Should Australians Still Invest Properties in the United States?

Hey,
I haven't been on here in a while, but I just feel like I need to reply to this post….
I can fully understand that everyone's experience when investing in the US is different, however, it seems that you have had a lot of very unusual things happen to you, that would not be the norm for any international investor.

We have worked with MANY Australian investors that have successfully made money investing in the US, and none of the above things apply to the general investor.

If you are having such issues with the management of your properties, why did you not change your management company? Especially as it appears as if they are stealing from you, I would not have allowed that to continue, but would rather have changed them a long time ago. We put a lot of time and effort into selecting an established company – you also got it wrong in that the management company works for the tenant – that is incorrect, they work for you as the owner.

You might also want to comment on how you/they scanned your tenants, as you seem to have a lot of problems. Only you can determine who you accept as a tenant, and there appears to be a lot of work to do there for you guys.
The fact that most Americans "do not pay rent" is simply not true, however, on the rare occassion that it doesn't get paid on time, did you and the manager agree a process to collect the unpaid rent?

Again, I think you need to select a management company a bit more carefully…. Also, the tenancy agreement can be used to outline what the tenants are responsible for, such as maintaining the a/c unit etc.

The fact that our mentality is based on "I win – you lose" is not true either in my experience, and I think many people might agree with me… We wouldn't be where we are business wise if we didn't have an environment where two companies/individuals could work together and both benefit from a deal.

The story about the woman from NY doesn't sound right to me either – if the realtor is producing bogus offers, why are you still with him? Why don't you/she report him, and go with another broker?

Don't get me wrong, but it sounds like you might have had some really bad experiences/bad decisions, and now you're trying to scare people away from investing at what might be the best time ever to do so. Sure investors need to be very careful, but you make it sound like there's some sort of "conspiracy" against foreign investors (you in particular) by management companies, brokers etc, which is certainly not the case. I think we're one of the countries where it is the easiest to invest as a non-resident or citizen.

We know companies who will look after your US and Aussie tax returns for a fraction of what you paid, maybe some more research would help you there as well.

As far as your comments regarding blacks/hispanics etc, those are your opinions, however, I do not agree with you that "all these people carry guns" and "they like to sit and drink and shoot in the yard", and I think you might be a little out of touch with reality. Sure we have bad areas, but it's not nearly that bad.

Also, drink driving is very heavily enforced in all fifty states and carry heavy penalties.

To sum it up, investors need to do their research and if they're not happy – do something about it, rather than try to scare people away from investing at what is the best time in history.

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To HighIncomeProperty:

I just recently bought a US property and am looking for someone who can help us with the US tax return for when the time comes that we need to do so. Would really appreciate it if you can recommend one.

Hi trhia,
Sorry I did not respond to your post – hope it hasn't been on here for long. I only checked in because I saw that Detroit Dan had made a recent post.
As far as "is this the time" – absolutely, with the AUD very strong compared to the USD and with some incredible yields – you bet this is the time.

We can recommend accountants, are you looking for one based in the US that can help you with your returns, or for an Australian one? Feel free to drop me an email, as I am quicker to respond on there.

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NaughtyJ,

LOL I had to laugh at your post. People can spend way too much time reading articles and less time actually doing it themselves. The best way to learn is to jump in, instead of having paralysis by analysis!

I often see this with a lot of people who “want to invest in the US” they want to get involved, but have to read some more articles to feel fully confident! It either makes sense to you or not, reading 100 articles will not influence that

Hi all
I am almost certain that this article was written some time ago by Rick Otton who has lived and closed many deals in USA.

Just makes me realise how important it is to get it right and understand the product I am purchasing.

So much stock that is being sold at the moment to investors, I believe the key is being able to do your own research and interprete whether it is in fact a deal worth pursuing not just by the numbers stacking up.

Cheers, Marisa

Hi,

I have my own property in the US and believe this is a chance of a lifetime. I will never buy another house here, I am buying 10 in the states. Why – no stamp duty, land tax, no GST, cheap prices, high yields and cheap repairs and appliances.

I have a great management team and so far no issues.

Like anything, location and management are key. Do you research.

If anyone needs an accountant or LLC etc, please contact me.

Steve

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DetroitDan9 wrote:

NaughtyJ, LOL I had to laugh at your post. People can spend way too much time reading articles and less time actually doing it themselves. The best way to learn is to jump in, instead of having paralysis by analysis! I often see this with a lot of people who "want to invest in the US" they want to get involved, but have to read some more articles to feel fully confident! It either makes sense to you or not, reading 100 articles will not influence that

Absolutely.  You can do all the research you want in the world and at the end of the day still do nothing. At some stage, you do have to stop reading and take the plunge into whatever investment you're planning/hoping to undertake (or rather CONTINUE reading, but take the plunge anyway – even after you invest, it's a good idea IMO to read as much as you can if possible and keep expanding your knowedge).

I just thought that anything "nuggets of truth" this guy might have had to say was (again, IMO) "spoiled" by what was clearly bitter personal experiences (kind of like a "I couldn't do it, so neither should you" mentality)

Personally, I think the US has a lot to offer Australian investors – as long as they do due diligence beforehand and go in understanding and appreciating the differences between the US and Australian markets.

were to start.

As much as people want to deny the facts. If you buy the cheapest US properties in the big cities Ghettos this is exactly what you can expect.

Of course this writer has taken liberties.  Drunk Driving is heavily enforced in all states. Although Texas you can legally drive and drink you just can't be drunk.

Having done well over 1,000 of these transactions throughout the Mid west and South east and 250 in Detroit as a Hard Money lender. I can 100% get behind the issues of property management. It ranges from out and out theivery to ones that are good. And the ones that are good do up charge for maintenance charge placement fee's and by and large do the best they can.

What happens in the states is that most "Promoters"  and thats what we call them the company that is in the business of buying the foreclosure rehabbing it. Then partnering with a sales company also run the gamit of good to crooks.

what I see is rate of return shoppers when I see the Austrialians looking at deals and talking to me. They are so fixed on Rate of return they neglect preservation of Captial and furture appreciation. And are blinded by the guy touting the 18% or the 26% return.
these can happen for a short time but will not happen over an extend amount of time unless you get very very lucky and its luck for sure.

And there is no doubt that the ones that bought inner city Ghetto properties on the cheap will end up in 90% of the cases losing their entire investment. Seen it first hand for over 30 years.  where do you think all these foreclosures and vacant houses come from The vast majority over 70% are from non owner occuppied homes IE investors that have thrown all the money at the houses that they care to and they walk.

the author talked about expense's and he is pretty much dead on about on going mainteneance. I see so many promotors touting 500 a year in maintenance and no vacancy factor and thats how they get the returns so HIGH.

We have over 400 single familys in our portfolio and I can just flat guarantee from vast experince no house can be maintained for as little as 40 to 50 a month I do not care where it is and we own high end rentals as well as blue collar, and especially if the home is located what we call North of the frost line IE hard winters.

Author talks about Aircondioning. Aircondiioning in the mid west is mandatory you can't rent a house without it unless its a shotgun shack with dirt floors.

To be realistic and conservative and to be happy if you do better one needs to plug in 200 a month for vacancy and repairs over a 5 year period. Now if you do a little better hey thats great but as we look at our portfolio thats the number we come up with, and since we self manage for ourselves and our investor partners there is no management fee. All maintenance is at cost there is no lease up fee etc etc. and that is still the target number we shoot for.

Your not going to be able to roll out of a rental ( sell it ) after it being a rental for 3 to 5 years plus without doing another what we call RETAIL rehab job. You will need paint ( better than rental standards) better carpets upgrade appliances etc etc to be able to sell the property to a potential homeowner.  Now if your planning to just keep them for cash flow then throw them away at the end of the useful life you can cut some corners. However doing that you risk losing tenants they will move at the drop of hat if the house is not up to at least rental standards. And will for sure withhold rent until things are fixed.

So at the end of the day we do not flip houses to out of area investors. We stay in the deal all the way to the end and take an ownership interest in the property we can and do manage and maintain them better than any property manager can because we own them right along with our investor bad tenant or vacancy is out of our pocket not the investor, you would be surprised how the risk is greatly mitigated using this model. And at the end of the day in almost all cases we will give the investor better net returns doing it this way than the old model which is for sure frought with Risk. And potentially catastrophic if you get hooked up with a bad promoter and management company. Not to mention our investor is the mortgage holder so for Aussie's that means no LLC needed and all the other expense's they incur trying to own the asset outright.

that all said never been a better time to invest in single family residental in the US at least in my 30 plus years we are buying 20 plus houses a month in our chosen markets and adding them to our portfolio.

So bottom line for the out of state or country investor is a big fat Caveot Emptar

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