Forum Replies Created
Where to Invest in the USA?
What I look for is a great balance of cash flow, potential growth and secure tenancy/management.
The main reason we see buyers investing in the USA is Cash Flow because. let's face it, rental returns in Australia suck. Some investors are wanting pure high net yields and are unconcerned about growth and this can lead them into dangerous territory if they do not pay attention to security of tenancy and management. We have seen these hazards where tenant turnover causes constant maintenance and eviction and tenanting costs, destroying the cash flow and causing investors to want to sell to cut their losses. Quiet often these same properties are shown to net 20% plus in the original offer.
Midwest cities like Kansas City, St Loius and Indianapolis have an abundance of high net yield properties available and the relative success of these properties relies entirely on good selection of neighborhood and manager. There is a big difference between the foreclosed price and the fully renovated value of homes, with often $20k plus needing to be spent to to bring these homes up to rent ready status. In some cases the risk of damage and theft of HVAC, furnaces and appliances can lead to extensive repair costs and a real loss of value if these homes are not effectively managed and remain occupied. With the real incentive for high cash flow being the main motive here, the investor will need to ensure they are outside of real trouble areas, yet not buying further upmarket where returns diminish. Capital growth is going to be negligible in these markets because these cities neither boomed significantly during the boom years or fell dramatically after the GFC.
Memphis comes into the radar, though higher cost and lower rents has this city falling below the above in net yields with even lower growth expectations. Wholesalers in Memphis work on much higher margins, often padding the home by $15-20k for commissions paid secretly to marketers. They can also offer vendor finance at low interest rates, but this is manufactured by the wholesaler buying the mortgage note for $5k and then increasing the price.
Atlanta is our number 1 hotspot at the moment. It has an abundance of newer constructed homes that are priced at 1/3 of their building replacement cost, giving excellent value for capital invested. With a sustainable investment priced from $40-60k and having attainable net yields of 12-16%, Atlanta has a great balance of all the investor needs.
Big money is moving into this market now with one of our major wholesalers discontinuing their reselling operation due to a new contract to acquire and manage homes for a multi-billion dollar fund. With a target that values homes based on a net-yield model, these wall street tycoons are making a play on a whole investment class which will cause increases in the prices of investment grade properties over the next year as massive amounts of capital flood into this market. We expect the market to increase by 25% in price and lower sustainable yields to 10-12% within a year.
Fortunately we have been able to enlist the same management as the large fund, ensuring quality of performance. This is the critical component. When Warren Buffet said recently he would "buy 200,000 single family homes now", he added "if he could find a way to effectively manage them".
There are areas of Atlanta you would do well to avoid. South of the city to the airport and west to the 285 ring rd are no go areas, so watch out for homes offered in these areas. Apart from the north east, inside of the 285 can be costly. We feature a steady stream of comparable properrties on our website that are screened fro these risks, so you can use these to profile your sweet spots.
Phoenix has shown us what can happen when the big money starts to move with a 22% increase in median prices over the last twelve months. The market for high grade, newer constructed investment homes is tight, with professional wholesale companies mostly working for large funds now. As a result there are very few turn key, renovated and tenanted investments available at reasonable cost. Most contracts will be cash unconditional with quick close, as the competition from institutional investors has made this buying method the norm, with wholesalers not needing to extend themselves in the buyer's direction. Net yields are now around 7-9% and growth will be capped at around the 5-7% net yield rate, above which the institutional money goes to sleep.
Tenancy takes longer with 2-3 month vacancies the norm between tenants. There also seems to be a consumer attitude to the renting public, with lower regard for the upkeep of properties and demands for maintenance higher. Air conditioning is a much higher expense here with the temperatures over 100f for six months of the year. Tenants do not clean filters on AC units causing a lot of breakdowns so you need to budget $7-800 per year on AC alone.
We do a lot of research on markets across the USA and I am happy to share further info. Please post your questions here and I will offer what I know. I will be updating some info on Florida soon.
Many thanks
Vincent Selleck – US Buyers Agent 888 US Real Estate
http://www.888usaproperty.com.au/buy-now/listings/LLCW wrote:RickH and Jefff1, take a good long look at some of the (currently listed) properties on HBUSA's website and that of 888 US Real Estate – there are some houses that look suspiciously similar last time I checked… and with a noticeable price difference too I would add.A lot of Australian Companies deal with the same wholesalers in the USA. At 888 US Real Estate we negotiate the lowest price for the buyer who receives it direct and often at a discount to the wholesalers list price.
This differs from the standard model for property wholesalers in The USA, which is to offer brokers an "uplift" which is paid to the broker secretly after close and hidden in the sales price. A company in Australia could charge you a buyers agent fee and also be collecting from the price uplift on the other side without you knowing about this.
In Australia this double dealing is outlawed and any real estate agent would lose their license if caught engaging in this gross conflict of interest, yet it is common in the USA property supply industry.
Our wholesale suppliers will not let us publish full street addresses because a google search will show our prices are lower than other marketers and this impacts their other business. You can find the full address on our website if use the "Brochure" button under "Property Tools" to create a pdf report. You can then google the address for full due diligence.
I have seen as much as $20,000 difference between our listed price and other operators on the same property.
Many thanks
Vincent Selleck
http://www.888usaproperty.com.au/buy-now/listings/
[email protected]property_scout wrote:In a recent post I made mention that 2 months ago I purchased a house for $23,000 in Kansas City. However what amazed me when I was doing the due diligence is this same house was for sale through another website called – "888 US Real Estate" and purchase price was for $45,230……. This was only 6 months earlier…… It made me sick to think that if you are not careful, you will be slaughtered by these Aussie Agents…. 888 Real Estate had the property advertised at renting for $850/month. When I took over as landlord, it was only renting for $625. $625/Month is still a great return when purchasing at $23,000 but it worries me that some Aussie agent can just inflate the rental estimates to make the investment numbers look appealing, when reality is, a few months later my tenant signed a lease for $625 per month. Now I apologise that this post has probably smashed 888 Real Estate's business, I realise that, but I would like to give Vincent an opportunity to explain himself and why the rent was inflated as well as the price? Address of this property was 3919 Euclid Ave Kansas City, google it and you will see the 888 RE listing that I found while doing my due diligence I don't like to criticise the Aussie Buying Agents for charging $3,000-$5,000 per property they find (It is a service provided after all), but more point out that there is a huge American company supplying to all of these Aussie Agent's at huge wholesale discounts and who also look after all of the LLC/Bank Set Ups/Property Management for these agents without charging the huge fees Hmmmm cutting out the middle man sounds good to me… Fortunately, I never ended up using Australian agents to purchase US property. I apologise for ruining the secret but http://www.americanrealestateinvestments.com supply to all of the agents out here in Australia, see for yourself… Good Luck Property_ScoutHi Property Scout
When a wholesaler offers us a property we research the market and assess value. In Kansas City the market value is determined by the renovated quality of the home. 3919 Euclid Ave Kansas City was brought to us by Mike Cantrell, who we believed to be sufficiently principled to provide good judgment when providing listings. Our subsequent building inspection found this property to be severely lacking and we therefore turned it in. The $23,000 you paid would have been more appropriate. Rent prices of $850 per month were possible through section 8 and this was how the property was presented to us, as already tenanted and leases produced to support this figure.
We have since terminated the relationship with Mike Cantrell. Anyone who misrepresents a property does not last long as a source with 888. We tend to favour large wholesale companies who provide consistent quality and value for money in providing turn key properties. Kansas City tends to be active with lots of smaller players with variable results. We highly recommend full due diligence for every home and independent building inspections. There was also a trend for vendors in KC to compete by providing vendor rent contributions to bump up the rent and give higher net yields, which is the main reason buyers invest in KC. We do not tolerate this practice and are very clear with the vendors about this.
American Real Estate Investments have been one of our wholesalers and provide very well renovated properties and excellent service. We are one of the few companies that have marketed their properties without mark-up or collecting commissions on the seller side. We also have a very healthy discount that would provide investors a better price than their direct model. We can never disclose full address or price in our website due to the conflict this causes with their other buyers who mark the property up and receive secret commissions.
For genuine net returns with quality renovations we have now turned to Indianapolis where duplexes fully renovated with tenants often exceed 20% net return. We have several orders from buyers now in this market and have a quality pipeline coming through.
Not every property we list passes through our due diligence process. We are the first to pull a listing if it proves to be less that expected. We tend to deal with specific suppliers with consistent, quality delivery and results now. Our network of supply is constantly improving.
Thanks for your comments and the opportunity to address them. Could you please also email me so that I know what is being said, rather than finding by accident month's later?
Many thanks
Vincent Selleck
http://www.888usaproperty.com.au/buy-now/listings/
[email protected]mallikk wrote:I had a very bad experience with this guy, Vincent.
I paid his commitment fee of 188$ on 7 Nov 2011 and pursued a property in Atlanta listed on his website. The correspondence that followed did not really inspire my initial confidence in Vencent. He neither exhibited any expertise nor his responses were adequate to quell my doubts. It appeared that he was merely shuttling messages between buyers and other parties on the sell side.
I requested a refund of 188$. he said no. He actually dared me to do what ever I can and I can only dream of getting the money back. It appears, he is right. Dept of Commerce (Real estate division) forwarded my complaint to NSW fair trading, When they approached vincent, the answer is still NO. They advised me to approach some small claims Tribunal in NSW. I am not really sure whether I want to pay (50.$..!?) tribunal fee and fill out bunch of papers and attend their hearings.
But I authorize whoever is reading this, to replicate this comment on 888 USA real estate WHEREVER they want to paste in this WORLD WIDE WEB called internet. That would be like achieving what I would like to achieve by going to the tribunal.
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Mallik
Every now and then we come across someone with a complaint which defies reasonable explanation. In this case Mallik completed our appointment agreement and paid a non-refundable fee to gain access to our professional network as he wanted to enquire about correct structuring, as he was operating a Singapore based company and was from India. He gained referral and free appointments with our team of lawyers, accountants and discount services for foreign exchange and identification of our suppliers and managers. Our contract is very clear that the $188 fee was non-refundable. He also gained rights to have all listings delivered as a priority through email alerts and the ability to hold properties off market for due diligence. All our properties are listed publicly with full disclosure at our site http://www.888usaproperty.com.au/buy-now/listings/
He expressed interest in buying 3473 Oakleaf Pass Atlanta, a 3 bed, 2 bath, 2007 built home listed for sale on our site for $57,900. Our price included a full rehab, new appliances, 1 year home warranty, rental guarantee and tenant replacement guarantee. It has a comparative value of $97,200 based on price per square ft of recent sales prices nearby.
This "A" rated property is in a market sector with high demand with investors competing for new constructed, discounted foreclosures in "A" class areas. We have a relationship with a specialist wholesaler who secures these homes under contract and provides full rehab and tenanting services with complete guarantees to our investors, so rent is paid upon close while the property is being prepared and tenanted. This differs from our other delivery model where established homes are renovated and tenanted prior to listing.
We encourage every buyer to complete their due diligence, starting with a google search of the address to confirm tax rates, location factors and recent sales prices. Mallik did this and discovered a listing for the property at the price contracted by my wholesaler, without any improvements or guarantees. He then contacted the selling agent who listed the property at the lower price and to his disappointment, was referred back to us. At this point he became unreasonable and aggressive, demanding his non-refundable deposit back.
Normally we would consider such a request, but it was clear that Mallik had gained the immediate benefits of our free services and professional networks and was unwilling to discuss or be reasonable about his position. No deposit had been paid for a property transaction, nor had he completed a contract to purchase. He had exercised his right to defer a property purchase through his due diligence process, while maintaining exclusive access to buy the listed property. He was never charged a fee for the property transaction.
We immediately contracted this property to another buyer and it it has since closed and the owner has received everything he expected, including rent guarantee, rehab including all items on an independent building inspection report and re-inspection to ensure all work was conducted to his satisfaction.
Mallik continued to escalate the dispute unreasonably and we decided not to refund his money on principle. That he chose to post his complaint here and that some of it was unprintable due to its personal and abusive nature is testament to his attitude.
We operate as buyers agents and receive no commission from the vendors at close or have any interests in any properties listed. We therefore do not need to be licensed as a real estate agent in the US states that we operate in. Our buyers pay us a service fee, which is fully disclosed on each listing. We have no exclusive contracts with vendors and have no conflict of interest in always representing the interests of our buyers. We also have an office in Miami Florida and have a fully qualified US real estate agent there.
We have closed over 400 properties in the USA with buyers from all over Australia and in Asia, Europe and the Middle East. People come to us because we offer full disclosure with all our listings available publicly at our website. Our clients are attracted to the direct wholesale pricing we offer and the quality of service that makes it easy to buy and manage. Every property can be contracted subject to due diligence and all aspects of the transaction are fully assisted to achieve a pre-determined result. We also continue to support our buyers after purchase with free service for management and other issues.
I sincerely hope that potential clients will not be influenced by this unreasonable attack on our character and good standing.
Thank you for hearing our side of the story.
Vincent Selleck – USA buyers agent
http://www.888usaproperty.com.au/buy-now/listings/Hi
Its been a while since I read this forum. In reply to the comment about never having been to the USA, I travel regularly and we also have an office in Miami, Florida. I spent three weeks in 8 cities in June. I know who would have said this to Speedy and their integrity is questionable when they have to deride others to support their own insecurities.
I also happen to be a US citizen! Living in Byron Bay does not necessarily make one a "Hippy"
Our attention to sustainable business practices that truly represent the buyers interests only stand up very well in a market where many choose to prey through hidden commissions and deceptive practices. All our commissions are fully disclosed with complete financial analysis on each listing on our website. We value each listing using current market sales and it must meet our standards before we list it. We also provide ongoing free support to our buyers to assist them in resolving issues with properties and management.
Vincent Selleck
[email protected]
http://www.888usaproperty.com.auTermites are active in Georgia and we encounter about 1 in 10 properties will have some evidence of termite infestation either current or historical, particularly where the properties are over 10 years old. We insist on pest and building inspections prior to purchase and will only contract subject to a detailed inspection report.
Our preference is to purchase further up the chain from wholesale companies where the properties are already renovated with tenants. This creates a crystalised result with cash flow, costs and expenses all determined at time of purchase. We also receive rental guarantees, tenant replacement guarantees and home warranties that allay any foreseeable risks. Net yields of 15% are easily achieved on quality newer homes in good areas without needing to go through rent vacuums while renovating and trying to find good management and tenants. Renovations are often under estimated and potential rents overstated. Time vacant while renovating and tenanting can be 2-4 months which needs to be calculated in your net yields in the first year.
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Vincent Selleck
[email protected]
http://www.888usaproperty.com.auHi Paul
I appreciate your interest in our company, 888 US Real Estate, and look forward to hearing from some of our buyers about their experience.
Regarding Treasure Hunter's comments, we do not have any interest in the properties we source for our clients. We act simply as buyers agents with the best interests of our clients as the most important factor. We do not receive secret commissions or any payments from sellers and have absolutely no conflict of interest. All costs are fully disclosed including our fee and we provide full access to all our contacts, so you can establish your own relationship with service providers in the US.
We are unique in this stand for integrity and full disclosure. Our currency is trust. Some of our clients have tried other providers and experienced some of the pitfalls described. For instance, one of the Kansas City properties we listed, 5631 Virginia Ave, was also offerred through our wholesaler to another agency in Australia, also mentioned in this forum. We listed the purchase price as $38,000 and declared all the buying costs including our fee for a total buying cost of $43,100 with a net return of 18.2%. Our client provided us with the other agency's marketing jacket and there was no disclosure of their commission and a price of $62,500! The net return from them on exactly the same property was 12.5%! A 50% mark-up would take a long time to recover and the property becomes an instant liability, rather then a well bought asset with built in equity.
What was even more frightening was the comparative price analysis they provided to support their extreme mark-up, which in my experience was flagrant deception. The properties were not comparable at all.
I hate seeing people getting ripped off. One of the biggest risks in US property investment is the moral integrity of the people you are dealing with, both in Australia and in the USA. Another is vacancy. I have seen and heard many stories of people buying a property through an agent, getting it renovated, and then having it vacant for months, sometimes being trashed and vandalised in the process. Atlanta is very risky for this, particularly in the inner metro areas.
When I was in the US in October I spent a lot of time in different cities building on our reliable relationships to provide properties that were renovated and tenanted, mostly with Government guaranteed rent. Fortunately we are now able to buy 10-15 properties a week for clients that have tenants and reliable management already in place, without extreme mark-up or opportunistic marketeering.
I do not want this to sound like advertising, nor do we need further business from members of this forum. I do like to see people treated fairly though and strongly advise people ensure that their due diligence is extensive and that they always contract an independent building inspection and market appraisal before they enter into any unconditional contract. If more people did this it would clear out some of the greed and double dealings that too frequently occur when buying in the US.
It is possible to invest in the US with safety and get great cash flows and bargain prices on properties that are well below their construction costs.
Please feel free to contact me if you have any questions about investing in the USA.
Many thanks
Vincent Selleck – US Buyers Agent
888 US Real Estate Pty Ltd
[email protected] / 02 66857 888 / http://www.888usrealestate.com.auI attended the Gold Coast day that was presented by Dymphna and found her tax structuring information useful and informative. I was disappointed that her examples were not qualified by naming the city they were in and her guide to where to invest was a general method of research rather than a guide to cities, markets and locations. It seems that information is only revealed to those who sign up for her 3 day boot camp and go on a bus trip to America shopping with her associates and the providers she recommends.
I am a bit over the bait and tease routine used by seminar presenters to get people to enlist. I do not believe that her methods are the only safe way to invest in the US, nor do people have to travel there to do it.
I just spent two and a half weeks in Orlando, Atlanta, Kansas City and Phonix working with my wholesalers and agents to provide quality supply and delivery of properties for our clients and refining our target strategies to allow buyers to get great cash flow, equity in the current market and great growth potential in highly discounted homes. As a result we now have great supply and consistent delivery for our Australian clients, who don't have to get on a plane to buy in the US.
Most of the investors i am speaking to do not have the time to do a three day seminar or a two week trip to the US. I am sure that works for some people, but there are other, easier, safe ways to invest in the US.
I also have a warning for buyers.One of our contacts recently contracted a property from a well advertised USA property company operating in capital cities in eastern Australia. It was a home in Kansas City at 5631 Virginia Ave that was fully renovated with a tenant on board. Their price was $62,500. We were offerred the same property direct from my wholesaler in Kansas City and had also listed it for our buyers. Our fully delivered price including all disclosed fees was $43,100!
Needless to say this guy was really disappointed and went to get out of the contract, but alas had paid a non refundable deposit upfront. Even though he lost about $1500 he still tore up the contract rather than paying $20,000 too much for the property. I asked my wholesaler about this and he said that these guys buy the properties at the same price I pay and then mark them up when reselling them. Their marketing jacket uses unrealistic comparables to hoodwink buyers into believing they are getting a great property worth more than what they pay.
I get really disappointed when i see good people getting ripped off. I had another call from a property marketing company on the Gold Coast who want to offer US real estate to their database. They wanted to buy properties from us and mark them up by $10-15,000 and on sell them to unsuspecting buyers. A net yield of 18% goes down to 12% immediately when this happens and you cannot hope to resell the property for what you paid for it for years to come.
This has nothing to do with Dymphna, but I want to warn investors to do their due diligence properly to prevent them from getting burned. Ask the company you are buying from if they have an interest in the property directly or indirectly. Search through recent sales records on http://www.zillow.com. Check the comparable sales for the area. Do not believe anything you are told by the marketing company.
I am sure there are hundreds of buyers blissfully unaware of how badly they have done or of how much the buying agent made from them in the deal. We always disclose everything.
We have more than enough buyers using our service at the moment, so do not consider this to be a promotion for our services. Just be very careful when you are out there because the biggest risk is the moral risk posed by people who see their own need for cash more important than your right to fair treatment. We are happy to share information about our experience in the US, so please call or email.
Wishing you all well in your US buying adventure.
Vincent Selleck
[email protected] / 02 66857888
http://www.888usrealestate.com.auHi Everyone
888 Us Real Estate Pty Ltd is no longer contracting Top Rental Returns to buy property for clients in Atlanta. We now have other US Real Estate Buyers agents working with us there as well as Phoenix, Orlando and Kansas City. Of the 17 properties originally contracted by 888 through Top Rental Returns only 3 are vacant. We have engaged Real Property Management in Atlanta to facilitate management of our properties and are working with all of our clients to ensure that tenants are placed in reasonable time frames. We apologise to any of our clients who experienced delays in tenanting by Top Rental Returns. As you know, we are still working with every one of you to resolve any outstanding issues and have intervened on your behalf to create solutions.
We are now offering already renovated and tenanted properties in Atlanta, to ensure that there is lower risk of theft or damage while vacant. We have a network of US investors selling private stock at great market prices with reliable tenants on board and net returns between 15-20%. We also have renovated and tenanted properties in Kansas City, Orlando and Phoenix, as well as fix and flip opportunities, multi family and wholesale discounted real estate as well.
Please do not be discouraged by the results demonstrated here as there are plenty of sound investment reasons to buy in the USA. Vacancy remains as one of the major risks to the US real estate experience and caution is needed to ensure every measure is taken to alleviate this risk. Selection is the most important factor and competitive pricing and rental incentives are vital to the success of property investment in the USA.
888 US Real Estate operates with complete transparency for all our investors. We do not load the property price with hidden commissions or take any profit from third parties. We want you to know about the risks of your investment and help you to mitigate them in all ways possible. Some risks are acceptable and lead to higher reward, but you also need a strong, experienced team to ensure you have the risks covered. The biggest risk with investment in the US is dealing with the wrong people.
I invite anyone who would like a frank and open discussion of the rental market conditions in the US with me to give me a call at my office in Australia, details below.
Many thanks
Vincent Selleck
888 US Real Estate P/L
Ph 02 66857888 Mbl 0403 255510
[email protected]
http://www.888wealthcreation.comHi Everyone
Our joint US and Australian tax agent has given us some FAQ on tax and investment structures for Australians investing in the USA.
We have also secured the services of a super fund consultant who is an expert in creative structuring for US property investment for self managed super funds.
I also have an Australian Lawyer who sets up LLC and EIN in America for my clients at a very reasonable rate.
Here is the FAQ:
Q. Can Foreign Individuals purchase US property?
A. Yes individuals can.
Q. Do foreign investors pay tax in the US?
A. Yes. Basically any income sourced in the US is taxed in the US.
Q. Can I set up a bank account in the US?
A. Yes. But you will need to check with the particular bank to see what info is needed. As a foreign investor you will need a reason for setting up a bank account (ie investing purposes)
Q. What is an ITIN number and why do I need one?
A. Individual tax identification number which is used for federal tax reporting purposes. (Similar to the AUS tax file number)
Q. Do Australians pay tax in Australia for their US properties?
A. Australian permanent residents pay tax on world-wide income. They are allowed a foreign tax credit for tax paid on foreign sourced income.
Q. Can income be quarantined in the US for tax purposes?
A. US sourced income will be subject to AUS tax by any Australian permanent resident.
Q. Do Australian investors pay capital gains tax on the sale of the property in the US?
A. Yes.
Q. Do Australian investors pay CGT in Australia on the sale of their US property?
A. Yes.
Q. Can the property be purchased in the US using a LLC company?
A. Yes. However, I strongly recommend that this is discussed with a local solicitor to determine any state requirements.
Q. What are the income tax rates in the US for LLC’s?
A. Depends on who the income is passed out to – they can be taxed at personal rates or company rates – in most cases for small investors it would be advantageous to be taxed at personal rates. Personal tax brackets can be found at http://www.moneychimp.com/features/tax_brackets.htm
Q. What are the CGT rates in the US for LLC’s?
A. Depends on who the income is passed out to – assuming it is passed out to an individual CGT rates can be as low as zero and they go up to 35%. The CGT rate depends on the length of time the investment was held and the individuals ordinary income tax rate for the year.
Q. What is an EIN number and how do I get one?
A. An employer identification number is used to process most business activities (similar to an ABN). It can be applied for online, by phone, by fax, or by email. I suggest this is discussed with your solicitor and is done when the LLC is set up.
Q. Can I quarantine capital gains from sale of US property in the US and roll them into another property without paying CGT?
A. Yes. Under a 1031 exchange this may be possible.
Q. If an Australian investor sets up an LLC in a tax free state like Delaware and uses a pass through LLC in the state which the property is owned do they have to pay state income tax?
A. All LLC’s are pass through entities. Wherever the net income is sourced is where the state tax will be paid (if any).
Q. Can an investor buy US property using a Self Managed Super Fund?
A. This may be deemed as running a business. Each situation would need to be discussed.
Q. Can a SMSF use an LLC in the US to own property?
A. This depends on who is the LLC member. This would need to be discussed with the local solicitor as some states may not allow this.
Q. What property expense deductions are allowable in the US to offset income?
A. Normal operating expenses.
Q. Can you depreciate US property for US tax?
A. Yes.
Q. Can you depreciate US property for Australian tax?
A. The depreciation would offset the US income which would then roll up into the net foreign income to be reported on the AUS tax return.I hope this is useful for property investors looking to invest in the US. I am happy to take calls and share our experiences in the US to date.
Vincent Selleck
Mortgage Broker
Buyers Agent
Wealth Creation Strategist
888 Wealth Creation Pty Ltd ABN – 37068435665
[email protected]
Ph – Fax 02 66 858 388 – Mbl 0403 255510
Shop 6/14 Middleton St. Byron Bay NSW 2481
http://www.888wealthcreation.comP.S. Just do it! People of accomplishment rarely sit back and let things happen to them. They go out and happen to things.
Hi
Apologies for the delay in reply, we are very busy buying foreclosed properties in Phoenix and Atlanta at the moment. If you want a report on our results my Blog on http://888wealthcreation.blogspot.com. It gives a detailed report on conditions experienced in Atlanta and strategies to help investors understand the challenges of the market.
We are getting 15-25% net returns factoring in the expenses of rental management, taxes or rates, insurance and provisions for maintenance. The biggest hurdle in getting tenants in Atlanta is getting the property approved for Section 8, Government sponsored tenancy, and the process takes time booking inspections and providing the paperwork. There is an 18 month waiting list for tenants to get on the program and it is helping people back into vacant houses and rebuilding community and neighbourhoods.
Most of the tenants applying to rent our homes are sponsored under Section 8. The Government pays the rent direct to our rental manager and inspects the property regularly to ensure the tenant is maintaining it well. If they are not, then they are at risk to lose their sponsorship, so the majority of these tenants stay put and do the right thing. Our rental managers also inspect and do the regular police, employment and credit checks, get references and reject unsuitable applicants. It generally takes about six weeks to place tenants this way and there are plenty of tenants wanting to move into near new, fully renovated properties.
The vacancy figures in Atlanta are skewed by the number of foreclosed properties that are boarded up empty. The Americans can't get loans to buy and their credit is compromised from walking out of houses that were "under water", that owe more than their current market value. Atlanta was particularly hard hit by the sub-prime crisis and as a result suffered more dramatic falls than places like Texas and Indianapolis, but this is good for investors because we can buy near new homes and get the high returns.
Property prices are trending upwards, but there will still be a window of opportunity to buy homes with 15% plus rental returns for some time to come. The foreclosures that are forecast for the future are generally for higher value properties than the ones we are buying. This will impact middle and upper value properties much more than the lower percentiles. Much work is also underway to refinance the loan resets to extend the viability of current ownership and I would be cautious about waiting too long to enter the market.
I like buying value, and when we buy a house that is built in 2006, 4 bed, 2.5 bath, close to central Atlanta which sold for $350,000 and would cost $150,000 to construct or more today, at a price of $40-50,000, it is like buying BHP shares for $5 with a dividend of $1 per year. We know the assets and earnings are worth 10 x what we are buying them for and the market will eventually correct and represent their true value. While we are getting a 20% return on our investment, there is little risk in holding and waiting for the correction, even if we are borrowing funds.
Lending is difficult in the US now. After talking to countless brokers and lenders we have decided not to pursue lending on low priced property in the US. Investors are raising cash, using super or lines of credit on Australian property to buy. In the future when equity increases and the lending market improves we will take out loans in the US so we can make further investments. This would be a good strategy to avoid capital gains tax while still being able to raise cash from the property growth.
We are borrowing funds for short term fix and flips in Phoenix. We are getting 75% LVR on purchase and the lender will also value the property for us, confirming the comparable sales target for the project, adding another level of safety. This allows our investors an alternative method of profiting from property and increasing their total investment pool for buying more high yield properties. We recommend both buy and hold with high return and fix and flip as a combined strategy to maximise the equity momentum and cash flow of US holdings.
One of the best safeguards we have for investment are some of the best people on the ground in the US to help us. I really enjoy working with Karen and Jesse in Phoenix and appreciate their total commitment to making our deals work, following through on every detail and taking total responsibility for delivering service to our clients. Likewise, our three Atlanta teams are doing a great job and as we bring more clients on board, the resources we can attract in the US make everything smoother and more satisfying. I think one of the greatest risks in investing in the US is going it alone, because it takes some pull to get good agents to give you total attention. We have agents who are only working for us and adding extra team members to meet the needs of our many new investors.
Structuring deals and setting up LLC's is fairly simple, though different for each case and we refer all our clients to a great joint US and Australian tax agent for a free consultation. There are different approaches for super funds and individuals and, not being a tax professional, I do not give specific advice. The processes are straight forward and we direct people on the preferred path to ensure everything is set up satisfactorily.
I have now included some sample property deals on our website and would encourage anyone interested to have a browse at http://www.888wealthcreation.com .
I will be back soon to answer questions and give you some more guidance from our growing experience in the US markets.
Aloha for now
Vincent Selleck
US buyers agent
888 Wealth Creation p/l
Byron Bay NSW
[email protected]This is not accounting or tax advice. Please consult with a qualified accountant to ensure this
information is suitable for your individual needs.In my experience, different accountants and advisers will give different advice. An LLC in Nevada is OK for direct ownership because Nevada does not have any state income tax. This is also true for Delaware. We would use this LLC as a holding company for all US properties up to an income threshold of $35,000, after which the federal tax rate increases and it is better to break up the assets into more cells.
If you are buying property in other states, we generally recommend using a single member, pass through LLC in the state where the property is owned with your Delaware or Nevada LLC as the member. This allows profits to be passed on without attracting state tax. Buying through super funds needs careful consideration about structure and who controls it so you do not breach regulations.
Hope this is helpful.
Many thanks
Vincent Selleck
http://www.888wealthcreation.com
Buyers Agent for US foreclosed propertyHi Peter
Texas is doing well economically and less affected by heavy foreclosure rates, but that may not be a good thing for property investment. Value investors such as Warren Buffet buy when stocks are low and this can be applied to property. If Texas is doing well then the relative decline in asset values are lower than areas harder hit by the GFC. As a result the value of your purchase is not going to be as high as areas harder hit with more foreclosures. The percentage decline in properties for an area is of greater interest to value investors than the economic strength.
For instance, if you are buying a nearly new property at 15% of its actual cost to construct, you are getting leverage on a real asset, because new homes being built again nearby will still need to be built at that value. If, on the other hand you are buying properties that have weathered the storm magnificently, you may be buying them at 80% of their former vale which is a lot less leverage on the asset.
The key to value investing is to get a return while holding, and this also better for highly devalued assets, provided you can manage them well and retain tenants. Fortunately the US Government has come to our aid with Section 8 rental assistance, providing a guaranteed rental payment to assist US citizens in financial hardship. In areas hardest hit by foreclosures, there is also an abundance of tenants with Government guaranteed rent. It takes a little bit longer to get through the paperwork and have the house inspected and passed for Section 8, but it is worthwhile when you consider the benefits.
Once you have a steady, positive cash flow, the rewards that will come from the recovery of the US economy will be extraordinary, with highly devalued homes increasing in value by hundreds of percent. The cash flow from rent returns we are achieving is between 15-25% net on properties that are being purchased at a fraction of replacement cost, so there is little to worry about as the wheel turns again from bust to boom.
I have made it my mission to provide an ethical, transparent and safe investment path to for Australian investors to buy US foreclosed property and we have had great success in Phoenix and Atlanta. I would invite anyone serious about US investing to contact me, as this is 24/7 passion that is expanding constantly in knowledge, experience and connections.
Many thanks
Vincent Selleck
Licensed Buyers Agent
Mortgage Broker
888 Wealth Creation P/L
http://www.888wealthcreation.com
[email protected]Hi Sapphire
Thanks for your concern for others and taking the time to warn them to conduct their own due diligence. Thanks also for concurring that the houses we are buying are pretty darn good in regards to cash flow of 20% net return.
I do need to correct you in regard to some of the assertions made. It is true that i do not own any of these properties at the moment, but I do love buying them. It is far more exciting than looking for deals in Australia where great cash flow is break even after depreciation. I have a large growth portfolio accumulated pre GFC and frankly it is not generating the extended lines of credit year after year that it used to. Banks are not lending the sort of LVR's they used to and cash out for investment has become a dirty word. I have some of my non-performing assets on the market and will be investing solely in the USA from now on.
I entered into this venture to serve the needs of my existing investors, who like me, have negatively geared growth portfolios and need to generate cash flow to balance the drain on lines of credit. You can see by the examples given that we are achieving the results we set out to achieve. As for the information provided it is all true, including the values that the properties sold for or were valued at. Our due diligence package which goes out with each property also includes current comparable sales and county valuations, putting the current market value into immediate perspective. None of our clients commit to purchase until all the due diligence has been completed to their satisfaction.
I have spent 10 years living in the USA and will be returning again in June. I have been to all eastern states including Georgia and have been enjoying my contacts with agents and friends on the ground there. Your comments that I can not back up what I say I have done are difficult for me to comprehend. i just read all the posts and can't understand how you could come to that conclusion.
All my buyers pay the market price for the house. We do not buy it for $20,000 and resell it to them for $40,000. They have title and ownership from the moment of sale. There are plenty of agents who build margins into their deals and resell houses for huge profits after buying them themselves. We choose not to do that but just charge a flat fee per property and that is all the money we receive from the deal. It is listed upfront on our property offers.
My staff and I pride ourselves in our integrity and enjoy the fact that we do not have anything to hide. I am happy to answer any question truthfully and encourage enquiry.
It appears my only crime here is not owning a house myself, for the reasons just disclosed, and this is something I never purported to have done. What I do professionally is buy for others and i can assure you that we have been getting results that warrant the small fee we charge, which is less than airfare and accommodation to go to the US yourself. We know and trust the networks we are operating in and respect that others have far more knowledge and experience than ourselves. That is why we enlist the support of top performing agents who know localities, streets and houses due to the fact that they have lived there all their lives. Going to Atlanta for 2 weeks is not going to give anyone that kind of edge.
I am glad you have satisfied yourself with this discussion and that you recognise that I have expertise in my field. I always enjoy an opportunity to show my true colours against the doubts and fears of others, including prospective clients. I really do believe in what we are doing and that we are doing it really well.
I also appreciate the opportunity to be able to reach a wider audience through this forum.
My thanks to Michael and Bronwyn for creating this topic, and for the friendship we have shared through this process. I enjoy working with them and love the work they are doing for us in Atlanta.
In the end people have to satisfy themselves and I invite them to check out what we do for themselves.
You could always come to Byron Bay to see us… it really isn't that bad a place to live or visit.
Many thanks
Vincent Selleck
Licensed Buyers Agent
Accredited Mortgage Broker
888 Wealth Creation Pty Ltd
http://www.888wealthcreation.com
[email protected]
Ph 02 66857888 Mbl 0403 255510Hi Sapphire
Please refer to the links below for the properties that meet the criteria you are saying do not exist.
This one was purchased for a client and is in the process of renovation.
http://www.888wealthcreation.com/pdf/1601jonesboro.pdf
This one we just missed out on in a bid 3 weeks ago.
http://www.888wealthcreation.com/pdf/1061HankAaron.pdf
I have numerous other examples that I can share if you would like to enquire further.
Our focus is currently on supplying the buyers we have subscribed with over 100 properties on order. I am not competing with them for preferential purchases for myself. The best properties are hotly contested by investors and represent less than 2% of overall listings. These are primarily newly constructed homes in favourable locations for rental with good returns approaching or exceeding 20% net.
Our main concern is ensuring a seamless process from beginning to end, something we are achieving with the assistance of a great team on the ground. We continue to learn more constantly and refine our systems, processes and contacts to ensure that we are meeting the highest levels of service delivery.
Sapphire, I sent you an email enquiring about what you are offering the buyers you represent and we have not received any more detail about the opportunities you would prefer people to buy by using your services. My enquiry was solely about networking with others working in the field, including yourself. I am sorry if you took personal offense by my posting on your topic, but i genuinely believe that some of your opinions were not true in my experience. I do not purport to be an expert authority about everywhere in the USA, but my professional skills do allow me to recognise good property when i see it. I also encourage everyone to do due diligence and invite them to ask questions, ask for examples and make independent enquiry.
We are achieving excellent results, from purchase, rehab through to tenanting. What we represent is happening and i am happy to share our results with anyone making a sincere enquiry. There is nothing to hide, no secret agenda, no secret commissions. We run a totally transparent operation. If you like it.. then fine. if not that's OK too. So far we have found many people like it and our results.
As our buyer group becomes larger we hope that they will agree to be referees and give testimonials. Those who have completed our process at the moment prefer their privacy be respected. I would not expect anyone to vouch for a service until it is complete, and many of our properties are still awaiting closing or under renovation. Once they have tenants I will invite them to share if they want to. There are numerous testimonials on our website from other investors who have engaged our services in past ventures.
I hope this satisfies your feelings of doubt and distrust in our ability. The truth is out there.
I would encourage anyone following this forum to investigate this for themselves, as many have. Our results speak for themselves.
Many thanks
Vincent Selleck
Licensed Buyers Agent
Accredited Mortgage Broker
888 Wealth Creation Pty Ltd
http://www.888wealthcreation.com
[email protected]
Ph 02 66857888 Mbl 0403 255510Thanks Sapphire for your comments.
It is easy to criticise others, particularly when you have experiences or views that are contrary to their opinions. This doesn't make anyone right, just different. That's what forums are about.
I personally believe Michael and Bronwyn are doing a great job and we will continue to offer their services as one of our buyers in the US. We also have other buyers with many years experience in the cities they live in, foreclosure experts with great credentials and most importantly great results. Anyone who has spent the time to investigate what we do and how we do it will appreciate the care and research we put into managing risk and maximising reward.
Our investigations into Miami have shown us that prices are still relatively high, when compared to the rental return available. High insurance costs and lower rental returns make Miami unsuitable for investors looking for the high yields that are available in other locations. We are engaged in continuous research in a number of cities and now have 5 buyer groups working with us on a number of strategies, from buy and hold for rental return to wholesale purchase for renovate and sell for profit.
There are a diversity of property options available in the US and anyone who dismisses them out of hand without a thorough investigation is missing the real possibilities that exist. We certainly encourage all of our clients to do as much research as they can. I always appreciate that they will discover new and better ways of doing things and add value to all of us working towards positive financial outcomes in the US.
One thing I love about dealing with the Americans is they do not suffer from tall poppy syndrome. They appreciate people who are trailblazers and encourage each other to be more successful. This is certainly a refreshing change from the resigned and cynical barrage one gets in good old Oz for sticking one's head a little bit higher than the pack. Perhaps we could find some merit in each other's contributions and look toward a collective possibility that allows everyone to gain value through shared experience by pooling knowledge and networks. This one of the reasons I was attracted to working with Michael and Bronwyn. They chose to share freely and encouraged others to join in.
I invite anyone who prefers this kind of approach to contact me and participate in an amazing possibility, a once in a life time chance to buy property at a fraction of its real cost, while receiving rental returns that create real financial freedom and the possibility of living your dreams now. It may seem too good to be true, but what if it isn't?
Many thanks
Vincent Selleck
Licensed Buyers Agent
Accredited Mortgage Broker
888 Wealth Creation Pty Ltd
http://www.888wealthcreation.com
[email protected]
Ph 02 66857888 Mbl 0403 255510Hi
Sapphire said:
"There are also some people selling USA properties in Australia to ill-informed local investors. I just advise each of you to do your homework on these operations as some of the people involved have never set foot out of Australia, yet are giving a lot of advice about cities and suburbs in America they know little about. What they are doing is emphasising the gross return to get you excited. Don't be fooled by the high returns only, as these can be depleted very quickly once all outgoings and possible social/tenant issues come to light. Investing in buy and hold property in Atlanta is one that comes to mind.
Atlanta has a 60% black population which is high. On it's own it means nothing, but mixed with education, unemployment and economic status, you get a different picture. The city has been hit extremely hard by the housing problem. Unemployment is high and there are thousands of houses going cheaply. The 'good' suburbs are few and far between and you can bet your last dollar, that the many of the houses going for $10-$50k are not in these suburbs or they are in what is referred to as the 'cookiecutter' developments. These are small subdivisions of usually one street cut into a section of forested area with up to 100 houses, all the same. In some of these streets over 50% are in repossession. Have a look at any American city on google maps and you can see these new subdivisions on the edges of the city ( Try Atlanta and you will see what I am talking about). Zoom in so you can see the street name, then type a number and the street name in the search bar and see if you can get a street view and have a look for yourself."
I would be happy to take on your bet for your last dollar! Most of the houses we are buying in Atlanta are within 4 miles of CBD, in areas with predominant white collar families and netting in excess of 20% return. There are areas that in Atlanta, like any city of 5 million people where crime, drugs and vacancy are a problem. Fortunately, we have 2 Australian buyers in Atlanta working with local rental managers and property brokers who have told me that they know who built the house, why the property was foreclosed and where to avoid buying in that area. I agree that buying without sound local knowledge is an impediment to good investing. That is why we spend so much time on research and getting resources on the ground.
The great thing about Atlanta is that the prices are so low. We just bought a house 1.5 miles from the city, built in 2005, sold in 2006 for $350,000 for $42,000. A block of land in the same street is going for $40,000. You get a free, near new 3 bed 2.5 bath house! Rent is $1,300 per month and after all expenses it nets 21.5%.
I have discounted buying in Detroit to investors previously for the reasons of shrinking population, crime and unemployment, but I read in this forum there are investors with sound local knowledge buying very well there and making money. It is easy to criticise what you do not understand. Unfortunately much of what is given as good advice and warnings is based on assumptions made rather than than the facts of the matter. I will be saying "I don't really know" more often in the future rather than trying to look smart.
Our view on Atlanta is that it will provide huge discounts on great property for some time to come. The major risk factor of vacancy is mitigated by sound management and a highly competitive approach to the rental market. We viewed the risks carefully when proposing a strategy of quality rehab (renovation) and competitive rental pricing. We have been talking to all the dedicated property management companies in Atlanta and have had great results with our top two. Their screening of tenants is first class and their support with local knowledge has been excellent.
My buyers agents are also placed to support investors after purchase and continue to provide expert Aussie intervention with a cricket bat for negotiation when necessary. We have found Atlanta to be a friendly, laid-back city with plenty of helpful people, including many wonderful African Americans. Can we please drop the "Black" label, after all they do have one as president now.
We place hundreds of offers on property all the time. Out of a hundred offers, only ten will be accepted and of those ten, 3-4 will pass our inspection tests. Only after they have satisfied our due diligence for location, cost to rehab, rent-ability and comparative value are they offered to our clients. We are currently bringing through 4 -6 properties per week and plenty of happy Australian investors are buying them.
I would encourage every investor to do their own research and verify all the information they are given before committing to a purchase. Ensure you are in control of the transaction and only pay money into your own lawyer's trust account. We operate in a totally transparent way and assist our clients to access information, call and talk to all the people on our team and do independent research to ensure they are making an informed decision.
My first introduction to companies offering US property to Australians was from a company doing seminars on the Gold Coast. They were offering us $12,000 commission if we would encourage buyers to purchase Las Vegas condos for $95,000. Our research showed us they were buying them for $44,000. Needless to say we declined their offer.
I have been buying investment property as a licensed buyers agent since 2003, and take very seriously the fiduciary responsibilities of that position of trust. I can only act for my clients best interest in everything I do. Where their is integrity, there is high performance. Everything works better. There is nothing to hide. We expect integrity from everyone in our team and from all our business partners. Where that is not evident, we have parted company.
We are achieving great results and invite all your questions, doubts and fears. Trust is earned through loyalty and truthfulness and we are ready to take on any challenge to earn the right of your trust.
Please take the time to visit our website, contact me and find out for yourself. We want to make it easy and safe for you to invest in the USA.
Many thanks
Vincent Selleck
Licensed Buyers Agent
Accredited Mortgage Broker
888 Wealth Creation Pty LtdSome of you have spoken to me over the phone or sent emails. I just wanted to let you know that you view me on a short youtube video with a link from our website.
The link is http://www.youtube.com/watch?v=l8-TmMzyQl4
I look forward to talking to you again soon.
Vincent Selleck
Licensed Buyers Agent
http://www.888wealthcreation.com
Ph 02 66857 888 mbl 0403 255510bek_leigh wrote:Hi VincentI have contacted Michael but unfortunately I haven't heard back from him. I'm extremely interested in purchasing some properties in the USA. I would like to know more about your services but I would also like to do some more of my own research. How do you narrow down your search to select the right cities to invest in?
Bek
Hi Bek
Michael and Bronwyn have just landed in Atlanta, so i am not surprised he has not replied yet. We are filling orders for our investors regularly from our buyers in the US and keeping Michael and Bronwyn very busy placing bids.
We are delivering a quality buyer's agent service for Australian investors with a fixed fee and direct access to all our professionals, contractors and agents for legal, accounting, management, renovations, insurance, and buying. You buy the property and hold title through your own structures. We do not receive any commissions or mark-up from any third parties. We represent you and your interests in the deal from beginning to end.
Our objective is to create a seamless experience for investors to buy foreclosed US properties including tenanting and ongoing support. Most of my buyers are buying multiple properties because they see the incredible benefits of over 20% net return, huge potential capital growth and a high Aussie dollar.
Bek, there are markets within markets in most cities, places where you would do well and other places where the risks outweigh the rewards. The most important factor is getting a significant discount on property prices. I love buying homes for $40,000 that sold for $350,000 in 2006, particularly when i can get $15,600 p.a. in rent. Without the huge discount in price, there is not going to be a significant rental return. We like Atlanta at the moment. There are plenty of newer homes in good ares where we can secure tenants. The West coast is too expensive to get these sort of returns and places like Miami have held value as well. I am avoiding Detroit and other manufacturing based cities as their economies are suffering more than other locations and whole neighborhoods are vacant.
Send me an email at [email protected] and I will forward some more information and a schedule of services we provide. We are dedicated to providing exceptional service and results and making it easy and cost effective to invest in the US.
Many thanks
Vincent Selleck
Licenced Buyers Agent
http://www.888wealthcreation.com
Ph 02 66857 888 mbl 0403 255510Risk and Reward
I do not recommend casual investment in the US. It is not easy or safe for part time investors.
Investing in the US takes courage and commitment. There are plenty of lack-luster operators who say one thing and do another. They appear genuine and tell you what you would like to hear, but do not honour their word or give good service.
Building Your TeamThe key to success is in building your team. It takes time and a willingness to test your connections in small ways before making big commitments. Do they deliver on time? Are they accountable? Are they prepared to invest time in building the relationship?
I expect high performance. There will be breakdowns. It is how we deal with breakdowns that makes a difference. One way that I protect my interests is through triangles. I have a buyers agent, a builder and a rental manager on the ground. Each one operates independently and reports to me about the performance and conduct of the others. This avoids collusion. The builder knows his work will be inspected and photographed before payment. The buyers agent knows the rental manager will be reporting about the social and economic realities of a particular location and the realistic return. The rental manager knows the buyers agent will be monitoring the property, doing drive byes to check on occupancy and conditions.
It takes time to build trust. It takes trust to build a network. I am committed to building the best networks possible in the US for my investors. Two weeks ago I terminated one of my buyers agents. He was not walking his talk. I have a rental manager who is not delivering and keeping their word. We are talking to everyone in the market and we keep talking to everyone, in case our initial choice falls over.
For me it is a passion to create excellence. I work on it city by city, finding the sweet spots between risk and reward. Where there is a circle of trust, there is greater reward. When people deliver great results I let them know how much I appreciate them. We have fun and enjoy ourselves, knowing that the team is together and achieving high performance.
This is not possible without integrity. I love having Michael and Bronwyn on my team because they have integrity. If we experience a breakdown, it is just a breakdown. It doesn't mean anything, it just gets fixed.
The Next Wave of Foreclosures
The continuing foreclosures due to the Alt A and Option Arm mortgages resetting over the next few years will provide continuity and ongoing opportunity for astute investors. The home ownership failure in the US provides a solid foundation for property investors, with a growing rental market. The risk of a further price slide is present, particularly in markets that have fared better through the sub-prime crisis.
Where we are getting cash returns above 20% net, however, there is little likelihood of further decline, particularly with the growing appetite for these properties from international investors. For instance, when we are buying a property built in 2007, with a county tax valuation of $207,000 for $35,000 from the bank and it has a rental return of $13,200 p.a., can you imagine that it will fall significantly enough to phase a long term investor? The property is at rock bottom already.
The Main Risk is Vacancy
Given that you have a competent and honest manager, risk of vacancy is mitigated by working with supply and demand factors. We renovate the properties we buy to a higher standard and ask for a lower market rent than our competitors. We choose family homes in good locations close to schools, shops, transport etc. Once a family moves in they are less likely to move out, compared to singles and couples. By providing cheaper, better accommodation it prevents vacancy by retaining the tenants for longer periods, since they would be paying more for a worse house if they did.
One of the problems with buying foreclosed homes is that they lie vacant for extended periods while the bank gets it together to sell them. They are often boarded up and become targets for theft and vandalism. People will steal heaters, air con, appliances, tapware, doors and in one case recently they even stole the kitchen sink! A vacant home is a magnet for theft and damage and this is the greatest risk we have experienced in US investment. Insurance covers repair, but doesn't often cover loss of rent.
With exceptional rent returns, we can certainly afford to be generous with rent to mitigate the main risk factor. Another important factor is location. There is a mentality we have seen where people just want to buy the cheapest properties on the market. There are vast difference between the conditions in different suburbs in US cities. We found buying properties in one location for $20,000 was not as cost effective as buying better properties in another area for $35,000. The cheaper properties needed more spent on them to rehab them and the 2-3% difference in net return was minimal when considering risks of potential vacancy. Yet I see people heading to Detroit where vacancies are through the roof and rent is only collected at gun-point! There is no point in going for a 40% return if you can't get someone to reliably pay it.
The Kookaburra Has Landed
The US may seem as far away as the moon to some investors, but it is surprising how easy it is to manage a property once a successful network has been established. Having fellow Australians on the ground in the US is great way to start a rewarding investment journey. It is important to band together and use the strong connections that are established to help you find safe ground in the US.
We are delighted to have Michael and Bronwyn as one of our buyers agents in the US and look forward to their arrival in The US next week. They have already accumulated scores of orders for property and will be busy for some time to come. Considering what they have already achieved from Australia, they are sure to be successful in the US.
I am really glad they are going to Atlanta and not Detroit!
P.S. If you would like to find out more about our US property buying network, visit our website at http://www.888wealthcreation.com
Many thanks to all those who have posted in this forum.
Vincent Selleck
Licensed Buyers Agent
Accredited Mortgage Broker
888 Wealth Creation Pty Ltd
Ph 02 66 857 888 Mbl 0403 255510
[email protected]
