Forum Replies Created
- Freckle wrote:
There are those now who are entering at what is virtually the top of the market with lots of downside risk. .
I tend to agree that those now entering the market are lambs to the slaughter. They will be hoping for increases as have occurred over the last year or so but they don't understand the limitations of the US general public to be able to afford housing even at the relatively low levels that current prices represent.
The original highs in Atlanta (of my market) were $150 -200K these dropped to $30-50k plus reno so averaging $70k renting for >$270pw around 20% gross. My ideal exit is $140+k which would mean 100% return on my money plus the rental in the mean time. They are now up to $120K and I don't feel positive that they will go much higher for a long time. The funds have a lot of stock that they will get tired of holding and as Fickles article already indicates, will go exit stage left potentially leaving those late entrants with negative equity and a double whammy of only getting 12% gross which is way below what you need to stay in the US market.
Jay
As has been the case all along the returns in the US have to be very generous or else the headaches associated with investing in a different jurisdiction is just not worth the effort.
Thus with the reduced returns from more expensive US properties and then add to that the falling AUD and the limited capital gains in the US why would any sane investor bother.
Lot's of people are now getting 'dear john' letters from Wells Fargo.
It seems anyone who opened an account without actually being physically present is having those account summarily closed and they will send you a cheque for the funds remaining in the account.
The deadline for the closure is early September.
Seems that the Patriot act the the root cause of the problem.
Hi Jay
Understand that there would be a legal process prior to a lean (as is in Australia).
What I meant is that at least there appear to be some assets that could be pursued if you get a favorable judgment.
The question is how many $5k chucks has he ripped and would there be room for a class type action?
Regards
<moderator: delete personal comment>
I have found a house that's owned by a Corey Fuller
The address is 2270 Sheryl Dr Decartur 30032
Parcel ID 15 138 01 011
He also comes up under a company
Fortis capital
http://www.fortiscapitalpartners.com/Index.htm
But there are no contact details.
And he comes up under Fotis Capital Partners LLC but this doesn't show up in the Georgia Secretary of state site (like our ASIC)
http://www.manta.com/c/mtmjmbg/fotis-capital-partners-llc
Hope you guys are successful in chasing him down, should help if he actually has property as you can lodge a lien.
Regards
Just need your passport and maybe your drivers license. I can't remember whether I had to use my drivers license but you should have it with you anyway.
We went to this branch only because a friend had used this branch a month previously so they were aware of Australia.
Wells Fargo
3800 Howard Hughes Parkway
Las Vegas, NV 89169, United States
(702) 791-6370
Get them to also set up the online access.
You will need about $200.
They sent everything out to our Australian address.
The banking features are limited compared to Aust but mainly the direct credit ability. This is a feature that is restricted to US citizens. I was talking to them the other night and the person I was discussing this with was indicating all I needed was my ITiN. Previous help desk types did not indicate this.
Cheers
I just don't understand why people are still using their own mobile's or services that you need to pay for!!!
Use google voice you can make all calls to the US mobile or land line completely free of charge,
Have now used this service for many hours.
Regards
emma171 wrote:Calorie count = task … Hate Squats (don't we all) – how much does squatting to paint baseboard trim in semi gloss paint add to your house? $3000 – how many squats does it equal = 3,000 – calories burnt ENDLESS – do you NOTICE them – NUP… your house looks prettier though – your arse just burns afterwards…. I have NEVER in my life been as toned as when I am working on properties and I seriously used to "gym it" and hate it a lot.Forget the sqauting – use a milk crate to sit on. Makes the job so much easier. Also you won't need a knee operation down the track. Up for one right now and it's not fun.
Regards
Ilovehouses wrote:Not sure if anyone can help me. I became the money partner in a property purchase in the U.S. The deal was that I would buy the property plus provide the funds for the rehab. The property was already pre-sold I was to receive 17% in 3 months time. I have a lien over the property and a promissory note from the this guy. Of course, when the 3 months was up, no money. I was told that the sale had fallen through but the property was rented and I would receive the rent until it was sold. Despite receiving a "deposit slip" I received nothing and then the emails stopped with no contact since.
So if there is anyone on here with a similar story or any americans, what would be the next step and how hard is it from Australia to foreclose if that is what is required?I would start by talking to your attorney who help you establish the lien and promissory note.
If you did not use an Attorney then my guess is that both are worthless and you have done your dough.
emma171 wrote:I am in Atlanta if that helps and will lend myself to the cause… As we only charge $115, $1500 to paint a house up to 2200 sq ft and 7% of gross rents for property management with no renewal or reletting fee, if you need someone on the ground I HATE PEOPLE BEING SCREWED HERE!!!If you paid over 8k for repairs and that didn't include an A/C – YOU WERE PROBABLY PRETTY HIGHLY CHARGED……
Let me know if you want a drive by I am everywhere tomorrow – literally from Cobb to Clayton and back again…
Hi Emma
Interested in finding out more about the management service you offer in Atlanta?
I think I have seen the sort of management deal that you offer for those with Atlanta properties but purchased outside of your organisation I just can't seem to locate it. Thus wondering if you care to post the details.
Do you manage the properties yourself (or your organisation) or do you use a third party (licensed broker) where you have struck a deal regarding the management arrangements. If you are personally involved then what is your license arrangements, particularly re trust account and the like?
Also I think it is important that the PM is close by the properties (say within 15miles). The bulk of my properties are located from Loganville through to Covington with the outliers being stone mountain and loganville. So the ideal location is around Lithonia giving the PM an opportunity to check issues such as late rent and simply playing phone flick with maintenance people rather than understanding the real problems.
jayhinrichs wrote:
WI thanks for sharing,, thats about what I was figuring on your out lay for the props and such…And as you say you stay on them daily to weekly you will mitigate a lot of what goes on…. My point is for everyone that is up for the task like yourselves there are others that are sold this product with the mind set that the PM will just take care of everything and the rentals work like AUssie rentals. And nothing can be further from the truth, as you have shared with the group…AGain thanks for sharing your business with the group,,,, I refer to you as a business owner not an investor.. Your running a nice little business here in the states.
It's not different a mind set than they have in Aust. This is the reason that these type of 'investors' never go past 1 investment property because even with the PM 'taking care of everything' they can't cope with the unexpected.
The reality is that there is no difference between having investment properties in the US or Aust. In both cases the PM can be good or bad and the issues are much the same except that heating/cooling are suddenly emergency repairs in the states.
I am very much with WI that you need to run your RE like a business and to that end need to have sufficient numbers to ensure that you can cope with the financial variability that this sort of business with create.
We follow this model in Aust having substantial RE holdings here and are following the same model in the US with 10 and soon 11 SFH's
Regards
nyc88 wrote:Hi Stu82, Sall94 and WorldInvestor, The US-based accountant said that many countries recognize an LLC as a “corporation” for tax purposes – while the United States recognises it as a look-through entity. In situations involving many other countries using an LLC can raise the worldwide effective tax rate of the investor to more than 55% when compared to something more traditional, like a US limited partnership. WorldInvestor, again, thanks for sharing – I find your structure involving loans against LLCs interesting. May I ask you some questions using the $500k loan scenario to an LLC, if it okay: Lets us assume you have personally lent $500,000 to your single-member LLC and that you have purchased seven properties (spending approximately $71,000 for each property). You personally charge interest at 10% – this amounts to $50,000 per annum. You pay withholding tax in the US on interest only, which is $50,000 x 10% = $5,000 pa. If you have seven properties in the US (for simplicity, lets say, in Atlanta) with each property yielding a net income of $5,500 pa after all expenses have been taken into account but before the interest charges of 10% is applied (yes, I am being conservative here about $5,500 pa net income per property). Seven properties multiply by $5,500 pa = $38,500 per annum. So WorldInvestor, as you saying that as a consequence of applying the interest charges, in this example, the properties will be negatively geared by $11,500 (that is $38,500 – $50,000 = $11,500)? If the above is correct, then no US tax is payable, and the tax loss of $11,500 incurred on the US tax return can be deducted from the person's Australian gross total taxable income. If you pay withholding tax of $5,000 on the interest charges on your US tax return, you could claim this amount as a tax credit against tax payable on the Australian tax return, couldn't you? Thank you for your time.These calculations need to be based on properties that have returns close to 20% gross.
At a 20% gross they should net out (before interest and tax) at about 12%. This works out to 40% for expenses.
So on a rent of $1200 pm or 14400 pa gives a net of $8640 X 7 = $60480.
If you end up with losses then I think you will start to attract unwanted attention.
The loan agreements need to be able to alter the % interest charged to adjust for the eventuality that there is a greater or lesser net income.
Yes you are right that the interest witholding tax is credited to you in Aust.
Be interested to hear further about experiences with US insurance companies. I recently organized a blended policy for 4 of my properties in Atlanta which means that I am paying slightly more but covered when the property is empty without having to immediately advice the insurance company.
Regards
AntheaProperty wrote:I have recently come across a co called Memphis Investment Properties. They offer a full service. Their prices are on their web site. They do deal with international clients. They seem to have multiple repeat clients. Memphis is the headquarters for AutoZone and FedEx. Memphis has the US's third-largest railroad hub and the world's busiest air cargo hub so is a hub for distribution. So plenty of good jobs for renters. There are no state property taxes. They offer a 50% asset based loan on rental properties and is available to foreign based borrowers. I think there are representatives in Australia.These folk are simply resellers with massive mark ups on substandard property.
As an example.
Of their site we have the following property listed for $72k with all the associated <moderator: delete language> to entise you to buy and make you feel comfortable.
448 Brookfield Way Jonesboro, Georgia 30238
If you then check zillow or redfin or any other RE site you find that you could have bought this property for $35k unrenovated.
The reno they will do will be a cheap reno with a max spend of $10k so they will be marking up the property $27k or nearly 100% profit margin.
This is only one example and the first one I checked so no doubt most of their offerings will follow the same business model. Leopard and it's spots and all.
If you need to buy through an organisation like this, that promises to hold you hand the whole way (they won't), then really you shouldn't be investing in the US.
Cheers
worldinvestor wrote:Hi Allsome time ago we discussed cages, just got this from a friend who has researched this and is using these for his properties in Atlanta. They are not cheap, around $650 each. Much better than the norm.
http://westendcages.com/WI
I recently installed one of these cages and was very impressed by the construction of the cage. I was so impressed that we are installing a further 3 shortly.
These cages will certainly slow down the thief and hopefully encourage them to 'shop' elsewhere.
In the end if they are determined enough they will get through any measures that we put in place.
Security lights (as per Alex) is an example. BB gun to knock them out or conversely simply help them by lighting up the 'job' sight.
I suspect that a lot of these newly installed units are actually an inside job with the installers helper the likely culprit.
regards
I was the one angling to purchase this property with the foreknowledge that there are fundamental problems with this house.
The whole of the baywindow area inside the house was water damaged and no doubt heavily moulded behind the gyprock. The bank (or someone) had already tried to repair the damage but even the repair was showing water damage.
Basically when it rains it has a waterfall down between the garage and the bay window. All the roof elements converge on this spot with this spot being about 300mm. With the orientation of the house it appears that the bulk of the weather is directed to this area.
With so much water coming together the is really no way to keep it from flooding into the building cavities.
So whoever bought this property is going to be facing substantially increased maintenance costs to continually rectify the basic and inherent building fault.
I was prepared to pay up to a price and spend money to rectify the inherent fault. I doubt that those who bought and then flipped it will have done anything more than slapped a bit of gyprock and paint around so this fault will just reappear from the next major downpour.
Beyond the visual damage is the ongoing mould issue which will potentially effect the rent-ability of the property and even invite a liability issue should a tenant suffer some medical issues as a result of the mould.
Not everything that shines is gold.
zmagen wrote:Have to say I like the owner-financed option as an exit strategy – I'm just wondering how much you could add to the price when selling it, if say the area hasn't gone up at all since you bought? If you add less than 12-15% to your total benefit, wouldn't you have been better off selling it, like Eng says, at no or almost no profit, just so you could free it up to make more money elsewhere? And why would a potential home-owner want to get his finance from you (the owner) at 12-15% if he can get it at say 10% from the bank? The only people open to it, I'd say, would be those who are refused standard channel funding – and then, do you really want to get into a financial bed with them as their last option?
A very fine line there…I'd be interested to see how you'd structure those deals and how successful they turn out to be – please keep us posted.
I had contemplated that vendor finance strategy could be an exit strategy when the market returns to equilibrium.
The problem that I feel would affect the concept is, as you say, the % over standard interest rates and the type of clients that this would attract – the desperate or bad credit rating or both jump to mind. Then more so the fact that the US Re market has a history of boom and bust so by following a vendor financing approach will you actually get out in time or will you be stuck in the market with vendor finance deals whilst the market crashes again.
Regards
Hi All
Just some more US bank knocking.
Bpay in the US means bill pay and Wells Fargo will send out a cheque (check) to the person you want to pay. Takes up to 10 days. The most you can electronically transfer in a day is $1000 and this is to an account in the same bank.
My general contractor (builder) indicated that if you want to get more than $9999 in cash out then you actually have to fill out some federal form.
Yet with all these restriction we went into a local branch (we are in the US by the way ) and withdrew just over $5k from an LLC account that we didn't have our debit card for. We did have the debit card for our linked personal account.
I forgot, took us over 1/2 hour to arrange to get cheque books for 3 LLC accounts at $25 each and will take 10 days. In Aust it takes about 2 seconds with a choice of small or large and will be out in the next run. So next time you speak to your US banker and ask for a cheque book and they avoid the issue you know why.
Anyway back to the OP question. We do have a US debit card for each LLC and one would think that you can just go to an ATM and withdraw the money, up to the limits and their crippling FX rates and charges. We have certainly done this in reverse using our Aust debit card in the US.
Regards
One of the US guys can most probably guide you better but the bulk of your policy cost is covering the $168k value you have nominated for replacement cost of the property.
You do need to cover for the value but only up to 80% (not absolutely sure of the %) of the replacement value or else the insurance company reduces the payout cover. None the less at $60 replacement cost you are covering for a 2800sf property and at $80 replacement 2100sf.
The other thing that is really different from an Oz police is the liability with an Oz policy having $10mil cover included. Notice in this policy you only have $300k – big difference.
Thus far we have paid in the vicinity of $1000 per policy.
Regards
Lawsjsbut for anyone starting out, I think the way to make this work is NOT buy one – you may be lucky, but you may not. It will take as much effort to run 4-5 as 1, but the averages will make the returns a lot more palatable in the long run.
I couldn't agree more that unless you are prepared to buy multiples and prepared to stay for the long haul (5+ years and possibly more than 10 years) you are likely to waste your time. I also think that unless you are a seasoned Australian property investor you really shouldn't be entering the US market as it's simply a completely different market both, in the attitude of the management companies and also the way that the market behaves in respect to capital gains.
I have already commented on the standard American management agreements elsewhere but the bottom line is that they are writen to benefit the management company not the landlord with a financial costs upwards of 1 and 1/2 months of rent for placement of tenant and renewal of lease, respectively. You are alreaady down to just over 10 months rent for the year. The one group who are making a lot of money out of the whole US debacle are the management companies as illustrated by the many new entrants to the field.
Regards
