Forum Replies Created
Hi Eric,
Yes you have picked up on the amount of interest that Australian’s are expressing in the US real estate market. I’m not sure if you know much about the Australian real estate market but as a comparison…..in my local market….the average price is about AUD$400K and you will rent it out for approx AUD$380 per week. Our mortgage rates are around 7%……all up your getting a negative cashflow and the chance of capital growth. To buy a property in this price range will cost you approx AUD$25K in government fee’s & charges.
Taking this into account you don’t need to be Einstein to see why us Aussies are showing such an interest in the US market. So from an American’s point of view……where would you invest if you personally had the opportunity ?? Better still….why ??
Hi Ray,
My apologies…..no aggression intended on my behalf…..I did question if it were ME missing the point…not yourself but again sorry if my tone came across wrong.
Do you mind if I again clarify…….if my property manager based in Houston Texas for example wanted to deposit rent into my account…..the Citibank option would only prove useful if the Property Manager and myself both banked with Citibank ??
Nopz,
I registered with them and James (the one in charge) called me and emailed me the same day so I have had no issues with getting them to contact me.
Hi Globaltraveller,
I’m not sure if I’m missing the point or not ?? What’s the use of having a USD$ bank account with a bank in Australia ? I appreciate that your dealing in USD$ if your rent is coming in USD$ but the fact still is that the account is based in Australia…..regardless of being with a major bank like Citibank…..Most using this forum would be wanting a bank account for rental income to be deposited. If your property manager was depositing rental income from your US property….any deposit would still be classed as a international transfer and subject to additional fee’s as it has to come to Australia first to be able to be deposited.
Hi Jeff,
By all means you are entitled to your opinion on upstate NY…….problem is that as soon as you mention the area you immediately think of Buffalo, Rochester etc. This area saw an influx of Aussie investors a few years back and everybody lost money. The gross returns promised realised into negative net returns and further loss upon sale due to continual frustration.
I take your point on board that it is possible sometimes if you have the right team. Also a good point that usually you find the salespeople themselves have never invested their own funds so how could you expect to trust them with yours
Where exactly do you recommend in upstate NY out of curiousity ?
Hi Rosa, If you want inferior properties that are in questionable locations and are prepared to pay an overinflated prices then by all means use any of the services of the dozens or so spruikers that have sprung up in the last couple of years. As you have seen…they exist in Australia and the UK. They will predominantly sell in inferior markets of Michigan, Ohio, Arizona, Nevada, Florida, upstate New York…the list goes on. No surprise that these markets are the most depressed with high unemployment and high crime rates but they will do a good job of telling you all about the high gross returns. You will need at least $25,000-00 and no lending is available as banks won't touch the properties involved.<moderator: delete advertising>
harrypnh
Yes bank will take into account your Australian financial position and want pay slips etc amongst much paperwork to prove your income. I have been following the threads on RickH & melbourne girl and the reason I am certain was the lenders would not lend in the name of their LLC’s
Hi Nopz,
Try USTaxCentral. They have an article in this moths YIP magazine and looking at their website they look after ITIN’s, EIN’s, tax returns in Australia and the US
Hi JD,
McKinney is located on the Interstate 75 north of Dallas. It is a city in it’s own right but is statistically considered part of Dallas Metroplex which is fast growing. Texan cities tend to grow to the north and to the west of the downtown…..this is particularly the case with Dallas. When you drive on the I75 north from Houston to Dallas……Dallas just comes along all of a sudden without the normal build up of suburbs and all of the growth and freeways being built is to the north.
I personally went a little further north and invested in the Sherman-Denison area which is only 60 miles north of Dallas. This area has already had some Australian’s sucessfully invest over the past few year (an article recently in the weekend Australian Financial Review followed one such investor) and has a population of around 120,000. Brand new 4 bedroom homes can be purchased for under US$100K. The return is around 13% which is low compared to cities such as Kansas City, Detroit, Miami, Orlando etc but the upside is a much lower risk. The area is also close by to Lake Texoma which has over 6 million visitors a year and borders Oklahoma
If you after some basic info on Texas then have a look at http://www.texaplex.com/ and look at the video’s…. or the major research on real estate in Texas comes from Texas A&M at http://recenter.tamu.edu/
I’d be happy to tell you any more info needed.
Thanks Melbourne Girl,
That rule must have changed cause when I checked with them myself a few months back they specifically informed me that they only work with myusaproperty
Hi All,
Agree with the above comments. As per any successful investment into property…..it is usually determined by your network of professionals that you have around you. I was fortunate enough to get a first hand introduction to a team that had been tried and tested by previous Australian & New Zealand investors so I wasn’t going over to the US to re-invent the wheel.
And don’t expect that the service will be exactly the same as what your used to in Australia…..there are some subtle differences particularly with property management and the banking systems.
I guess the advantage that these companies do have is that it is very daunting to do it alone and it will require a lot of dedicated time on your behalf to succeed……problem is they take full advantage of this and as James points out……the sniff of commissions kicks in and the consumer loses out. Please understand that they don’t care whether you succeed or not and don’t have YOUR best interests at heart
These are very professional marketing groups who will do a great job of making it all seem so easy for you to the point you will ask yourself “what have I got to lose” They do a great job of making themselves look like a huge organisation with all the expertise and drop all the right names and have all the right answers and even have dedicated Customer Service Departments to look after you after hours……just look out and don’t get sold on the numbers alone.
Hi Jodee,
All I will say is tread with extreme caution. The concept etc is all 100% correct & I have no concern with investing in USA real estate (in the right markets) I have had personal experience in USA real estate market having been involved in financing to sales at one stage and still travel to the US and am already investing in property there.
My concern comes down to the actual companies you mentioned themselves. I won’t mention company names in this forum but mid last year I was interested enough to gain employment with one of the companies you mentioned. I wanted to see if I could gain any inside knowledge and to see if they knew something that I didn’t. I was not seeking a long term career. I discovered that the inside management had a past in selling overpriced real estate to Australian investors. The sales staff that most of you will deal with have been put through intensive training programmes to give the hard sell to prospective buyers and trained to sell multiple properties. They are not the slightest bit interested in your financial future and will move on to the next sale once you close on the deal. They get their stock from wholesalers in the US who have already made a substantial profit when they have purchased from the banks and then add on commissions to the price to cover Australian buyers agents. Oh I’m sure they’ll tell you that they only sell the homes to you at the same price they sell to Americans and that is correct…. but think about it a minute. Go back in time to overpriced Gold Coast investment properties. The marketeers duped all the southerners into paying inflated prices that was for sale to Queenslander’s at the same price…..if they were stupid enough to pay that price !!.
I suggest if you had had no experience in US real estate that you need to see it first to understand it. It’s a completely different market from Australia so you should have a look firsthand to get a firm understanding of what drives that market etc before you commit. You need to consider school districts amongst many demographics. I am no fan of Neil Jenman but on this occassion I think he may have it correct……he suggests many Australians are being duped into absolute crap property investments in the USA….driven by expert salespeople keen to earn a commission and move on to the next kill.
Let me ask you….if you saw the same numbers for an investment in the NT….would you go an have a look or rely upon a salespersons details ??.
As far as US investment…go for it I say if it suits you but check it all out first
Hi Gilby,
I came back from a due diligence trip to Texas in November and was very impressed with the DFW area and north. I have many clients who are interested in US property investment. The DFW area is where all the population growth is centred in Texas and I don’t believe you can go to far wrong as long as the area’s are in the right school district and the numbers stack up.
I would be very interested in your contacts details so I can likewise have a look. I plan to return in late March/early April 2011 so could look into the area’s more intensively. Could you please personal message me the details such as websites etc ??
Have a great 2011.
Hi Jason,
A lien follows the property and doesn't get wiped unless the lien is paid in full. Melbourne Girl has it right……save yourself the headache and make certain the property comes with title insurance….otherwise your playing with fire. Read some stories on the cheap properties in Detroit for example. You can pick up a cheap home for less then US$10,000-00 but it could come with prior mortgages or family debt liens well exceeding what you paid for it which now become yours to cover.
Hi PropertyInvestor
You will find that LoansUSA operate specifically to arrange finance for clients of MyUSAproperty. If you don't buy a property from MyUSAproperty then you are not eligible to use the services of LoansUSA.
I have a contact for a bank north of Dallas Texas that will lend up to70% (or even up to 80% for strong applicants) but you must purchase property from a specific source in Texas to be able to get "a look in" so to speak. Rates at 6.75% and will do in the name of a newly established LLC
Other then that you will find it very difficult to arrange finance in the US as a foreign nationalHi Lucigoosey,
White Goodman is correct…exchange rate risk. It also saves using all/some of your Australian equity.
You are also correct Lucigoosey in that everyone's situation is different and there is no single approach that suits all. Just like investing in Australia.
Hi Lucigoosey,
There is no such thing as US financing at 2%. When you hear in the media that rates in the US are close to zero percent….that is like a wholesale rate that the bank buys the funds and the re-lend it to customers. If your a US resident you would expect to pay as low as 3-4% if your credit score is solid.
As a foreign national borrower you are obviously a higher risk. The other thing to consider is that the bank can't off-sell your mortgage or get it securitised via Fannie Mae which is their source of funding. So you should not expect to get rates the same as a US resident. I met with a Regional President of a smaller regional bank north of Dallas when I was over last and an Australian resident would pay anywhere between 6-7% depending upon the strength of the applicant and what type of property you were purchasing. They considered a single family home the best security and were quite happy to lend in the name of a newly formed LLC.
I used to work in the US, 9 years ago and had a lot of dealings with banks and unfortunately the delay that RickH in his purchase of the 3 KC properties has is common. From experience, more often then not such delays indicated that a negative response is likely…hope that's not the case for you Rick
Hi TuckerOneProperties,
I have found an address from a current forum about a property located at 5631 Virginia Ave Kansas City. One agent is claiming we Aussies can buy it for around $43,000-00 whilst also pointing out that another agent has it listed for sale at $62,000-00. As a local I'd love to hear your opinion on the area and value. As a local would you buy there ??
Try this from the IRS website to see if this is how you understand it ??
http://www.irs.gov/businesses/small/international/article/0,,id=129631,00.html
Hi Bernie006
I have only just come back from a due diligence trip to Texas & had a detailed conversation with a US attorney while I was there that specializes in litigation. I explained that I am an Australian investor who wishes to build a property portfolio in the US. He suggested that I would be absolutely crazy if I purchased in my own personal name even if I had Landlord Insurance on a property as I would be minimising my risk of litigation. Even more so if I planned on paying cash as I would have equity that a potential party to a law suit would easily see from publicly available information.
You also have the issue that with IRS laws….a property manager would have to withhold 30% of your rental income and forward it to the IRS….if it were in the name of an LLC this is not the case.
For a small fee to set up an LLC it is well worth it. Plus you would still need to lodge a tax return in the USA even if the property is in your personal name.Hope this assists
