I disagree with Andrew 191919

Yes the internet is a wonderful tool and yes you do not necessarily have to go the States to secure a good deal, but real estate is not the same world over, and buying something off the internet is fraught with more pitfalls than I could list here.

Even going to States for a couple of week to do nothing but look at properties is not the way to buy property in the States.  Unless you can spend 2 to 3 months there to familiarise yourself with the market , the neighbourhoods, the legalities and  the network of people your going to need you're bound to make errors in your investment.  When I started buying properties in the US for myself I spent 5 weeks in the US doing nothing but research and even then I made bad decisions that I certain would not do now .  The process really need you to stub your toe a few times before you get it right.  But stubbing your toes two or three times at the beginning can amount to a couple of bad investments.  However, once you have gotten it right the rewards are there.  Therefore, my recommendation is that unless can spent months in the US, then secure the services of someone or a group that has to ensure that you do not fall into some of the pitfalls that can beset you.   

For those who still want to do it themselves I would suggest as a minimum properties that are in the Burbs, already fully rehabbed with warranties against any defect not picked up by the Building Inspection and importantly are already tenanted. 

Regards
Rob

US Property Invest
http://www.uspropertyinvest.com.au
0413 099 598

Hi all, firstly I must advise that I have a vested interest in posting on this forum as US Property Invest sources and consults on properties for Australian investors looking to invest in the US market.  

YES, the chances of buying a true cash flow positive property for $11,000 is extremely unlikely, and I would urge all but the very astute investors, that are on the ground in the US at the time and have been there for months on end and know the city intimately, to stay away from them ( for all the reasons that Jay has given and then some). 

So "WHAT IS THE RIGHT BUY in the USA"  There is so much information out there about this that it can make your head spin, so I will try and keep it simple.  Firstly you need to look at the purchase price to net returns ratio, or simply ROI.  Then look at the potential markets and narrow it down to only those cities that have good core economic fundamentals.  A key indicator of this is the unemployment rate, has it been steady over the last year or two, or has it increased or decreased?  What are the main and supplementary industries of the city and what is the potential for improvement or decline of that economy. 

Okay so let get down to specifics.  Basically look for properties with a cap ex for a tenanted, fully rehabbed property, with defect free warranties etc for the $40k to $55k, this will maximize your return and should give you a nett return north of 16%. 

WHERE,  it also very important.  There has been talk in other forums of Kansas City, and I would have to agree that it is a reasonably place to invest in, providing you stay in the Burbs.  Why, because Kansas City is the urban hub of the rural or bread basket area of America, an economic segment that is somewhat insulated from the economic woe of Greater USA.  Indianapolis has also been mentioned as a hot spot for investment, but there are also other cities that provide good ROIs and economic stability.  For example Columbus Ohio.  Now, I would not put my client's money in many, if not most other cities in Ohio, but Columbus is one that I would.  Apart from being the Capital of Ohio, and therefore providing a lot of Government employment it also has the largest University in America – Ohio State University, which directly employs 52,000 people, and indirectly many 100,000s more, and in essence this has kept the unemployment rate stable and significantly below the US average, and will continue to do so. 

However, how we wish it was as easy as just picking a price and city, because of course in each city there are good neighbourhoods and bad neighbourhoods, good streets and bad streets.  So how does one know unless they have themselves spent several weeks in that city doing nothing but researching the property market and the neighbourhood in question?  Well, if anyone on this forum has used a US buying consultancy firm in Australia or NZ that they are comfortable with and which has provided them with good results and service then stick with them.  For all others unable to put in that sort of time for a $45k investment and considering using a consultancy firm for the first time or switching firms then I would suggest as a minimum that the firm have there own employees on the ground in that US city checking out every property and neighbourhood that is offered, and backing up their findings with a report, not just a report on the building in question but also on the socio economic factors surrounding  your investment.  Not an agents report or word for it, not a wholesalers recommendation, not something from a client manager in another US city, but their own employee, preferably with a qualified building certificate, physically checking out the property and the neighbourhood and vouching for it.  Furthermore, insist that all purchases have a separate independent building and termite inspection done and that anything found during the inspections is fixed at the Seller's expense, and then that they give as a minimum (written into the purchase contract) a 3 month warranty from any defect or maintenance issue.  Yes it can be done! 

However, having said all this, and whilst knowing the RIO and where to buy in the US is extremely important, critical even, the buying decision however is so much greater than just knowing these two things.  There is for example the type of property, the property management arrangements, the legal checks, the US accountancy compliance and so much, much more.   Yes, investing in US property can be rewarding, I have more than a dozen US properties myself, but it can also be a minefield. <moderator: delete advertising>

Wishing you the best in your investments

Rob
http://www.uspropertyinvest.com.au            

Getting back to the original question on 10 year rental guarantees.  I would like to see the fine print.  Really the best genuine guarantee I have seen is a 12 month Seller's guarantee, where something has been put into an escrow account, or even more straight forward a Section 8 tenant at the beginning of their 12 month lease.  Now that is more or less guaranteed.  As for the rest, buyer beware! 

Yes, there are great turn-key properties available with 12 month tenants in place and good nett returns of 16%+, but unless someone is willing to escrow that money, which I doubt they will, then I would not believe in the 10 year guarantee. 

Furthermore, on the subject of guarantees I would also look at, and I do for my clients, what sort of guarantees the Seller is willing to provide on any defects that may be found in the property between exchange and settlement and for a period (say 3 months) after purchase.  Buyer' s protection and location are probably (not necessarily in that order) the 2 most important things when buying in the US.

Rob
http://www.uspropertyinvest.com.au

I suggest not buying anything unless it is already fully rehabbed, has a defect warranty attached that will cover you against any and all maintenance or defect issue for a 3 or 6 month period after purchase with no excess amount, AND has a 12 month tenant already in place.  If it is not tenanted then write into the contract that settlement will not take place until a properly vetted tenant on a 12 month lease is secured.

Rob

uspropertyinvest.com.au

Hi all, firstly I must advise that I have a vested interest in posting on this forum as US Property Invest sources and consults on properties for Australian investors looking to invest in the US market.  

So where to buy?  An extremely important question, and there is so much information out there that it can, as one poster put it "make your head spin," so I'll try and keep it simple.  Firstly you need to look at the purchase price to net returns ratio, or simply ROI.  Then look at the potential markets and narrow it down to only those cities that have good core economic fundamentals.  A key indicator of this is the unemployment rate, has it been steady over the last year or two, or has it increased or decreased?  What are the main and supplementary industries of the city and what is the potential for improvement or decline of that economy. 

Okay so let get down to specifics.  There has been mention of Kansas City being a good place to invest your money, and I would have to agree.  Why?  Basically because the cap ex for a tenanted, fully rehabbed property, with defect free warranties etc is only $40k to $50k and the nett return is often still north of 17%.  But importantly because Kansas City is the urban hub of the rural or bread basket area of America, an economic segment that is somewhat insulated from the economic woe of Greater USA.  I also agree that Indianapolis is emerging as place to invest for the reason already given by others. But there are also other cities that provide good ROIs and economic stability.  For example I have seen no comment on this forum about Columbus Ohio.  Now, I would not put my client's money in many, if not most other cities in Ohio, but Columbus is one that I would.  Apart from being the Capital of Ohio, and therefore providing a lot of Government employment it also has the largest University in America – Ohio State University, which directly employs 52,000 people, and indirectly many 100,000s more, and in essence this has kept the unemployment rate stable and significantly below the US average, and will continue to do so. 

However, how we wish it was as easy as just picking a city, because of course in each city there are good neighbourhoods and bad neighbourhoods, good streets and bad streets.  So how does one know unless they have themselves spent several weeks in that city doing nothing but researching the property market and the neighbourhood in question?  Well, if anyone on this forum has used a US buying consultancy firm in Australia or NZ that they are comfortable with and which has provided them with good results and service then stick with them.  For all others unable to put in that sort of time for a $45k investment and considering using a consultancy firm for the first time or switching firms then I would suggest as a minimum that the firm have there own employees on the ground in that US city checking out every property and neighbourhood that is offered, and backing up their findings with a report, not just a report on the building in question but also on the socio economic factors surrounding  your investment.  Not an agents report or word for it, not a wholesalers recommendation, not something from a client manager in another US city, but their own employee, preferably with a qualified building certificate, physically checking out the property and the neighbourhood and vouching for it.  Furthermore, insist that all purchases have a separate independent building and termite inspection done and that anything found during the inspections is fixed at the Seller's expense, and then that they give as a minimum (written into the purchase contract) a 3 month warranty from any defect or maintenance issue.  Yes it can be done!  So, I guess I'm saying that knowing where to buy in the US is extremely important, critical even, but the buying decision is so much greater than just knowing where to buy.  There is for example the type of property, the property management arrangements, the legal checks, the US accountancy compliance and so much, much more.   Yes, investing in US property can be rewarding, I have more than a dozen US properties myself, but it can also be a minefield, and anyone considering buying in any overseas location should consult one on one, face to face, with someone that has done it many times before and is familiar with all the pitfall that can befall the unsuspecting Aussie investor.

Rob
http://www.uspropertyinvest.com.au