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You can try american family insurance or state farm.
I have been investing in the Atlanta market for years now. Its predicted to be one of the growth markets for 2015.
http://money.cnn.com/2014/12/04/real_estate/hot-housing-markets/I have mainly been targeting newer constructed dwellings, a 3 x 2 you may pick up for 60 – 100k and achieve a NET yield of 8 – 10% after paying insurance, HOA (equivelant of our strata), property management and county taxes (council rates).
I think all the markets mentioned above (Florida, Atlanta and Texas) are all good markets and worthy of consideration.
Texas is a very solid market but did not see the price falls that the others had after the GFC hence bigger discounts in the other 2 markets.
please do tell us who is running this course.
They should throw in a house for that price! and not in detroit!
Are you kidding me? 25k – 45k for a course on how to invest in the USA? That is absolute robbery.
I have never heard of this course. Who is running it?
Wells Fargo (at least in Atlanta) will not set up a bank account without clients visiting a branch.
Its still possible to do through other banks if you have the contacts. A good attorney that deals with international clients can usually help out.
Hi Engelo,
Would love to catch up with you and share stories.
I tend to agree with you Angelo on the US offering much better opportunities than Australia. In my opinion we will see more capital appreciation in the US than in Australia in the short to medium term and much better cashflow. I have invested in both markets but have not purchased any Australian properties for 7 years now. Have been buying in the US for the last 3 years. I can't see myself buying anymore AUS properties anytime soon.
ausinvest wrote:Check outThey have partnered up with Ray White Real Estate to sell there USA stock.
Just had a look at their website. The asking prices are insane on their Atlanta stock! (way high). It appears every property yields 8% so the asking prices seem NOT to be based on comparable sales but on the minimum yield an aussie investor with pay.
Here are just a few examples straight of the website. You can see the asking price is almost double the recent sale price.
328 Macland Springs Dr Dallas , listed at $110,367.50. This property last sold on 25th March 2013 for $58,000
6287 Hickory Lane Circle Union City, listed at $119,901.25. This property last sold on 4th Feb 2013 for $62,000
6697 Gina Agha Circle, Lithonia, listed at $114,210.00. This property sold on 8th April 2013 for $54,000
USA Investor,
My take on your comments
"I tend to agree that those now entering the market are lambs to the slaughter. They will be hoping for increases as have occurred over the last year or so but they don't understand the limitations of the US general public to be able to afford housing even at the relatively low levels that current prices represent.
The original highs in Atlanta (of my market) were $150 -200K these dropped to $30-50k plus reno so averaging $70k renting for >$270pw around 20% gross. My ideal exit is $140+k which would mean 100% return on my money plus the rental in the mean time. They are now up to $120K and I don't feel positive that they will go much higher for a long time. The funds have a lot of stock that they will get tired of holding and as Fickles article already indicates, will go exit stage left potentially leaving those late entrants with negative equity and a double whammy of only getting 12% gross which is way below what you need to stay in the US market."
In my opinion you purchased BELOW fair market value at the time. I am almost certain some of your purchases were the lowest sale priced recorded in a subdivision . So a 37k purchase on a 2500 sqft home that last sold pre GFC for 170k was an exception not the Norm. I can understand that you may look at an 80k price today and think that's expensive to you because of how well you bought at the time.. The reality is it was probably worth 60k when you bought it but you got it for much less. That's one thing I love about the US housing market, the market imperfections presents great opportunity for savvy investors. In all the chaos of thousands of foreclosures there are bargains to be had if you search for them.
For those that know my story I purchased many homes in Geraldton WA before the mining boom in Australia.
http://somersoft.com/forums/showthread.php?t=21333
I picked them up dirt cheap at 60 -110k, in many instances below fair market value. I started buying at 60k so when they got to 110k I thought they were expensive and stopped buying. They went on to be worth 200 -250k within 24 months. Had I kept buying I would have continued to profit.
I have personally been buying in the US for last 3 years and buy whenever I can afford another property, I am still buying today. I bought when the currency was 88 cents (3 year ago now) and when it dropped to 83, and when it went up to 90, 95, 98, $1.00, $1.05. It's back to 89 today so really the exchange has been kind to me.
My personal view is that we still have more growth to come on well selected properties as we are still well below replacement value in Atlanta. Properties are still positive cashflow even though the returns may not be as high as those achievable at the absolute bottom of the market around 2011/2012.
Owner occupiers are back in the market and buying. Its still cheaper for them to buy than rent so those that can get finance will continue to buy in my opinion.
I don't think the hedge funds will dump properties for a loss. They get the funding at such cheap interest rates that they can only profit from the rental income they receive. Their cost of acquiring the properties is much less than the Aussie investor who has to pay 5 – 6 % for money through a line of credit.
For those that don't know the hedge fund story here is a great video of what's been happening.
I am not as optomistic about the Australian Housing market. I think the US housing market will out perform the Australian market by a long way in % terms over the short/medium term.
Jay,
In regards to your comment
"Rare is the house that one just walks in and vacums the carpet and cleans the windows and sells the home… be it owner or renter what we typically see in reno is > New flooring, new cabinets , new appliances, new bathrooms, landscaping paint in and out. were as I am sure there are many readers of this forum that have lived in their homes and they may change these items once every two decades… Everyone has a certain degree of neatness that they live by, however if you really think about it ,,, just look at the pre reno and after reno shots of any turn key operator.. they are all the same… Not sure its like this is OZ but many many americans are just tough on houses period."
The Australian tenant has a different expectation. I have homes in Australia that I have not repainted, recarpeted since I purchased them , some have old wallpaper, old kitchens, old bathrooms. One tenant moves out another moves in. I have properties that I have not painted or replaced flooring in over 10 years and they still rent no problems. I have also never redone a bathroom or kitchen. The US tenant has a higher expectation of how the property should present.
Wells Fargo was previously setting up accounts through attorneys however this has now changed.
This is their process.
A non-U.S. citizen without a taxpayer identification number may not open or be added to a deposit account, IRA/ESA plan, Express Send agreement, or safe deposit box as an owner or with transaction authority unless they are face-to-face in a store, business, or alternative banking location or an offsite location within the United States and in the geographic proximity of the team member's home store or Business Banking location.
In other words the client must visit the US and set up the LLC in the state the LLC is registered to do business. Some allowances may be made to set up in another state but this will need aproval so its best that clients travel to the state in which they are buying to set up the accounts.
Ozforex can set up LLC accounts in the name of the LLC (not all states but in Atlanta they can). This is a way to be able to wire money home and still have a paper trail through the LLC. Most property managers would have wire capability to be able to send the US$ to ozforex and the beneficiary of the funds can be an Australian bank account.
Ideally though it would be preferable to get to the US and set up a bank account. For anyone that owns US property I believe this can be claimed as a tax deduction.
Disclaimer – Please seek professional advice for all tax and legal matters from a licensed professional. This is not advice and no liability accepted.
Alex interesting post….
You noted in your post “My first concern is that Americans in general do not move to rental areas” What is your definition of a rental area? Would a 70% owner occupant, 30% rental fall into this category? What percentages are we talking about where by your definition a property would be considered to be in a “rental area “
With the “lease option” strategy in todays market, what do you feel would be the option exercise “buy price” (if we are talking in percentages). Say if the property was worth 70k today what would you be looking at offering it at as the option buy price in say 5 years?
My concern with this strategy is that you are capping growth potential. Say you set the buy price at $100k in 5 years (worth 70k today) and in 5 years time the property is worth $150k. It is likely the occupant WILL exercise the option and buy the property at 100k. If on the other hand there has been no growth and the price is still 70k in 5 years time it is unlikely the occupant will exercise the option.
So the way I see it if you view that we are going to experience strong growth then the lease option is probably not a good idea if on the other hand you think we are not going to experience much growth then there could be an upside with immediate cashflow using this strategy. For international investors another consideration is the exchange rate and where it will be in 5 years time. If the option is exercised in 5 years and we are forced to "sell" what do we do with the US dollars if its not a favourable time to exchange the currency to Australian Dollars? Remember we are selling a 150k property at 100k, its not like we can buy another property valued at 150k with the 100k we have just received.
I personally feel we will see some good growth over 5 years on well selected properties purchased at the right price. I prefer the flexibility of being able to time the sale and price based on market conditions at that time.
Alex, I would just like to add that my comments above are based on owner financing / option strategy's as we understand them to work in Australia, perhaps what you describe is a little different.
Karina Perez Ronderos
Phone +61 412 900 111
Jay,
You are making some assumptions about our business model which are incorrect.
Your business model is interesting. One question for you, how do you determine the price of the note? If for example you source a property at 40k, spend 8k on rehab and 2k in closing costs, do you sell the note for 50k or do you make a margin upfront as well as keeping an equity share of the growth? I can see your business model would appeal to those that want a guaranteed rate of return.
Jay,
When we decided to set up our business we had input from a US attorney of how we should structure ourselves to operate within what is allowable by law. We followed that advise and operate within those rules.
Would love to hear more about your product and how you get paid. I believe you work on an upfront fee and some equity share arrangement on the capital growth is that correct? Sounds interesting if thats the case, would like to know more.
Karina Perez Ronderos
+61412900111
jayhinrichs wrote:Karina,so if I understand you right your negotiating a sale between a seller ( in this case a bank) and buyer and your charging a facilitation fee.
Are you a licensed Real Estate broker in GA… How do you do this legally if your not , just curious really.
Jay,
I guess you are asking me how are we negotiating the purchase and sale of the property and earning a real estate commission as you need to be a licensed realtor to earn a commission.
In answer to your question I am not a licensed real estate broker and I do not earn a real estate commission on the transaction.
We have a relationship with a licensed realtor in GA that is actively negotiating on OUR behalf so there is a licensed realtor involved in the transaction who earns a real estate commission. They have a brokerage license.
Our fee is one of a facilitation/consulting fee for our services, we analyse the property, determine whether we consider the property to be a good investment, the potential rental market, assist in identifying renovation costs and provide a network of support to facilitate the end to end purchase including property management. I was an investor in the US market before I set up Select American Homes and have transferred the skills that I have learnt through the ownership of my own properties to help others do the same.
What’s different about us is that we don't add a margin to the price of the property and are transparent with our fee structure. Our clients know exactly what we charge and I have no issue in disclosing our fee is at this time $5000 per transaction. This means that if we secure a home for 60k, our clients pays 60k + our facilitation fee. We don't charge upfront fees or membership fees, fees for tours or to view properties. We only get paid if a client uses our services. There are no hidden fees or kickbacks to us from the vendors we engage. We engage vendors to assist with the renovations and property management as we understand international investors need more assistance than just buying a property they need to have a complete network that will look after their longterm interests and make the property a profitable venture. We have a good relationship with vendors that assist with all aspect of the transaction. Its a win win situation for our vendors and our clients. Our vendors get constant new business coming in and our clients get access to vendors that value our business and understand that they need to perform to a standard we expect of them.
I have tried to structure my business model as one to help investors get into the market at a “wholesale” price and take advantage of the great opportunities available in the foreclosure market without having to pay a retail “rent ready”price.
Apart from running Select American Homes I am an investor also and have been investing in Australia and the US for many years so I write the following with my investor hat on and not to judge anyone else’s business model.
The retail “rent ready” product does not appeal to me as an investor. Why because I am not getting the property at the best price I can. It doesn’t make sense to me as an investor to pay someone 71k for a property they just closed on for 27k just because they organised and paid for a renovation and have a tenant already paying rent.
As an investor I would prefer to do the hard work myself, find the property, co-ordinate the renovation and find the right contacts to property manage and lease the property as I will be able to get a much better quality product for the 71k invested. It will get me a much better house in a much better neighbourhood to do the hard work myself.
Firstly my property will actually be worth 71k as the surrounding values will support this. I don’t have confidence that if I buy a house from a wholesaler at 71k that they paid 27k for that if I need to sell the home the property will be worth 71k and I will be able to get my money back.
As an investor I am prepared and understand the risk of doing it all myself. (vacancy, additional rehab costs, potential risk of vandalism etc) I manage that risk by buying the best properties I can and not buying the low end of the market and I understand that for a few months the property wont deliver any income to me. Ironically people buy “rent ready” property with huge undisclosed mark ups because they feel its less risky to buy something with a tenant in place, its more convenient, its easier. The risk in my opinion of doing it this way is much higher as investors are buying an inferior product than if they spend the same money and buy at the foreclosure price. People are paying 10's of thousands of dollars more than they need to with some firms.
Like I said I am not here to judge anyone’s business model. It is up to the purchaser to select the business model that best suits their requirements. I highlight this particular example as it was an example that was recently posted on this forum being marketed to Australians.
I have received a lot of criticism from competitors, family members of competitors and in some instances I suspect competitors “reincarnated under new identities” to highlight their views on this forum and make a point that I am not a licensed real estate agent when in fact there is no reason that I need to be to offer the service that I do. I guess competition is not always welcome.
What I can say is that I can sleep at night knowing I do the best I can for each and every one of my clients, I am upfront with what we do and am fully transparent on how we get paid. I always have my clients best interests at heart.
We source some beautiful homes for our clients which I am very proud of. There are still some great deals out there.
This is a property we sourced recently in the under 90k range that one of our clients is moving forward with. Just an example of what is out there in this price range even in this very competitive market.
Video Footage
http://www.youtube.com/watch?v=_-7qj_-ofR8&feature=youtu.be
Photos
http://s1178.photobucket.com/albums/x374/selectamericanhomes/Glenleigh%20Way/?albumview=slideshow
Karina Perez Ronderos
Phone +61 412 900 111
Jay,
Thanks for listing the county information.
I was a little confused by your comments
"So its pretty difficult to break into the flow of this, and compete against the regulars that have been doing it for years. ( and thats what I think has been labeled on this site as first generation wholesalers.. they buy at auction then flip to companies like TRR, Karina's company and a host of other turn key marketing companies."
Jay the majority of what we buy are bank owned foreclosures (we don't do courthouse steps), we don't have any companies flipping properties to us for us to onsell. We do not mark up the price of the properties. If we negotiate a price of $60k with the seller thats what our client pays $60k + our facilitation fee. The facilitation fee is how we get paid and this is fully disclosed to our clients. Just wanted to clarify as there are many different business models out there. We source our properties direct from the open market and facilitate the renovating and tenanting of the homes for our clients.
http://www.selectamericanhomes.com
"Facilitating the purchasing, renovating and tenanting of homes in the USA for international investors"
Jay,
Can you share the 7 counties the institional buyers are purchasing in?
Gwinnet and Dekalb were named in the Wall Street Journal article you posted. I would be interested to know the others they are targeting.
Karina Perez Ronderos
http://www.selectamericanhomes.com
+ 412 900 111
Speedy,
We havn't done any deals out in Temple so can't give you too much information on that area. $50 sqft seems high to me. I would be aiming for closer to $30 sqft. We did source some properties for WI and other investors at $20 sqft (and under) but most of those deals were in 2011 or early 2012.
In regards to whether its too late it depends on what you base your comparison too. I believe we are past the bottom of the market and trending up in prices but still way below building costs and the peak of the market. Still good value in my opinion if you can secure a good property. That's the challenge right now, just because its listed for sale doesn't mean you can buy it even if you are prepared to pay full price or higher. The competition out there is fierce with multiple bidding. It just means you have to work much harder to get the deals and act quickly when the right opportunity presents itself.
Karina Perez Ronderos
Select American Homes LLC
Phone +61 412 900 111 | http://www.selectamericanhomes.com
WI,
Just had a quick look at Lithonia rentals. There are executive style homes, really nice, large brick fronted homes on big lots that have asking prices of $1500 – $2800 month. Obviously these properties would demand much higher purchase prices than those we are targeting for cashflow.
Different calibre to the Belmont's and course side properties. I can only assume these guys have bought higher end thus aiming for a $1500+ rental.
Here is an example of what $2800 month in Lithonia looks like.
http://www.propertypanorama.com/slideshow/?id=923049
Jay, great article thanks for posting.
Karina Perez Ronderos
Select American Homes LLC
Phone +61 412 900 111 | http://www.selectamericanhomes.com
