Portpirate,
there you go, its like us crazy americans running up thousands of dollars of credit card debt at 18 to 30%… And then investing in the stock market.. Your better off paying off debt , getting into a cash position then investing. its epidemic here. Credit is far to easy. I did not realize your mortgage rates were so high.
At the end of the day 18% plus returns on rentals in the US is just not sustainable. If it was the case the US buyers would have bought them all. Heck there is 300 million of us and only 30 million of you. What your countrymen are doing is buying half of our JUNK and making a bunch of promoters who have no concience a lot of money. Just keepin it real
Like I said for everyone who post of a bad experince there is 10 to 20 behind them that are too embarrassed to admit they got taken.
Bilobunch
contact me off the forum and I will explain how you can invest and be the bank.
jayhinrichs wrote:Portpirate,
there you go, its like us crazy americans running up thousands of dollars of credit card debt at 18 to 30%… And then investing in the stock market.. Your better off paying off debt , getting into a cash position then investing. its epidemic here. Credit is far to easy. I did not realize your mortgage rates were so high.
At the end of the day 18% plus returns on rentals in the US is just not sustainable. If it was the case the US buyers would have bought them all. Heck there is 300 million of us and only 30 million of you. What your countrymen are doing is buying half of our JUNK and making a bunch of promoters who have no concience a lot of money. Just keepin it real
Like I said for everyone who post of a bad experince there is 10 to 20 behind them that are too embarrassed to admit they got taken.
To complicate it further, Australians are required to contribute 9% of their income into a superannuation fund. Many Australians have started self-managed superannuation funds to invest in shares, property, etc. Recent changes in the law now allow borrowing for these purposes, however, money cannot be withdrawn to pay down personal debt. So even though, you may owe money on your own home, you can have a pile of superannuation money you can access to invest with. That is where a lot of investment funding from Aussies would be coming from.
Ok we have the same in our self directed IRA's and 401ks. its all about making the right investment decison.
and if its super fund it seems to me you want to be super careful. Not go out on the limb chasing the highest investment % someone touts only to be wiped out.At the end of the day its about capital preservation and return not just return. that is why your hearing all these horror stories Aussies chasing the golden ring of high return with no idea of the risk.
Jay Hinrichs Portland Oregon try me on Google US
Guys, please read the somersoft post ‘boholt seminars – no’ which later became ‘the emma171’ thread. Its an iffy area because I can’t say what really want to, but if you read all of that (might take a week) it could save $$$$$$.
Just to clear the air I have discussed this with SteveM and whilst he is in a difficult position he knows where I am coming from and is aware people could be hurt. I went to one of Steve’s very early wrapping lectures so have known him from the early days. I have the highest respect for his word, his approach and his integrity.
Just my 2c worth which could save others a lot.
bilobunch, I quoted your previous as it said in better words than mine what annoys me so much about an investment market that CAN be great… Your wise words were sent to me through a third party. I felt it important for others to read them. Please accept my thanks and apologies for not being able to contact you directly – you don’t accept emails…
Good on you Rick, on your purchase and also on your eagerness to share your experiences.
Us “virgins”, (so to speak) need and rely heavily on the experiences of those that do not have a vested interest in the sale of the properties as we most of the time fall victim to overzealous Investment Houses.I will be following your thread with much anticipation as I too am desperately wanting to invest in the US (while it is still available and affordable) after having disappointing misfortune investing here in Sydney.
So, please continue to post your ongoing experiences as I will when my moment comes.
Thanks Rick, much appreciated
4Sighted:
Thanks for your post.
At present all is going well and I have been very happy with service from HouseBuyers USA. The communication from US based and Aust based people has been fine and prompt.Will keep updating as things move on.
Congrats Rick.
This has been a great read so far. I hope I can buy an investment property in the US too.
I have not read in this post if someone has successfully got finance to buy investment property in USA with HomebuyersUSA or other agents.
Anyone?novusprimo wrote:Congrats Rick.
This has been a great read so far. I hope I can buy an investment property in the US too.
I have not read in this post if someone has successfully got finance to buy investment property in USA with HomebuyersUSA or other agents.
Anyone?novusprimo,
I have posted a few times…maybe not in this exact forum topic…but I was able to get finance for 2 of my recent purchases in Dallas TX in the name of my LLC. Normal 30 year amortized loan with a minimum LTV of 50% to a maximum 65% LTV. I didn't use any of the buyers agents so can't comment on whether or not they are successful or not. They tend to use hard money lenders which gives you high rates and short loan terms…effects the cashflow too much.
PM me and I can give you the details of the company I used in Dallas
<moderator: delete advertising>
Leonard ….. you get respect by helping answer peoples concerns on forums not obvious self promoting.
Get people trust with good advice without having to call you ……. stop spruking it is annoying !Or there is me the tell it like it is American with 35 years experience and watching your fellow country men throw their money down the rat hole.
I was telling one of my office staff to day that no matter what I say these Aussies are going to chase the brss ring and they wlll just have to expeience the loss's as I have outlined. at that point they will never comeback to the states but maybe we can keep some from getting wiped out. that would be our goal/
jayinrichs,
Seems you and I are both fools wasting most of our time. I am equally invested in the US and AU in property and have been (successfully) for more than 10 years. I did not lose anything in subprime. And, IMHO you are correct and we are watching fools parting with their money. We tried to tell the story but so few listened….You can lead a horticulture but you can't make her read it:)
PS: My US broker is of the same opinion as you. He cannot believe Australians are as stupid as we seem.
Hi Jayinrichs and Lawsy,
While i thank you for your invaluable comments which do make sense, I don’t quite agree with your opinions of Aussies in a general whole.
sure, we are after the elusive “Brass Ring”….i don’t know many people that aren’t, here in Sydney, over there in the US, in Asia, Europe etc.
We may seem to be too eager in our approach to investing in the US, but the situation here in Oz is not all that good. We have to do what we can and part of that is keeping the hope alive. Thus our over enthusiasm at times.
I would like to see more of your suggestions and experienced advice. I for one take your words into account, even if I do not follow it to the letter, your words are in the back of my mind when I throw my all into it.
Everything in life is a gamble, you only have to ensure that you gamble only what you can afford to lose.4 Sighted ……. i agree with your comments. I believe a % of Australians are asset rich and cashflow poor.
They have the family home and maybe another 1 or 2 properties with a fair bit of equity.
Seeing the cashflow in the US is inviting ….. to own a property that pays you to own it ….. how is that not inviting.
Some do jump in without thinking it through . i believe if your plans are cashflow and to hold for medium to long term
providing you buy a sound property in a sound community it should in theory be a good investment.
If you want to sell as soon as the aussie dollar moves up a cent or two then leave your cash in the bankIf you dont have a go you never know …… you cant turn back time !
To all I need to temper my comments. there is no way that I think the Aussie investor is not intelligent and educated etc.
I think its more of a culture divide in that by and large the average Aussie investor really has no clue as to how the sociodemographics of the US play out. And its my understanding that fully 50% of the Aussie investors are buying their first rental property and doing it half way around the world, so you have a bunch of first timers with no practical experience jumping into a business that they really can't know a lot about based on experience, only what they educate themselves on and or read marketing pieces.
And one just has to be careful of buying based on purported gross or net returns.
The more sophisticated US investor that buys larger multi family or has a large number of single family units would never make a purchase based on proforma data. They will look at 2 years operating history, and come up with a cap rate that is associated with the risk or the asset class be it an A class property that will sell for a 5 or 6 cap. or a C , D property that sells for a 15 cap.
There is a happy medium there for single family and that is 8 to 10% returns if your honest with the numbers and if your an Aussie and you factor in your cost to come to the states and view property your LLC set ups your tax returns etc etc. its probably less over time, the first year is the honeymoon. its year 2 3 4 5 that tell the true story, Tenants average 1 to 2 years max. especially in the low end assets. they are by and large fairly unstable class of renter. And as such you will always have a 1 to 3k bill to turn over the unit. it will need new carpet usually new paint , and other items.
We have hundreds of section 8 houses in our portfolio and we budget 1k to 1500 a year just for the recertification process. You can get lucky and get one for 500 to 800 but thats rare and that does not include ongoing repairs during the year.
one thing that is certain there is no rental in the US over the long haul that will cost less than 10 to 15% of gross rent in deferred maintenance and or cost of tenant turn over.
As I have said if you use 50% of gross rent for your operating expense's your going to be in the ball park. If you do better that's great however when you come in at that number your not disappointed. And or you make sure you have enough capital to own a rental. I have seen more than a few folks loose their properties because they did not have enough money to maintain them once they purchased them.
Just think about it. fully 50% of the foreclosures in the US are from non owner occupied loans, IE landlords that finally gave up and gave the property back to the bank.
Lastly I will say it again if you can get 7% in an Aussie bank with Zero Risk then that is one heck of a return and I will personally be seeing if I can set up accounts in your fair country. Do not leverage your personal residences to buy US rentals with the hope of making 15 to 20%, this is HIGHLY risky. In my humble opinion
Jay,
Aussie interest rates are comparatively high because of the strength of the Australian Economy. Unfortunately for Australians, overseas investors see our high interest rates and pour money into our bank accounts, etc. Ultimately this leads to too much money in the economy which then starts to overheat. Consequently, interest rates are raised to stem the tide of inflation and this sucks in more overseas cash. Just a merry-go-round. In the US, Aussies see the low interest rates and believe that with rates that low, as soon as the banks have money to lend, people will be falling over each other to buy their own home.
In Australia, a rental property might return maybe 6% GROSS, probably around -10% nett, with little chance of any capital growth in the foreseeable future as homes are now beyond the reach of many people. Suddenly, the US starts to look very attractive.There is a risk with any investment, but with the world shrinking, investing overseas is no longer an issue. Distance is irrelevant as the airfare to the US is not much more than flying from one side of Australia to the other, and just as tax deductible. The only shining light with Australian property investment is that on the whole, I think Australian tenants look after their property better, although that is a generalization as I have seen some shockers here too. Fortunately, we can get landlord insurance for any malicious damage, but as in the US, carpets need to be replaced, homes painted and maintained properly and usually at much higher prices. A $20,000 rehab in the US will get you a lot of work done. A $20,000 rehab in Australia might get you a new kitchen.
You pays your money and you takes your choice….Portpirate
what are the rates the banks in Aussie are paying on deposits these days?? I have heard 7% is this correct?? And is it government Guaranteed like our CD deposits up to 250k.
The idea of investing in the US is great, and we as a country would be in a world of hurt if the Foreign markets did not invest not only in our Real Estate but our bonds, stock market etc. to that end we are truly a global economy.
My point is that Rates of return are over stated and expenses are grossly understated. If your fine making 5 to 10% Net. Its doable. that will mean your maintaining your property in a manner that could see some capital growth and your being realistic about the times where you do not have a tenant for a few months.
The issues are going to come for those that buy in the low end areas. When 1. they settle on a property only to have it broken into and everything stripped out Including the Kitchen sink. Aircondioning condesner units are stolen by the millions and if you have an old one with the new freon laws then you have to replace the whole HVAC system to the tune of 3 to 4k.
I had 2 houses in detroit that I foreclosed on, I was the lender, when I made the loan in 07 neighborhood was nice supported 75k values. by the time I got the property back the neighborhood had turned into a bad one. And this can happen over the course of a few years in any of the inner big cities. A few undesirables move in displace the better tenants or home owners. And you get whats called White flight every other house goes for sale the neighborhood turns into basically 100% rentals, and its a nightmare.
Bottom line when I got the houses back they were completely stripped, I spent 25k on each of them totally remodeling them. Then rented them out only to have both of them completly trashed with in one year. I let these properties go back to the state for back tax's they were a money pit with no way out. And this has happened to me about 20 maybe 25 times over the last 5 years.
So basically 5% of our portfolio got caught in neighborhoods going into blight and you just walk from the property. In the scope of business we can absorb these loss's and move on.What I worry about is the Aussie borrowing against his house in AU. buying a few of these so called CASH COWS only to have a nightmare experince. and end up walking away from them and adding 100k of debt to their personal residence that they will take many years paying off.
This scenerio was played out many times in the US and untold Millions lost their homes when they Used their equity in their personal residences to purcahse investment property, the investment property did not pan out, they were counting on the investment property cash flow to help support the debt they borrowed that cash flow never came or was negative cash flow and at the end of the day they not only lost their rental but their home as well.
Jay
Yes, Aussie deposits can get you 7% totally risk free. take 30% off that for taxation and inflation of say 3% and there ain’t much left if any. I don’t think too many Aussies will be borrowing against Australian held assets to buy US property. They only need to think back to the 80s when a lot of farmers lost their farms through foreign loans when the currency exchange rate turned against them.
Regarding low price US properties, I agree. If you buy from a $2 shop, you know it’s not going to last and ultimately it will cost you more. I ruled out the Midwest for this reason. I have also seen properties being offered for sale from rehabbers for $60k when their listed purchase price was $12k. Must have been a good rehab!!
As you say, buy good property in good areas and set your sights a bit lower on returns and you can do well. Do the opposite and you get what you deserve. Everyone loves a bargain but buyer beware!
Many economists are saying that Australia is also in a housing bubble and our market is about to collapse too. They could be ri
right. Australian property is way over priced to the point where it is totally unaffordable. Great for the rental market but what is the future for capital growth? The oldest saying in Real Estate is that something is only worth what someone will pay for it. When there are few buyers like now, what is your investment property worth? A big fat duck egg!
To compare: average Australian home $450,000. Average Australian income $50,000. So 9 years gross income.
US homes price in this sector, $100 to $150,000. Average income $35,000. So 4 to 5 Gross income.
Average rents achievable in this sector. Australia: $1,600 per month. US: $1000
Aussie dollar at $1.08 US.
Do the math
Where are you going to invest?
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