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Thanks for your helpful pointers
I have been in Fort Myers for a couple of days, and so far it has been a real eye opener. The place is a lot different than I expected, but it is a really nice area and I look forward to more trips here in the future.
I was able to set up business bank accounts for my LLCs with Wells Fargo, so that is great to finally have online access to my money and can tell it will be a great benefit down the line.
I also met with a mortgage broker this morning who was very confident in being able to get a loan. There is still a few things I have to provide to get pre-approval (tax returns, proof of funds etc) but if I am successful I will definitely be sharing the contacts and experience with fellow investors!
I only have a couple days here left (quick trip I know) but hopefully am able to close on a property I put an offer in before I came here, it was meant to be accepted by now…
I recently had a similar situation. My brother and I purchased a PPOR a few years ago and recently I wanted out and he wanted to buy out my half of the property. I was surprised to learn that it is basically like buying a house off a stranger. So yes you will need a solictor for the necessary paperwork to ensure the bank approves the finance and everything (if you are buying outright it may be different, but I would say you would need a solictor to ensure it is all in order).
Thanks for your nice words.
Do you think there is realistically any chance of meeting with a bank who will allow me to obtain a loan for a property? I really think I need to leverage to really take advantage of the situation over in the US. And having to save each time to buy a new house outright is taking too long and in a couple of years I have already seen property prices rise dramatically in the area I am investing, and the amount of 'quality' houses on the market is significantly less than what it used to be.
I do not want a ridiculous loan that led USA to get in trouble in the first place (like a 100% loan with no proof of income and such), I am more than happy to provide up to a 50% deposit and pay a slightly higher interest rate (given I will be a foreigner). But it would definitely be a step in the right direction.
I work not too far from Chinchilla in the Coal Seam Gas mines in the area, stayed in a camp there for a few months, now I stay over in Dalby (about an hour away).
There is no doubt that at the moment Chinchilla would be a good investment and give you positive gearing for any investment you have there. But the mines will not last forever, and when the people finally do leave the area, you will find a significant drop in your property value. In fact with the amount of housing they did build in Chinchilla, I imagine there will be hundreds of vacant houses when the mining companies do eventually finish up and leave the area. The population there simply will not be enough to fill up the houses for a very long time. Supply will be high and demand will be low, ingredients for very low property prices.
Myself personally I am not interested in investing in mining dominated areas, and although Chinchilla isn't a "pure" mining town, it is very significant part of the economy, so once it is taken away, so will the economic viability of the property in the area.
Dalby is slightly bigger (15,000 people compared to 3,000 people in Chinchilla), but again it is mostly dominated with the mining in the area, I would almost rather invest in Toowoomba, which although affected by mining at the moment, is still building in population even without the influence of mining. And it is only about an hour away from Brisbane outer suburbs. Toowoomba would also provide a lot of the maintenance resources required for the mining sites, as you can imagine the maintenance of the mines is going to last a lot longer than the actual construction. This is in regards to coal seam gas anyway.
He works in Oz, up in QLD with me, and he has no Japanese heritage (unless his wife is Japanese but I do not believe so).
And thanks Richard, but I was not asking about an Australian institution to lend foreign currency, but good to know nonetheless.
The loan was in AUD, that is one thing I would have to ensure on. The last thing I want to do with an investment property is add currency exchange risk to the investment, there is plenty of other investments having to try to mitigate.
Interesting thread. Every time I speak to someone in Australia about our US property pursuits they seem very interested and are either actively pursuing a similar goal or have at least done a bit of research in the area. I think that there is still some way to go yet and plenty of opportunities for people wanting to invest.
The market is slowly trending up but I agree with what has been said previously, if you buy property in the US, your main short to medium-term goal should be high cash flow returns.
Hi Bigfirerichie,
We've looked into opening an account with HSBC. The problem is, they will only allow you to open an INDIVIDUAL account in the US which is pretty useless as you're technically not allowed to deposit rental payments into it. This is because the US government views collecting rental payments as you operating a business and hence requires that you open a business bank account. It's impossible to open a business bank account in the US with HSBC as they require you to have a turnover of at least $3million and be in the import/export business.
I agree with Emma. We bought a property in Florida earlier this year and did exactly what Emma mentions in her post. It is quite easy and as long as you have a property manager that you trust (shouldn't be working with them if you don't trust them) then you can just ask them to wire you funds back to Australia whenever you need them. At the current exchange rate, I'd be keeping all my funds in America anyway.
I have a feeling that you are almost hoping a property is negatively geared? Even if the property is positively geared, you can still claim all of the expenses you have? And you will still have to declare your rent on your tax return anyway?
I mean sure you may pay more tax with a positively geared property, but you will still come out on top.
Hi Everyone,
We've been using an Australian real estate agent who is working Florida. Her name is Judith and she has been great in helping us buy our first property. Happy to pass on her details or if you have any questions then shoot us an email. We've written about our experience on our blog http://www.streamlineinvestingaustralia.blogspot.com
Thanks for the information Catalyst, and to clarify, I have had experience with property investment, however not much with renovations and hence I do not want to make mistakes.
Also our blog may offer some advice, but mainly is just to display our experiences so far, mainly with US investing as that is where we have had some experiences.
And to clarify, our intention would be to purchase a property around $200k, and then renovate it to get it up to around the $300k value. Hence why I was looking at what a property around $300k might be able to rent for. Sorry for the confusion.
What you are doing sounds exactly what our plan is, basically just purchase a property in need of renovation, and then do it up a bit and get it to CF+ and hold it and keep it in our portfolio, and used the increased equity in the property to continue this onto the next property.
Catalyst,
I assume some posts were deleted that I am missing?
Looking at our profiles – LillianWA has been a member since 9/8/2012, and I have been a member since 5/12/2010?
And also I do not believe I did any promotion anyway?
My personal opinion with investing is that it should not be a stressful experience. Don't get me wrong, it can be frustrating and a lot of hard work. But at the end of the day I do not want to have to be worried that things can go terribly wrong for myself financially.
This leads me to be a bit more 'safe' when it comes to investing and maybe taking baby steps rather than giant leaps in my portfolio, but I know that I should always be safe and comfortable in being able to maintain the amount of debt I have acquired.
For example, I purchased my first property with my brother, it was a PPOR so could not rely on any rent so the loan repayments had to come out of our incomes. With both our incomes we could cover the repayments comfortably, however if there was a situation that one of us all of a sudden lost our incomes, then it would be difficult, but we made sure that even on one income, we should still be able to maintain the loan and keep the bank from knocking on our door.
It is all about preparing for the worst so that you can handle anything that gets thrown at you.
I believe both are fairly strong rental markets, one benefit we see attached with Maitland is hopefully there is some effect from the mining in the area that will increase the demand for renting.
Looking at both areas, they both seem to be able to provide relatively strong yields, up to $400 per week for a $300,000 property seems to be quite achievable.
Looks great so far! Though I must say when I first got to the site I thought I made a spelling mistake in the address bar, I did not recognise it at all! But it looks really good, easy to navigate as well.
Cheers
James
New South Wales, Australia…not North South West, would be a funny name though, nobody would be able to find it!
Depite your actions, most people are simply not loyal to their bank of financial institution. So it is of no wonder they are no longer loyal to us, it is disappointing but I guess that is just how things are.
It is strange, because you think showing loyalty might be a way of differentiating themselves from the other banks. But like you have shown, one bad experience and they are ready to just cut you loose, losing a significant amount of business in the process.
But just find a mortgage broker and shop around, you may not have a large deposit but with the income and past credit history you should be able to find suitable finance somewhere.
It seems that you are able to get the third IP, but that being said it all happens with how comfortable you are with the extra debt. I know some people do not like the extra stress that comes with extra debt, other people do not see it as a risk and are comfortable to take it on knowing the tax benefits and believe the capital gains will make it a worthwhile investment.
But looking at the numbers – your current debt is $640k, your weekly income from rent is $790/week. The interest repayments per week would be $800 per week (assuming 6.5% interest rate). So you are $10 per week out of pocket, however I assume the rent was gross return, so really you may be about $150 per week out of pocket? Depending on your disposable income it will really see if this is sustainable or not.
If you do go for the extra property, that will give you $1,090k in debt, with a rental income of $1,220/week. The interest repayments would be $1,362 per week. So now you are $140 per week, and again assuming this is gross rent, you may be more likely about $350 per week out of pocket. And again look at your disposable income to see if you can afford to maintain these loans.
Keep in mind to factor a rise of 2% in the interest rate assumptions to see if you can still afford to sustain the loans.
Renel,
A simple spreadsheet willl be able to let you work out all the financial aspects of a project.
But at the end of the day, it is more important to be able to calculate exactly what the expenses will be, and be as realistic as possible with your expectations.
Once you know what all your costs will be, because keep in mind there are a lot of hidden costs that you do not always expect to have, then you will be able to develop a simple spreadsheet to show the total cost. And similarly for the expected cash return, as long as you are realistic, you should be able to see the profit potential of the job as a whole.
