Forum Replies Created
- TZ wrote:AREIJoel wrote:Guys, I truly believe that going through an agent who relies on commissions is the wrong way to go about it from a foreign investor perspective. If you are going to be managing a property from so far away, then you need to align yourself with a company who is not in it for the short quick profits. Sure everyone needs to get paid, but there is a difference between going with a quick sale agent compared with a larger turnkey provider who is not only interested in the long term success of your investment but values your business relationship. It is a win win for each party. Where is the agent going to be in a 1 year from now and somethings goes wrong with the property? Research the companies that have considerable experience – Companies and experienced real estate guys who have not only seen the last boom and bust but have also gone through the 90's crash, and if possible the 80s crash. Also, check if these same professionals are investing along side you and have skin in the game. If it such a good opportunity why wouldn't they be investing as well!
I don't get the "skin in the game" point you are making – with the AREI business model it appears the investor buys AREIA's skin in the game, would you mind clarifying? An agent's skin in the game is their reputation and their license, should regulatory audits find that they have compromised the fiduciary obligations they owe their client by law. How do you find the turnkey provider one year from now if they are not licensed, and how do you know they are a larger, established firm with a track record? Does AREI fall into that category?
TZ, skin in the game refers to the company putting their money where their mouth is. Owning the property they are selling. That have a vested long term interest in the assets performance because, the company took the risk, bought it foreclosed, renovated it and believed they could on sell it at a fair price.
If you rely solely on a licensed agent… well I've met some absolute muppets who have licences. Its not hard to get a licence. Its harder to build a credible reputation, putting your money where your mouth is and going above and beyond what is required of normal service.
To answer some of your above questions:
Ask the agent who actually owns the property how many properties this agent you are dealing with owns. How long have they been in the game? What is the long term service if you purchase through this company.Google the address of the property and you may find it available on many websites (we wholesale to a bunch of aussie brokers, some who sell 10k above our net cost to our retail investors.)
Question the agent on the area. Get a gauge on how well do they know the city they are actually selling in.
How do they know if it is a large or small firm? Ask the turnkey company how much money they have invested in the market at any one time. How many foreclosed properties are they doing up at the moment? Speak to several companies and ask them how many deals have they done in the past few years. Do they provide market updates and other free of charge services that keeps you in the know and aware of how the fundamentals are tracking in your specific market, this is crucial especially during times of negative sentiment <moderator: delete language>
Again, just determine experience levels of each firm with these types of questions and use it to filter through your preferences.
Hope this helps
I think before looking to invest anywhere you will need to understand the risk:
Currency Risk
Litigation Risk
Market Value
Insurance
Vacancy Costs
Maintenance Costs
Taxation
Entity Structure
Property ManagementBUT….. there is something that is even more important than the above issues before you should take your next step:
YOU and YOUR KNOWLEDGE will be the most underrated type of risk you will need to be aware of.
How much do you know about investing, accounting, leverage, property, the global markets, inflation, quantitive easing, population trends, local demography, valuing businesses, job numbers, debt…etc.
If you don’t know a lot about these issues, then I would suggest getting financially educated to minimise your own personal risk way before putting your hard earned money anywhere.
There are a lot of people who can fast track you on this journey if you choose the right team members.
Agree with Zmagen, you are in a great place to start learning
I am hoping that people will not lower their criteria to still chase the 15% + returns in less fundamentally attractive areas.
This is where the herd will get slaughtered in my opinion.
There are 3 phases in any new bull market, and I think we are entering phase number 2 as we speak. The smart investors have all positioned themselves in well in phase 1.
Phoenix, florida and parts of Atlanta are beginning to dry up. The amazing deals are getting harder to come by.
As long as Aussies realise they have probably missed the extreme value buys, and are prepared to take a small hit on yield, it will be ok for maybe another 12-18 months
US Banks are tough work Richard in regards to making it hard for Aussies to wire money.
The problem is most of us don’t have ITINs. Once you get this with your first tax return, your wiring will be easier.
So while you wait for an ITIN, the key is getting in with a good retail bank manager. Establish yourself in with someone. Sure some companies can set you up with a bank account but being able to use the account is key!
We simply email the manager the wire request and he does it for you within 24hrs. It has worked for us for some time and this is through Wells Fargo branch in San Francisco
Hey there WI,
Not sure if you have your own property manager in place or managing it yourself but most property managers offer this service for around a $75 fee.
Best to ask your manager when the last assessment was done and what the current assessed value is. If it is high then obviously it is worth the appeal, if its low or near to what you paid it might be worth staying put
Check these links out for more information.
http://www.americanrealestateinvestments.com.au/smsf-investing/
However, it doesn’t mention Bank compliance issues but is a good start for people wanting to go down this path.
Most people seem to be set up with Wells Fargo accounts. (One of the safest of the US banks in my honest opinion) WF doesn’t engage in nearly as much of all this arbitrage derivative trading and other risky profiting strategies leveraging of its customers own savings.
When the federal reserve met with all of the bank leaders in the midst of the financial crisis in september 2008, Wells Fargo were one of the few banks not wanting to accept the Fed bailout money. Their books were solid and they were one of the few banks that would have survived had the fed not intervened with their loose monetary policy.
So it puts a lot of people in a tough situation if WF is one of the safest US banks but may not comply with SMSF ATO compliance rulings.
I didn’t have a problem with my annual SMSF audit with my Wells Fargo account. I just had to nominate my foreign income, and show proof of the accounts, money in money out etc. There was no mention from my auditor that it needs to have an affiliated australian branch…
Worldinvestor is on the money.
You don’t pay double tax.
Whatever you pay in tax on US soil, you will pay the balance owing in Australia.
e.g.
1. If you earn $10,000 in rental income in the U.S. (you would be classified in the 15% tax bracket)
2. You will pay 15% tax to the IRS.
3. If you are on the 30% tax bracket in Australia, you will declare $10,000 in foreign income. Because you have already paid 15% of that foreign income to the IRS, the ATO will only require you to pay the remainder 15% to them thanks to our USA-AUS Tax treaty.
This is how I have been paying my taxes on an annual basis. Obviously if you have the standard interest, travel, maintenance, management, depreciation, deductions etc. you will reduce your tax owing significantly
As a foreign investor, you will receive your ITIN upon lodging your very first US tax return if you haven’t already applied for it prior to lodging.
ITIN comes in handy if you have a US bank account and you are trying to wire money across the United States. It gets a little tricky for foreigners to do this without a bank manager approval.
There are loopholes for this like billpay etc. but probably not the right thread to share this information
Not too sure if I agree with companies charging membership fees I’m sorry.
Charging an upfront fee for information and services that are easily obtainable on other websites are probably not a good idea to pay for if you are the consumer looking for true value.
I am using AffinityGroup Insurance which is a company the deals with specific real estate investment insurance.
Underwriters are the National Real Estate Insurance Group. They insure in all 50 states. Here is the quick link I send our clients when they wish to enquire about insurance. Get a quote from these guys and see what they can offer you.
I have found them to be the best bang for your buck.
Guys,
I truly believe that going through an agent who relies on commissions is the wrong way to go about it from a foreign investor perspective.
If you are going to be managing a property from so far away, then you need to align yourself with a company who is not in it for the short quick profits. Sure everyone needs to get paid, but there is a difference between going with a quick sale agent compared with a larger turnkey provider who is not only interested in the long term success of your investment but values your business relationship. It is a win win for each party.
Where is the agent going to be in a 1 year from now and somethings goes wrong with the property?
Research the companies that have considerable experience – Companies and experienced real estate guys who have not only seen the last boom and bust but have also gone through the 90’s crash, and if possible the 80s crash. Also, check if these same professionals are investing along side you and have skin in the game. If it such a good opportunity why wouldn’t they be investing as well!
