The joining fee was $350 and the additional $13,000 was for finding the properties. Yes I did lose quite a bit on the exchange rate. That was all the money I have sent so far. The renovations came with the costings of the properties. Youngstown cost $12,000 to but but $6,500 to renovate, hence the total being $18,500 US. Detroit cost $27,000 plus the additional money to renovate, around $8,000 for a total of $35,000 US.
Rental guarantees were within three months, although Andrew would deny this later. He told me face to face I would get these properties rented out within three months which is what really hooked me into buying them, as I was looking at getting rent as income. HOWEVER I have received absolutely no rental income in since I bought the properties 2 and a half years ago.
Sorry to nit-pick Gavin, but:
Youngstown $12,000 with $6500 to renovate = $18,500
Detroit $27,000 with $8000 to renovate = $35,000$39,000 worth of property and $14,500 worth of repairs.
What rental were you led to believe you would get once reno's completed? I believe Youngstown was a 4u? and Detroit was SFR?
How long were the reno's going to take?
Was the rental guarantee to rent 'inside' 3 months, or 'for' 3 months?
Did you see photo's of the properties inside and out that you were going to buy?
Finally – it seems from what you said above that the $13,000 was nothing to do with renovating, project managing or anything like that, but merely a 'fee' for looking on the net – am I correct?Regarding answering the questions above; the estimated rental income I will have to check, I will be away from home for the next five days, so won't be able to disclose this until next week. Yes the Youngstown Property was a four unit apartment. Detroit was a house.
Off the top of my head the estimated rental income was along the lines of $600 a month, as it was part of My USA Property's marketing pitch. The Detroit one was around $400 a month. I will confirm this next week though, once I look at the documentation Andrew gave me upon our intial meeting. Rental guarantee was within three months for the renovations to be finished and the places rented out.
The $13,000 fee was basically for them, in hindsight, searching on the internet and quickly getting a property manager and renovators with obviously little time spent on research. I did see photos outside the property, but not inside, although I was aware both properties needed restorations.
To add to this though, what My USA Property and Andrew Allan didn't tell me though was that my Detroit property would take around six months to renovate and that the property manager Andrew Allan found; Ronnie Williams, ran off with six months of my rent. Later on, by all accounts, people were living in that property for free until a couple of months ago and then left it in a shambles. Since then I paid for a property agent, who I found through absolutely no help from Andrew, to take picture and board up the place after seeing all the damage that had been done by these tenants. So now I am back to square one. I also have to pay an additonal $250 to Michigan Tax Assessors as the title was never actually transferred into my name.
Regarding Youngstown, the renovations have never happened and none of the units have ever been rented out. Despite Andrew guaranteeing it would be done in a very short period of time. Once again, I hired a property manager for this place too to take photos and the renovations will cost around $10,000. Consequently the apparent renovations which was part of the package in My USA Property was never done.
All this will be spelled out in a bit more depth in the weeks ahead but I will be away over from the computer over the next five days.
I have found ALL the feedback so far to be constructive. Kind regards to all.
No need to rush Gavin, all in your good time. I was just trying to get the investment picture that you were 'sold' in a nuts and bolts form. On paper, your Andrew Allan deal looks good so far and you also had a great personal recommendation from someone you respected – just like 99.99% of Bernie Madoff's clients.
I think it is important people see exactly where it started to fall apart, the bad stuff hasn't happend in your detailed time line – yet!
For those willing to invest in the Detroit area take a look here https://www.propertyinvesting.com/forums/property-investing/overseas-deals/4344313 and see my comments.
OMG,,,,
Gavin,,, this is not what the US is about….
It sounds like One OZ taking advantage of another OZ citizen…
there are so many red flags in your statements about how the process was to work…
bottom line is in my mind for everyone like yourself that steps forward there are many many more with the same experinces.
Lord knows there are literally Hundreds of thousands of US investors that got taken for the same ride,,,,save the up front 13k fee you paid. ?This is where all these foreclosures are coming from… Not from some poor subprime borrower,,, but from dead and dying cities with High intensity rental situations that can only have a positve outcome for companies that live there and work there and buy at cost …. not investors paying 2 to 3 times what a local would pay for the same property.
Also rehab on any home for rental only takes 2 to 4 weeks MAX… 6 months is red flag.. We build new homes from ground up in 4 months.
For anyone who has read my posts…. These lower end markets are just not appropriate for out of area investors being out of state or out of country ( Sorry Kyler)…. There is a business to be had in the lower end rentals but only for those that work it for a business….. problem is greed on the Oz and US investor front.. They want to beleive in these huge returns but have no idea about the risks……. Take in the money Oz investors pay to middlemen and the rental returns are never going to be what they think…. Keep your money in your local banks way better off…. in the long run… Or invest with better properties make a 6 to 9 % return and call that realisitic.. by the time the property manager gets done with you it will be rare to get much above.
Thing is Jay, we live in a very safe world where tenants rarely wreck property, pay their rent and (generally) aren’t accomplished scammers. It is why Australians get so easily taken. As you saw, rent rolls are the real money behind Australian RE agencies. It is all so very different. Without people like you, Alex, Kyler TX CC, Cheeves, Emma etc posting, the truth is just not accessible. Between you all you would have saved thousands of would be victims.
.It would be a great shame if ANY of you guys stopped posting. It will get boring occasionally because we don’t know anywhere near what you all do, but keep up with the pearls of wisdom – people like Andrew Allan only survive because people like you aren’t easily accessible to newbies…
And on that topic, if I were Steve McKnight I would be inviting Jay, Emma, TXCC, Alex, Cheeves etc for a USA ‘Super Saturday’ or something similar to have ‘experten’ (Luftwaffe speak for ‘real experts’) talk real world issues to real investors…….IMHO it is WAY overdue.
Glad to make the trip Lawys fire up the cirrus… 16 hours to Hilo…. 14 to midway,,, 10 to some other Island then 8 to OZ….
I followed my flight instructor ferrying a cirrus over there to OZ and those were his legs and times….. I think I will just hope on the big Q, use my miles to upgrade to business stretch out walk 5 movies and be there.
Glyn, from Professional Realty has invited me to meet his brokers in the coming months. I have a con call with them this week.
Want to read the tea leaves before I put any real investment into marketing in OZ other than bandieing about on this site.
JLH
There is a company based in the Pacific Northwest that makes jets that can do it much faster Jay, you may have heard of them…
Heard the one about the Indian Ocean between LAX and HNL/HTO? Full of Warriors, Seminol, Navajo, Cherokee etc…
I would think if Steve were involved any of you guys should be compensated in some way at least. Anyway – sorry for thread drift, looking forward to Gavin’s next installment.
This was Andrew Allan’s response which he sent to me on February 22nd last year. Please read this email and my comments below, it is quite frustrating for me going back over this, considering Andrew sent me this 15 months ago and nothing has come from what he said below. I have written some comments after this email
Hi Gavin,
Firstly I understand your frustration in relation to these 2 properties. I know that there has been issues from day 1 on these. In regards to Detroit I was recommended the property manager by the wholesaler who had used him for many years and never had a problem. I feeling that being an overseas buyer that didn’t care about your file. This is why I appointed Debra to be the National Property Manager and make sure these things don’t happen. I pay Debra a very good salary to make sure this does not happen and this is a direct cost to me and not the client. She has been working non-stop to get on top of this file and they have not been very helpful at all there. There is only so much I can do from my end being based in Australia and this is a major reason for my move as well. We are working on this and will make sure we get it back on track. I would suggest once we have a new tenant selling the property straight away as it will be nice weather and buyers will be coming out. There is NO indication that ANYONE wants to pull this property down so I am not sure where you are getting this information.
In relation to Youngstown this is getting fixed up nicely from the update from Alan Applegate. They expect to get tenants in the coming weeks. You must remember you paid $12k for this property and yes there has been a number of issues but I am VERY confident of getting this fully rented and ready for sale in the summer months.
I am a person of very good standing Gavin and I thought by providing you $4,000 for the rehab in Youngstown that was shown. I am always available to meet. You know where my office was and could have called in anytime. You have my mobile number, office number and email address. If I was hiding I would never return call or emails. I want to get these resolved for you as quickly as possible as well and I know we are on the right track but threatening me is not the answer. I am actually going to be meeting Alan Applegate next week for a follow up on where the progress is on Youngstown as I am confident that will have the highest profit.
Gavin feel free to call me anytime (US time) or send me an email. I will have Debra send you an update on the progress tomorrow as its 7pm over here and all staff have gone home.
Lets get these on track and sold.
Andrew Allan
OK, now unfortunately despite all his SPIN and promises and talk no results have come out of any of the suggestions Andrew has given in the past 15 months since he wrote this email. As for the woman Debra, she has apparently disappeared as I have not been able to get in touch with her for the past year. The renovations that were occurring for the Youngstown property also never happened, and the property manager Alan Applegate left the property management company soon afterwards as far as I am aware. I have no idea where the money I paid for renovations went for this property, but the renovations never happened.
Andrew was always hard to get in contact with, which doesn’t help. Anyway there is still plenty of more to come, as I work through the next 15 months regarding what has happened with my properties.
Gavin,
We have a new member Mahovi on the forum he is working Detroit,,, I bet he will have one of his people do a drive by for you snap a pic and give you the real scoop..As a courtesy.
If you want to send me a private E mail I will have one of my Ohio assets look at youngstown for you…
Just to be clear I will do these at no charge… If there is work to be done or evictions etc… I just refer you to a PM that I know can handle it and they will expect compensation… I tried this with another forum reader on thier Phoenix disaster and for whatever reason my kindness interpreted from this owner as I would hire a PM and do the evictions board ups etc all for free…. No PM is going to work for free. But drive by and snap shot to give you an initial assessment we can do as a courtesy.
Not sure what you paid for these properties but I would not put another dime into them and I would dump them for whatever you can get… If your buying from a Aussie company through a US wholesaler and paid 12k for the house that means they paid 1 to 3k max for the house and it really has no functional value at all… do not pay tax's do not pay insurance do not put another dime into these you may want to try to put them on http://www.bid4assets.com this is where all the low end properties are traded… Only offer a quit claim deed to a buyer and there you go.
This e mail from Gavin is just the poster story of why its so risky buying properties in this manner,,, you have an Aussie company that is not there trusting a wholesaler that they may or may have never met anywhere but on the internet… Kind of like internet dating,, you can come up with a bunch of frogs instead of prince's…. Just Highly Highly risky in my mind… And I am not saying all companies are like this of course… but there certainly seem to be only a hand full that have credibility.. And those you do not hear about because things go fairly smooth… I bet Net yields are not what they are advertised but you do not have these wipe outs either, and what appears to be total negligence and fruad.
JLH
Gavin, please send me all the details about you transaction or at least what you have in mind for the future with regards to that particular property. I can send my PM there to take some shots , if you like , and asses the present situation. But if you'll give me just the address I bet that I can tell you pretty much all you'll have to do if the isssue is what I think…Send all the info please.
I just submitted a complaint about Andrew Allan and My USA Property to FTC Bureau of Consumer Protection in the States. It will be interesting to see what happens, I focused on Orlando, Florida as that is where they are located. If you know of any other consumer affair watchdogs that deal with property complaints in Florida let me know. I want to focus on Florida, rather than Detroit and Youngstown as that is where the company is based.
By the way this is what I wrote to them too below; I will keep on updating the past two and a half years with this so called 'expert' Mr. Allan in the upcoming week but not now as I spent the past the last three hours writing this silly complaint.
In December 2009 I bought two US properties through the company My USA property. The $40,000 for Detroit, Michigan included the purchase of the property and also renovation costs, and fees for sourcing a property manager while the $25,000 for the Youngstown, Ohio property also included the renovations and fees for sourcing a property manager. It was made clear to me that Andrew Allan was a legitimate real estate agent.
Due to the fact that I did not have a US bank account at that time I transferred some of the money directly into CEO’s account, Andrew Allan in quantities of between $8,000 and $10,000 installments. Obviously this appeared to be a risky proposition however I had been recommended through a friend of mine, that Andrew was competent.
Through paying for these properties I was guaranteed by Andrew Allan that both properties, would be renovated and rented out within approximately three months, and that he would organize the renovations, property manager and help me open a US bank account. Please note that such guarantees were also promised on his company’s website.
However the company has not done as they said they would, consequently this has put me in a dire financial situation.
The purchases occurred were two and a half years ago and my Youngstown property has not been renovated, let alone rented out. I am currently paying additional money for the renovations, as the money I gave Andrew Allan for these renovations never occurred. Consequently it appears that he has <moderator: delete>, as over $8000 of the money I paid him for the Youngstown Property were supposed to go into renovations, to make the property rentable.
Regarding the Detroit property, My US property recommended and endorsed Ronnie Williams a property manager who they selected on my behalf to represent me when I purchased the property through the company. They obviously did not put enough research into finding a quality property manager, because as Andrew let me know via email, nearly a year later the guy ran off with six months of my rental income, and the property has since been damaged by tenants who were not paying rent. Clearly Andrew did not do his homework regarding finding a legitimate property manager and he is to blame for this as I paid him a fee to find such a person. Since that time I have had to find my own property manager and pay additional money to board up the Detroit place as well as pay for damages to the place that occurred when it wasn't being managed.
Andrew Allan comes from Melbourne, Australia and posed as a real estate property expert and agent when I bought the properties, and by the looks of his company's website he is now working under a broker as his website seems to imply. However I bought a property through a man who was pretending to be a buyers agent – not a wholesaler, not a flipper – he made it clear to me that he was an agent – which is a clear misrepresentation of his expertise.
I strongly encourage you to follow this link and watch this piece on him by Australia's National Current Affairs Show 730 Report that screened on 24/4/12:
http://www.abc.net.au/7.30/content/2012/s3488301.htm'It is titled US Property market offers promises and pitfalls'
Richard,
with one google search,,, I found the wholesaler who this Andrew used,,, its Jeremy Burgess…who is Canadian… so he was the seller of this property… And he has a big profile in Detroit…Your property is on his website and on the Net…
I did 2 deals with this guy ( loaned him money to buy foreclosures) and he stiffed us… Bad actor as well.
his company is Detroit urban wholesalers
Just use goggle and you will find all sorts of info on him… Also check out the http://www.ripoffreport.com in the US… thats also a good place to air your grievance's there will be people on that site that will give you ideas. And file complaints against him at the BB.
At first blush as I look at this property and its been 5 years since I left that market,, but its south of 8 mile and south of 6 mile… I will let Mahovi chime in since he is currently working Detroit…. When I was lending in Detroit our general theme was to do nothing south of 8mile….
At the time you bought it I think you paid about the going rate,,, the Issue is location and what I keep preaching on this web site these inner city investments are NOT appropriate for out of area investors….Americans or foriegners in my humble opinion. I am not preaching to Richard just making a statement for the audiance. As the deal was presented to you I could see why you moved on it… Although again when you look at the proforma they put together, They have no vacancy factor and they have on going mainteance at 50 a month…. These are huge red flags and just fantasy numbers… As well as looking at the house the rent is probably over stated as well…
So there is no mystery here in my mind.
Andrew Allen runs around the internet and approach's US wholesalers.. He does not care about who they are he just wants product… he then puts up his web site in OZ claims to be an expert in US property,, and when you look at how he structures the deal he is taking a consulting fee on top of what you paid the Seller…. Now he is definatly selling RE without a RE license based on his representation to you,,, the actual transactional details could be differrent but the representations he is making are clearly engaged in the sale of Real Estate for profit.. And he does not own the real Estate if he owns it personally then no license is needed. And on Andrews materials he states he is based in OZ…
One needs to do a simple chain of title search to see if Jeremy Burgess did indeed own this property or if he was just flipping it… But with Jeremy's high profile I am sure he has that base covered….
so from Burgess's stance OZ middle man brings him a buyer… He probably also paid Andrew a fee as well… So I would think Andrew made 7 to 10k on this deal.. I think Burgess probably bought the home for 5k or less as is.. And thats all its worth today as a board up… Even if you fix it up I doubt you will be able to sell it for more than 20 to 25k to anyone who knows anything about the area…And it sounds like the rehab was done on this one.. And it was Jeremy no doubt who brought in the Manager.. And or the PM works for Jeremy in some capactiy…
bottom line on this one.
If you bought the house and it was rehabbed and a tenant moved in….then there is no cause of action…. If the property manager ran off with the rent money as you state,,, that is the only one you have an action against.. Other than Andrew if you can tye him into representations that he would look after the property for years to come after you bought it….If they had an appraisal you might have a case for apprasial fraud BUT ONLY IF YOU ENGAGED THE APPRAISER AND PAID THE APPRAISER.
So you ran into the OZ Spruiker who found a wholesaler in Detroit who could not give two hoots if you have a bad experince.. and who has been doing this for years…And the property manager was a theif, you need to file a complaint with the DA for theft,,, The attorney General in MI for consumer protection actions against Detroit Urban wholesalers, and the Department of REal estate against Detroit Urban and Andrew and the property manager theif….
These all need to be done in the jurisdiction where the offense occured and need to be done in writing.
I would start a web site and blog about these two companies and would not give a crap about any liable or other wise,, Especially from Burgess he can't touch you in OZ…
I will now look at Youngstown.
JLH
As I think about this you may be able to Rattle Jeremy Burgess cage hard enough to get some money out of him or at least make him resell it for you…. He is the deep pockets in this scenerio as you present it.
Jay, take a look at what I wrote Richard yesterday:"Hi Gavin.
Nice meeting you, even if the circumstances are not the most fortunate ones…Some quick thoughts, just after searching a little bit, without knowing anything about the actual shape:– you've bought the house from one of the biggest wholesalers (in my opinion he is the biggest) in Detroit : Jeremy Burgess. He's not a scam artist but being only money oriented sometime things get out of his control.– the neighborhood is NOT one in which myself I want to buy a property. Even is in the one of the good investing areas of Detroit, is close to 2 dangerous Detroit "landmarks": River Rouge Park and (this I learned in my first day in Detroit-never buy close to it) Grand River Avenue. Even if the block (because investing in Detroit is about the block not the street) is a good one, it will be hard to find someone willing to rent in that hood, maybe a Section 8 tenant, with a low rent…Why do you think the seller didn't renovated it (most of the time he renovates all the GOOD properties in GOOD areas)? He didn't want to take the risk of spending the money and renting it at a lower than usual price. The house is clean though inside and outside and the rehabbing cost it should be in the 8k-12k range, depending who do you want to rent it to. A Section 8 rehab will cost a little bit more , as the inspection will be a little bit more severe. The whole street looks pretty clean and I can say the owners on that street take care of their belongings; this is a positive fact– one of the things I adhere very strongly is to never buy anything else that SOLID BRICK HOUSE in Detroit. It has more value (I think the cheapest house I owned had a past value in 2004-2008 of at least 150K; yours was valued at 89K in 2004) and says a lot about the neighborhood (poorer people with limited possibilities). If the whole street, or block has a single wooden sided, aluminum sided or vinyl sided exterior I quit on buying anything on that area – this says something about the immediate area. The only exception to this rule is when I buy multifamily or out of Detroit properties. That's a different story.Anyways, I'll send my PM to take a look at the property, send my some pictures and some inputs with his ideas…We'll get in touch soonOvi"
The first mistake Richard did was to not check on the area where the property is located. It's not a bad area, but not a very good one and no way I was to invest there, and especially in that dwelling type. Have no idea if the house was rented or renovated, but supposing it is in a good shape I highly doubt that it will sell more than $15k-$18k (for cash transactions). If Richard doesn't want to keep it and slowly recover his money through rent, the next idea which comes to my mind is to sell it through a land contract, as those are in great demand right now in Detroit. Anyways, my PM will give me the right numbers after he'll pass by.
Yes, Jay, you are right again – the rent was WAAAAAY overstated. You can get $800-850/month only in exceptional good (with regards to Detroit) ares in the City. In my opinion Richard can't get more that $450-500/month in that area, maybe $600, with some luck and hard work from the PM.
Regarding Jeremy Burgess now: I personally don't know him; I spoke with the guy on the phone when I brought some Canadian investors in Detroit and he had some properties available for sale, as I was buying outside Detroit, at that point. He had great properties, the price was so-so (he even gave them a discount based on bulk purchase, which is pretty rare from him, as he personally states), but what changed my investor's mind was his insistence and the way he started another approach ("if you don't want to buy just come to my office, we'll stay at the table and I'll teach you everything you need to know about investing in Detroit for $1000/hour"). I know people working with him (not for him) and everybody has only good words about Jeremy. The commission I know he spends for selling through a third party is $2500/property. He moved from Seattle 7 years ago when he'd seen the potential Detroit offers. He lost $400k in the first year due to his lack of knowledge in Detroit RE investing. Anyway, he recovered, he sells around 100-150 properties/year now and he is the leader of Detroit's probably biggest RE club called Renegade Detroit Investors Real Estate Club. Around 50 people from all RE (investors, RE agents, brokers, hard money guys, title-insurance-banks, etc., etc. ) gather once a week and discuss about Detroit's RE market, share opinions, create JVs, teach new investors, etc., so from this point of view he does something creative and helpful for the others. I don't know anything about his scam artist's side and never heard anything about it.
In Richard's case, Jeremy is not to blame as he did his job – he sold the house for the market price at that time, but what has to be questioned here is for how long in what kind of circumstances Andrew Allan and Jeremy worked together. At the first sight, Andrew Allan <moderator: delete personal comment>.
If Richard rehabbed the house and had a tenant move in you have only the case against the PM, who ran with the rent money. Opening a case against Andrew Allan seems a little bit late (under $25k is a Small Claims court case and it did pass more that 1 year since the action took place, so it will be dismissed from the beginning), so for any legal action against any of those guys, probably an attorney will have the best idea how to do it.I can only relate my dealings with Jeremy lent him money on two houses he did not repay. Would not communicate unless pushed to the limit by going semi public…
I think you feedback is very good…. And I know some of the better players there in Detroit that have gravitated to land contracts… Land contracts have about a 50% mortality rate IE they stop paying within 24 to 36 months… but then you just sell again.
key is to not have your house trashed while you wait for another land contract buyer
jayhinrichs wrote:I can only relate my dealings with Jeremy lent him money on two houses he did not repay. Would not communicate unless pushed to the limit by going semi public…I think you feedback is very good…. And I know some of the better players there in Detroit that have gravitated to land contracts… Land contracts have about a 50% mortality rate IE they stop paying within 24 to 36 months… but then you just sell again.
key is to not have your house trashed while you wait for another land contract buyer
Right, Jay, you have to transform your house into a fortress, if possible. There is a company in Detroit who is using some tough materials (almost bullet proof) for boarding the properties. I think the price is $150/month and the house is practically impenetrable.
As for the Land Contract, is better to try a rent-to-buy tenants for 1 year, in order to qualify them (as they know this is to be their house-they'll take good care of it), and after that to have the house sold with pretty tough conditions (15-20% down payment, 5-7 years amortization at 7% rate, another 10-15% balloon payment after 2-3 years); if it stays this way good, if not you've made good money and re-sell again as it's back to you.Some very good tips Jay, unfortunately the more the truth comes to light the angrier and more frustrated I find the whole damn experience. Anyway, I have filed complaints with Andrew in Florida, now to get onto the Detroit Property Watchdogs, as you mentioned tonight.
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