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Hi Miniman

Yep, the condos near Miami Beach that my realtor has wanted to show me have ridiculous HOA fees (ranging from $500 to $900 per month).  For this reason I haven't bothered to see any yet.

She says one reason the HOA fees are higher here is because the fee includes insurance, and these buildings are worth more so if they burn down it'll take more to refurbish them.

But honestly, if there are 300 hundred condos in a building and everyone's paying $500 a month, that $150,000 they're raking in per month.  There's sure to be a lot of wastage with that kind of cash flow.

But I reckon if you're buying cheaper condos with HOA's at $250, and property taxes at $200, and the condo only costs 50K, and then you rent it out for $1150 per month, then you're making $700 per month, which is a rental return of over 15%.  I've seen a number of condos like this for sale on Trulia and Zillow, in Miami's cheaper areas (eg. Allapattah, Flagami).  However, whether you can in fact buy them at 50K remains to be seen.

Hi JacM

send me a private message, and I'll send you the name.  I don't think it's appropriate to recommend someone on an open forum whom I haven't dealt with for very long.

Also, I'm happy to give some pointers in terms of suburbs if you're thinking of Miami, although remember I've only been here 5 days
cheers
Steve

Hi JD

HSBC definitely lends to foreigners, but only as part of their Premier account program.  So first open a Premier account (for which you are supposed to keep an average balance of $100K or above) and then they will give you a loan.  However, they prefer to loan on bigger purchases (perhaps $200K and above).

Here's an interesting event that took place yesterday when I visited HSBC here in Miami.

I have not yet made a Premier account.  I just took all my documents (letters of reference plus bank statements) to one of the loan officers dealing primarily with foreigners.

He let me know he'd be happy to give me a mortgage, and then ON THE SPOT, without me even having a single HSBC account anywhere in the world, he typed me a pre-approval letter, stating that HSBC will be happy to lend me up to $200K for a purchase of a Miami property that fits with their criteria.  This means I can purchase up to$300K.  I think he wrote that figure simply because I told him that was the range I was looking at.

Basically, here are their criteria:

1. Do not state it will be an investment home.  Just state that it will either be your residence if you move to the US, or that it will be your vacation home if you don't move to the US

2. After you find the home you want to buy, you pay HSBC a sum (I forgot to ask how much, but other banks are charging about $250) and they will have the property appraised (meaning they just get a realtor who works with them to go and estimate the price).  Whatever the appraised price, that is how much they will loan you.

Here's an example:  Say you like a house costing $320K.  You put in an offer of $300K, and it is accepted.  Then you go to HSBC, but their independent realtor only appraises it at $200K (at this point you should get a bit worried that you've overpaid, and you still have the chance to pull out of the deal).  But let's just imagine that you love this place, and the owner won't go lower.  So then HSBC will just give you a 70% loan of the $200K, in other words they will loan you $140K, so you'll have to come up with the rest in cash.

One more thing about HSBC.  Their interest rate is phenomenal compared to all the other banks here that have Foreign National Mortgage Programs.  HSBC yesterday was offering 4.623% on a 30-year fixed loan!!!!!!!!!!!!!  The rate changes every day, but only slightly.

So now I've got a pre-approval from HSBC, but in fact it's probably worthless to me, as is their great interest rate.  I'll make a subsequent post to explain why.

Hi Tassie

Thanks for the encouraging words.  Now that I'm here it doesn't seem so difficult as it did from afar.  Just last week I felt unsettled, but this week I already feel completely at home (except for the absence of family).  I've rented a great spot near the beach (for a month), I've got my own parking place for my rental car, I'm loving my morning and evening swims, plus all the amazing restaurants (not expensive ones, just the incredible variety of fast food like Taco Bell and Subways plus the little local South American restaurants).

I'm not finding the shops expensive (eg. Publix) and sometimes I cook up some great steaks at home, with a nice bottle of cheap Californian red wine.

I think it's important to first be comfortable and settled, so as to have the peace of mind to do some serious bidding.  Also, you need a realtor you trust and like.  I have such a person, and what she lacks in experience she makes up for with enthusiasm.  I have not used her at all to hunt for properties, but did it all myself on Trulia, or by sitting at her computer and going through MLS listings.  There's just no way she's going to understand "value" like I can.  Sounds arrogant, but when it's your own money, and you've being buying properties for yourself for years, you will develop your own instincts, which are bound to be sharper than someone who's just in the market to earn a salary.

Two days ago I found the property I want, and have been absolutely focused on it ever since.  I've posted on Trulia and Zillow to get ideas for what to offer, I've phoned up and bugged people knowledgeable in the Miami market (people I met on the internet) until I got their opinion, I've spoken to every agent, plus the senior partners, in the agency where my realtor works, and I've visited the house in question several times, and have even spied on other buyers who've come to view it (by pretending I'm a dumb tourist who happens to be passing by, and then engaging them in a conversation, and asking them how much they intend to bid).  I have built up in my mind the range that I believe others are going to bid within, and today I put in an offer that hopefully will be a touch higher than I feel the second highest offer will be.  Yet I'm absolutely convinced that if my offer is accepted, I'll have got it at about half of its real value.

Since it's an REO, I know have to wait a few days (6 at the most) to find out if the bank accepts or rejects my offer.  When I placed the offer (which you do via the MLS website) I saw that 5 offers had already been submitted in just the past 3 days. 

So now all there is to do is wait, and hold thumbs.

In the meantime, I'm gonna start looking at small investment properties.

I forgot to mention: the number of people going to view my "dream property" is quite astounding.  Every time I've visited it, I've bumped into at least one other buyer.  And I've visited it often, since it's near where I'm staying.  Today there was a company viewing it, doing all the measurements and checking out the walls and foundations.  I got talking to the manager, and he told me their business is buying up REO's, fixing them up for a month, and then putting them straight back on the market.

So, although prices have come down by at least half since 2006, don't think this isn't a competitive market.  If you want to buy something that has intrinsic value, there'll be plenty of other vultures circling.

Someone asked whether they should borrow in Aus $ or US$.

Assuming you were offered the same rates (eg. 30 year fixed at 6%) in both countries, then you should definitely borrow in Aus.

I say that because the current commodity cycle will end at some point (let's say 8 years from now), since:

1. China will slow down it's infrastructure investment and residential property development

2. African and South American countries will get their acts together and bring on line more and more mines and farms, resulting in a glut.

When commodity prices crash, the US $ will go down to 0.65.  That's when you get a cash-out refininance on your US property, and use the cash to pay off your Aus loan.

But if you are offered an Aus loan at 9% but a US loan at 5.5 for 30 year fixed, perhaps go for the US loan.  At least you're dealing with certainty, and a 5.5 fixed is going to look very cheap one day when the US economy is humming and everyone else who didn't lock in their rates now are all paying 10%.