Hi guys – I have been reading far and wide in the lead up to making my first investment in US property. As part of this I would love to get feedback from the group on my biggest questions given the diverse array of experienced people active on this forum.
As is the case with many Aussie investors I could not help but notice the possible positive cash flow potential that appears on offer from US property investment – that is very appealing to say the least. And as is the case with any investment it is only reasonable to assume therefore that the potential reward on offer is also matched by the risk profile. Extensive reading of the forums and similar sources has outlined these many pitfalls to me although I am still grasping a strategy that could circumvent any path to disaster.
Groups such as Inprop-USA (www.inpropusa.com/) and US Invest (www.usinvest.com.au/) sound good in terms of managing the investments on behalf of investors, but it is difficult to analyse the merits on anything other than their face value.
I intend on starting slowly, and want to buy just 1 property (a modest property in a good area – $100-$120k). My intention is to use finance to lower my initial cash outlay/exposure just in case something does go wrong and I am 'scammed' – at least I would only risk losing $30k instead of the whole $100k (assuming a property price of $100k). The generous attributes of US mortgages is also encouraging of this strategy (30 yr fixed rate non-recourse).
I wanted to see if I could trouble people on this forum to hear some stories on how you started out in US property investing, feedback on the above two groups, and what you think would be the lowest risk entry-point into the US market for a novice Australian investor.
There are lots of warnings on what not to do, but what did you do that worked and how did you get started?
Thanks in advance
Adrian
Hi Adrian,
I am interested to know some of your references that you used for research. I am relocating to the USA later this year and see it as an opportunity to be able to research as much as possible before I get there with the potential of looking at investing when I am there.
-Rob
Hi Adrian,
Thanks for your post.
Before I made the move to the US in September 2012 I spent a good year and a half building trust and relationships with key people on the ground that I knew would have my interest at heart.
In my opinion money can be made in any market in the US at the moment. Some area more and some less. Some might appreciate more over time and some wont as much. The number one key to investing successfully and not becoming another horror story is the team of people you have on the ground looking after your investments. I cant stress enough how important this is.
I always tell investors if they would only shift their focus on establishing the right people on the ground rather than looking into stats on particular areas we would most likely have much less horror stories. No matter how good the stats are in an area if the the property manager is dodgy for example you wont succeed.
Just my 2 Euro's worth
Thanks for reading and I am sure you will get some other great posts following mine.
All the best
EngeloRumora | Ohio Cashflow
http://ohiocashflow.com/
Email Me | Phone MeF@#$ THE REST WORK WITH OHIO CASHFLOW TO INVEST
Gday Rob – there are quite a few reference points you can use for research. I am just starting out, but here are a few I have picked up from other people or stumbled across:
– Firsthand accounts of investing experiences, on this forum as well as a notable series by Quibbles you can find here — http://somersoft.com/forums/showthread.php?t=18101
– You'll find great data on demographics and economic factors from websites such as http://www.city-data.com (GREAT WEBSITE) and http://www.greatschools.org
– http://www.census.gov (housing trends and eco data)
– Various press articles (here and in the US) covering foreign investment, such as this Wall Street Journal article http://online.wsj.com/news/articles/SB10001424127887323764804578314380251939580
– Blog sections of property websites such as realestate.com.au
– API magazine
I think the point of the research is to tap into many different views/sources. Reading as broadly as possible will give you better perspective yourself.
With that said – I am a complete novice at US property and am trying to extend my own understanding by building more of a foundation, so by no means limit yourself to what I have outlined.
Cheers
That's some great advice thanks engelorumora.
It seems like the largest factor driving success (or failure) in this kind of investing is a factor of trust, given the investor is so reliant on people on the ground to manage the properties.
Your investing will often be successful based on the quality of people you are dealing with. You can be in the best market but if you are dealing with a fool you will lose money.
There are some good experienced people on the forum. I have a partner in Florida and we deal with commercial property and apartment complexes because you can borrow up to 70% through the banks.
It is important that you develop a strategy as to why you want to buy in the United States. If you are doing it because you want to create a separate income stream in the United States then that's great. However if you want to buy a cheap property because you cannot afford to buy in Australia then think again. It is important to develop a plan that makes sense and a solid reasoning for wanting to invest in this exciting market.
Nigel Kibel | Property Know How
http://propertyknowhow.com.au
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No prob Adrian
Happy to assist.
Thanks
EngeloRumora | Ohio Cashflow
http://ohiocashflow.com/
Email Me | Phone MeF@#$ THE REST WORK WITH OHIO CASHFLOW TO INVEST
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