Forum Replies Created
- lawsjs wrote:He he he. The other way of looking at it Rick, is that there are many ways to skin a cat and there have been some phenomanally successful US RE investors. The key to learning is to actually have an open mind. I have learnt so much from buying in the US and many things I have carried home. I loathe the fact they exist under archaic systems, are very difficult to _really_ communicate with and generally have no sense of aesthetics at all, but what they are EXTREMELY good at (light years ahead of us) is in creating flexible finance arrangements. And I don't mean the MBS scenario we know so much about from recent times. Tahoe would be a sensational place to start playing. There would be generally less dead beat people, and probably (know nothing about the market) a number of semi 'holiday' properties. So a number of properties that will be being offloaded to pay college fees etc. A very target rich environment for zero down deals…. Outside the foreclosure market there are many, many areas where $3-5m properties can be had for $1m or less – asking price. I don't see that as spruiking any particular business or trying to prove one contact is better than another. ALL contacts you find yourself will be WAY better than a multi tiered (and totally unpoliced) marketeer – you will also learn a lot more. There will be nothing worse than people working out how hard it is to 'run' a number of properties, or even one, and deciding to offload the things only to realise the places are unsaleable for anything like what you paid for them. Factor in airfares you pay for to solve the disasters that may have occurred and you are looking at big losses. Find your own path, above all think and learn!!
Tahoe is pretty popular. Not sure you going to see that kind of price compression there. Its not he central valley.
You cannot assume morgages in the US anymore, you can however take title SUBJECT TOO: although all deeds of trust and Morgages have Alienation clauses. Which state the loan can be called if the titel changes hands. Ergo lost of contract for deed transactions.
Folks that have those high of mortgage balances tend to be far more sophiticated than those that have 100k mortgages or lower. So they are much more difficult to work with on anything that does not pay off their existing mortgage if they are to convey title.
Nathan thanks for the reply:
Actually I have a ton of experince in Detroit and that is why we left. I did well over 200 hard money loans to local wholesalers and their California clients. Its the Califorina client who has been down this road before, thats why US wholesalers are targeting the foriegn market Where do you think all these properties are coming from at least 50% of the foreclosures come from Landlords that gave up because they could not feed them anymore.
Nick Virtucci at IHG group out of Irvine his property manager was Doug ( forgot his last name) at Debeers ( which I sure you know who they are) Scott McDonald at Tradewinds did a bunch of deals with him. There is an African American fellow at Detroit invest that we did deals with all as a lender, Most of the investors came from Radio shows in LA. Like Mike Harri's this is your life in real estate ( old Name was Real estate round table). Jay McBee down in San Deigo ( but he never liked Detroit) Rock and Roll Real Estate show in the Bay Area) Just to name a few. These Wholesalers whould hook up with the radio show's that would feed them buyers I made the hard money loan to buy and provide the rehab plus the Wholesalers profit all in that one loan. I would hold the wholesalers profit or give them a little when my hardmoney loan closed then pay them the rest upon the refi of the retail client.
Ok Fast forward to today, sound familar only differnce is Hard money and the rate and term refi are pretty much dead, a little of that goes on but not what I was used to we were doing 40 to 60 loans a month. Now its cash and carry but same scenerios.
One thing that is good about now is prices are way lower and rents are the same basically. So the cash flow is far better. than in the past. For those that can actually buy wholesale.my experince comes in taking the properties back through foreclosure when the owner from LA could not keep up with the cash drain. And viewing all of these wholesale HUD 1's where I saw the line items when I made the original loans. Unlike the west coast , east coast closing agents show both seller and buyers side of the HUD so you get to see all the dirty little charges that Wayne county puts on the properties.
I still see them today, its not uncomman and its normal practice for a US wholesaler to mark up the properties anywhere from10 to 30k or more depending on the deal they got. You cannot provide all this service without making a substantial profit on the sale of the asset to this new client and hey its America thats what we do here in the Real Estate flipping business. When I am selling my new construction here in Oregon I try to make 50k a house sometime I do better sometimes worse but thats the goal. And thats in the 250 to 400k price range.Do you provide the HUD 1 to your buyer of when you bought it from HUD or a local asset manager. And then give a detailed description of repairs that are verified through a 442 with reciepts to back it up. and the apprasier doing the 442 is not someone you have picked. And thereby disclose your exact profit on each home that is bought from you?????
Not to split hairs but I have done well over 2000 loans in 12 states in this asset class there are very few individuals in the US that know this asset class any better than I do. Our focus is back here in Oregon and Washington with a little work in Indy. This asset class has become cash and carry very very difficult to get loans.
Nick and crew decamped to Indianapolis where he is currently hooked up with Armando Montolongo and his students and I did maybe 10 or 15 loans last year for Armando's folks. Heck these guys charge 7 to 40k ( and 40K is not a typo) just for the privlage of being one of Armondo's students plus the profit on the house which is 15 to 20k. Now these guys really got it going on. Thats why Armondo can pay for info mercials he is just coping Robert Allen et al.
So to me anyone who claims a property will stay 100% occuppied over a 5 year period is Puffing. Anyone who claims that a section 8 tenant will not leave a landlord in Detroit stuck for a water bill at some point is glossing over these issues. And anyone who claims that the yearly Section 8 inspections will not cost you 1 to 2k per is just not giving all the facts. Or are you saying you are going to personally pay for any of this maintenance and or water bills or thefts. So that your clients returns are as you advertise.
PM companies that do not charge letting fee's are in danger of not making it in my mind. As in this era a lot of leasing agents bring in the tenants ( they are starving Real Estate agents who would never have looked at leasing a house a few years ago) and they are paid a fee up front someone has to pay that. If your paying it great your just adding it into the mark up of the house. Then there is the maintenance calls and the mark up that PM's should make on those so they can stay in business.
I just think its a disservice to this audiance who is largely a first time investor who is from what I have been told and told by people on this site pulling equity out of their personal residence at a 7% interest rate to invest in the US thinking they are going to make 8 to 15% on the spread like its guaranteed money.
Not saying if someone invested with you personally they would lose their investment. However many of these folks are going to thats a given and they will be stuck with debt on their personal residence that they will have to pay off over the years and then lament what the heck was I doing thinking I could buy a rental house in the US and consistantly and monthly recieve 15 to 20% interest income. Not to mention the cost it takes for them to get all set up.
To me this is Deju Vu all over again only insert Aussie's for Californians. Remember Californians in 2000 to 2008. They bought a house for 200k and now its worth 800k. I know I was born and raised in the Bay Area and owned many homes there that I made huge gains on . So you had the exact same sentiment that is going on and metric's with Aussies.
Huge equity increase at home currency strenght and the Hype of buying real estate in the US for the price of a car. I saw the same type adds and hype in the mid 2000's all over CA.
investlongterm wrote:I know there's a lot of people who beat up on Detroit investing, and for good reason. There's so much crap in Detroit that you can buy for $1,000 it's ridiculous, and unfortunately so many morons in Detroit have taken advantage of people everywhere and that has left a bad taste in their mouth, and frankly, I don't blame them. I've talked to many who won't touch Detroit simply because of a bad experience. That's where working with the right company is so important.What I can tell you is that every day we are selling rental properties in Detroit, MI to international investors that are generating 14-20% returns. If anyone you ever talk to about Detroit investing talks about "equity" or "value" then run away as quickly as you can. The only real opportunity right now in Detroit real estate is in ROI from actual rents. This is no equity play. It is a really good ROI / Cash Flow play though.
For example, here are actual numbers from a property that we have for sale. You can view pictures on our website. This is a beautiful house in one of the nicest parts of Detroit. We don't buy junk, and that's how we generate the returns that we do, completely hands off, for all of our investors.
Currently Available: 17330 Strathmoor, Detroit, MIYour Investment: $42,000 USD
Monthly Rent: $900/Month USD
Annual Rental Income: $10,800 USD
Actual Annual Taxes: $1,755 USD
Projected Annual Property Insurance: $850 USD
Annual Property Management: (10%) $1080 USD
Net Monthly Rental Income: $682.92 USD
Net Annual Rental Income: $8,195.04 USD
Projected Net Return: 20%
3 Year Projected ROI: 60%
5 Year Projected ROI: 100%Check out pictures at: http://www.detroitcashflowproperties.com
You can also download a free report that I wrote about Detroit real estate investing, and how to generate great returns from it. That is located here: http://detroitcashflowproperties.com/?page_id=34
Again, just be careful with Detroit real estate investing. There is a huge amount of opportunity but there are also a lot of snakes here who will do anything to make a buck. We're in this long-term and to build relationships long-term with investors. That's why we actually answer our phones, return phone calls, and work constantly to prove to someone that we are trustworthy. We'll always do that, no matter how good or bad the markets are. Right now I assure you… Detroit is a really good market with a ton of opportunity.
Hey there your spruiking big time, Love that word.
And your giving in my humble opinion absolute fantasy pro forma numbers.
Any one who buys any property in the US thinking that a Freshly renovated home rented on SECTION 8 is not going to have an on going repair cost from year one is one of 2 things completely misleading the audiance and investors on purpose and or just does not know what the reality is.
In addition you have not accounted for any vacancy or Letting fee's… There are some properties that will stay occuppied for years but the average is 2 years max. And Section 8 leases by law are only 1 year terms the tenant can move and will move….And unless your SUPER Property manager your not going to have one Section 8 tenant move and another move in and never miss any rent just not reality.
And what happens when the condenser unit is stolen were is that factored in And or if the house gets hit for all its copper and appliance's as is so comman in virtually all markets.. We have 300 plus Section 8's in our portfolio and each year they have to be re certified there is rarely a re cert that happens for under 1200 to 1500 dollars. Also in Detroit and I have experinced this many times if the tenant does not pay the water bill its added to the tax bill and becomes a lien on the property, I have been stuck with water bills in Detroit far in excess of 1k, and I purchased a Hud home that had a 4k bill on it.
The bottom line fact is 7 to 10% returns on US rentals are realistic in these markets if you factor in reality over an extended period of time. There is no way the pro forma you presented here will be acheivable for the average out of area investors 99% of the time.
I was in Atlanta suburbs last week looking at some of my recent purchases for our US investors really nice neighborhoods of homes that sold 5 years ago for 150 to 200k and low and behold No condenser units. Copper cut out of the heating unit. applilances gone etc etc. This is reality when houses are vacant for any manner of time. In a market like Detroit this is magnified
Same with any of the Bigger cities period.So need to deal with reality here no house or PM is bullit proof your going to get things broken and stolen its not if its just when. No matter how hard you try, And heck my PM our are employee partners and it happens to us. Its out of OUR POCKET not the investor so thats why we have a much bigger handle on reality not rental fantasies as goes on on this site.
HighIncomeProperty wrote:I am not surprised at all at what Property_scout is reporting.
We have supplied properties to many Australian- and international "buyers agents" and many of them (although not all) are looking to mark up the price to make huge profits, on top of any commission they were due.
As you can see on some American/international agencies websites, they're now offering to bring an "International buyer", which is really saying, pay our fees and we'll get you more money than your house is worth.Getting the property from the source is greatin theory although I'd need to second Nigel's comment right above mine that it's a minefield, a deal might look great on the surface but once you dig deeper into it, that particular block might be a "warzone", the property has liens on it, bad roof, poor management – any of a number of things. Unless you have a person on the ground, or someone with a competent team, it's a can of worms trying to do it from 10.000 miles away.
With rentals you always need to be so careful, we are trying to stay away from the highest yielding ones now after seeing some issues with management etc, and I'm just not entirely comfortable buying homes anymore for $30-$35K that on paper brings you a return of 15-18%, once you have a few months of unpaid rent, the yield drops significantly and maintenance also tends to be more costly with those types of tenants.
We are going down another route with most of our investors, something we have done for years and consistently got returns out of, although we still do rental properties in select areas of the country, where we have a very string network of people working with- or for us.
To all heed the above mentioned Advice….
The major issue's you have with any and all sellers in the US wether you buy direct from the Owners ( which is frought with its own peril) as these sellers are one off and will rip you off just as bad as anyone else. FSBO's are usually dilusional about what their property is worth and that dilusion is on the high side of reality.
Its all about location, Running costs that are real ( which I have not seen one purveyor on this site come up with real numbers some are close non are real) the reason is they all have to quote 15% plus or this audiance is not going to respond.
I had a funny experince last week we are opening a new market and I was with my new partner and we were discussing this phenom of Aussies and GB buying these low end rentals. And he said he had a group of them and when he showed them real properties that would return a nice 8 to 10% net yeild if everything went right, 2 women just laughed at him and said we are out of here we are going to detroit we can buy 20 to 25k houses that return 20 to 30%…. We had a beer and good laugh over this one, the amount of wishful thinking is really incredible…. Anyway as I have stated and others are doing so with far more eloquence than me, is these quotes of returns are just not sustainable. If you see a brochure and their is no Letting fee's No vacancy factor minimal mantenance costs then your looking at something that is just pie in the sky and if you base your investing decisions on these numbers you will be very dissappointed….. In another thread going on this site they are talking about tax lein or sale investing, I predict that many hundreds and thousands of these ghetto low end rentals the foriegners are buying once they figure out they bought a money pit and keep feeding them will be tax sale inventory 3 to 5 years from now. When the foriengers pay cash there is no obligation of a cash buyer to pay the tax's its not a crime it does not go on your credit, and their is no bank thats going to pay them to protect their mortgage, so these investors will walk and ergo you will have another slew of tax lien properties avalaible for the next set of folks that thinks cheap properties in the US are a great investment. Just saying.
taxlienlady wrote:Hi James,As a tax lien investing specialist and trainer I think you are being slightly mislead. Some people make it sound like you can invest anywhere in the US online without coming here. That is simply not true. Only a few states have online tax sales and the 2 states you mentioned Georgia and Indiana do not have online tax sales. Indiana does have only 4 counties that just this year conducted online tax sales but for all the other counties in that state you have to show up in person to bid. Yes they are internet tax sales but you have to use their computers, you cannot bid from from your own computer. Also Georgia is a redeemable deed, which means that the price of the deed is bid up and there is more of a chance that you can foreclose on the property, in which case you will need someone to rehab, and manage the property for you.
Another misunderstanding that people have from these seminars is that they misinterpret the words "government guaranteed," that these gurus use so flippantly. It does not mean that you are guaranteed to get paid on a tax lien, no one guarantees that you will get paid. What is guaranteed is the interest rate. The only thing that guarantees that you will get paid is the property thus due diligence is very important. Quite frankly I would not trust aerial maps or comps from websites like Realtor.com or Zillow.com.
I am not familiar with HigginsNationalTaxSaleDirectory.com so I cannot comment on that, but most of these resources only provide the tax sale lists from the county and you have to pay for the enhanced lists, which are the lists that you need in order to do your due diligence on tax sale properties, and these lists can be quite expensive. I do not know if that is the case with this particular tool or if get a certain amount of enhanced lists for free each month.
Another thing that you may not have been made aware of is the competition for these liens. This is big business and when you are only bidding on residential single family homes as they suggest you are in competition with with big business as well as all of the other investor who want the same thing. In some of the online tax sales last year there were a few thousand bids on one property!
I do not want to discourage you from buying tax liens, I think it is a great way to invest your money at high return without the risk of the stock market. I just think that there are better ways for foreigners to do it without paying $5000 to learn how and without having to jump through all of hoops of setting up an LLC, getting a US bank acount, finding contacts in the US, etc. For my foreign subscribers and clients I suggest that they invest in a US tax lien investing fund or with a tax lien agent. It will cost them a lot less than $5000 and they will have experts doing the work for them. All they need is to have a US tax ID number and all the work is done for them.
By the way I don't think that luck is involved you just have to know what you're doing and Bid4Assets only does tax deed sales – not tax lien sales.
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What type of return does your fund generate? I have competed with funds at various sales and its certainly a very highly tuned operation. and most of the sales I have been too in various counties and states, if the property was one that an investor or group wanted to own at some point the interest rate was bid way down to 5% or less. I think this is the item that is missing from those selling the hype and the 5k come and learn programs. This is not a new concept people and companies have been doing this for years and years….
And there is no way its guaranteed as this poster explains, many properties are never redeemed and your out your money. There are so many non buildable slivers of land throughout the US that have no value and the tax deeds get traded around, the only ones who win are the counties when they recieve funds on a worthless peice of property.
I suggested bid for assets as for me personally I prefer buying at auctions where I own the property outright and do not have to go through 3 to 5 years of following it and continually buying the next semesters tax deeds to have a chance to quiet title, ( which again I think is tough if you have any one protesting the sale).. Some states have a 1 year redemention. However CA doe not I have bought many there and resold the properties as soon as my tax deed was recorded. But again we did it for a living. And I saw many folks buy worthless properties and waste there money, there is a whole group of people that buy these cheap worthless properties then sell them on contract to unsuspecting foreign investors, primarily Chineese. As for Hey 5k they can tell their family they own a peice of the US.
If you go to bid for assets and look at the up coming sale in Lake county CA. were I did most of my work for 30 years you will see a spectacular lake front property coming up for 900k or so. That property was and could be a nice development in the future.
Any good feedback from this poster who it seems is in the day to day.
Alex,
he usually has an add on this site in the right hand margin although I am sure someone will give you the info
agree with the above post's.
Your far to undercapitalized to be entering the business of owning rental real estate in the US.
we have finally gotten some realistic and honest US post's in the last month on the site, from US companies.
Investing in 30k properties in the US is very very risky and pretty much a guarantee that you will over time end up spending double that just keeping it rented. and or will tire of feeding it and will literally walk away and let the property go.
All these foreclosures you see are from the first wave of US investors trying to do what the OZ investor wants to do now, they tried it a few years back and it did not work so well ERGO mass foreclosures.
The Gentlemen in KC and Alex from SC will give you some reality check and straight answers.
I use the analogy of one trying to pick single stocks as oppossed to investing in a mutual fund…
Your out their trying to pick a single property, the time and effort to do so the cost etc. you would be far better off with the funds you have to use your time investingating good US REIT's and invest your 10K into one of those they will return 7 to 10% maybe and some equity upside.
The greatest disservice I see going on with the selling of single family rentals is the promise's of huge gross and net returns. These by people and companies that are working on projections not actually running numbers huge diffference. So when you get cross eyed thinking your going to make 18% net guaranteed return because it has a sec. 8 tenant your just buying into someone's sales pitch. Yes this can happen for 6 months but its year 2 or 3 or 5. after you have had turn over vacancies maybe a complete rehab in between that you will see that 7 to 10% is more realistic,
And I am sure Alex and Mr. KC will agree with me 30k all in homes in the US are not what folks should be buying for capital growth. There could be pockets I am not saying this is 100%, however if your buying in any large metro area on the eastern seaboard or south east these are rental neighborhoods.
Just like Mr. KC ( and I mean that kindly) admitted to he gets excited if less than 20% of the houses on a block are boarded up.
This is just not were Mr. and Mrs. Jones is going to buy a house to live in and raise their family no matter how cheap. These homes are cash flow commodities and folks like us in the business treat them as such.For capital growth in my mind you need to be investing North of 50k for your houses. In certain markets I do beleive these are nice enough houses and neighborhoods that you could see substantial captial growth over the next 5 to 10 years.
James_Johnson wrote:16 to 35% minimum returns guaranteed by the government plus the possibility of getting unencumbered property for no more than the cost of the rates and foreclosing fees is what the seminar presenter promises. Your thoughts?Like all things real estate related and that are going to cost you money to join the seminar or training session there will be a handful of people that can pull this off. the information company makes a killing selling what is basically public information.
These same seminars have been sold for the last 30 years in the US.
Lots of work and luck. depending on if you actually attend a sale or bid on line. The live ones I have been to are crowded with locals that have been doing it for years. and the bids are basically handed out very very quickly little chance to really know what your bidding on.
also in practice if a property has any value at all some local will bid down the interest rate that is paid to under 7 % or so.
Go to http://www.bidforassets.com and follow some of the sales on line this will be a free way to go through the learning curve and see if TAx Lien investing is something you want to do.
Other Data point
Rarely does one end up owning the property. For the simple reason that you need a superior court judge to issue you a deed and they are very reluctant to do that knowing that some person or family has just lost their property for next to nothing, if the owner of the property shows up the judge will do everything in their power to save the property for the owner, and if its single family owner occ. you can be virtually certain the judge is not going to give you a deed to those peoples house that you paid 200 bucks for.Go to E bay and buy any one of the tax lien course's used for maybe 50 bucks start there.
Hope that helps.
GreaterKCHomes wrote:jayhinrichs wrote:GreaterKCHomes wrote:Jay,
I might of mistyped that information, I am not looking for only 20% rentals, I don't want to be on a street with more than 20% boardups or just simply abandoned properties that are not be taken care of.
You are correct KC has over 40% rental base, but it's not hard to find quality properties in quality areas. I look at approx. 30 houses a week, and I can easily qualify half of those to buy. This city is so stretched out, that are streets literally change block to block, in fact one of our most troubled zip codes in terms of major crime, is also home to high 6 figure homes..To do proper due dilligence in KC, you have to almost ignore the zip codes, and literally look at the street and a 4 block radius, this will tell you so much more than a zip code could ever tell you.
John
John,
Good points, still staggering to think of 20% board ups on a street or abandoned homes.
Our market here in PDX is very much like, as in block to block. But our houses pretty much start at 150k and up for anything decent and rent for 800 to 1200 depending.
for cash flow West coast is tough. And we run into the same problems with tenants. Although I just had my first condenser unit stolen, last month. First time anyone in my area has even heard of it. You will not find one condenser unit caged in PDX a town of 2 million in the metro plex.
Believe me, I get excited when I only see 20% boardups. There are many streets in KC that nearly 80-90% of homes are boarded up, or simply being ignored. An absolute nightmare for any property manager, you can't give the houses away like that.
The stolen condensers are a major issue here, I have tried every trick in the book. I have put them in cages, poured a 6" concrete base and drove anchors in, elevated them 8' off of the ground, and they still were taken. I actually called the fire department and asked them if I could put the emergency disconnect in the basement, I knew they would say no, but I had to ask.
I have come up with a solution so far that is working quite well, to this point anyway. I never have them installed until the tenant is moving in, then I install dummy video cameras on the house looking down at the condenser. These cameras actually have a blinking LED light, and actually will imitate a motion detector and move when you move. So far so good! The down side, they run on batteries,and I have to send my maintenance man out there monthly to change the batteries.
John
John,
We need to come up with a lojac system and then the cops have to have the balls to actually track them down and arrest the vilians. Or we need Dog the Bounty hunter on the case:)
In all seriousness, the unsuspecting public just does not realize the amount of condenser theft. Its literally 100,000's of unit s are stolen in the US annually, and if you have an older unit and it does not have the up to date freon system you then need to not only replace your condenser but the whole system to the tune of 3 to 4k.
I was at a closing in a very nice suberb of Atlanta 4 weeks ago, and I asked the closing attorney why it was so hot in his office, Low and behold all 3 of their commerical units were stolen the night before.
Need to put the units on the roof is my opinon and or buy the interal ductless units that do not use condenser units. We use those here in Oregon in New construction and they work pretty good, of course not as stifling hot here were we live.
The reality is in the pond we are all fishing in, your going to have stuff stolen period. I do invest in some of the smaller mid west towns these are cash flow plays only really no capital growth but the crime is non existant, most forigen investor would probably not invest in these areas as they are communities that are just not well known as the major cities in the US.
All in all these are much better realistic conversations we are having than what I have seen with the US providers who are just blue sky and will not divulge the realities. It does not one any good to have an investor have a poor experince. We have already been there done that with the US investors that tried and failed at these rental properties over the last 5 to 7 years.
Think of were all these foreclosures come from they come from LANDLORDS letting them go back to the bank because they are tired of feeding them.
Again nice frank discussions.
ALExSC wrote:Those sound like great options for security. For me I worked in lower income areas.I just see them better for local hands on guys. The out of state investor ,buying a nicer home in a better neighborhood lowers the risk factors. I call them the what If"s factors.Now don't get me wrong. I still buy and sell homes in those areas. Only to investors who understand exactly what they are buying and the risk associated with those. I think when I need to set up camera's, not finish the properties until some one moves in. Already has me wondering why I would buy in a areas regardless of price.Again every one has a different investing strategy.. I just choose to work with nicer homes in nicer areas. This is a new model for us.We did the lower income homes and still do.I just think buyers should be very aware when buying in these types of areas.
I was just told I can pick up blocks of homes in Buffalo NY. I already know that means buying and cleaning up a large area.Some times for investors the risk out weighs the reward. I will pass.
again just my two cents
Alex
Alex,
Buffallo and a few other NY towns are poster child cities in the US for foriegners getting totally ripped off. they even passed laws that preclude out of area investors from buying the properties and or MANDATORY disclosures that they do at their own risk, Much like the war zones of Detroit, Philly, Cleveland , KC, and virtually any rust belt city,
Yet people advertise 20k homes that rent for 800 and some sucker buys them just no knowing what they are getting into.
Give me a call in the next day or 2 we can compare notes nice meeting you in LA last weekend, I had a meeting with D Scott yesterday he said you look at houses with bare feet, he was impressed.
Portpirate wrote:Interesting exchanges happening. For what it's worth, I actually agree with both of the posts above. The US is different from Oz and as we Aussies are the "aliens", I guess we have to respect the differences. We want what they have, which is investment opportunities, something sadly lacking in Australia at present. So it makes sense to understand that there are differences and always will be. The days are long gone when the world looked to the US for innovation and trend setting. I find Americans quite conservative and not as keen to embrace change as we do. The banking system is a prime example. Yes, the US system is quite primitive but it works for them, I guess. GKCH makes the most valid point. We are all trying to make money. There may be different views on how and personally I welcome the spruikers because each has a different perspective and sometimes a different method. At the end of the day, I don't believe any of us are here because we've nothing better to do, we all want to make money, so how you do it and who you trust to help you do it will come down to your own DD and feelings. I have looked at the US property market ever since the GFC and I think there are some outstanding money making opportunities, but I also think we Aussies are getting a bit carried away with the % returns compared to Oz and are ignoring the differences between the two countries at our peril. One non-paying tenant, one long vacancy, one trashed home can make a big hole in the figures. We all hope we get lucky and it doesn't happen to us, but be aware that it can and does happen, even in OZ. Be prepared for it and factor in the ongoing costs, and anything else is a bonus. Just my 2 cents….."Portpirate hit it right on the head" with this post… PM bizz in OZ is apples and Oranges to the PM market in the states.
Rates of return are most definatly tied to quality of tenant and how hard its going to be to handle the rental. rates of return are directly related to risk, and capital preservation, from what I have read now for a few months I am 1000% sure that a good many aussies have lost 100% of their investment when they bought the cheapest houses in the worse neighborhoods for the price of a used Chevy. Well this chevy blew a rod, broke and axel, and the windows got beat out and the tires are flat and whats worse the air conditioner won't work becuase some no good stole it. (sound familiar)
Get real with the returns 7 to 10% net and you will do OK go above that and the risk reward factor comes into play
big returns lots of issues and good likly hood of a very large capital loss from the investor. The only people that get really large returns 15 to 20% NET are those that live at the properties vicinity and run it like a business. Not possible for 80% of the out of area investors to achieve this its just not.
Jefff1 wrote:Hi Rick,Thanks, it was your previous comments that pointed me towards them.
They said they were pleased to hear existing clients were recommending them.
I've also been looking into US property invest and US property purchase but haven't decided which one yet, although I am swaying towards housebuyersUSA as I like the fact one brother is here and the other is in US.
I have spoken to Matt and have organised to meet with him and his brother next week as both will be in town for a short period. Great opportunity to talk to US and AUS partners at the same time.
These are good players, I have had Nate to my office in Oregon along with his Account Marty, they most definatly know what they are doing, Marty is an ex banker, We have worked on a few projects that have not taken off as of yet but we both have checked each other out thourougly and will be do some deals here in the near future.
I can tell you from first hand knowledge that they would not rep my properties without a personal meeting and vetting our company along with our financial capability.
JLH
bumskins wrote:Defaults are at an all time high and foreclosures have been artificially restricted for the last 9 months since the title fraud incidents. So don't go rushing in. Will be a long time before you see capital growth due to the credit restrictions in place.3 to 5 years in most markets to if ever in some of the upper midwest markets like a detroit, and other rust belt towns with population decline.
I have personally lived through 3 of these in the states and this one is the worse. Its going to take time to heal, time for a new generation of buyers to come out of the woods who have not been burnt. by buying properties in 04 to 08.
Hour commutes are not unheard of in most big US cities, with the price of gas though its can be an issue. Sounds like a fair deal on the surface.
if you want to send me a private e mail I will pull it up on the land rolls and MLS and give you a BPO
jjrose wrote:Hi all,
Have been a bit of a lurker
on these forums for about a year now, first time post however…. I'm wondering can anyone recommend a usa buyers agent (non turnkey properties) in California (Sierra Nevada area)? For background I've lived in the USA before (work visa, know the area I want to buy in inside and out), have my own funds and a SSN, just looking for a contact who will assist with bank account and facilitate the buying process start to end, but I'd like to find my own property…..have done a lot of research and keep finding companies that will sell you their properties which isn't what I'm after…..Any leads would be most welcome ~ thanks in advance.
From what I garner from you post, all you really need is a Local Real Estate attorney to sheppard the deal. Although in the states a good Real Estate broker will do all of this for you. With a SSN # you can open an account. LLC in my mind is not necessary just buy a umbrella policy for protection cost the same or less and actually gives you big dollar protection.
Again just contact a Real Estate broker have them send you listings off the MLS and there you go. I flew over Tahoe yesterday its one special place thats for sure, I grew up skiing there. A little crowded now for my taste.
And property is very expensive in certain areas especially lake front which will be many millions per parcel.
So no cash flow just enjoyment.
My other recommendaiton would be just to hire a local attorney on retainer, Tell him or her what you want to do and give them a budget this is a no brainer for them.
JLH
PS been California RE broker since 1975………………………….
GreaterKCHomes wrote:Alex, I could not agree with you more! So many PM's just completey miss the idea of actually building a relationship with tenants. Without question the most important part of the equation with income properties, is the tenant, yet to many PMs, just simply ignore it. I develop friendships with my tenants in alot of cases, and some of my tenants are actually on my marketing teams. They get paid as they produce, This builds a great relationship and pretty much assures they will stay put. I do the same in paying referral fees for qualifed tenants, I have one client that owns half the block of properties, i convined him that once a year we should do a block party for the tenants. We provide a cookout for them once a year, and provide everything. This costs the owner around $200, but he has NO VACANCY. We once lost a tenant to a sudden death, the unit was re rented 10 days after, with no marketing. The tenants had a name for me within days! You can never underestimate the importance the tenant plays in this role, this is exactly why I perform exit polls, I actually care what they think. JohnWe give our tenants a turkey at thanksgiving and a ham at christmas:)
My key to success is having the best house for the money, And since we own the house and our investor is the bank we have the freedom to do as we please, Many investors just will not let the PM provide the quality product that is needed and its short sighted but whats a PM going to do ( Spend their own money on things they think should be done) think not.
We make our investor clients succeed because they are truly passive, and they are not involved in the day to day..Our investors work fulltime jobs and the last thing they want to do is get a call from their PM with the bad news. " Hey the water heater went out please send us 800 bucks. Hey your airconditioner got stolen that will be 1400. And in any neighborhood were you have board ups of any kind that is going to happen for sure.
THEY JUST GET THEIR CHECK EVERY MONTH WITH NO INTERUPTION AND NO CASH CALLS. AND NO DOUBT THE TOTAL INVESTMENT WILL BE MUCH LESS THAN WHAT ANY OTHER TURN KEY OPERATOR IS SELLING HOMES FOR IN THE US BECAUSE THEY MAKE THEIR PROFIT ON THE SALE. END OF DISCUSSION.
Its a new paradigm, Give up some equity on the back end and mitigate your risk's during the life of the investment, depends on your risk threshold.
GreaterKCHomes wrote:Jay,
I might of mistyped that information, I am not looking for only 20% rentals, I don't want to be on a street with more than 20% boardups or just simply abandoned properties that are not be taken care of.
You are correct KC has over 40% rental base, but it's not hard to find quality properties in quality areas. I look at approx. 30 houses a week, and I can easily qualify half of those to buy. This city is so stretched out, that are streets literally change block to block, in fact one of our most troubled zip codes in terms of major crime, is also home to high 6 figure homes..To do proper due dilligence in KC, you have to almost ignore the zip codes, and literally look at the street and a 4 block radius, this will tell you so much more than a zip code could ever tell you.
John
John,
Good points, still staggering to think of 20% board ups on a street or abandoned homes.
Our market here in PDX is very much like, as in block to block. But our houses pretty much start at 150k and up for anything decent and rent for 800 to 1200 depending.
for cash flow West coast is tough. And we run into the same problems with tenants. Although I just had my first condenser unit stolen, last month. First time anyone in my area has even heard of it. You will not find one condenser unit caged in PDX a town of 2 million in the metro plex.
lawsjs wrote:I didn't know it had a name, I just knew the best deal I could get was to have a happy building with no worries. I made the suggestions, they thought it was a good idea. It worked for Marriott and Hilton so it seemed worth a shot. I am VERY happy for someone else to make money as long as I can cover my costs + a bit. This way the return went from a net 10-11% to about 18% on one building, in the process of fixing the others. It worked for me because the repair bills disappeared. If your company does a similar thing, then all I can say to people is that it works (so far) for me and there is NO WAY you can effectively manage places from 6,000miles away when you understand nothing of the culture. The other thing it has done is up the numbers on the properties way beyond what I had previously. On a refi I am doing on the first place I offered these guys, as the income increased so did the 'value'. Some 30% instant equity was created. You have to make it worth while for people to operate or over the longer term (5 years+) it just won't happen.This is the corner stone to our program> we fully manage stay long term, Glad to happened on this method. Its really the best for out of area investors either country or US. Our investors are mainly west coast buying South East so they like the Net payments with upside and no downside risk. Takes an investsor a few years to understand this as they have to write the checks and understand whats really going on. Not just what was sold them out of the gate.
And yes what you described is a triple net lease, which a great many commercial properties are managed that way. And equity sharing I have been doing for ever, marry the 2 and you have a great program with much more safety than trying to manage your managers from accross the globe or the US.
John,
You have no doubt scarred the the heck out the the AU investor who has bought in KC or other upper mid west homes., I would venture to guess not many of them would contimplate half of the maladies that are common to your market, much less know how to indentify them and deal with them.
I would think the chance of finding streets with only 20% rentals on them in the price points your working in to acheive the net returns IE 50 to 70k per property 15% returns which is bandied about on this site, is rare if not impossible.
The fact is these neighborhoods over the last 20 years have turned from owner occ to majority rentals.
The mid west towns all have about 40 to 60% of the existing homes as rentals, its a fact. Compare that to Oregon were I live and our rentals in the single family realm is about 10% maybe a little higher with the economic collapes.
so how would one find a house and a street with only 20% rental houses in your market at your price points, Now if you were talking 200k and above KC thats another matter.
However I for one totally agree with what your saying, At the end of the day its the investors cash, and your doing the best you can to help them, but if the house gets hit it gets hit and you have to deliver the bad news.
lawsjs wrote:They see their future in being turnaround specialists rather than managers. A property manager with a real interest in the quality of the tenant and building. The first few places of mine they did for free – considering 5-7% gross a waste of money collecting. Variation on a theme, we now split the rent increases. I am also looking at renting entire buildings to them alone. My list of US management disasters stretch as long as my us rental experiences. Generally I have found 'gringo' managers to be extremely difficult to communicate with and (whilst looking for a better word) lazy. If something is not directly going to benefit the individual they simply have no inclination for the task. If you want someone in the US to do something you have to first work out how to convince them it is in their best interests to do it. The old fashioned 'pride in a job well done' just doesn't seem to be in the US anymore. Fortunately the rest of the world has not reached that level of selfishness – yet. I hope it never does… In their defence, most individual managers Ive come across deal with 50-80 buildings. Some 250-300+ sets of tenants. That is a LOT of work for anyone. Also, the worst tenant in Australia is unlikely to know which end of a gun would hurt you, let alone kill you.So they are doing a triple net lease with you it sounds like, they make the upside you get a flat rate that you can count on.
This is excatly what we do with our company, our investors get a return they can count on, If we do well we make a few extra bucks. However the investor does not take the huge down side risk that is common to the industry. It will take a few years for this to all flush out and I think your story is more common than not. Its just hard for investors to admit its not going as the sales pitch that was delivered.
For those reasons our property managers in our companies are OWNERS not VENDORS, they are resposible personally and financially to the property. At the end of the day and as you have come to realize, if properties do not work right the property manager just walks away and says to the investor sorry about that nothing I can do and buy the way send me another 10k to fix this or that.
JLH
on these forums for about a year now, first time post however…. I'm wondering can anyone recommend a usa buyers agent (non turnkey properties) in California (Sierra Nevada area)? For background I've lived in the USA before (work visa, know the area I want to buy in inside and out), have my own funds and a SSN, just looking for a contact who will assist with bank account and facilitate the buying process start to end, but I'd like to find my own property…..have done a lot of research and keep finding companies that will sell you their properties which isn't what I'm after…..
