Forum Replies Created
Hi Northwind,
Here are a couple of contacts. All the best with it
Michelle Wiens [email protected]
Todd Campbell [email protected]What about trying to purchase a 50k home with U.S. private money lending at 50% LVR and an 8.5% interest rate?
Eliminates currency risk, bank fees etc. Better interest rate than personal loans in AUS, you can get into a nicer neighbourhood as you wont need to be chasing minimum of 14% Net Return and gives you a little buffer to pay down loan quicker as well as plan for unexpected maintenance issues.
Put all your cashflow back into the loan and get rid of the debt as quickly as possible and you will be on your way to building wealth that little bit quicker.
From a Macro point of view:
We are starting to creep into a slight deflationary period in the global economy. This is the Federal Reserves worst nightmare and as soon as larger deflationary signs appear, Ben Bernanke will start warming up the money printing presses and inject even more fiat dollars into the global money supply, this will then lead to inflation and possible hyper-inflation in years to come
Now is the time to not have all of your cash tied up into U.S. property. Spread the risk and let a bank or private money lender take on some of that risk. Let your tenants pay off your loan debt in cheaper inflated future U.S. dollars.
I love the section 8 program. If your house passes a section 8 inspection, you know you have bought well and the house is in good shape. They are very picky but if your house is rehabbed with certain paint and flooring specifications, vacancy costs can be minimized.
Textured darker colour walls, darker tinted floorboards, dark carpet to name a few will help minimize that outlay once the tenant moves out. Makes sure the company you buy through understand that this is paramount to your bottom line.
Here’s a video on why the textured walls etc. You will be able to find other tips in this blog which will help you understand other aspects of real estate investing often neglected.
http://www.americanrealestateinvestments.com/blogs/why-do-texture-walls-on-your-rentals/
I have spoken to various lenders in Atlanta for foreign finance.
They don’t lend in some of the high mortgage belt areas. A fair bit of the western side they are also very picky with. These guys generally like the north and east of Atlanta as a very general rule. Each case is obviously different but it is better to know these general facts to help you make a better purchasing decision
Be careful, most banks will charge $10 for every incoming rental payment you receive from the property manager.
Also when you are depositing some AUD into your US bank account, most banks charge up to $40 for incoming wire transfers
insurance $450
Property tax $400 (these are on average my numbers I have paid for my houses)
Management $900
Maintenance factored in of $300= $2,050
Which means the properties around the 50k mark will rent for around $920-950/month
Very achievable in my experience
Havnt factored in vacancy and usually factor in around 10%
Paying off these loans in 5-7 years is achievable, as long as you have the right management in place.
Keep in mind you have quoted high maintenance costs and high tax quotes. Taxes are fairly low in KC and my property are all basically brand new inside so the maintenance hasn’t been a huge issue as yet
Jay,
The key to this is making sure you get your net return a lot higher than your interest rate. So this loan structure works in cities like Kansas city where returns are a little higher, but wouldn’t work as well in Phoenix because as you have pointed out, you would have negative cash-flow. It’s a numbers game and here’s my example below for a KC home with this product:
50k home
18% Net Return ($9,000 per year income after all expenses) = NOI
50% loan
9.5% interest rate, 20 years amortizationDownpayment = $25,000 + $1,500 closing costs = $26,500
NOI= $9,000
Interest Principle Payments = $2,517 Interest $1,325 Principle = $2,842Surplus to use to pay off loan = $6148
$26,500 / $6418 = 4.13 years to pay off loan, and this does not include the principle payments that are also paying off the loan
jay,
In your example, I would not be happy with proceeding with that loan structure. As the net return on that deal is too low and therefore negative cash-flow is affecting our ability to pay the loan off.
Different loans will suit different markets.
Look for lower interest rate loans for Phoenix and other lower cash-flow yielding markets and markets like KC and Atlanta, the 9.5% interest rate loans can still pay off your debt very quickly if you have the right rate of return
These loans are based on purchase price and all the fees can be blanketed into the loan so there is less down payment required.
Do your own numbers, but these figures suggest you could pay off your debt within around 7 years if your net return is a good distance spread from the interest rate
Here are details of the loans we have completed:
Atlanta, Phoenix, Kansas City, St Louis
50% Loan
9.5% Interest Rate
5 year termOr
I have been notified of another product and this product is from an institutional lending fund
Phoenix property only
50% loan
5.99% interest rate
7 year termI understand where you are coming from dj_ajay and I dont mean to knock 888 at all. I just want people to save money where they can. I just went on that website and I have been offered some of those properties to buy through american real estate investments for prices consistently 3-5k lower after 888 add their fees on top. 888 look like they do a good job as well so apologies if I have been a little agressive on this thread, but I am just being honest with my assessment.
If you are buying 10 properties and consistently save 5k per property….. hmmm that means you could actually be buying 11 properties with the money you save going direct
Hi Jay,
Agree with some of your points. The benefit of buying turnkey compared to “pre rehab & pre tenant” property is that running costs are real and active before you purchase. The numbers you cant really forecast are vacancy and maintenance and this always needs to be factored in.
The guys at AmericanRealEstateInvestments advise to allow 10% per year for vacancy and also up to $500-$1000 for a property clean every time a tenant moves out (new internal paint, possible new carpet or floorboards re coated)
Always try to factor these figures on the more conservative side so there are no huge surprises once your deal on paper becomes reality in your bank account!
Nigel, you didn’t answer my question:
Please elaborate on the fees you charge before a person even gets to see a property available for sale through you?
Biggaz,
I completely empathize about your experience with MY USA. It is not the first bad press I have read about them. And makes me even more sick that MY USA have now rebranded?!??
That is a similar way how I came across americanrealestateinvestments.com
I saw an Australian broker advertise a property in KC and when doing my due diligence I stumbled across the American real estate investments website who had the same property available for $9,000 cheaper. Plus they were the company who offered the full service and were more than happy to deal with me direct as well.
I just hope, if you pay that $3,750 broker fee, that you get bang for your buck. This is what happened to me a year ago when I was curious at what kind of chook raffle some of these brokers were running.
My main goal was to find out how knowledgeable these brokers were on a particular city and it’s many suburban pockets. I wanted to know how intimate they were with the Area they were selling property in
1. I had a meeting with MY USA a year ago – salesman couldn’t tell me where a nieghborhood was and had to look it up on google maps
2. I met with 21st century – salesmen tried to convince me that Phoenix was a cash flow market and Kansas city was the capital growth market?????
3. I had a meeting with house buyersUSA – the saleslady didn’t own any property but said “she wanted to buy one”. She also wouldn’t let me view or buy property without buying a membership of $3,000I mean come on…… Kansas City a Capital gains play and Phoenix the cash flow play??? And these are the same guys you trust your money
Nigel, with all due respect, your continual self promotion on this site has lead me to ask if you could please elaborate on the fees you charge before a person even gets to see a property available for sale through you?
I have never had to pay letting fees… Check that with your property manager.. Try and negotiate for future deals
I allow 10% per year vacancy. In Kansas City it will generally take now more than 2-4 weeks max to get a new tenant in
I allow around $300 for maintenance.
When you look at the numbers advertised make sure you input it all into your own spreadsheet so you can see the big picture and are not misled by strategically low maintenance or lack of vacancy numbers
Also please allow at least $800 – $1,000 when a tenant moves out and another moves in. We can usually get a new internal coat of paint and carpets repaired for under that. The American tenant mentality is a lot different to the Australian tenant. The Yanks don’t care if they lose their bond, they expect a lot more from us a landlords so you just need to realize it’s a different game over there and factor it all in
Hi Biggaz,
I apologize about labeling time poor and lazy people in the same category. As you can understand I meant to say time poor or lazy. I am time poor as well but when it comes to improving the bottom line I will try to dedicate as much time as possible.
I think using an agent for the first home if you are either of the above is a great start. What I was trying to point out was, these wholesalers offer the same exact service as all of our Aussie buying agents and have helped build a lot of the Aussie businesses to where they are today.
If someone can get the same service, mentoring and assistance without paying the premium and the double tier marketing fees then I’d say go for it!
Jefff1: the properties we have bought through them has cash flowed from day one as the rehab has been completed and tenant already put in place before it is offered to the public. We like to do it this way as I don’t want my money to be doing nothing for 6 weeks or longer waiting for rehab and tenancy placement. There are a few KC companies doing this, it seems to be more prevalent in KC than other cities for this type of turnkey product
For all you guys coming on here and promoting why people should still use you as an agent and if you don’t it is very ‘dangerous’ ……
Well I am sure there are some good Australian agents out there, but, being an Australian agent means one thing: you are not going to work for free and your fee will come at a cost.
Now consider the fact that the American company supplies the exact service to your Australian Agent anyway (Fully rehabbed, and tenanted property, property management in place, access to attorneys, accountants, personal mentors) but you save over $5,000 per transaction. My god, there was at least a $15,000 price difference for that above property mentioned.
Some companies are charging people just to look at a list of properties they have for sale! Smarten up people!!!!!!
I started this thread to simply address an issue that would be at the forefront of all Aussie investor minds:
Why use a buyers agent?
Lack of education?
Lack of time to set up LLC bank accounts etc.?
New to US property game?
Don’t know ins and outs of every area?Who would you prefer to speak to and help guide you through this process:
Aussie company who is new to the game or the American company supplying to these guys and teaching them everything they know?
Jefff1: americanrealestateinvestments supply all their KC property to housebuyersUSA and look after their property management, I have seen several homes advertised through these guys for an absolute premium compared to what AREI are selling the same ones for
toprental returns have a great business going on in Atlanta and are one of the only Aussie companies I would recommend (TRReturns are based out of Atlanta so they are actually on the ground and not operating their business from their computers in say the outer suburbs of Sydney )
In general I have bought in pockets between south of 39th and Nth of 80th in Kansas City
Also parts of Ruskin, Raytown, Marlborough to name a few.
If you start going south of 80th you get into more ranch type property, with larger blocks. Can pick up some great cash flow property down that way.
Some nice solid suburbs within 2miles of UMKC also for a slightly higher price, but, in saying that, we have got in around UMKC with some amazing built in equity buys as well as high cash flow. Its harder to get these equity deals if an Australian Agent is taking a big piece of ‘your’ pie
Hi Rick,
I have quite a few properties in Phoenix and Kansas City. All have cash flowed from day one and I haven’t had one issue and my only annoyance was the title companies aren’t very good at communicating and I had to email through to make sure settlement had occurred on a couple of the properties.
I first entered the market a couple fo years ago with 2 of my friends and we did a quick flip and made a good 20% return in 3 months work. This was our way of a low risk entry to see how the market worked and whether we wanted to proceed further. The flipping side of things was very time consuming (even though we partnered up with our guys on the ground and they did all the work), so we decided to look for some high cash flow property and that is why we turned to Kansas City.
I am the kind of investor who likes to do it on my own and research research research and find the best bang for your buck. I feel that going through an Aussie buyers agent has its pros if you are lazy and time poor but you pay an insane premium!
I just put under contract 2 more in KC last night. I have recently come back from KC and Atlanta and I was really impressed by both cities.
The company I buy off in KC is the same company that supplies all its wholesale property to our big Aussie agents. Companies such as –
21st Century Property, myUSAproperty, housebuyersUSA, that dude in Byron Bay (888 wealth???), Property Shop USA all get their property through this company
I bought a property in KC 2 months ago for $23,000 that was listed with one of these Aussie agents at the start of the year for $46,000.
Be careful who you choose and when you can, try and cut out the middle man!
Hey now I really hear the pin drop!
Great info on the ITIN guys!
Bennyblanco – I had a Wells Fargo account set up when I was over in the US a few years ago, and it was in my personal name. All that was required for ID purposes was a passport and a credit/debit card.
I kept a good relationship with the guy who set my account up and once our LLCs had been set up, I then just emailed my him with all the LLC documents and operating agreement and he set it up for me within a day or so. I had to scan and sign and re email back the business account forms, but it was all very straight forward. The business accounts are now linked in the same internet banking window as my personal account.
Now, if you can’t get yourself to America to set up a bank account, and time is of the essence, then I could suggest the following:
Get on the phone to a Wells Fargo branch in any area (doesn’t have to be the same area you are looking to invest) and try and set up a personal account over the phone with one of the account managers, scan and send through your passport and debit card copies to their personal email. Most important is to keep that relationship handy for the future, especially living so far away. The more ID documents the better!
Im not sure if this will work and would be interested in hearing if anyone has done this already.
The have all your property transactions coming in and out of your business account and you have started the ‘seasoning’ process that banks look at when you are wanting to start borrowing money!
DHCP,
try this link: http://www.sos.mo.gov/BusinessEntity/BusinessEntitiesOnline/help/mo/notice.aspx
For some reason that Missouri State Government website was down on my computer as well
Let me know if the above link doesn't work
