when the market goes south like it has Condo's bear the brunt.. IE Strata fee's which we call HOA fee's and in extreme cases there are not enough Strata ( HOA) fee's to effectivly run the building, there are some very real horror stories for those invested in Condos and for sure banks that ended up with them.

If I was looking at a Condo I would be slanted for something that I would eventually live in. I would not buy unless at least 75% or more of the units were owner Occuppied….  In the old days you could not get FHA financing until you hit 60% Owner occ sales.

As the banks have already been through the boom and bust cycle back in the late 80's.

Again if your looking for something to eventually use for yourself there are some fantastic buys Nationwide. To buy as a cash flow rental I would be very cautious

Nothing like kicking the tires,,, based on what I have learned on this site, there is a big difference in how rentals are handled in OZ and how the tenants take care of them compared to certain asset classes in the US. Its really a great idea to come see these for yourself… Plus we need the tourist money even if you do not buy it helps our economy:)

lawsjs wrote:

JLH "…I grew up in San Francisco Bay area, and there was a very famous columnist for the SF Chronicle named Herb Caen, he wrote an editorial type collum on daily life in SF he called it Bagdad by the Bay before we bombed the crap out of Bagdad… And at the end of his life and collum he would constantly compare SF of the 50 and 60's to the current times pretty much exactly as you have portrayed the US in your post. You come to Portland Oregon were I live and I think you will see a different US than just about any part of the country and it will probably remind you of AUS like no other place in the states. Its all about demographics and attitude…. Portland average age is 35, I am on the old side but lots of young kids doing their thing in a time warp of sorts…" I missed that response of yours (not a totally avid reader) but you are so right. It started in the UK in the 70's – they now openly refer to 'pre immigration England' and is starting in Australia now. There is slightly more freedom of speech here and in the UK so we can still say such things, but it is a problem that no one seems to refer to in the states anymore….. JLH again – Just buying my first storage facility now (in aus). I like van parks too, but this seemed simpler to start with – Ive wanted this particular one for years. This one also is letting out space at genuine 1990 prices too, so hopefully I can do in short order what you did to your park. Like your work!!! "…Only way to own and run one of those is to live on site. with your nice tenants"…. and your gun collection and monthly subscription to 'Soldier of Fortune' magazine:)

Good luck with your storage facility I own one in Portland that is 44 units under 7k sq feet of office. they are 10 X 20's and fully finished inside meaning drywall and lights with automatic garage door openers. We get 150 to 200 a month for these. Last year I did a Strata on them. And my goal is to sell each unit individually as market conditions get better. Our site is right down by the Columiba river and there are about 500 plus floating homes within 1 mile of me, most of my tenants own floating homes. So good captive client base. The thought is they can purchase their unit then tie that unit to the deed of their floating home. Will make their floating home that much more valualble because storage is always an issue.

Storage's need to be run like a business you do get high turn over but when they get full with a waiting list like mine is now its a beautiful investment. I would not buy one as an absentee owner though unless I had an equity partner on the ground managing it.

JLH

lawsjs

Its the same in the US, if you have a property with virtually perfect management and tenants your buying what we call Investment grade real Estate…. In the letting of office's its called an A property as compared to B class and C class then D and lower which is properties in the Hood.

Examples of investment grade properties are, Top flight Mobile Home parks in a major metro area of the west Coast LA SF PDX SEA.  These properties will trade at a 5 to 6 cap…. Same with larger apartment complexe's that cater to the upper end renter. So cash on cash those are lower returns than just leaving your money in the bank at home.  How many Aussies are going to buy US property that return 4 to 7% net or less. I venture not many although these are sold everyday to US REITS and other syndicators.

However these properties are not without isses but are mitigated by Iron fisted corporate management.

The issues we are talking about is Single family which is a very fractionalized rental product that has just come into vogue in the last 20 years. then you take it the next step and invest in lower grade properties that the masses can afford IE 20 to 50k Houses in the mid west and Now you have a whole investment community with little to no experince ( IE buying their first rental) Absentee owners. And a very difficult tenant base as is well documented here on this site.

Our investment program is very successful with US investors simply because they know the risks, virtually all of our investors own rental properties that they manage and are burnt out. They want the leverage of the great buys we bring  to them with the fully managed aspect of our program.

There is no other company in the US that does what we do in the single family space… Each and every turn key company does the exact same thing. They buy wholesale do rehab and sell to investors and either introduce you to a property manager or they have management in House which is a profit center for them ( as it should be no one wants to work for free) And once settlement occurs they have made whatever amount of profit they are going to make they have no other financial involvement its all on the investor. KC talks about suing and fraud and such. But I can tell you thats not reality, unless you bought a house that the seller claimed was rehabbed and turned out it was not and was a vacant shell ( which has happened to many foriegn investors).. If the house is as represented and your returns are not as promised there really is nothing you can do. You can sue but the cost are far to great to litigate over a 50k investment.

And like you state the claims of 15% net yeilds and 25% gross yeilds are just that claims there is no way that absentee owners paying for compitant management and maintaining their properties will make those kind of returns at the price they are paying for the properties. Like I have stated many times these returns can happen for a short while but are not sustainable over the life of the investment. I have 30 years at this I know what things cost and I buy my stock for less money than 90% of the investment public. And unlike virtually every company in the US selling these properteis I own every single one of the properties that my investors invest in. we went back and forth with a turn key guy from Detroit in a nother thread at the end of the day he admitted to owning no one rental in his area.. All I can say is thats a person or company that knows how risky the investment is in his market otherwise  would they not at least own some properties? stands to reason no.

Anyway to answer your question our investments are set up up where our investors are our partners. We stay in the deal manage it with no fee's whatsoever, we handle all maintenance and when we sell we earn some equity in the property.
Our investors have at least 4 individuals in the transaction with them for the life of the transaction and all in the key areas.
Myself for overall management and accounting, our partners on the ground that handle the PM and rehab. We are all owners and partners and like you stated in your previous post if your going to ensure yourself of not having a big problem and a lot of sleepless nights its a nice way to invest. especially the first time investor. Of course the Investor gets the lion share of the return. We make our Money with being the part owner of many many homes.

Lawsjs

Your exactly right this is why I created my company the way I did. Our property managers are our partners in every sense, they have ownerhsip interest in each house. You would be amazed at the difference in our portfolio is now compared to 3 years ago when I had to deal with multiple PM's in multiple states.

Instead of dealing with all the day to day issues our partners deal with them and the cost of a bad tenant comes OUT of THEIR Pocket. Same with the folks in charge of rehab. They have an ownership interest and any bad workmenship comes out of THEIR pocket.

Its really gives the investor the best protection one can get if they are looking for turn key rentals. Ours are not only turn Key but TRULY fully managed. Our investors only get one thing from us. And thats a check each and every month,

JLH

Trent that in a nut shell is the theory for investors the world over… I personally do not like leveraging up to buy lower end rentals.
the % returns will never be what you think they are or what were promised by the companies selling these. The US investor has already been down this road in the last decade and many many people have been devistated here in the US

If your buying much nicer assets like the guy buying in LA leverage is a nessesity and warranted.

lawsjs

I grew up in San Francisco Bay area, and there was a very famous columnist for the SF Chronicle named Herb Caen, he wrote an editorial type collum on daily life in SF he called it Bagdad by the Bay before we bombed the crap out of Bagdad… And at the end of his life and collum he would constantly compare SF of the 50 and 60's to the current times pretty much exactly as you have portrayed the US in your post.

You come to Portland Oregon were I live and I think you will see a different US than just about any part of the country and it will probably remind you of AUS like no other place in the states.

Its all about demographics and attitude…. Portland average age is 35, I am on the old side but lots of young kids doing their thing in a time warp of sorts.

JLH

20% net yields for a passive turn key investor off shore really are just not realistic.

Zillow values are all over the board, It picks up the Bank sales of props that need total rehab. and then you could have a house on the same street that 30k or so was spent on it rehabbing it and the value looks inflated. So use the internet value sites with a grain of salt is my stance.

Good feedback from all, I think the bottom line is that there is opportunity in the states, there is very diverse asset class's and its up to the investor to source which ones work for them.

What the main theme of these post the last few weeks is,  Its that the low end rentals with spruikers advertising these 20% returns, these are <moderator: delete language> not sustainable for the out of area passive investor.

The audiance has heard it from me for 6 or 8 months now,  Alex has chimed in, Mr. Kc , And now our friend in suburban Detroit.

All I can say is plan on 7 to 10 Net yield if you do better thats fantastic, however if your investment is dependant on 15% net yeild year after year or more, its time to get a reality check.

Just property tax's that are usually pretty low for bare land. No other tax implications from a US point of view.

Look for land in the path of progress