leverage in Australia versus ‘all cash’ in the US

Is 5% annual appreciation in OZ year after year a reality???  Or does the market move in more of a peak and valley.  10% annual appreciation year after year in the US is overly aggressive in my mind.. our markets depending on area either are flat line  ( most of the mid west for example) or see wild swings like up 25% one year flat the next.  Our PDX market ( portland Or) had a nice 13% gain in 2013.. that followed devaluation from 08 to the bottom which was end to middle of 2012. Most US investors are looking at cash flow and appreciation is a bonus. IN 04  it was negative gear and appreciation.  profit on rental houses also is tougher for individuals because of the flood of investors buying.. MOst that make profit on rentals right now in the US are the marketing companies and turn key guys that have highly advanced and well funded sales arms….IE they create their own market.

I see the OZ market very much like where I grew up in San Francisco Bay area… I bought a house in Palo Alto  ( think STanford University)  in 1985 for 170k  900 sq ft. on 6k sq ft lot 3bd one bath built post WW11  Sold it in 92 for 450.. that house just sold last year for 1.565.000  to be fair they did update kitchen and added 400 sq ft.  So housing now in Palo Alto sells right at $1000.00 a foot.. and that house even today would rent at maybe 1k per week.

So the point of the above is it all depends when you buy in the RE cycle. Now that Google, Facebook etc moved into Palo Alto that house could be 2 million in a year or two…

then you go to Alanta and 1.5 mil buys you a mansion like those you see in Hollywood Movies… So really depends on when where etc here in the US.

1.2 mil extra and i get those Bars to prevent burglaries and trap me inside in case it burns down.

I cannot believe those are actual prices.

Is one in EURO's and the other in US at the very least ?

What works in one part of the world, may not in another part.  A 10% return in the US is about unheard of except in pro formas….at least in Atlanta where my group works.  We are able to offer investor partners a 10% return guaranteed for 18 months on rented and renovated housing.  Examine each model and seller or investor partners carefully to understand the pitfalls & returns of each.  You'll find a more realistic return for many US investors to be in the 3% range and many bank on appreciation to ramp up expected returns.  As Jay mentioned….appreciation is just a bonus…if you get it…super but don't count on it.  We are able to offer bank & private lender financing on our rented properties which usually sell for $65k to $120k and our lenders will usually go 50% on these.  I don't know what lenders are doing in other markets but this is in greater Atlanta.  Lenders like our product because we only do shared housing so we have constant revenue, minimal vacancy and maximum return.  Whatever you do in the US, make sure you have a solid team with boots on the ground as it will mean the difference between success and failure.  In some cases, like ours, you could be a front end investor partners and earn 10% plus half of the profits when it sells which translates into a return north of 20%.  With our model, it makes more sense to NOT own real estate….at least not for very long.  It took me over 20 years to arrive at this conclusion but the returns speak for themselves.  Happy Investing!

Oui Oui

How far from Paris?

There are come amazing Chateau's within 3 hr drives from Paris.

Vive la France haha

The 30-40% purchase costs in France will adjust your desire to buy there. (hence the prices of French property)

Hi nyc88,

Thanks for your post and I am privileged that you can remember my posts dating back to 2011.

I did accumulate quite a few properties in a short space of time. I believe it was 7 months.

At the time of building my Australian portfolio I only had 1 property in the US and as I pretty much moved myself and my whole life to Kansas City in September 2012 I fell in love with the numbers the US market had to offer. It was a "no brainer" to start selling out of all Aussie investments and move the funds here. It was also good timing as the AUD was super high. I predict the AUD will keep dropping.

It is much better IMO to build a portfolio with high cash-flowing properties with no debt. Fortunate to be able to do that here in the US due to lower priced properties.

Then later on potentially look at using some finance to continue buying and speed up the process of building the porftolio.

If there are any hiccups with the finance properties (and there always will be) the cash-flow from the cash foundation properties can be used to cover any losses without interupstion to one's lifestyle.

Thanks for reading and have a great day.

Their president has a wife and 6 mistresses, what do you expect.

Hi Burrito – having read through the thread there is just one thing I wanted to ad. Buying one property is not really a valid strategy. Nigel has been on the forum for many many years like myself so perhaps have a chat to him about non recourse borrowing. There is little point buying just one home.

It would be good to consider strategies to build a portfolio.

Could you buy 10 income streams over the course of 3 years with the right structures & research.

Here are my only rules to long distance investing: Visit, visit, & visit. Become a local. Read their news. Bird dog the purchases but do the rest yourself.

I believe that it is a great time to buy in the United States. The economy is recovering and there is no doubt that both prices and rental demand are on the rise.

If we look at commercial property and that can include apartment complexes you can fund the property with 40% down and borrow 60% as non-recourse finance. hat means that the loan is only based on the asset. At the end of the day the banks consider that this is a low risk. You are putting up a 40% deposit in a rising market. From an investors point of view you could buy a property in America tat you could not buy in Australia because from day one these deals are positive cash flow. We recently brought an office building that will return 35% cash on cash. The net return on many apartment buildings will return anywhere from 12-17% and the cash on cash returns to be far higher. I believe America will be a great market to invest in over the next few years. At one point it may have been a little cheaper but the ability to leverage is a game changer.