have proponants of one area and others who like something else for other reasons.

The discussion we ( US based investors) have been having about a market like Texas as compared to others is this.

Texas properties as a whole did not crash like most of the other hot beds of investing today say like Atlanta. However depening on the value of what you buy you will always have the builders there that can and do build new product in the low 100’s that will compete with standing inventory. And especially a home that has been a rental for any number of years.

So with average prices much higher in Texas and rents pretty much uniform accross the country is it better to invest in a market that has properties that were selling 05 for 175k that can be bought for 75k with the hopes a small move to 100 to 110k will give you a nice equity return.

Or is it better to go to Texas where the market has not moved per se’ and the only hope of equity gain is to make new Highs in the value of the real estate as oppossed to other areas where profits will come with just a bounce back to a % of the highs.

I have one client who invested with us that had 30 houses in Texas and sold them all his comment was the vacancies and tax’s just ate him up.

I will be in Dallas tomorrow,,,,,

JLH

Alex your right keeps us hard money lenders in business:)

As you know there are many folks with marketing companies for these properties that do not own them and are not licensed. What has happened is that so many US investors got wiped out from their 05 to 08 purchases, these same folks are going back on the Turn key guys that sold them the properties claiming fraud etc etc.

So if they go to an attorney the attorney goes through the normal process of dissecting the deal and making sure there are no holes in the transaction: and one of the gaping holes have been these marketing companies that do not own the property, and are not licensed.

It has gotten the attention of the AG’s in various states and the Feds as you have business taking place over state lines.

Same thing with folks flipping properties the closing companies no longer allow one buyer to buy\\\\\\\\\ unless they show up with cash to close then process the second transaction when in the good ole days you had pass through escrows with middle man taking their fee out at closing. This has created the transactional lender who charges fee’s for one day loans. Now not saying this practice is all but eliminated as smaller private closing attorneys may participate however any national title and escrow company with not.

I presume the Aussie marketing companies are going to start to get on some regulatory radar if they are not licensed as well in the states they are working in.

A huge benefit for the buyer when using a licensed agent is they have a fiduciary to divulge to their client what properties are listed for. And of course everyone knows what the commission are to the agents no secret….

Time will tell on all this.

I am in Vegas this week and week end, contact me next wed. I will be in the Southeast… 503 789 2451

I do appologize I was probably too strong in my comments. It just so happens I had been getting e mails from an AU investor who is having major issues with a detroit property all the same scenerio.

The nice turn key company that sold it does not call them back tenant paid for few months and left. Problems getting the rent from the property manager, So now they have a vacant house and once they go vacant with no one to look after them you have a great chance of having your property stripped and major damage done.

One good thing for this person is they are not in the property at a real inflated price like the 42k nathan was offering they were in the property less than half of that. So they can walk and only lose 10k or so, which will probably be the best course of action depending on how bad the street has turned.

I think the audiance is getting the picture with True running cost  and that is good that way you can get a handle on what is reality.

Perfect, thank you.

At that price what is in it for you, given that cash flow and such most of the Nice US turn key guys would be selling that for double what your talking about and pocketing 20 to 30k profit. not to mention the layer of marketers that go along with it.

Now do you own this as in did you close on it already with your own funds and are flipping it. Or is your Aussie;s funds closing the deal.

From those numbers I would think  you making a modest fee maybe 5k on this deal…

Most properties that sell this low in the big US cities frankly are not in good neighborhoods as you suggest.

I loaned on a half dozen Chicago properties a few years back and lost my ass. So not sure where these are.

I did do some loans with a very good company that sold to US citizens they were buying these doubles at 40k putting 50k into them and they would rent 800 a side.

So on the surface your numbers seem very low in purchase an rehab I mean 6k rehab on a double is really just barely carpet and paint.

once you close maybe you can share address so we can all do a little quick check up.

thanks for your reply.

At least we are starting to bring reality to the AU investor on what the true running cost are for properties. unfortuantly there are so many spruikers out there that claim little to no running cost and these nice folks buy because of that and then have bad experinces.

I basically get 1 to 5 e mails a week asking for help the investors nice turn key guy just screwed them and they need management or whatever. Since I have loaned over the years in Chicago, St. Luis, memphis, Jackson, Atlanta, Birmingham, Indianapolis, Columbus, Kokomo, Ft. Myers, Vicksburg,  cleveland, Pittsburg,  and last if not least Detroit, Eastpointe etc. I have probably a better working knowledge than most folks when it comes to the US rental market in the low end.

Then of course I live in Oregon have investments in CA. NV and AZ personally, Not to mention my new venture of buying Cash flow rentals in Bham, Jackson, Memphis, Indy and Kokomo, and suburbs of Atlanta.

end of the day I KNOW what the real returns are over time, we have a 5 to 10% net market. and few will do a little better. A lot of these investors will get wiped out completly because they go for the highest posted returns and buy in the HOOD and god help them. And the folks selling them to them are really only out for themselves, its america and real estate is cavet emptar to the maximum.

JLH

True cost of owning rentals in the US  would be much appreciated.

Since we are on the subject would you be so kind  to delinate what you think true cost are. I will start. And for this exercise figure buyer paid cash so no mortgage debt service. bought a house that will rent for 700 gross which is average.

These are monthly and yearly  I will start with fixed cost then go to variable.

Tax's insurance                         200 .00  if your in Texas tax's will be higher if your in florida insurance will be more. Mid west  

                                                     combo could be 125 to 150 so for this example lets say 150 for both.

Management                             60 to 100 depending on rent but 10% of gross rent is good number. let say 70 for average

on going maintenance             100 per month minimum if you have turn over each year 200 is better number. lets say 150 to be
                                                       super safe. if you do better hey thats great but who wants surpises.

Letting fee                                  one months rent so average 70 per month. if you get a tenant that stays more than a year
                                                     thats great however 95% of leases in the US are written for one year so again factor this in
                                                      and if you do better great.

vancancy factor                        70  you lose one months rent per year does not happen every year but certainly can. Anyone who
                                                   has owned rentals acknowledges a vacancy factor.

So for the average rental at 700 a month gross rent here is what you come up with on averages as described above.

T and I                                      150
letting fee                                   70
maintenance                           100
vacancy                                      70
management                            70

total                                           460 a month for a net cash flow of 240 a month on say a 50k investment and some homes will be 
                                                   a little less some more.       12X 240 = 2880.  or a 5.76% net return…  and a 16.8 % gross return
                                                  which is what most companies hone in on .  Now if you do a little better get a good tenant etc. your
                                                 Net will go up however 6 to 9% net is a reasonable estimation if your not cheating at solitare. Now
                                                  add in your travel your LLC formation and any other fees  and your returns are negatively impacted.

So mr. Chicago and I mean that nicely:)  can you give real numbers to compare to these in your market since your offering .

JLH

Good to know I am working on a fund specifically to lend to Aussies that want 50% financing.

We are toying with the following program and am wondering if anyone would care to give me some feedback wether this would work

8% interest  some points plus 3rd party settlement fee's lenders title insurance etc.  Fully amortized 10 years.

I for one do not like Balloon payments unless you have the funds in the bank and can easily pay them. So I am thinking the 10 year fully amortized would be a good product.  Although when I run the numbers on the following scenerio

purchase price 100k
down                     50k
loan                       50k   @ 8% fully amortized payment is 606.00

Then on the income side say rent is 1200. 

120 management fee
200  tax's insurance
100 letting fee if applicable and or vacancy factor.
100  maintenance
600  payment

1120.00  per month would be actual expenses    so net cash flow is 80 bucks a month or to round up 1200 per year… Cash on cash 1200 annual return on 50k down payment is well not a lot. but someone else pays your house off and you own it free and clear in 10 years.

Your rate of return of 14% you quote is based on an interest only payment is that correct. Or are you saying that the cash flow including the payment of note and all other cost will allow you to pay the note in full in 3 years without you coming up with additional funds???  Is this how you see it.