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To answer your questions regarding borrowing funds in Australia to purchase property in the US, I had 2 main reasons for choosing not to do this –
* Interest rates are a lot lower in the US and I wanted to take advantage of this, with me being able to get an interest rate of 3.75% that is a lot more beneficial then in Australia where I do not think I would get much below 6% for a loan of this size (it is only for $55,000)
* I also wanted to make sure I got the loan in US Dollars, I am not positive how an Australian loan would work, but I just want to be able to have it all in the same currency, with the rent paying off the loan. If I had to transfer the rent back to Australia every month to pay off the loan it would be annoying.
* I also think going through the pain now to get a US Loan is worth it in the long run, it has been difficult and frustrating but I think I am almost there, and hopefully now that I have one under my belt it will be a lot easier the subsequent loans I do get. That is the plan anyway.
As Richard said, be wary of the low lying areas, a lot of undesirable people living in certain parts. Want to make sure you steer clear of them.
You can try these people – http://www.ifindproperty.co.nz/
Maree Tassell is her name, I have not previously dealt with her but enlisted to her newsletter when I was looking at investing in NZ, seems to send out some good deals every now and then. Has contacts over there which would be very useful as well.
If you do end up dealing with her, would be interested to see how your experiences with her goes.
It is obvious now the banks were ridiculously greedy in 2006-2008 with outrageous loans to people who could obviously not afford them. But what they have done now is just taken a massive backwards step and have now just become too conservative it is no doubt hurting their own hip pocket. Last time I checked a bank makes a bit of money out of having a home loan, so they should be happy to give them out, providing they give it to someone who can reliably pay off the loan.
Now not saying I am a good candidate for a loan, but seeing as I already have 2 houses in the US which they can use for collateral if they wanted, not to mention my bank account has enough money to actually buy out the loan should it need to, and also considering my annual salary is 3 times the loan amount, you think they would be pretty confident that I should have no problem paying off the loan. Oh and did I forget to mention the rent the house will receive will be double the loan repayment?
Anyway….fingers crossed I will get there soon, maybe the next one will be easier.
Sigh….I thought I had all my forms sent off and everything was going well, then this morning I received a letter from Capital Bank with about 12 more requests from me, more things I have to provide. A lot of it really makes no sense –
* Please provide proof of funds in your Commonwealth Bank account for closing…..even though I have more than adequate funds in my Capital Bank account to close! That is what the money is there for in the first place.
* Please provide tax and insurance for your place of residence – I told them this at the start that I do not own where I live, I asked to have it removed from my loan application when they had it there as part of my assets but they never did. Very frustrating.
And there is another 10 more requests which are mostly just clerical errors on their behalf, oh well. Hopefully soon I can close…..fingers crossed
It seems that a lot of economists are predicting a downfall, but there are still some out there predicting that it will just keep going on it's merry way. Who is right and who is wrong? I guess only time will tell…..
As for supply and demand, well it may be simplistic it still holds true, the Australian government can control supply by only approving a certain number of new dwellings per year, and given the population increase there is a natural increase in demand, the only other variable we have is the foreign investor. At the moment we are seeing an unprecedented number of Asian investors into our country, the article points out this is because they realise China is no longer a safe investment and they are getting their money out as fast as they can. If China does not collapse then I imagine demand will continue to be very high, and provided supply is controlled and somewhat restricted, house prices should continue to soar. If China does collapse, well, at least domestic purchases will have more a chance, but the supply will need to be controlled even further to ensure demand is still there.
I am no expert, I do not know who is right and who is wrong, but I am still planning on buying a place in Sydney in the next few weeks, I just want to make sure I do not bury myself in debt and buy in a place that is relatively cheap and shows good prospects.
Definitely recommend getting rid of the debt first, I know it may put off your RE dreams off for a bit, but no point adding a lot more debt to what you already have. Financial stress is not something you want to put onto yourself if you can help it.
Finally able to meet up with a Notary Public and have the final form "Notarized", difficult to find one seeing as I spend most of my time out in Rural QLD where I work. But I was able to duck into Toowoomba and meet up with a great bloke who did the job for me, and then I was able to scan and email it through to my US Agent and she was able to have her end notarized as well.
So as of this morning I have sent it off to the bank, should be the final form to submit. Now I will have to play the waiting game and see how it all pans out.
Hoping by this time next week to have a new property under my belt and a nice small loan to start paying off
Hi Tom,
As others have said, University is a personal choice, definitely not essential. I know in my university degree (civil engineering) I did not learn too much about how to be a good engineer, I learnt everything as soon as I stepped into the workforce, in the end I feel like the only reason I did the course to get a piece of paper which meant I could be an engineer.
I would be interested to keep in touch, I have a younger friend (about 17 now I think he is) and I have been trying to show him the light in terms of investing and achieving financial freedom, unfortunately he has never seemed interested in learning that sort of thing, I bet he will realise it when he is older and wishes he started doing it when I first started showing him!
But for yourself in your current situation I think you should use it to your advantage, and by that I mean is after focusing all on school of course, you should have a fair bit of spare time, so do not waste it, try and keep researching and planning for the future, so by the time you are able to start investing, you will have all the knowledge you need!
But feel free to drop an email, I would be happy to keep you in the loop with my next investments so you can see (almost) first hand every step of the way regarding investing in property. Hopefully you will find it interesting and perhaps make a decision if it is something you want to pursue in the future, and with the bonus of not having to risk any of your own money!
Just to keep it updated –
I have submitted all of my loan documents except one (approximately 20 documents all together), the only one I have left to submit is a US Agent Authorization form, it seems like a useless form, it states
"As my authorized US Agent in the United States. This appointment includes but is not limited to acting as a translator on my behalf and/or in my absence regarding the affairs related to the above described property and mortgage. Responsibilities of Authorized United States Agent shall also be to assist in any service of process in connection with any legal action or proceedings in the courts of the United States"
It looks like I need a US Agent for the life of the loan, still do not really know the reason for it, but I guess just in case something goes wrong they will have someone to contact in the US. This was the only form I had that needed to be witnessed by a Notary Public, hence the delay, being out in the outback it took some time to organise an appointment with a Notary Public. Eventually I was able to drive a couple hours and meet one in Toowoomba, saw him for about 15 minutes, he signed my documents and put his seal on it, and then back out to work it was. Hopefully I will be submitting that to the bank shortly (still need to send it over to my US Agent to have her side notarized as well)
Still hoping to close by mid-February. Fingers crossed for the time being.
Only cost be about $300 to set up both of my LLC ($600 total), may have gone the budget version but they still do what I need to do so cannot complain.
As for US Bank Accounts I have had a lot of bad luck, I was able to get a bank account set up with BB&T Bank remotely (without even visiting the country) but they closed the account about a week later. Then when I was in the US I had an account set up with Wells Fargo over there and all seemed to go well, but they were subsequently closed about two weeks later (never even got a reason). Now we have an account opened with Capital Bank (been opened since the start of the year) and that seems to be going alright so far, but we have formed a partnership with someone who lives in the US so hopefully they can manage it if anything occurs.
Well hopefully now that I have the loan documents it should all be completed very quickly and smoothly. Our initial closing date we just said anticipated closing to be in a month (which was mid February) so we just aimed for that, looks like we are slightly ahead of target there so that is good news. Still a little way to go yet.
There is one document that needs to be notarized, I need to have a US Agent apparently, to be honest I do not even know what that is and it needs me to have myself sign it, my US agent sign it, and have it notarized. I have questioned what this is exactly and how they want me to achieve it, given I am currently in a remote area, a long way from any Notary Public. Hopefully I get an answer about that shortly and can still submit the loan documents soon.
Will definitely open a lot of doors for us if this is successful.
When we had to get documents notarized we found a guy in Sydney who was very willing to help us out, wasn't cheap (about $50 per document I believe) but he was very helpful and a pleasure to deal with.
Just to update on the proceedings, I have now received the Loan Documents from Capital Bank, seems to be a never ending list of documents to sign! Nothing too exciting though, I had a lot of questions about the loan application itself, I do not know who filled it out or where they got their information from but it was all over the shop, hopefully it is not too much to change.
I am hopefully going to submit them back to the bank by the end of the week and still aiming to close mid-February.
One good thing they do in the US is allow you to upload the documents via the internet, it is very helpful, not sure if they currently do this in Australia (haven't opened a loan in this country for few years).
If anyone was interested in a full breakdown of the loan application process just PM me, I will be happy to go through all the documents and fees that were associated with the process.
I agree with the earlier posts, you really need to take into consideration all the costs associated with maintaining a property to calculate numbers effectively, such as rates, strata, utilities etc to be able to calculate yield.
But as was said before, yield is just a number, it does not mean much and you can manipulate numbers very easily to make them say what you want. At the end of the day you want to see how many dollars are coming into your pocket or out of your pocket.
Interesting situation, I would try and borrow as little as possible because a few dollars between friends can quickly turn friendship into enemies, that is the last thing you want.
Care to explain how this exactly works, like if they give you enough money for the deposit, are you going to be able to save up enough money in a couple of months to pay them back? Sorry it just sounds like a bizarre situation, if you were able to save enough money in the couple of months to pay them back, then I would just hold off buying a place and then only buy it once you can afford it properly.
I remember with my first property we had to chase down a notary public to sign the documents. It was quite a hassle because a Notary Public over there is the equivalent of a Justice of the Peace, so they are really easy to find over there but very difficult to find over in Australia. Not so much difficult but expensive, I remember we had to pay approximately $350 for our Notary Public to put his seal on approximately 8 documents, compared to a JP which in most cases would do it for free. Anyway, I am not sure if Notary Public is required, however my contact in the US is a manager (with limited power) in my LLC and hence should be able to do that part for me, which would save a lot of hassle.
I am still waiting for my loan documents but looks like I should get them early next week, definitely looking forward to reading them thoroughly.
The finance will be with Capital Bank, same bank I have my bank accounts with over there so that has made things run a bit smoother. Also the loan will be in my LLC's name as oppose to my own.
Yes I was surprised to see loans at such low values, but I talked to a mortgage broker when I was last over there and he said they would generally go as low as a $50,000 loan, so approximately $75,000 property would be the minimum property value you could go for.
You are definitely right, there is an opportunity here to make some money and I am looking to take advantage of that. Someone has to make the money so may as well keep it in the family if possible?
As for taking longer to sell due to renovations, she wants to sell the property around March next year, and I am looking to have the renovations completed before then so it should not make much difference in terms of her getting money. Also this way she is guaranteed a price that she has agreed upon before we do anything. If she is not happy with the amount then we simply won't carry out the renovations and we can let the market decide the value.
Thanks Terry, looks like I will have to talk with someone directly about the situation to make sure it does get done correctly. As for grandma's capacity, she is of sound mind at the moment at least. I know what you mean about pressure from other family members and that was a big concern, especially since she has 8 children who will all have their own ideas of what should be carried out. I made sure I talked to all of them about this before we got too far and they were happy enough for the works to be carried out, all they are looking out for is what is best for grandma, and they realise now that we are looking out for her best interests as well.
Do you have any contacts you can recommend to help us out with all this? Setting it all up so it works best for everyone. We are based in Sydney so that would be preferable.
The site for the Sydney Olympics was basically a wasteland prior to the Olympics, since they have come and gone there have been whole new suburbs that have taken off, notably around Rhodes, North Strathfield, Newington and Homebush etc, all these high rise apartment blocks along the river that were just not there before. The train stations along these areas have also been improved significantly. Whether this was on the back of the Olympics is hard to tell, I would say just new pieces of land came onto the market for development which investors snapped at and has since changed the landscape so significantly. With the new demand at these stations, they needed upgrading. They were only upgraded around 2009 though, so well after the Olympics.
No doubt the Sydney Olympics improved public transport in the area, but the main improvement was really only transport into Sydney Olympic Park itself, where nobody lives, it is just stadiums and arenas. Couple hotels, pubs and shops in there but nothing too significant. You need to remember the site of Sydney Olympic Park is still a fair distance from the city, (approx 15km)
Hard to tell what Gold Coast will be like, I do not know the area well, I would say if it is already built up then it would pay to buy now ahead of all the main works that will be carried out in 5 years time. But just make sure the people selling the places have not taken that into consideration and used it to increase their property value…
