Forum Replies Created
Not sure what you mean by senior, they are experienced investors in the US market and they are also selling their own product, no offence intended to either Jay or Alex.
As I mentioned I am achieving great results in US 15% net yields, they are no longer there coz the market has risen. Timing is everything in any market.
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As far as Australia goes I have started purchasing and there are plenty of opportunities.
My strategy is not growth as we are not seeing this now in Australia as you mentioned
I am purchasing properties with development potential, building a new property at the rear this actually gives me cashflow and also equity on completion of build. This is a very low risk strategy as I am purchasing at the lower end of the market, bread and butter areas. I would not give OZ a miss but perhaps review your strategy.
Cheers WI
Ilovehouses
I know nothing about the Japan market.
The reason I purchased in US was simply because of the cashflow, 20% gross (15%+ net) and because I can purchase well below building costs at $20-30 per sq ft, once building commences I am expecting growth, however this is actually happening now/today. Obviously the yields are now diminishing as prices rise.
The risks you mention – war zones, property management etc. I was well aware of this prior to purchasing so just did lots of homework before purchasing any properties.
I am sure investing overseas regardless of whether it is Japan, US, Italy etc will not be risk free.
Cheers WI
Unfortunately you can not believe anyone, there have been a few negative posts regarding various companies selling US properties. Not all companies are bad, however it is a matter of doing your own research to establish whether you are actually getting a good deal or not.
I assume you signed a contract with Key Property management, you need to check this and find out whether you will be charged additional costs if you take your business elsewhere, also find out what you have given them authority to pay on your behalf etc.
All the best
WI
Hi All
Thought I would provide an update on this.
Select American Homes on my behalf had 2 of my county taxes reassessed and I have received a substantial reduction.
This has improved my cashflow from 15% net to 17.12% and 18% net.
In the last 3 month-5 months all my property purchases have risen and entry levels at $37K-$50K for large homes are just not around anymore, and it would not be realistic now to achieve these returns in Atlanta, not sure about any other States.
Cheers WI
I am playing in the Atlanta market – This is what I do to keep the figures real and work out whether I am buying well in terms of price only.
If the asking price is $50K and the size of the property is 2500 sq ft simply divide sq ft into the purchase price to establish what you are paying per sq ft and you will need to know what it would actually cost to build per sq ft today. For this example I would be paying $20 per sq ft for this property in Atlanta.
I know It costs anywhere from $65-90 sq ft to build in Atlanta so at $20 per sq ft an absolute bargain. Of course there would be other boxes that it would also need to tick, but at least this is a start to try to get your head around values.
Cheers WI
Cheeves and Jay
Thanks for the feedback appreciate this.
Good for those who got in before the herd and have already made some money with great returns, they certainly are slowly deteriorating.
My plan was once I double my capital I will be offloading and bringing back the money to Oz, I was expecting a timeframe of 7-10 years, perhaps it will happen earlier than this.
I do not like this new format whatsoever, and it appears to be very very slow, very frustrating.
Also, I got an email this morning where a wholesaler has access to finance at 50% I think 8.25% – 30 year loan, first time I have seen at 30 years for Atlanta, set up fees $7000 pricey.
It will also be dependent on how they value the property, they are only providing this for what they call A grade properties that the wholesaler is selling, I looked at some of these properties they similar properties I have been purchasing, however much more expensive. Also they will not refinance properties that have already been purchased.
I would still be very causious when entering into any loan agreement.
WI
I am from Perth, however about 18 months ago I put together DA (plans and permits) for an 8 unit site in Broadmeadows, Melb and on sold it to a builder developer within a 12 month timeframe.
I made approximately 40% profit and it cost me all up around $20,000 for the architect to put this together. I am not sure whether I could repeat this in the Melbourne market at the moment as I believe things have changed and there is an oversupply.
My DA did not even hit the market as it got snapped up, the reason being the developer/builder had enough fat in the deal to make it work.
Perhaps at the moment the Melb market may be a little risky for this strategy. At the end of the day it comes back to numbers, its one thing you making money but if the builder has not got a minimum of 20% it will be very difficult to sell.
Cheers WI
Hi Cheeves
so where from here, do you see the property market in general in US going from strength to strength?
I still hear that there are lots of foreclosures that the bank has not released, however I am assuming there are now major players buying up so this will continue to drive the prices higher.
I would be interested in your comments.
Cheers WI
AREIJoel
Trusting a system and the people securing properties is important and one way you can achieve this is by firstly being able to understand, research and interpret information that is provided by any company selling in US.
Lets face it there are plenty of investors buying and not even checking recent sales in subdivisions, size of the home, year of the home, building costs and what they are paying, last sale of the actual property and it goes on.
Cheers, WI
I personally believe the window of opportunity has closed for me in the Atlanta market, but then I will only purchase properties at 20% gross due to slippage, this has certainly given me a buffer.
Also, I would not recommend anyone purchasing in US unless they are buying multiple properties, cost involved such as insurance, pm, accounting, structure set up etc just does not make it a viable proposition.
My experience to date is very positive it has taken about 12 months for me to secure 8 properties, I can no longer source properties at 20% gross, my completed properties averaged around $65K each. I am told these are now averaging around $85K which will require a reno/rehab.
I have no doubt from what I have read there will be many that will get burnt, why? buying in the wrong location, buying the wrong property – too old, paying too much, not understanding or researching stats/data provided, not setting up correct structures, also the big I see is buying 1 property and expecting to end up with cashflow is just naive.
Cheers WI
I agree good feedback, and needs to be kept real.
My concerns are that what Steve is buying may be higher risk and would not suit the average investor because he/she does not have the contacts, resources and business partners that Steve has in this area to make ti work. I think it is important that this is clearly highlighted.
Steve is providing investors with tools however I personally believe that for the average investor to try to replicate what Steve has achieved will be a tough call.
Cheers WI
I would pick the development property which will provide ultimately the better return and opportunity to add value which of course makes it unique and sort after. This is what will add value regardless of whether you choose to develop or not.
However in saying this the figures would need to stack up now, in other words if it is costing too much to hold until you can build it may not be viable. This is where you need to research areas with potential and work out whether the figures stack up for you now.
Areas like Ashby, Sinagra personally do not hold much charm for me because one is totally relying on growth and those areas do not have any unique value as far as I know, ie period homes, close to city etc……..
WI
Thats good, as you have selected Joondalup I believe North Joondalup is moving this could be due to rezoning by the Council.
One strategy that I use is to identify properties that are in the process of being rezoned, find out what precinct, check out the plans and then purchase a property which will allow you to build at the rear and retain the front.
This is a great strategy as you can end up with cashflow positive properties with growth once zoning has been gazetted and you can also build up equity from the rear property, practically doubling your money on the rear property.
Cheers WI
Hi Chooky
you seem to be every where and no where cos there is a whole in your pocket. Slow down, this is real, this is debt you are incurring and the decisions you make now will impact your future goals if you get it wrong.
Investing is all about managing risk and strategy = the end plan, most will only buy and not think of the outcome, just keep buying and hope for the best, some will do OK and most will get burnt.
What you are proposing is high risk, the entry level is very high and there is only one industry in Pilbara which is mining.
Just to give you an idea of the risk you are taking I will give you an example of my recent acquisition which I consider very low risk –
I paid $325K for a property 12km from Perth, will rent for $390 per week, demand is great and rents are increasing, it gets better, the property will be cashflow positive because I can build at the rear of the property for $160K revalue rear property at $350K and rent for $420 pw.
My point is you do not need to take high risk to achieve a great outcome, what you need to do is research areas that will provide opportunities to add value, houses on blocks which can be sub divided is one strategy. It may require more work however less risk.
Cheers WI
Hi Chooky88
Perhaps you should be holding back at the moment and review your strategy, look at ways of turning negatively geared property into cashflow investments.
Where are you based?
Cheers WI
I will have to agree with Freckle on this on this for a change.
I will not comment on the mining side of things as I am no expert on this area, however I am an investor in Perth and would not touch the Pilbara area at this time because you are buying at the top of the cycle, very high risk.
Also, the product you are purchasing is entry level in this particular market but the most costly. I would also be concerned about oversupply with land releases coming on deck in the area. Are mining companies sourcing their own properties, something to also consider??
If things go south those yields will vanish very quickly and this product will be the most difficult to sell.
Personally I dont mind taking a punt on mining towns but the boat has already sailed in the PIlbara and therefore your risk is too high.
Cheers WI
I like the older units, art deco etc. As far as thes types of units go they are very much in demand and there is a short supply of these, they get snapped up as soon as any hit the market, as they are in leafy sort after areas surrounded by period homes. They also tend to have larger floor plan which is an added bonus.
If you are looking at a newer construction and villa or semi detached I would look closely at Yokine, 7 km from the city, nice area and very good value at the moment. Many developors have jumped into this area and built some nice high spec homes which has helped maintain a good feel to the area.
Out of the areas you mentioned Cloverdale would be my pick, however this would be for house on development site not unit.
Thornley and High Wycombe can not comment, not sure how you would go for growth in these areas, nothing extraordinary as far as I know.
However, when buying interstate which I have on a number of occasions it is very easy to get confused when you start looking at too many areas. Personally I find it is easier to focus on 1 or 2 areas, get to know them well, there is no need to rush it is not a rising market, you have time on your side. Also, have you networked with a couple of RE agents this can be very helpful, make sure you phone quite a few ask the same questions, keeps them honest, just some suggestions.Does this suit
http://www.realestate.com.au/property-villa-wa-yokine-111020791or this, tad over $400K
http://www.realestate.com.au/property-villa-wa-yokine-110681785
Cheers WI
Well done.
For those who do not know the Moree area can you give us all a little information on the area, ie population etc. I understand it is a regional area? Will it be easy to rent?
What is the biggest risk in buying this type of property? I know Nathan purchases outside the square properties for his clients so is he also purchasing properties that only attract tenants from hell. I would like more info, as I love the entry level, .you may be lucky to buy a new car for $15K.
WI
Hi Andrew
Not sure if this is what you are after, I am listing the way I proceed when purchasing not all the costs associated as this is a given, and this list would change depending on whether its a development property, renovating or a build etc
Just making it simple – if I was chasing a property to renovate, this would be my check list to identify suitable property.
1. Purchase Price Range, Identify a number of areas/suburbs in this price range that fit my criteria
2. Look at all previous sales over last 6 months, identifying size, condition, location of property to establish true value
3. Rental returns
4. Network with local agents and work with a couple to locate the right deal/price, weekly contact and use other sources.Once a suitable property is located get costings of renovation and potential resale by using comparables and (20% min), also as part of this process if I was holding the property I would look at how much rent could be increased once the reno was completed.
As you mentioned this is broad and have no idea if this is useful to you.
Cheers WI
Am no expert in this area, however I have properties in US and this info that may be helpful.
Firstly, I had my accountant align my US tax to Aus tax lodgement date just to keep the process clear and simple. I believe tax in US is lodged in December no idea on exact date, sure someone can help you with this one.
Do you have loans set up against your properties? I will be claiming interest on loans that I have set up, however there will be a with holding tax in US of 10% on interest.
I would imagine you can claim anything that is an expense on the purchase of your property including maintenance same an in Australia and depreciation. In addition 1 flight pa and associated expenses. I am in the process of completing my second US tax return so am still working on this. Will post more info soon.
I would be interested if you care to share on accountant you are using for US tax.
Cheers WI
