Forum Replies Created
Hey Chris
My partner owns a holiday rentals company on the Mornington Peninsula. The best places to buy are in Rye down as these have the most demand, but all areas are sold out in Summer. Best to look for 4+ bedrooms if you can get one in your budget, this way it allows for 2 families to stay and you can ask a higher weekly amount.
Luxury homes can go for $10,000+ per week and we have some of these on the books. We have a lot of owners who live in their properties and move out to allow it to be rented when booking come in. Less demand for Rosebud overall. Best location, bang for buck is Rye 4 bed house.
Anything with a pool and a view and close to beach your onto a winner.
If it can pay for most of the mortgage and you get to stay there when its not rented why not.
Hi Pete
You also want to look at who your target buyer is. I am guessing it will be a landlord and not an owner occupier as the area sounds like it is predominantly renters if your concerned about vandalism.
As a landlord you always would rather buy an investment property with a tenant than one that’s vacant. That alone will enable you to get a better price as it’s generating income from day one. The other benefit is as Nigel has already outlined and you have having someone living in the property is added security for it and less of a target for opportunity theft.
Good responses Senense and Xenia. Thanks for those.
I think Trulia has to be one of the better sites in the US if you want local information about which state to invest in
Check this out on New York for example:
http://www.trulia.com/real_estate/New_York-New_York/It has crime with dates and type of crime, schools and stats on sales prices and market trends.
Then use http://www.realtor.com/
to find a property for sale. This is based on the MLS (Multiple Listing Service) used by all the brokers in the US.
You can also download this app on your iphone, drive around the US and get instant data on houses for sale in your location. Or use the map view and search remotely.I also love rentometer.com as ten_bruner has pointed out. Very accurate and easy to use.
Hope this helps those looking at the US.
What do you guys think to this request..
Tenants inspect a property and see it has vents for heating and cooling in the ceiling and floor. They also notice that there is portable electric heaters in the bedroom and lounge room downstairs where the vents are. One of the vents has been taped over with sticky tape.
The tenants asked the agent if the heating works in the property as there are portable heaters in the rooms. He said he would confirm.
They agree to move in and find that the heating does not work. The agent then inform them it was obvious the heating did not work during their inspection as there was sticky tape over the vents. They ask for the heating to be fixed but the agent informs them the portable heaters are sufficient. The room is open plan double story and there is one heater downstairs and one upstairs.
Would you want to rent from this agent?
Okay thanks for that. Tax Liens are an exciting opportunity in the US. You certainly don’t need 3 days to learn about them.
What I found attractive about tax Liens is they are backed by the US government. They come about when a property owner has not paid their annual property taxes (our council rates here), after a certain time the county will put a lien on the property (similar to a caveat here) and then sell it to the highest bidder and guarantee a fixed rate of return each year. e.g Lee County in Florida is an 18% return on the cost of the lien. The county do this as they need to pay for public services and if no one paid there taxes they cannot run these local services such as the police force!
Investors buy liens as they are very low risk, backed by the US government, as long as you don’t mind waiting a year or two for your return. The idea though is to buy the right liens that are likely to get paid out as you do not necessarily want to have to force foreclosure on a property, which leads to more time. Albeit you are earning interest the longer it runs.
If you foreclose you can then end up with the property, which for some investors is why they buy tax liens, however I think the opportunity to end up with the property is less and less in the current climate, while property prices are rising again, owners are less inclined to walk away and find a way to repay their debts and keep onto their home and biggest asset.
hi Cath
What was it about tax liens that you liked?
Did they provide you with a basic approach on how to go about buying tax liens in your chosen state?
Hey Lauriek
I have a section 8 tenant in the US. Ideally you need to make sure you back to back any agreements where you have more than one party involved. I would believe the tenancy agreement would be the one most enforceable regarding your property. But you are asking about legally binding, so you should contact your local US attorney to find out. I can recommend two in the US if you do not have one, but the question is do you want to invest more money in litigation costs. Water and sewer are not a lot and if they believe they are not responsible for it on renewal you add this on to the rent or you do not renew and lease to someone else who will take those bills on. Quite strange for your tenant to not be responsible for water and sewer for a residential property.I hope this has helped in some way.
Steve
Hi Ajay
To answer you first question about how many properties you can purchase with $300k at 70% LTV you could potentially buy up to 10 properties at $100k per property, but you will need money for closing. That could be another 2% of the property price. Another consideration on lendind restrictions is some lenders will want the property purchase price to be above a certain amount such as $100,000 and below a certain amount say $300,000.
Closing is the terms used in the US for settlement. You pay no stamp duty in the US which is great – we get robbed here on that. You do have to pay a small amount for title insurance charges which is the transfer of the title and insurance to confirm the title is all good and any attorney fees you negotiate. But I have paid as low as $200 for attorney fees and around $180 for title charges. Any delta is property taxes you will also need to pay based on the date you you buy
Alternatively if you do not wish to leverage and own property debt free you could buy one good commercial property for $300k or one or two multi-family properties at $150k each in decent areas in the US.
As an example I bought a warehouse in Florida for $90,000 that generates $1275 per month – this is owned debt free.
Another example I bought a multi-family duplex for $65k, carrying back finance with the seller with 50% down on 0% interest with balloon in 36 months with note payments of $500 per month paying off 100% principle. This generates $595 per door. This asset generates $1190 per month and I bought it tenanted. So using these as example I used $122,500 cash to generate $2,465 per month gross income. You need to add in costs for property management, maintenance (although commercial has little to zero maintenance – owning commercial property debt free is where you ideally want to get to generate a true passive income) and property taxes.
Look at your exit strategy before you buy – be clear about what your objective is. To generate a passive income or to hope for capital growth and sell it x years later. I prefer to buy for passive income as this is a fact I know today, where as capital growth you are buying and hoping on something to happen that is outside your control.
On your second question about tax here – I am not a qualified tax accountant so I am just giving my opinion so you need to check with a tax accountant but you will pay tax on your income in the US first and any tax you pay their is then offset against the tax you owe in Australia. Whether this is more I cannot tell you but you are credited any tax you pay in the US. Generally the tax rate in the US is lower than it is here.
Check with a good US tax accountant on the tax consequences and I can hook you up with one I use that Steve McKnight recommended to me.
The CAP rate is what we call yield, I am using US terms as you need to use them if you invest in the US as no one will understand you in the US talking about yields!! haha
You have to Take Action if you want it to happen and build your US power team around you. If you locate yourself in the US then you have a great opportunity to make it happen, but it can also be done remotely with the support of a great team on the ground from the US.
Hi Ajay
You will not be able to get a traditional bank loan with a 5% deposit.
From my experience investing in the USA you can borrow for an investment property 70% LTV as Ivan said however this may have restrictions on the maximum hour price you can purchase – e.g $200,000. There is also conditions that you will need to purchase in your own name. If you wanted to buy it in an LLC you would need to put down 35% deposit.
In the US they are more open to creative approaches to buying real estate and it is quite common for seller to carry back finance for you. I have obtained this on several properties my partner and I have purchased in the US. You can negotiate as small as a 10% deposit this way depending on the seller’s motivation.
To finance into a bank down the track you will need to provide 2 years of US tax returns.
If you want to live in NY I would probably buy in another state that has better returns 10%+ with your $300k and then from the cash flow use that as the rent for your apartment in NY. Then when you come back to Sydney you will still have the positive cash flow from your assets bought at $300k. You could buy several properties with $300k that would return say $30,000 per year net passive income with no debt or leverage into an owner financed commercial property to move from a 10% CAP rate to close 15% CAP rate.
Good luck with it
Steve
