- HighIncomeProperty wrote:My 2 cents would tell me that ANY type of guarantee like that – buy back, long term rental, capital growth, just isn't something to rely on. A good enough product doesn't need any "guarantees" like that, while a poor product is never going to come good on them.
What we do, is we sell the homes turn-key, and we offer management thru our local partners, but we'd never be able to guarantee you the future performance. That's not to say we're not confident you will do very well with us:-)
Land is a fantastic investment, you have multiple exit strategies (building, selling to a builder, agriculture, off-plan sales) and very low holding costs, but as rightfully pointed out by Jay, you don't get any income from it and it is also not as liquid as some other investments. I think we'll see though over a 7-10 year period that the investors buying land now, will be the ones who will have made the most money.
We have a lot of experience in residential land lots in communities across the country, and are always interested in new ventures.
There is no doubt in my mind and based on 35 years of investing in the us real estate market that anyone considering entering the US real estate market should diversify and not buy only one asset type. Highincome is absolutely correct, the biggest capital growth based on % gain will be those buying land or shovel ready lots in the right area's. AND I STRESS RIGHT AREAS>
Lets take a case study of what I did in Oregon this year.
1. Bend Oregon 37 lots shovel ready bought from small commuinty bank at 25k per lot bulk sale.
Lots peaked at 175k each. cost to build each lot 75k. From the day we bought them we could do one of 2 things sell for 50k as spot lots to builders. Or build 1 to 2 homes at a time and make 25k on the lot and 25k on the house componant. Or hold for 2 years and sell at 60 to 75k. You will read that Bend Oregon is now one of the best buys in the country.
2. Hood River Oregon:
bought 26 lots from small community bank at 45k each. We are building this out. The bank subordinated the lots to our construction loan. No points no interest on the lots. We are selling houses at 200k under what the exact same house sold for in the peak of 08. and have pre sold 4 and have another 4 ready to brake ground. Profit 50 to 70k per house. With hundred % financing. So not sure what that return on investment is a guess 50,000%. to use the Aussie Gross rate return.
if anyone is interested in seeing this product just e mail me and I will send you a link to the RMLS listings its really neat looking product.
And there are so many other deals like this we are only constrained by capital. AU folks have capital, companies like our selvles and Highincome have the deals and the execution, not to mention the credentials of being local in the community.
We are starting to buyshovel ready lots in 4 or 5 of the biggest markets in the county at what we think is 10 cents on the dollar of just construction costs to build the lots. Granted no cash flow and we will have to mow them and pay the small tax's yearly however we feel we will exit in 3 to 5 years at least 10X what we paid for them. And the price point is rediculisly low. We are bringing in US investors into these deals at 10k or so per lot. So they buy one or 2 of those and sit on them. Then they can buy a rental for cash flow from whoever they want and hopefully they pick a good company and actually get positive cash flow this positive will pay for any holding cost on the lots.
And what I like is the lots will make capital growth no doubt as long as they are bought in the right markets, again there are cheap lots in the US that you do not want to touch. IE and lots were house's are selling for under 50k are worthless. a Lot in Detroit is worthless etc etc.
Have no dought though the big US builders Lennar, Drhorton, Pulte, are buying these lots by the thousands right now. There have been huge transactions in Vegas Pheniox, Central CA. No so much here in Oregon as we do not have the really huge projects. Although I am representing one bank that has a 1100 unit project in south central Oregon. that is going to be sold at 6.5 million for the whole thing.
So my point with all this is the US is not just about cheapie rental houses. We also like and OWN Mobile home parks, Storage facilities, and of course commercial ( which is in the toilet right now and anyone buying that has to have huge dollars and long term horizon) . And if there was ever the demand from AU investors we would set up investments to allow them to participate in these transactions.
There is more to US than buying a rental homes my friends check out some of these other opportunies I think if nothing else it will give you something else to study and consider.
Best,
Jay Hinrichs
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