Interesting; read the thread. https://www.propertyinvesting.com/forums/community/heads-up/4322449
I cannot comment on what other people are doing. My experience is that the thing that is critical when it comes to investing in the United States is who you are dealing with on the ground. I think that the USA is flavour of the month and that many marketing companies can see a quick. So you have to ask who are the dealing with, in many cases real estate agents who can see an easy sale, especially in markets that have fallen by over 50% such as Florida or cities such as Buffalo or Detroit where there populations have fallen by 50% since 1950. Again if the person you are dealing with on the ground is good then you can make money anywhere. I have been involved in the Texas market since 2005 I work with a partner there. I am not saying that to promote what I do. I have a great number of clients. I write here to comment about the markets generally. However if you want to do these things yourself then make sure your put aside at least 3-4 weeks and thats after you have done your initial research and hopefully established contacts.
In regards to contacts if you ring anyone especially agents they will all say they can help you, that is until you need the help. Professional services overall are poor.
The US is a great market but it is also full of mine fields if you do not know what you are doingNigel Kibel | Property Know How
http://propertyknowhow.com.au
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I post the below directly from one of my sister’s Somersoft posts as it pretty much explains what you _should_ do if you don’t want to be ripped off by these types of guys/scams….
Nigel above is saying similar things. I live in hope that one day the fast guys will just go away and die. Everyone understands a fair profit after all..:
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DIY Research
It is tough and hard for me to type specifically – I just caught up on the reading since you joined and I know that I echo my brother’s sentiments and ire on this topic. I really only started all this to prove that you can do this without being ripped off. Obviously I am in Vegas but I started here without knowing a soul, not one person in Nevada, let alone Vegas. What I had was a green card, a knowledge of the US system and a refusal to personally be ripped off and figure it out for myself. I knew how to fix properties and I have great faith in my own gut – or was just absolutely insane – take your pick. I personally don’t have a great love of real estate agents or property managers and am a cynic in the true Athenian concept. (That being said, when someone wows me, they get my loyalty).Zillow, Trulia, Realtor.com, county and borough websites (for tax info, who owns neighbourhood lots etc) – these are the equalizers to that system. SO, here is my refresher course……..
HOW ANYONE COULD DO THIS
Pick ANYWHERE in the US (NOT COLD, WET OR HUMID) and there aren’t that many surprises. Book your hubby and you a month trip over there. Do 1 solid month of research before you go…1) Max house price = ?? – including agents fees, closing costs, reno = (pad at 10k) price range you are looking at to buy….
2) pick 4 of your so far favourite locations in the US
3) Pick 6 random spots in that city that are in fairly decent neighborhoods (not hard to find…. )
4) Go to zillow, tind 5 houses for sale in those spots that meet your needs (3br/2ba/DLUG for equal comps) so 30 houses in each city, x 4 for the different cities = 120 properties for your random sample survey… with ADDRESSES
5) Go to Realtor.com (or now zillow) or Craigslist or GoSection8, find houses FOR RENT on those streets that are as similar as possible to your property –
a) CALL the agent and find out not just the rental price (you will know that already just by looking it up) but ALSO whether they would consider a rental reduction or any discounts…… you do NOT want to have people offering rental discounts…..this is NOT an area you want to buy in.
b) Ask them if they have a lot of other properties for rent… try and see how many days on market the properties are “out there” before renting…
6) Call an agent within you top market that you narrow down from the above…then call another 10….. ask them:
a) Can they meet you late at night if needs be
b) How many foreclosed properties have they successfully procured for their clients and are they familiar with specialising in themYour mission is to find a quick, good agent who knows the ins and outs of the foreclosed market. Doesn’t matter what the reply is, you will know within 40 seconds if they sound like they might be the “right” one. Quick, fast, professional and 24/7 if needs be.
7) Get on the plane for your month there, go to houses that are bank foreclosed,….talk to people… here is a great tip to find good tradespeople – go to your local Home Depot at 7 am and see who is in there at the various locations….. stop at a house that you admire the fresh paint job of, knock on the door and ask who did it and see if they will quote you for an average 1200 sq ft house to be painted…. think $1,300 for the whole house to be painted in Vegas for example…it may be slightly more where you are at but unemployment is high….
When I started, I was looking hard and researching all over the states – a PURE numbers game with just basic principles, I haven’t done serious research of other markets in over a year now but will. I think that there are great deals to be had in a lot of places and there are a lot of VERY hard, decent and honest workers out there desperate for jobs – they will provide references, they will show up on time and they will become your family…. ha, my Miguel who by trade is a framer does everything AND checks I remember to eat. My painter is a licensed roofer by trade and is just amazing etc etc….
8k for most house renovations including labour and new appliances would be padding it…..and that is probably throwing in a garage door or some window replacements etc! This would not include HVAC. Again, most expensive line item in a warm climate is an A/C which a 4tonne entire system is about 4 – 4.5k……
OOOOOORRRRRRR, yes, go through a 3rd party and save the hassle… there IS a value to that – “just do it” type thing…
IF you buy through someone else, I think it is fair to ask for a breakdown of the renovations that they did and to give some justification of their increased price. I think you SHOULD ask for why a lease is only 3 months, make sure you type the street address into Realtor.com so that you can check the rent is on par with the area and call a completely third party property manager from that area and ask them what they think that area might lease for that you are considering purchasing a property there.
As I always say, I won’t preclude offering on a flip, I just want to know that I am so I can make a solid decision……at least I can make my mind up knowing all the facts. I would view that the same as any third party here.
How much are their services and is that saving you in time, worry and effort an equal amount.
Financing – it WILL ease up but the second it does, you will not see the foreclosed market exist as supply will evaporate… thus ANYONE offering financing out there is offering it with some catches….. if it was easy, Americans would be buying every foreclosure, not us.
Shoot, diatribe.
Best of luck.
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Content provided must be deemed general in nature. It is not specific legal or professional advice and no liability is accepted.I suppose that would be good if you have the time and money to there…some would say that if you don't don't invest in that market… i suppose it depends on your investment style and what you are comfortable with.
And NO joining fee…
I hope you had a thorough check of values or at least looked at Zillow or trulia..
BTW – I didn’t mention that I flat out do NOT believe any reno costs should be more than $5k. I gutted and and replaced all floors, walls, kitchens and bathrooms in 8 separate units and the cost was $7k total.
Go ahead and throw money away if you like, but at least know you are doing it.
17% return is reasonably ‘standard’ foreclosure return, but I think anyone is MAD buying in Cleveland:) We will all know in 5 years I guess.
I agree with everything you said in your 2nd last post Iawsjs, a commission that high should be illegal. Thats crazy. But in my opinion your a bit mislead about Cleveland. It may have dropped ruffly 6% last year but its forecast to increase 2.8% each quarter till 2012. Its not the greatest market for your average investor but if played right I’m sure there is a bit of money to be made there. But then again I’m only going off statistics and anything can happen to those considering the world economy at the moment. But yea like you said, we will all know in 5 years
Cleveland quite possibly jumped 7% purely because of multi tiered marketers selling otherwise unsaleable properties to australian ‘investors’….
And the $8k I spent rebuilding 7 units was in a beach suburb of LA where costs are LOT higher than some of these very dead beat towns where unemployment is through the roof..
lawsjs,
you really have an issue with MyUsa dont you. basically you had a bad experience ?? with them. Thanks for the warning.
As far as you saying everywhere apart from LA is a deadbeat town full of unemployment is ill informed rubbish.By all means express your opinions if you had an experience to share. that is what forums are for. But if you are going to bag
areas that people are looking at with no evidence to support your rant then keep it to yourself.RickyH,
I don’t have an issue with anyone selling anything for a fair and reasonable price, but 70-80% commissions are – to this little black duck anyway – beyond something that is reasonable.I beg forgiveness of anyone who believes otherwise!
I have bought real estate in the US for nearly 15 years, I hold more than $10m worth so I do feel I have some knowledge that is worth something. I certainly did NOT get to where I am by paying 80% more for something than the next guy.
But if you do like paying that much more than you have to, then please let me know – I would be only too happy to help you!!!
PS: The comment about dead beat towns with high unemployment relates only to the relative labor costs. High unemployment = low labor costs.
PPS: I like London property too, but I think you would be MAD to buy there – just because you are 24 hours away..
Iawsjs,
I would like to hear your views on why you think Cleveland property is going to only go downhill. I was thinking of investing in some property there to but now you have me thinking haha
Despite my sister having 15 foreclosures of her own in LV and now helping dozens of people buy WITHOUT PAYING MASSIVE COMMS!! i have a general nervousness of most of the bulk foreclosures.
Being in Australia and having been on aircraft more than enough times I like getting on ONE aircraft and getting off at my destination. That led me to LA.
The bulk of foreclosures are in rust/white/sand belts and Cleveland is slap bang in the middle of rust.
I have done very well from property but I firmly believe in paying for quality properties. Unless you really know what you are doing (like my sister in LV) I think any foreigner who buys in an area where single streets had DOZENS of foreclosures is completely mad. And only then should you buy if it is a _real_ bargain – not by paying an 80% commission to someone just so you can say you own the most exxy property in the street.
The US banking system has faults but those places offloaded in that manner created a ‘market’ value. Buying at grossly inflated prices is taking out probably 10 years at least of growth before you start. Then there are problem tenants etc etc. And if you think these streets will have no tenant issues down the track when more than half the houses are bought for $20-50k then you have a very optimistic view of the world.
Steve M said in a BRW article last month that you shouldn’t buy in the US for CG. Steve does not know enough about the US to comment. He has had only minimal experience with it and bought (IMHO) absolute junk, so of course he only has that view. On that subject I got an email from Steve M saying something along the lines of ‘having more than $1m invested in the US market I am probably one of the best people to inform you about the US market’. I bought more than that last month alone, so that hardly qualifies in my book:) The properties I have bought are clearly growing in value right now and although have been harder to sell recently they did not lose any value during sub prime. My ‘worst’ property was bought in 06 and suffered from my bad management of bad tenants. Yet it was only a 5 minute walk from one of my best buildings. I bought it for $715 and sold it late last year for $705 – and the rents had fallen!!
I only started posting on the USA topic on somersoft because a friend went to a boholt seminar and I could not believe she could look people in the eye and charge what she did. Months later someone asked about myusa again on somersoft (my sister has become a bit of a hit over there) and bugger me if they don’t appear to be ten times worse. Rip off merchants in realestate are like a red rag to a bull to me, seeing this post I was compelled to say something. Real estate has been very kind to me, I enjoy it and I enjoy seeing people do well out of it. The likes of myusa are not the types that I like seeing. That is the beginning and end of my ‘rant’. As you get more successful these forums mean less and less to you. You read the same stuff over and over again and never learn anything. I hadn’t posted for nigh on ten years, so it was a bit of a trip down memory lane. I get nothing out of this, I just don’t like seeing people ripped off.. Go out and buy, but you will never succeed if you are only out there looking for ways of paying more than the next guy…
BTW: My sister has experienced something like 100% CG in ‘her’ very specific areas of LV in the last year. I am not saying it is impossible to make money in foreclosures, but starting out by paying more than 50% more than anyone else has is like trying to fight Mike Tyson with one arm and one leg:)
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And… The $AUD has had quite a slide today. Whilst you can never predict currency the high dollar is a very helpful thing. I had an argument about this with someone on SS. My final comment is that I don’t really care where the dollar is, but I can say I MUCH preferred getting $USD rent ‘checks’ when the $AUS was .48c than I do at $1.01:)Yea I get what your saying
thank you for your response I'm only 23 and just starting out in the real estate business so hearing feed back on other peoples experiences is really helpful. Especially successful peoples opinions like yours are hard to come by. Thats why I really liked the US Prime Property website. It seems they are a down to earth, helpful bunch of guys <moderator: delete language>. I just hope this memphis property goes well haha. Being my first investment and all 1eyeopen – congrats on your first investment in the USA! I have a feeling you will be back for more (if it turns out well).
What are the specs on the property you purchased?
enjoy the ride 1eye!
Just to make yourself at least feel very confident it might pay to read my USA foreclosures post on somersoft.com (property investment – other). If you understand half of what is on that post you will be a pro. The nuts and bolts of it are not my work, my knowledge is more general:)
Just to be fair I bought a flip for cash last week and paid a flipper $60k for the pleasure, so I do not say ‘never’. I knew exactly what i was buying I knew what they paid before hand and that they had held the property for for 200 days trying to offload it. I did get it furnished with big screen TV, Mies van de Rohe furniture and a B&O sound system but realistically that stuff all up in the US is worth maybe $5k. I’d never done that before, I just mention it to prove I am not immune – there are reasons why you might, but the important thing to know is EXACTLY what you are paying, who gets it, what the neighbours houses are WORTH and what you could sell it for to a local.
At the very least you will learn heaps!!
And I would also like to add my congratulations to Mr Dan’s for actually doing something so young. Huge thing to achieve and no matter what happens you have the time on your side to sort out ANY problem that may occur. Imagine what you will be doing in 20 years…
Hi 1 EyeOpen
I would be interested in your views on why you would invest in Cleveland….not to make any criticism's at all….just curious from one investor to another.
As of the 2000 census the city itself had a population of 478,403 and was the 33rd largest city in the US. The cities population has been shrinking since it peaked at 914,808 in 1950. As of the 2010 census which was released this month…it has declined a further 17% to 396,815 residents making it amongst the fastest declining cities in the last decade and now the 43rd largest city in the US
As a property investor one of the basic fundamentals that I have looked at in the past is population growth. Without a growing population you can never expect appreciation, business will move on and more jobs will disappear which makes it hard to sustain a rental income long term.
Memphis – http://www.city-data.com/city/Memphis-Tennessee.html
meh…
Dan,
I bought a 4 bed, 2 bath single family home. I am receiving 17.4% ROI PA. The house i bought looks nice and was already tenanted.
lawsjs,
About your sister buying property in LV, I think she is crazy to invest in property there. I’v been doing some more research and found that LV is forecast to drop 19.4% by the end of next year! Here is a link to prove it
http://cgi.money.cnn.com/tools/homepricedata/index.html
Just select the state and then the city and you will see the figures. Now this site, CNN Money uses data collected from Moodys, the top analytic research company in the world. Now i’m not having a go i’m just curious as to why she is investing there.Speedy,
I was only thinking of investing in cleveland, after doing the research i have done, plus the help of all you guys
I have decided to hold back and just see what happens. I’m very excited to be getting into this area of investing but i think i’m now going to slow down a bit and do my research before i blindly rush in and start buying stuff. In my opinion, the biggest thing I have learnt in life is to be patient. White_Goodman,
What ever that link is, it is way out of date… Like i said to Iawsjs, click on that link above and check out what Moodys predictions are. Memphis is forecast to increases by 7.5% by the end of next year. Unless there is some sort of natural disaster or another GFC, (which there won’t be, we all know that) then memphis is only going to keep increasing in value. As to WHY I invested in memphis is because the houses are cheap, (like I said to Dan, I bought a 4 bed, 2 bath house for only $32,000 which was also already tenanted) and as my first property investment I wanted to start with something with a good return. But as I said before, I’m only 23 and don’t have that much money. Which is why i started small and will eventually work my way up. And maybe have over $10M in property like Iawsjs
one day tho, one day. just a note just because Moody's forecast something doesnt make it gospel. They are good at reporting things that have happened, generally pretty useless on forecasting as is most people. Lets remember Moodys, Fitch and S&P all had Lehmans and Bear as AAA rated or whatever the highest was before they went under..
<edit> I think Vegas and Florida present great opportunity and will give you maby 3 years to start getting a portfolio together in these areas. Im sure his sister will be quite fine.
Well it sound like your well misinformed about moodys, considering they have over 4,000 of the top analytic representatives in the world working for them in over 28 countries alone. Not to mention after the GFC they now analyze every major banks standard and poor's valuation and risk strategies. I think I would trust what they have to say over anyone else.
<moderator: delete personal comment> Just because a city or market has a high population does not necessarily mean to say that the property there is going to be a great investment. Its the cities and markets that have a potential to grow that you want to invest in, in my opinion. I'll give you an example, My home town was/is a small beach town called Port Stephens, 40 min north-west of Newcastle NSW. Now when i was growing up, it was just a little beach town which most people retired in. My parents house that they bought back then for something like $100K is now worth, 10 years later, more than $1.2M. That is because of the rapid expansion that has occurred in the last 6 to 7 years. Now to me, THAT is an investment. I say go invest in Vegas and Florida… but I'm going to stick with moodys forecasts and invest in something thats going to make me money. Not a property thats going to decline in value by over 20% in the next year alone.
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