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TO DHILLON

I didn't read Soros's Alchemy of Finance, but a few months ago I read the updated biography of Soros (I can't remember either the title or author offhand).

I think you're right about him changing directions at the drop of a hat.  Probably something he learnt as a Jewish youth on the run from the Gestapo. 

I think his statements (on the new geopolitical order) are more of a wake-up call to the US. 

But I must agree with Soros that the speed of China's rise is becoming exponential.  I remember just 5 years ago important people (eg. in the World Bank) came up with "astonishing" figures that China would overtake the US withing 50 years (in terms of the overall size of the economy).  It now seeems very unlikely they won't do so in the next 15 years.

TO CHUI

I'm a bit worried about China's property market overheating.  That's not to say it might not double in prices, but even at today's levels property is unaffordable for 90% of the population.

But China is breaking a lot of records these days, and going into unchartered territory.  Never before have so many Far East Asians (with their unique value system that has historically put a lot of emphasis on property values) been catapulted into the middle class at such a high rate.  Ultimately, one of the following 2 things must happen:

A. Chinese (incl. Hong Kong, Taiwan, and Singapore) will redefine the levels to which property can rise, creating an island of extreme property prices in Far East Asia.  This will have a trickle-down effect, making all countries near to China (geographically or economically) experience similarly property high prices.

B. China will experience a boom-bust like Japan did. 

At the current levels of Chinese property, I don't think B is likely to occur.  Yet if there are further rises (ie. faster than people's incomes) then a crash becomes quite probable.

Right now, I think there is about a 70% likelihood of A happening, and 30% likelihood of B.  Therefore, I'm planning to sell 30% of my Chinese properties and invest that money in the US (I will do so gradually over the next 2 years, and only assuming that I get satisfactory prices for my Chinese properties).

Another factor that may slow down (or even halt) my purchase of US property will be the buying and renting out experience.

As I drive around Miami's middle-class suburbs, it is quite shocking how many abandoned homes one sees (let alone how many For Sale By Owner signs stuck in the lawns).  Except for the very best suburbs (NE Coconut Grove, Brickell, South Beach to Bal Harbour) all other suburbs are riddled with homes that have had their windows boarded up.  One sees this even in nice middle class suburbs, but the worse the area, the more the foreclosures.

At least in the nice suburbs it seems that the local community keeps an eye on the abandoned homes (neighbours take care of the garden, and the neighbourhood watch will board up the windows and keep an eye out to make sure homeless people don't move in).   As a result, these kinds of suburbs can maintain their standards.  But once you head to a less affluent area, you can see how the rot is already corroding entire neighbourhoods.

Today I saw a beautiful REO going for 36K.  It is one road away from a nice area (IE. on the "border") and the house has a stunning garden.  The garden was so big you could have separate areas (eg. a pool area, a trampoline area, a BBQ area, each separate from the other).  The previous owner obviously loved his garden and his home (which was large and once-beautiful), but from this house westwards, things went downhill rapidly.  Nobody looked after their properties, abandoned homes were common, people parked bashed-up cars outside their houses.  From the look of the neighbourhood, it was once nice, but probably will never be so again.

So when you're buying in the US, it's Location Location Location.

Apart from the fear of neighbourhood deterioration, I also will be interested to see what it's like to be a landlord in the US.  How expensive will maintenance of a SFH be?  How easy will it be to find decent tenants (and to evict bad ones)?  How much can one rent out SFH's, and what will the rental return be?  How high will property taxes be, and flood and hazard insurance?

All these factors will determine the speed at which I purchase in Miami.

I can't answer that, since I have no more experience as a landlord in the US than you do, except that I own dozens of rental condos in 4 different cities in China, which to my surprise do not cause more headaches than their income is worth, even though I do not use any property management companies (my wife might disagree with me on this point, since she'd probably say that she's the property manager!)

If I was in Aus right now, with a steady job and $70K cash, I'd have 2 options:

A. buy 2 condos with cash (1 bed/1 bath, about 500 square feet each), expecting to get a monthly rental return of 10% minimum, and just using an agent to help me rent it out (the agents charge you for this service, perhaps half of one month's rent).  I wouldn't bother with a management company.

B. if I had the ability to come to the US for a long enough period of time, I could buy a cheap REO SFH for about 150K (IE. pay for it with a mortgage).  After paying property taxes, insurance (banks demand you get insurance if you want a mortgage) and interest, you'd probably just break even each month once you've rented it out.  Since you've only purchased one SFH, I'd try to manage it myself (rent it out using Craig's List, and give the tenant a discount for agreeing to look after the garden).  You can also write into the contract that minor repairs must be handled by the tenant, and for major repairs he must find a contractor, but you'll pay.

You could pull off A without coming to the US (provided you have someone you trust to assist with the purchases), but for B you'd probably need to come yourself (to get the mortgage).

The advantage of A is you'll get a good solid rental income, and less can go wrong with the properties (though don't forget you'll be managing 2 condos, as opposed to 1 SFH).  The advantage of B is you've purchased twice as much property (in $ terms) so you stand to gain twice as much in capital gains.

I know I haven't said anything you don't know, but just thought I'd clarify the issue for you.

I don't think there's any chance you'd have people squatting in your SFH.  Squatters only move into abandoned homes that have been sitting unattended for years.

TO SNOWY

REO listing agents are always a team, with one person cozying up to the banks to get more listings, and the others on the team sell the REOs (and remain anonymous from the bank, which is why one of them can be your buyer's agent, but the team head cannot).

Some may help you rent out your properties.  I can't see why they wouldn't.  But actually, if you're intending not to have a management company, why not just rent your properties out yourself (my forner buyer's agent only put free ads on Craig's List, and she found people quickly – on the last weekend that I was working with her she was very happy because she rented out 5 of her client's properties using Craig's List, and made $1,000 on each deal).  But if you're going to use Craig's List you'll need to have someone in Miami to help with drawing up the contract, getting it signed, and handing over the keys.  I'm sure your buyer's agent would assist if you gave a tip.  My intuition tells me that they feel responsible to you and your property since they helped you buy it.