And that is rolled gold US RE advice right there.

GREAT post Speedy, particularly:

Time and money on airfares etc is NOT inconsiderable – especially when considered as a proportion of the investment as a whole. The ‘thrill’ will wear off quickly – more so with sub-prime hassles thrown in.

These guys ARE scum of the earth, it is not fair when there ARE very legitimate guys doing a very good job that get a bad name from (as my LA agents says) bandits like these guys…

Don’t feel stupid, it is not your fault that you are dealing with people well practiced in being on the very edge of the law (and I am being deliberately generous there for the sake of the website).

CF,
The funny thing is when people say ‘too pricey for 99% of investors’. What is pricey about an investment that you KNOW will make money as opposed to one that looks cheap but will likely not go far and probably cost a bomb to operate.

Boats are extremely cheap in the US as well, and you can bring them to you and look after them yourself. Most people buying low end RE through any one of the spruikers would almost certainly be better off buying a boat!

And then there is the dollar. The easy to forget elephant in the room.

It is possible to do foreclosures, but my last 10-15 years in the US has been made very profitable and very easy buying ‘quality’ stuff. Most of my purchases were made around 65c in the dollar.

Right off the bat, someone like CF seems genuine to me. You can neg gear in the US just the same way you can in AUS. Why not buy a 4% property in a booming area in NJ or NY at $1.05 or .95. Say you spend $200k. And it doubles – I think CF is right, you may not, but it makes for easy numbers. $200k thus becometh $400k USD. Not a stretch of the imagination to see the AUD at .80. That makes $500k AUD. Your return is therefore 250% for 5 years of ‘parking’ your money in a rolled gold RE market.

Foreclosures work too, but you either need someone REALLY working for you or you will fail.

Thanks SS.

It IS possible to do well in foreclosures, but gee you have to know what you are doing… My sister in LV does, but she works bloody hard and has been in the states doing property herself for 15 years. It is possible. but the successful guys are VERY quick on their feet and VERY local.

There was an excellent article in the Fin Review 16th Nov 2011 page 31. I sent it to my broker in LA. This is his response with spelling errors included:

“….This is exactly what I have been telling the few people that have contacted me from AU. The gal that wrote this (Monique Sasson Wakelin from Wakelin Property Advisory) and I are on the exact same page. As I mentioned when I last wrote you, you more or less did exactly what she said and things have worked out despite the fact that you live on the other side of the world.

There are a lot of people who get into real estate at a time like this because they hear about the quick profits that some make and they want to jump in and get some, that’s called “greed” and that’s what makes capitalism work, unfortunately. So, the same greed that got the inexperienced in the real estate market when it was hot, and caused the collapse, get a new batch in to do the same thing as we leave the bottom. At the top we call them “speculators” and t the bottom we call them “bandits”. Your an investor which is someone looking to make a reasonable profit with a minimum of risk. You have a plan and you stick to it. I read a very good story in an AU magazine and it quoted Warren Buffet about just buying $12 billion of IBM stock at close to their all time high. He said IBM “fits my principles, it is something I expect to own indefinitely.”

There is nothing wrong with playing with some funds and taking some additional risks in a market you know.

What is crazy is to think that you can invest remotly from the other side of the world and actually find deals that the people here don’t see.

It is the epitomy of arrogance and stupidity in my opinion. Like if I flew into AU and started selling your property to people over here claiming to know a good deal based upon my experience in Los Angeles. The truth is that even LA experience doesn’t work in most other areas of the US. Here is a link to the hottest player in Long Beach. They hit it so big in the run up years that they made the cover of INC Magazine as one of the hottest growing companies in the US. They sold all their stuff in Long Beach and headed to Texas and Arizona and you can see where it got them. I sold a few of the places they sold as they were leaving and my clients are doing great……”

I removed the link for privacy, but the preface is this:

Background

xxx Holdings, LLC and its related entities were primarily in the business of purchasing, rehabilitating and operating multi-family apartment complexes in California and Arizona. After acquiring, fully refurbishing and operating each apartment complex for some time, the complexes would either be sold or refinanced.

xxx Holdings and its related entities held title to 51 properties, including a commercial property which served as the Debtors’ headquarters located at xxxxxxx, xxxxxxxxx, California, and a residence. A listing of all the Properties held by xxx Holdings and its related entities is attached hereto.

Based on the extensive analysis and research completed by the Chapter 11 Trustee and his professionals, the Trustee determined that six of the Properties generated sufficient cash flow or had sufficient equity to operate while the Property was marketed for sale. The Trustee determined the six Properties listed below would be operated and sold and the remaining 46 Properties abandoned.

etc etc etc etc etc

It makes for very depressing reading.

If you really want to throw money away PM me and I will give you my acct details. As an added bonus (early bird special?) I wont call you every day at 3am with tenant and tax costs.

There are good buys out there, but why in gods name do people insist on supporting charletans and thieves??

Even people who vehemently attacked me for saying things like that a year or so ago are themselve starting to ask sensible questions.

I have spent a (relative) lot of cash in premium areas in the states in the last year or so (adding to the 15 previous years) but it STILL costs a lot to get things right – and I know people who get things done for the ‘right’ price – like spending $5k a door to bump rents $650 – $1400.

I applaud anyone trying new things, but the things I see people trying are guaranteed to get you slaughtered.

I like property but it annoys me when people are trampling each other in the rush to invest in something that will almost certainly convince them all property investment is going to do nothing but send them broke.

I’ll try to see if I can dig up the email. I rarely read steve’s stuff, but this piqued my interest. The particular mobile was not high end:) Nor was it an entire park… I forwarded the link to my sister in LV – she had a fit:)

I’ll PM you the link if I haven’t shredded it.

Like you, I have a deep and growing love of storage and van parks:)

I have heard Steve has ‘unusual’ ways of dealing with property management. Similar things are done in Australia and although I have personal issues with the hows and whys if you can make it work then great. After all, I suppose that even though it is a bit of a captive market no one is ‘really’ forcing particular tenants to rent from you, so I guess I would wrestle with my conscience and probably convince myself it is OK too! There is no doubt his methods improve an area/property but be very aware that Steve’s approach is probably as far from rocking up to an agent and asking them to manage some property as you could possibly get. Like my (eventual and hard won) approach to US property management it requires very close ties to people who you trust to make anything work.

I would suggest that unless you are very lucky, buying a property in anything other than a very prime area and ‘hoping’ you have a great managing agent is going to cause a lot of headaches. My guess is a lot of people will simply walk away from the ‘investment’ (as no doubt the previous local purchasers did) and be happy to pay the price to stop the nightmares continuing. Assuming of course, you get to sleep with the phone/emails constantly waking you up:)

The US guys posting on this site might seem like killjoys, but each of them firstly _really_ understands the culture and secondly has very good reasons for saying what they do. It is extremely generous of them to post answers to newbies over and over again, especially when they are clearly good enough at what they do to make money on their own!!

Property management is the key – and it is very hard to maintain all the relationships in good shape.

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:)

Jay – I don’t know what exactly you do, but it sounds interesting and I would suggest any Au person looking at buying in the US have a sticky beak at it. I can promise anyone that without very careful tenant management a dream 15%+ return will end vastly less and negative is easy to imagine. A manager with skin in the game is a very sound solution for a foreign investor. As I said before there are many ways to skin a cat, but the last thing anyone wants (who is 17+ hours away) is to be constantly having to solve silly but very time consuming and potentially expensive problems.

I am not saying you _can’t_ get good US management, but what I have found so far is not what I would have expected from my Aussie experiences where it really is very rare to get a bad manager/bad tenant.

GKCH,
See, in Australia we still (mostly) live in a world where people treat people as people.

It just doesn’t happen like that (the US) over here. The biggest single problem with Aus guys doing business in the US is that it is based on a philosophy of ‘if I rip the next guy off I have done well’.

I operate in the US successfully, but for all the reasons you mention, I _really_ don’t like the place that much. In the 80’s it was something special. The early 90’s I remember, and I fell in love with fluorescent g-strings and rollerblades. From where I am standing it went downhill from there – IMHO buried in a morass of super expensive personal rights, healthcare and trust fund babies. I cannot communicate with 90% of the US property people I know. Strangely I can communicate with 90% of the Mexicans I know in US property. I don’t understand a heap of what they are actually saying, but I know what they are talking about. One of the greatest compliments I was paid was when I was helping the guys rip up a disgusting floor and this bloke looked at me and said ‘you are no a lazy gringo – you a proper wetback!’

I have said it many times before and I will say it many times again. An Australian/English attitude to life will get you slaughtered in the US. The US and China are way, way off in boondock swamps paddling their own canoes. Thus far I have been successful enough to make it worth my while me being over there. I may well come crashing down and little things like design, simplicity, ‘real’ online banking and treating others as you would treat yourself – and not that god awful utterly meaningless happy clappy lip service kind, either. Who knows? they may, after all, just be passing fads that get me hammered…. A lunatic, is, after all, nothing but a minority of one:)