Forum Replies Created
he he he… We just have more space in Australia – we can afford to be picky. It will change:(
Sewage farms are great!! If they are anything close to modern they can be the most amazing wildlife habitats. In fact Michael Mobbs (58 Myrtle St Chippendale) has his own complete sewage farm (composting wetland) in the tiny back yard of his small Sydney terrace.
http://today.ninemsn.com.au/homeandfamily/182206/visit-the-sustainable-house
http://www.melbournewater.com.au/content/sewerage/western_treatment_plant/habitats_and_wildlife.asp
Not exactly about US property, but interesting about what people like and dislike near houses. Most Americans are probably more worried about being shot in dead beat areas rather than whether the cable to your light switch in a good area is less than 10km away:)
Professionally managed – I would believe that comment after a year:)
Regarding 888.
I dug up this post from Somersoft, written by Bevk on 23rd March last year.
The reason I put this example property out there on the forum was to try get to the bottom of why an Aussie company like 888usrealestate is advertising this property as fully restored for $49,800, whereas Zillow shows it as (quote) “This spacious 2 story home has a screened-in porch, fireplace, whirlpool tub, but it needs your special touches to make it move-in ready”. Priced at $14,000 through a completely different company which re-listed it just last month.It’s all there on Zillow for anyone who cares to look.
So, I’m curious as to actually has the paperwork for this home – 888usrealestate or Realty Executives of Kansas City.
Do a tiny bit of searching on this site (or Somersoft) and you will quickly be pointed in the direction of people who will do a fair days work for a fair days pay and you will avoid this type of marketer.As an aside, Speedy Gonzales US property approach is probably the smartest I have ever come across for an Aussie. I only recently read in one of his posts that he actually got a job with one of these type of operators to occupy some time and see if he could learn something. What he learnt was that in fact he already knew far more than they did so he went out and did it himself – and successfully. Not everyone has the time to educate themselves like that, but you can take what he says as ‘the truth’.
kylermrice wrote:Those markets are ruff but you can find good deals.If kyler says something is ‘ruff’ it should not be attempted under any circumstances without highly competent adult supervision.
I can do that for you even though I posted it under the heading 'worth a read' (which no one read:( )….
Now, just get me the money to buy a postage stamp in Woodside:)
http://www.bloomberg.com/news/2012-0…ale-falls.html
Not sure if I am allowed to post links or articles, link above – article below..
Bidding Wars Erupt as U.S. Supply of Homes for Sale Falls
By Prashant Gopal and John Gittelsohn – Mar 28, 2012 1:14 AM ETMatthew and Carina Hensley offered $10,000 more than the asking price for a three-bedroom house in suburban Seattle, then lost out to one of seven other bidders… <moderator: the article was too long to post here in full. Please see link>
Eichler house. Steve Jobs.
I got into property because of my love of architecture. Steve’s comments on Eichler mirror my own thoughts. In fact, I couldn’t believe someone else saw in them what I did. Especially someone ‘famous’ – although when I worked out the parallels he had been completely written off as a has-been…
Pettit and Sevitt in Aus – A VERY similar thing.
Then I fell in love with Glenn Murcutt (now a good acquaintance of ours after we bought one of his more famous buildings) and the rest is history. Unfortunately to support my architecture habit (crack is so much cheaper:)) I have to delve into the most hideous places I think have ever been built – and they are in SoCal. I make them as pretty as possible and they rent very well. I shouldn’t tell anyone, but that is my whole US RE game plan in one sentence.
In _general_ Australians like the most god awful US style McMansions. Pillars, fountains and the like. There is taste ‘less’ and taste ‘free’. As Steve Jobs said so well ‘People do not know what they like until they have seen it’. I have a world of design experience in my 25 years of travel, and I give people what I would like to live in – in my books it has given me a fortune, though I doubt my entire worth would be able to pay the fuel bill for a few hours in the Job’s new boat, but I digress. My game plan is that simple and it works. It just makes me very sad (nigh on angry) when I see tasteless idiots screwing up a near pristine environment (like many parts of Sydney) with pseudo Californian, fake Georgian, Neo Edwardian, Italinate Gothic, French Farmhouse ‘style’ because they have not an inkling as to what looks good, just a desire to ‘out turret’ the next door neighbour.
Clean and simple pays. If you couldn’t see ‘your’ design in a house in Copenhagen, then I would suggest it is hideous and bin the thought immediately…..
To summarise:)
You never go broke making a profit.And for those who may not have noticed, Jay has tugged his forelock to the ‘Aussie/French’ way of doing things by saying he drinks Shiraz.
Having spoken to people who live in Shiraz and pronounce it Shiraz it would come as a surprise to those who don’t know that a large proportion of the world pronounces it ‘Syrah’.
You are a Gentleman and Scholar Sir….
And… If you read this, heed the advice:)
Jbelmore – I posted that link and no-one bothered reading it:(
‘worth a read’ – clearly it wasn’t:(
I will go back to weaving baskets and singing kumbahyah…
Zmagen,
I understand the advertising thing – I actually think a Japanese property would stack up very well. You don’t have (many) crack head losers hell bent on ripping off the system in Japan. I have spent a fair amount of time in Japan – my problem is I can’t speak the language, and especially after my US experience that would make me nervous:) I can totally believe you about the ‘easy’ cash returns, dealing with the Japanese would be a walk in the park in comparison to low end US rental property.I would be very ‘nervous’ dealing with a buyers agent based in Australia. It might be worth anyone reading some of Speedy Gonzales posts on the pitfalls.
My sister is a buyers agent (emma171) and I know she does great work. Not just because she is my sister but because she only became a buyers agent originally to help out people who have been royally screwed.
I really like Jay’s system which is a partnering type deal – he gets the worry and half the cash, you just get the cash. A bit like investing in Japan maybe.
Alex and Kyler really ‘know’ what they are doing as well – it oozes form their posts. They are in there doing the hard yards and doing it sure for money, but fair money and nothing like the scam artists that are out there.
I have had issues with WI (above) over ‘other’ matters, but she speaks the truth in what she says and I agree wholeheartedly with her property market comments above and elsewhere. She would be another person worth contacting.
All the people I have mentioned are clearly treating this as a profession and not just a way of making money if they weren’t selling pink batts or Tea Trees.
It is a complex area, and certainly not for the feint of heart – there are plenty of mean nasties out there to rip it out of you:)
zmagen wrote:Don't quite follow – I get the logistics bit, but how exactly does putting all your eggs in the one city basket reduce the risk by anything? In my view it vastly increases risk – unless I'm missing something in this equation? (assuming you'd do your DD wherever you may invest, wouldn't spreading your investments geographically reduce your risk far more?)
You haven’t dealt with US trades, banks or PM’s. It is like herding cats just making them understand what it is that you want, let alone getting them to actually do it. Two cities = 10x the problems of one city. Three cities would be 100 times more difficulties.
It is VERY difficult for someone who hasn’t been through the dramas to understand. Simple things like ‘I haven’t noticed any rental deposits in my account for these properties over the last 3 months’ and the response ‘Oh, you didn’t let us know you actually wanted them banked’. dealing with the US is not something that is easily done!
Land would beat low end housing (in my books) every time.
You answered your own question with your comments re A/C units. You would need considerable local knowledge to get a good return on speculative land purchases but if you aren’t chasing tenants over $3 every month and fighting deadbeats you would have time to stay ‘educated’ in the market.
jbelmore,
There is one thing in the US that Aussies don't really get and it again relates to scale. Right now there is still contraction in the rental and buying market. The economy is definitely changing and getting better – not just from the official figures, but from my personal experience. People are buying cars again, going on holidays etc.What happens when people en masse lose their jobs etc is that they downsize, move in with family or friends etc. This reduces the demand on established homes. When things start to improve again these people move out and live on their own. If one or two do it, the difference is negligable, but when thousands (or millions) do it at once you get 3-4 fold increase in tenants and/or buyers. I can see that type of thing happening in small pockets right now. There are just more people responding to rental ads.
In Australia newspapers etc bleet about the rental increases when they increase 3-5% per year. My properties in LA have all had 30+% rental increases in ONE year. And they didn't drop in subprime either – those yields were retained throughout this mess, which is why in my particular (and lucky) case my US property portfolio increased in value.
There is almost nothing I disagree with Jay on anyway, but I cannot recommend enough that people look at what he wrote above regarding 'better' quality property. The yields 'look' low on the surface, but the risk is almost zero and the potential increase (near guaranteed I would say) is exponential.
There is certainly money to be made (still) in 'once in a lifetime' buys in subprime areas, but that is not neceassry to make very good money in. It is a different mind set, but an equally good strategy to include higher quality assets in a portfolio. I am not sure if I would put money into land plays (though I trust Jays judgement) but it is more of a gamble and more expensive to hold up front than high quality income backed US real estate that you KNOW is going to go places from a very low base. These properties any day of the week, any week of any year kill the yield return on any bread and butter Aussie property so don't think the US is a yield play alone. Again, read carefully what Jay says about returns – having the opinions of someone like that available for free is fantastic.
jayhinrichs wrote:Lawsjs We have no hood in Portland. It's a fact. Not to confuse our market with San Fran peninsula which is priced well above the highest priced Sydney homesI stand by what I say 'hood boy' – All depends on your perspective. Sydney and Portland are equally Hoody:)
FYI: These are the 'non hood' places I was comparing to that flea pit you call home:)
http://www.dailymail.co.uk/news/article-2063771/Tamara-Ecclestone-Inside-Bernies-girls-jaw-dropping-18m-home-refurb.htmlI do agree with Petra's view of Candy's interior design skills. The Spelling's taste is appalling. I actually really liked Tamara's old central London house, the one she got for her 21st, with the 25m swimming pool she never used and the turntable in the driveway so she could get her Ferrari in the garage, sadly it was too small for her ….
It's all relative. If you were Tamara or Petra Ecclestone then Jay's own home would be the 'hood:)
Richard,
I am missing something I think. In my experience I have found almost any US bank is happy to loan on ‘second home’ basis. Usually something like 30% down at good rates but SFR only. Investment loans are not easy, but are possible I agree. As a non resi alien I just got 4.36 30yr 70% with Chase for example, but the second home business is much more widely available to aliens.Not sure what your post immediately above was getting at?
In my experience almost any US bank can (and will) do 'second home' loans on reasonable rates at the LVR you mentioned.
But thanks for the response Richard..
All of 3 minutes to find….
But yes, unnecessary digression.
You _can_ buy condo’s without HOA, just rare. I would avoid HOA’s (in general) like the plague. Just don’t buy in them! There is no shortage of houses to buy! The whole thing is that people think the buying is the hard part. Buying is the EASY part.
I suspect you are happy with your PM’s because you haven’t had the properties long enough:)
Organising rehabs over the phone is fraught with danger. Obviously it worked out OK, but if it was that easy I suggest you wouldn’t be doing anything else, so you wouldn’t need to work your ‘other job’. $15k profit is what I would consider wafer thin doing what you are doing, but I would be the last person to criticise anyone for making a profit.
I would not in ten million years recommend the types of properties Steve (McKnight) uses to advertise his USA Property Power Pack thingy. Financial suicide IMHO.
WI: You will be able to buy the properties Steve talks about forever. They are the worst of the worst – no one with half a brain wants them:) In any case he uses very specific management ‘techniques’ which will not work for everyone and even then I doubt the numbers really ‘work’ – I suspect the business in reality is offloading them immediately.
You bought the wrong stuff Lab…. Getting involved with HOA’s is plain silly (often only a few people are paying so that means the bills fall to YOU). Also, unless you look at a system like Jay’s playing at US property as just a hobby you are setting yourself up to get badly hurt. Management really shouldn’t be more than 7ish% but after 15 years of US investment I have yet to find the ‘perfect’ (i.e.: Australian/UK standard) manager. In short US managers as a generalisation are hopeless. Again Jay’s system gets around that – or use my sister who is setting up her own long term systems based on Aus standards. I agree with you about taxes. I would NEVER recommend anyone from O/S buying properties scattered all over the place – you are likely to find it almost impossible to get good maintenance people. I am sure you can do well in FL. but it is not my cup of Oolong – boats and retirement are the ‘main’ industries – Space Coast notwithstanding:). Given my sister has been living and breathing this since ’08 I have all the wherewithal and trustworthy assistance to buy foreclosures very well. I don’t because of the major dramas involved in operating my LA portfolio. I did not need to replicate the problems in more places – one was quite enough! To replicate my dramas with just one property in a different area would be logistical suicide IMHO. Globetrotting simply to check up that maintenance is completed as it said it would be would lose its appeal VERY quickly. And if you aren’t there it ain’t going to go smoothly! I was also very fortunate that my portfolio actually increased in value over sub prime (more tenants) and I was getting good finance. 7-8% nett returns might be boring, but they have worked over time for me and spending cash seemed expensive to me – I am addicted to gearing:(
Your summary however is very good and I think a lot of people would do well to heed it. It shows the ‘hobbyist’ approach and how it is likely to work in real life. You will in time, do very well, but I am certain you will have a rough and painful ride along the way. Hopefully you will be able to keep up with the dramas and not just get sick of the hassle & offload your properties for peanuts to end the annoyances.
If you find the ‘right’ help (Alex, Kyler, TX cash-flow or Emma) you will get ‘experts’ on your side and get ‘much’ better buys and especially rehabs. Amateur vs professional. A guy at work was talking in hushed tones about US property – turned out he used Emma. I think he said he had 8 or 9 and was netting (after 12 months) around $80-90kpa. He spent all up ‘under’ $500k but I am not sure of the exact figures. He wasn’t advertising either who he bought through or what he bought but when I asked if it was Emma (my sister) he asked how _I_ knew her:) So I knew what type of thing he was buying. Point is, this guy had never bought investment property before and thought it was ‘easy’. Professional help makes the difference. The trick is, of course, how to find the genuine help in the sea of charlatans, thieves and scumbags that either sell Pink Batts or Tea Tree schemes if they weren’t ‘selling’ US property.
My sister (emma171) does an outstanding job as a buyers agent with foreclosures, and you won’t beat the buys she finds and certainly not the reno work and particularly the ongoing hand holding that goes with it, however I have got to say if direct ownership doesn’t make you drool then I would be into Jay’s system hook, line and sinker. It makes a lot of sense – the profit is obviously less but the risk is near as dammit to zero. Moreover you have no ongoing stress with bad builders, busted water heaters at 3am, angry tenants, etc etc etc etc etc. Etc etc etc.
Owning your own will obviously get you a bigger return and 5-6 of these will get you a very good salary for the rest of your life – but you hold the can. Bigger upside, but how much time in the long run do you wish to put in? A ‘lazy’ 9%+ for a lot of people is an unheard of return, nice currency hedge too….
As you have seen in the ‘confused Aussie’ post I am certain that the great percentage of these properties that were sold with headline grabbing returns will be available at unbeatable prices in the next 12-48 months.
Jay speaks as I see it with a slant for the ‘alien’ investor. I would love to see how Kyler operates – he plays in an umimaginably tough pond. Cheeves & Alex’s words ring true every time they write. All these guys are hard working experts in their highly specialised fields. Do not expect to come near their results as an out of town investor – I can’t say enough about how valuable long term knowledge is when you talk about US RE. It is an amazing body of advice they have offered here for free. I hope Aussies here reading this can really join the dots and understand exactly what they are saying.
