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I think this subject has been done to death and there are some so called experts giving there opinion or advise on this thread, so i asked my contact to give me the correct and legal advise for opening accounts without being there in person ( I have a few, but my main contact is a senior banker and senior business manager, so I think he knows a little more than most ill informed information being bandied around ) so I have included part of his reply for all to see.
Do you think that a major bank would or could, open accounts in contravention of the patriot or any other legal act? Of course not, if it can't be done legally, then they wouldn't do it. It can be very frustrating at times, when dealing with those in the US that will use the Patriot act or some other reason why something can't be done, it's normally due to their own ignorance or just not knowing, and that's the same as many over here in Oz, that simply don't have the right information, the right contacts, and don't do the right research, whether you go over all the time to the US or not.
This is the message from my main contact at Wells Fargo….
'As for this patriot act and closing of accounts. This is not coming from a creditable source. Wells Fargo is not closing oversea accounts. The way that I open your client’s accounts is as good as being here in person anyway. That is why I have to fax signature cards to the clients to have them sign and return to me. All accounts are opened follow Wells Fargo’s policy and procedures and your clients will not have any problems with the accounts that I open fro them. Please assure them of that and if they need it directly from me then give them my contact info and I would be happy to relay this same information.
Hope all is well on your side of the world!'
Hope this helps.
Jeff Lewis
Just to reply to some of the comments here, according to the Patriot Act, yes, there are strict laws that apply.
However, when I mentioned that you need the right contacts, it's still holds true.
So far, i haven't had any issues with opening an account for buyers, I work with senior people and some managers, and the ones I work with have all had legal advise within the bank, otherwise they certainly wouldn't and couldn't entertain opening an account without the applicant being present.
Sometimes, when reading various comments, it seems that everyone is an expert, but the facts are the facts.
I had buyers that were originally with Wachovia, a remnant in a lot of cases from the MYUSAPROPERTY days, and the problem there was that the lady that was opening accounts, retired, and the lady that took over didn't want to know and just referred everyone to the Patriot Act, so many found they had a big problem, I had to get some buyers to start a new account at Wells Fargo, which went fine.
And one of the big problems is staff turnover at the bank, as the person that can and does open them, leaves, no one can take over unless they have been shown and are willing to do the same, but if you work with long established and senior contacts, it solves a lot of those problems.
Normally you would open a personal account first, then a business one, you have the EIN and LLC or whatever entity you have, and it takes a longer period of time to get the ITN.
Yes, the banking system can be frustrating at times, and has caused some issues, but nothing that can't be resolved if you have the right contacts at the bank to sort things out.
They have the Bill Pay System, that still uses cheques in most cases, and as it's not as online advanced as Aussies are used to, it can be a source of frustration, but again, with the right help, everything can be resolved, and accounts opened.
Hope this helps for what it's worth.
Jeff
When trying to buy directly from the MLS, many are what's called HUD homes, that are listed with selected realtors, if looking at placing bids on them, they will give preference to someone wanting to be a home buyer for themselves, before they look at an investor.
And that can lead to multiple offers on the property being made, and quite often the selling price end up being higher than the listed price.
Buying from over here in Oz, you should ideally have someone on the ground over there to place bids for you and know how the system really works.
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You can get lost very quickly in placing offers on what seems to be a great buy, but can often be a total disaster in the making if you don't have someone on the ground to check the property out before making your ofers.
That's right, certainly their not closing down accounts held by Aussies, as I'm opening accounts with Wells Fargo all the time, and have just opened another one for a client buying through his LLc / Trust, and had some unusual requests for the bank account, that they normally don't do, but it was all done and has now been opened.
I think going back to the MYUSAPROPERTY days, many accounts were opened at the Kissimmee Wells Fargo Branch, but when the contact their left, which can happen at any bank, or branch, it caused many problems, as only a few people in some of the banks / branches understand and can open accounts for overseas investors.
Most still refer to the Patriot Act, and seem to think Australia is just over the road, so they ask for the buyer to come in to their branch to sign and open the account, and seem quite perplexed when told Australia is on the other side of the world.
But, opening accounts at Wells Fargo is not a huge issue, if you have the right contacts, etc.
I would also agree with some of your comments, however, there are some points you make that I think are open to discussion.
I think that firstly, if buying through a local company over here, unless they have actually brought the properties they sell in the US, which can easily be checked if they have taken title to the property, ultimately, you will be dealing with companies in the US that are the ones selling the actual property, so the first thing is knowing that you are NOT dealing with an agent in the US acting as a third party, but you are dealing directly with the actual company that owns the property.
How long have they been established? Do they actually live and conduct business in the same area/s they they sell in? Are they local neighborhood experts and not based in one State yet selling in a dozen different states, as it's impossible to be a local expert in that case, down to the very street and even which part of the street.
NEVER go by just a zipcode, as it can cover a multitude of good and bad areas.
Are the owners of the company investors themselves in the areas that they sell in?
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Section 8's, again, you get many freeloaders, who couldn't care less about the property, and even under the section 8 program, can still cause many problems, on the other hand, you can get some very good section 8 tenants, who have great jobs and want to stay for a long time. Section 8 is no guarantee of having a better long term problem free tenant, they still have to be checked out just like any other tenant.
Using a title company that works with a lot of both local and overseas investors is also a great help.
Bottom Line, ask lot's of questions, do your research to actually know what questions to ask, there are many excellent and credible companies in the US that care for their buyers and provide a top quality product and who will stand by their product well after the sale has been made, but there are also probably far more shonks that are out to fleece unwary buyers.
This also applies whether buying a single home, a 1-4 Multi Unit Block, or a much larger commercial block.
One of the most asked questions i get is how does a buyer know that they are paying the right price to start with, and that they are not getting ripped off, never mind any work that has to be done, or has been done, that is included in the selling price, even that can be questionable.
Going to places like Zillow or in fact most online appraisal sites still don't give you the true pricing, and can in fact be very misleading.
Over time in this business, a number of companies over here selling US property have been caught out adding / marking up the price by $20K-$30K or even much higher to the unwary buyer, and then the buyer also finds out that the property still needed a lot of money spent on bringing it up to scratch.
You can go to the MLS sites ( Multi listing Service ) and get the true pricing of what places like Banks, Courts, HUD Homes, etc, are really selling the properties for through various listing agents, and then check with Zillow, Trulia, etc, and they will normally give the same true current market prices on these mainly foreclosed / short sale homes.
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As for the US Finance, i get approached all the time from both private and institutional lenders, all over the place in the US, with all sorts of rates, percentage of deposits, and other lending criteria.
Many sound really good…..on the surface, dig deeper, and what sounded a real good deal at very low rates, at maybe 70% lend etc, can be fraught with many dangers, and locked in terrible terms and fees etc. The one company i have used for the past few years, and has also lent against Aussies using their SMSF, who have been terrific with my buyers, are not the cheapest, at 8.25% and 30 Year mortgage loan, etc, but are certainly one of the best i have ever come across, and this same company is used by a large number of US Companies selling property in many states to clients both locally and overseas, so they have a great track record.
Knowing who you are dealing with in the US and their track record etc,, is part of any due diligence, and should always be included in the many questions you should be asking.
Thanks for reading this message.
Hi Sonic81,
Do you have a particular location in mind? As it's definitely possible to get US Finance in that price range, and get good quality well located property as well.
There are a number of claims to get all sorts of low rates, but some are through local banks and only lend locally, or in that state, or, they have certain lending criteria that might not be that attractive, so you have to know what your paying for, and if the loan repayments include the property tax and insurance.
I have been working very closely with a particular finance company that lends at 8.25% and for a 30 year period, also lending in a number of states, so you don't have to be concerned about refinancing in a few years.
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Jeff
Hi Phil,
I get asked quite a lot for the contacts I've made, and I always tend to use them to look after my buyers, as part of the services i provide to them.
One of the main issues i have, and that's why I only ever use this forum piecemeal, is that i get a number of replies when i do include an article, that usually tends to put me down, together with the services I provide. Normally to promote their own interests, or to prove something.
Even though there are many different business models in this game, I tend to think that there is room for everyone that tries to do the right thing for buyers.
So i tend to shy away from providing contacts etc, and only mostly generalize on this forum.
Best
Jeff
To remark on all the above answers, i don't know if there is a right or wrong answer, as everyone involved in some way with selling US Property is always going to try and push their own barrel, it's only natural.
Yes, someone can purchase direct with a company based in for example Australia, who do actually buy ( Take Tilte ) from whatever source in the US, do any rehab and then resell to the investor ( I know this is a simplified example ) and the investor can possibly make more on the deal buying this way.
However, that is only one business model, and certainly it doesn't fit everyone's needs or wants.
So definitely YES, there is a need for someone like myself or others similar, that do not actually buy the properties and then resell them. I can only speak for myself, as I have developed a really good team both here in OZ as well as on the ground in the US of A, and I get clients that want to buy but want a lot of handholding, others might be cash rich but time poor and certainly don't have the time to both travel over there or do the proper research.
And as anyone knows in this business, almost every would be buyer have different needs, circumstances, budgets, depth of existing knowledge, and most definitely….personalities. So you have to cater for many different circumstances.
What i personally don't like, is when an unwary buyer gets told a pack of lies, packaged to make the seller, seminar company, other agents etc, look like they are real experts, and that if the person doesn't buy through them, they will get into a lot of trouble, and quite often, they end up buying a dud, maybe one of the cheapies with high returns in some really bad areas, that are often flogged at some of these seminars or through some uncaring agents.
So if providing an honest, personal service, that handholds the buyer through the whole process, has the proper contacts for the buyer to use, such as opening the US Bank Account, getting the best professional advice on all tax matters and opening the correct structure etc, through to the start of the rents being paid into their accounts, then YES, we all have our own roles to play, and for all that, and providing the contacts etc, of course we should be compensated for our services, and compensated well, although ripping people of is a different story and to be frowned upon.
For what i charge, and the actual time and effort spent with every buyer, the end result from my fees, is really not much if worked on an hourly rate, but customer satisfaction is paramount.
So whether you actually are the owner of the properties you sell, or like me, an agent that sets everything up and organizes the whole process, together with my associates and Asset Teams in the US, as well as over here, there is a definite place for all.
jeff
There are so many sites to look at, whether it's for pricing, walk ability, crime, schools, sold or for sale, etc etc. that everyone seems to have their favorite one they refer to. and yes in most cases you have to still use your own judgment as many are so far of the truth, especially for pricing, the area info is normally pretty good though.
It's still strange that many use Zillow for their pricing values, and even they themselves tell you that they can be way off the mark and in many cities or states, they can't get the info so they just use their own Zestimate.
To give an example, right now i have beautiful tri level property in a really good middle class location in Kansas City, selling for $70K appraised at over a $100,00, but Zillow has it at over $250K, absolutely crazy.
You really have to have the right contacts and local neighborhood experts, it even takes true wholesalers many years to develop their contacts and form business relationships locally to get the better deals, so what chance does the odd person have, especially from overseas.
So when looking at buying, ask a lot of questions find out about who you are really buying from and what their experience and local knowledge is.
Do your own due diligence, and you should get a good overall picture of what you are paying for..
Jeff
I know it's been a real concern for everyone buying in the US, to be able to open a Bank Account without all the hassles and negatives that are thrown at you from both locally in Australia and from most in the Banking Industry in the US
I have had my fair share of working with different managers over the last few years, and just when you think you have cracked it with the right person, they then up and leave, and no one else seems to be able or even want to help, always citing the Patriot Act or some other reason they can't open an account without the customer being present.
So for a while now, i have been working very closely with a fantastic Personal Banker at Wells Fargo, who has been working with Aussies and others for almost a year now, everything goes through the legal department, so everything is kosher, and he has been able to successfully open accounts, where many others just don't know how or what to do.
And yes, you can both transfer in and out of your account and back to Aussie, even though others have told me you can't do it, but i have very happy clients that he is looking after and is always very helpful.
You do certainly need to have the proper docs in place, and a list is included…
1. LLC Registered Articles of Organization
2. The EIN (tax number)
3. Copy of Passports
4. Copy of drivers license
5. Physical US Address (use the property)
6. A US phone number
7. e-mail address
And there is a definite process that is done.
If using the US Tax Person I use as part of my team ( Totally Independent to me and also a US Accountant ) to set your LLC etc up, then you will get the US address and phone number as part of my opening the account for clients. Others have got their LLC or other entity set up elsewhere and have their address etc already.
It also doesn't matter where you purchase, even though the US is in many ways far behind us in electronic banking, sometimes even mailing cheques to the bank branch, it can still be done.
Finding this person took a lot of using my contacts over there to find him, and good contacts are like finding gold.
Also, I'm sure many have found out, is that good communication can also be a problem when dealing in the US, so far that hasn't been a problem, and accounts have been opened very quickly when everything is in place.
As for US Loans, again no problem, 8.25% initially for three years, then 5 years refinancing with a further 5 years available, so 8 years to start with, so no worrying about finding ongoing finance or paying a huge balloon payment after the initial period. And just started, for total peace of mind, you can now get a 30 year Mortgage, this is for both US and Foreign Investors, on a 50% lend, same initial rate, but a low monthly payment, and the tenants will pay that as well as all other expenses, and still leave you with a pretty good cash flow ( money in the pocket ) every month.
Right now i have properties that are packaged with the 30 year loan included, you can always pay cash for them as well.
Just to give you an idea, a buyer is just purchasing 10 really top quality beautifully renovated properties in good middle class mainly homeowner suburbs, with the 30 year loans in place, so she was able to virtually double her portfolio in one hit, spending $300,000 and after all the loan paydowns and normal expenses, she will still be cash flowing at approx $3,200 PM. It's not for everyone, but it's available.
This is through a proper Finance Company, not some back street group of hard money lenders, and being an asset based direct lender, they don't depend on the banks, and they also don't lend on cheap badly located rubbish, and have set criteria before they will look at lending on a property. but when they do, you will know you have a very good well located property as they basically partner with you.
So, just to let people know that these things that can be major problems, can be overcome, it takes time to develop the better contacts and build relationships.
Thanks for reading this message.
Jeff
Just my few bobs worth to throw in the mix.
i am mostly involved in Indianapolis and Kansas City MO for my buyers.
But rather than me saying that these two are the best, or Atlanta or Memphis, Orlando, etc, or wherever, most good cities have like anywhere in Australia, both good and bad areas, it's just the same as in Melbourne or Sydney etc, you know the good and bad areas. It's just the same over there, yes there are some bad areas which i would never recommend or sell in, and every sales company can try and say that where they sell is the best city in the US etc etc etc.
What you have to remember is that you are buying from a US Company, agents or large seminar sales companies it really doesn't matter who, are NOT actually selling properties themselves, but only as the middleman, myself included.
So the real question should be, who am i buying from? What is their set-Up? How long have they been in business? what;s their background? Do they really have local neighborhood knowledge and know all the better places down to the streets etc, where to buy and sell? Are they investors themselves? What services do They supply? And so on,.
It doesn't matter whether the agent or company over here are owners themselves, it matters who they are working with and whose properties you are actually buying from in the US.
Knowing this information, will help in getting the best help and advice and ultimately, a good Investment Property, I happen to work in these two locations not only because they are always ranked very high in the top places to invest in for many reasons, but also because of the teams on the ground that I work very closely with and have proven time and time again, their credibility and care for the buyer and providing a very good product.
I hope this helps a little.
Jeff L.
Two points regarding questions above.
Firstly, Yes you can open a US Bank Account in days, without having to travel to the US, or without using third parties, I am doing it quite easily for my clients, you need an LLC or other form of business identity, plus the normal US Street Address and Phone Number, all of which can be supplied, again, I have clients opening Bank Accounts very easily and quickly.
Secondly, US Finance, I am successfully getting US Finance at 8.25% at 50% Lend with fairly low fees etc, <moderator: delete advertising>
Jeff L.
avest50 wrote:There are so many sites on the internet about purchasing U.S property. Some people say its a great opportunity and others say its a scam… Who can I trust?One of the many problems that unwary buyers get caught up in, is that there are so many US Property Supply Companies who are either trying to self promote on forums such as this and through other social media sites, as well as working together with many local agents selling their properties over here.
One of the problems is that many are just in it for the quick money they can make from unwary foreign investors, and many are really agents themselves over there.
When a company is selling properties in a large number of States or even in cities in the same State, I don't care who they are, it's almost impossible to have expert local neighborhood knowledge, down to the Zip Codes and even the streets, I do know of one company that does actually buy every property they sell in different States and are very knowledgeable in the areas they sell in, but that is an exception rather than the rule.
But if dealing with companies that are located in the same areas that they also sell in, are professional investors themselves in the same areas they sell properties to investors, and have the expertise in the local neighborhoods, and have been established for a number of years in that location, then you will at least be purchasing with experts who know the business and also know the areas.
It takes years to establish themselves as a wholesale supply company, ( called 'Asset Teams' locally ) and years to establish their connections and sources with realtors, the local county offices, tradespeople, etc, to get the very best sources of properties and have everything set up properly, all so you don't have to. The new individual buyer just can't compete.
So if looking to find a reputable and transparent company to buy from, then when talking to any agent over here, you should also find out a bit about the company / companies the agents are representing. always ask questions.
Hope this helps you sort out the good from the bad to buy through or from.
Jeff
If looking to open a US Bank Account, there are a few ways that it can be done without visiting in person, but one of the most important things to remember, is that when dealing with a particular bank, the Business manager is the key to whether you have no problems or nothing but problems, or you get a Personal banker to work with.
A number of buyers are using companies that have a third party on the ground over there, and who then open a Bank Account under an established account with the third party involved, or, opening a new account but again with the third party being involved.
So you will always have that other company or person attached to your account.
After using a number of contacts to help open my clients accounts, I have now established a great relationship with a personal Banker at Wells Fargo, and it doesn't matter where you are buying in the US. He also understands the Australian situation and has been a great help with clients, having opened for a client who was using his SMSF as well as those with an LLC, without too much fuss and without any third party or having to be there in person.
So it can and is being done for clients, which is part of the services I can offer to clients.
Hope this little bit of info helps.
Jeff
Hi Dansu,
I haven't sent any information to anyone on this site for a long time, but i know that many people have been given the wrong advice by so many so called experts regarding buying US Property through their SMSF.
There is heavy penalties if you have not done everything correct from the start, and I have just had clients buying safely through their SMSF using the services of one of the team I work with, who is not only a Registered Financial Planner, but also a Tax Lawyer and a Master of Accountancy, based in Melbourne. The recent client had their fund set up with others that really didn't know about setting it up properly to buy through, and this person that I use had to go over everything and set it up correctly.
And if you are looking at getting a loan ( I got my client a 50% loan to leverage his buying power) you also have to know how to set that up as well to comply.
I can't even begin to give you any help as I'm not licensed or trained in that area, that's why you need very specialized help.
But one thing I can tell you, do NOT go with anyone's advice on this or other forums that try and tell you what to do, unless they are properly licensed and trained to give that advice.
If you are serious about wanting to purchase US Property, you need to get the right professional advice right from the start.
Hope this helped you in some way.
Jeff
Also my two cents worth, if buying through an agent over here, you have every right to know exactly who you are buying from in the US, their history, are they investors in the areas themselves, how long have they been in the business, how well do they know the areas where they are selling the properties to investors, what is their set-up, do they include their own property management, or if not, how do they work together with the property managers. Etc.
Also, would the agent be happy to show you a property on google maps or google earth so you can actually see the whole of the outside and the street and local area?
It's a dangerous game to think that if purchasing an unrenovated property and then be given the estimate to pay for it to get renovated, with the idea that you will make a larger profit on it later, as most people that have been through that process will tell you, that estimates are usually blown out the water, and you can have so many problems. That to pay a bit more and buy it completely professional renovated to a very high standard, will certainly attract better tenants, and really, in the end, what are you after?
Most people and not everyone is a professional investor, most are everyday average people who just want to develop a true passive income, a hands free armchair investment for their money. That's what a true turnkey investment should provide if everything else is in place. The before, during and after sales service from both your buyers agent over here, and the company in the US should be nothing less than top notch, so it's a real shame when you hear of all the horror stories that should never end up like that.
For what it's worth, I would suggest that the buyers agent locally is only part of the equation, as the company / companies they represent in the US are what's going to make or break you, but both are very important in the whole process.
Jeff
What did you spend that much on?????, and I would be interested to know if you went through someone that did it for you, as there are many so called experts that are just out to take advantage of those that don't know the real deal, or how to go about it properly. Of course there are fees to pay, but within reason.
Are you also looking to purchase now or in the near future? If so and you haven't got tied up with anyone yet, why not let me see if I can be of help. Advice is free, the right help and advice will save you money not cost you money.
JeffWhat would normally happen, you normally would get your LLC in place then get your EIN, to get an ITIN, can take many months and even then it can be knocked back, it can be quite difficult to get one. The best advice I can give as I am not a licensed tax agent or cpa, and you shouldn't take just anyone's advice as everyone's circumstances can be quite different . Is to see a registered/ licensed US.Tax Agent re your own personal situation.
We always send clients to our US Tax Expert, and believe me, many individuals have got themselves in a lot of trouble trying to do it themselves or taking the wrong advice.
They are a Sydney based group involved in selling US Property, they seem to be quite professional, and haven't heard anything bad about them.
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