All Topics / Overseas Deals / Atlanta or Houston or ……..???

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  • Profile photo of InvestingnoviceInvestingnovice
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    @investingnovice
    Join Date: 2011
    Post Count: 12

    Hey guys,

    Just to give you a run down on myself. I have previously invested in Kansas City MO and relatively happy with my purchase exceptions to:

    – My previous useless property manager
    – Minor maintenance issues with home

    Although I have now developed contacts in Kansas City I want to invest into a different City and from my research Ive been informed the best two cities to buy from are Houston and Atlanta

    I was just enquiring on your thoughts and if there were any other markets to look into and possibly even contacts in these areas as I found the majority of my issues arose with my first property was when I used all contacts from the middle man (Australian based). my turn key investment didnt start so smoothly however is soon to be ironed out but want to avoid similar issues had with previous property by collecting my own contacts.

    Thanks

    Investing Novice

    Profile photo of jbelmorejbelmore
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    Dear Investing Novice

    http://www.housingpredictor.com/2012/texas.html

    The Housing predictor website is saying the Houston market is recovering while Atlanta is still working through foreclosures. So you might pick up a bargain in Atlanta or buy into a rising market in Houston.

    I agree having good contacts, property managers and finance can make the difference in where you’d buy. (Personally I’m still doing due diligence on contacts.)

    Regards

    David

    Profile photo of worldinvestorworldinvestor
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    Investingnovice wrote:
    Hey guys,

    Just to give you a run down on myself. I have previously invested in Kansas City MO and relatively happy with my purchase exceptions to:

    – My previous useless property manager
    – Minor maintenance issues with home

    Although I have now developed contacts in Kansas City I want to invest into a different City and from my research Ive been informed the best two cities to buy from are Houston and Atlanta

    I was just enquiring on your thoughts and if there were any other markets to look into and possibly even contacts in these areas as I found the majority of my issues arose with my first property was when I used all contacts from the middle man (Australian based). my turn key investment didnt start so smoothly however is soon to be ironed out but want to avoid similar issues had with previous property by collecting my own contacts.

    Thanks

    Investing Novice

    I have purchased all my properties in Alanta. I have also posted the properties I have purchased, just search some of my posts.

    The yields are very attractive, Atlanta hands down.
     
    If you read some posts by jayhinrichs he mentions Texas and that the taxes are too high, this would wipe out your cashflow, too risky.

    Cheers, WI

    Profile photo of Alex SCAlex SC
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    I would have to pick Atlanta I am not buying to many properties their. How ever my preference would be Atlanta . Prices are great their. Long term I am bit worried about Atlanta coming back if your looking for appreciation but cash flow strong .

    Alex

    Profile photo of Texas Cash Cow Investments AustraliaTexas Cash Cow Investments Australia
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    Investing Novice,

    I can't comment on Atlanta although many posters seem to be having success there…a matter of the right contacts. We operate in the Dallas metroplex and when you consider Dallas versus Houston….one thing to consider is the cost of insurance. It will cost you at least $100 a month more to insure in Houston compared to Dallas. Houston being down on the Gulf they get hurricanes and that brings lots of rain (in Houston when it rains I mean it really rains !!) and resulting flooding which is why the insurance costs more. In Dallas our biggest insurance events are wind and hail. So taking into account cashflow…Dallas comes out better then Houston

    Profile photo of staceymacstaceymac
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    I am going into San Antonio myself.

    I head off there next month to do some due dilligence as part of a buying group.

    I will look at the other markets in Texas as well whilst I am there. I’ll report back my findings.

    For me my main concern wont be paying a bit extra for insurance or taxes or whatever ongoing expenses. That’s a business/investment expense as long as all the overall numbers are right that is. It will be getting the right property in the right spot at the right time but probably for me will be having the right people on the ground as my team.

    I know someone personally who got ripped off buying in the USA. The yanks see us as pretty soft cashed up targets unfortunately.

    At some point being all the way over here you need a good team behind you if you cant do this fulltime. Fulltime is my goal though.

    Profile photo of Texas Cash Cow Investments AustraliaTexas Cash Cow Investments Australia
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    staceymac wrote:
    I am going into San Antonio myself. I head off there next month to do some due dilligence as part of a buying group. I will look at the other markets in Texas as well whilst I am there. I'll report back my findings. For me my main concern wont be paying a bit extra for insurance or taxes or whatever ongoing expenses. That's a business/investment expense as long as all the overall numbers are right that is. It will be getting the right property in the right spot at the right time but probably for me will be having the right people on the ground as my team. I know someone personally who got ripped off buying in the USA. The yanks see us as pretty soft cashed up targets unfortunately. At some point being all the way over here you need a good team behind you if you cant do this fulltime. Fulltime is my goal though.

    Well done staceymac,

    Fully recommend to go and have a look to get some idea of the area you intend to invest in….nothing better then seeing first hand. I am sure if most people had a look where their $30K gets them….they wouldn't be able to get out quick enough !!

    Your also spot on….the team on the ground you leave behind to look after your investment is paramount…..anybody can buy a property…it's managing it thereafter which brings success. It is always disappointing to hear about us Aussies getting ripped off in the US market….happened around 5 years ago in Rochester NY and is happening again today in the normal bad foreclosure markets of AZ, NV, FL etc etc….. Funny thing is a lot of the companies flogging off these properties also have a past of selling overpriced Qld investment properties a few years back…you know what they say about a leopards spots !! Point is….you can be scammed in real estate in ANY country….comes down to doing your due diligence to make sure you don't get caught

    Profile photo of kylermricekylermrice
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    San Antonio would be my pick if i invested in Texas.  :)

    Profile photo of worldinvestorworldinvestor
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    staceymac wrote:
    I am going into San Antonio myself. I head off there next month to do some due dilligence as part of a buying group. I will look at the other markets in Texas as well whilst I am there. I'll report back my findings. For me my main concern wont be paying a bit extra for insurance or taxes or whatever ongoing expenses. That's a business/investment expense as long as all the overall numbers are right that is. It will be getting the right property in the right spot at the right time but probably for me will be having the right people on the ground as my team. I know someone personally who got ripped off buying in the USA. The yanks see us as pretty soft cashed up targets unfortunately. At some point being all the way over here you need a good team behind you if you cant do this fulltime. Fulltime is my goal though.

    I would be looking at areas in US that got hammered as there will be many more opportunites for upswing/growth.
     
    Why would you purchase in Texas when yields are not much better than Oz, so much risk….. by the way, if you are purchasing only 1 property, give it away… you need to be purchasing multiple properties to cover costs, legals, interest, fudge factor ….. etc.

    For example you can purchase  in Atlanta a property  that sold in 2003 for $130,000 for 38,000, building costs in Atlanta currently $70-90 per sq foot, I am purchasing on average $25 per sq ft.  now you are talkin….. Buy 10 of these grossing over 21% and you will be sitting pretty

    WI

    Profile photo of Texas Cash Cow Investments AustraliaTexas Cash Cow Investments Australia
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    worldinvestor wrote:
    staceymac wrote:
    I am going into San Antonio myself. I head off there next month to do some due dilligence as part of a buying group. I will look at the other markets in Texas as well whilst I am there. I'll report back my findings. For me my main concern wont be paying a bit extra for insurance or taxes or whatever ongoing expenses. That's a business/investment expense as long as all the overall numbers are right that is. It will be getting the right property in the right spot at the right time but probably for me will be having the right people on the ground as my team. I know someone personally who got ripped off buying in the USA. The yanks see us as pretty soft cashed up targets unfortunately. At some point being all the way over here you need a good team behind you if you cant do this fulltime. Fulltime is my goal though.

    I would be looking at areas in US that got hammered as there will be many more opportunites for upswing/growth.
     
    Why would you purchase in Texas when yields are not much better than Oz, so much risk….. by the way, if you are purchasing only 1 property, give it away… you need to be purchasing multiple properties to cover costs, legals, interest, fudge factor ….. etc.

    For example you can purchase  in Atlanta a property  that sold in 2003 for $130,000 for 38,000, building costs in Atlanta currently $70-90 per sq foot, I am purchasing on average $25 per sq ft.  now you are talkin….. Buy 10 of these grossing over 21% and you will be sitting pretty

    WI

    Those opportunities you speak of could be many years away yet WI and the opportunities you speak of…have been/are already happening in Texas.

    #1. Employment Growth in the US
    # 1. Lowest Cost of Living in the US
    # 1. Population Growth highest in the US

    Some interesting reading in this link written by Dr Mark Dotzur. Chief Economist at Texas A&M
    http://recenter.tamu.edu/pdf/1983.pdf

    And yields not much better then OZ….c'mon now your really kidding yourself. If you were talking yields in California then yes we could all agree !! I am sure once staceymac starts she will continue building her US empire once she see's it work for herself and builds confidence.

    Profile photo of worldinvestorworldinvestor
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    Texas Cash Cow Investments Australia wrote:
    worldinvestor wrote:
    staceymac wrote:
    I am going into San Antonio myself. I head off there next month to do some due dilligence as part of a buying group. I will look at the other markets in Texas as well whilst I am there. I'll report back my findings. For me my main concern wont be paying a bit extra for insurance or taxes or whatever ongoing expenses. That's a business/investment expense as long as all the overall numbers are right that is. It will be getting the right property in the right spot at the right time but probably for me will be having the right people on the ground as my team. I know someone personally who got ripped off buying in the USA. The yanks see us as pretty soft cashed up targets unfortunately. At some point being all the way over here you need a good team behind you if you cant do this fulltime. Fulltime is my goal though.

    I think your  kidding yourself Capital Growth in Texas – the US economy is a "basket case" . 

    I take Economists opinions with a "grain of salt", most analyse to death and they never ever get it right  ……. they are not investors.  We have had lots of experience in Australia with economists getting it wrong.

    As I mentioned I would rather invest in Australia than Texas as returns are similar.
    There are many additional costs associated with investing in US, you know it and I know it ….  property managers retaining 1 month in advance is just one killer, plenty more, just erodes the yield.

    Stacetmac, good luck, don't get suckered into the gloss, if anyone offers finance, make sure you get your lawyer to check out the contract, but most importantly make sure you are not paying too much for the property, and those bank valuations, don't buy that.. with short sales, foreclosures and forgeiners purchasing property in US at over inflated prices it is difficult to know what the true value of a property is, regardless of whether it has a "bank value" do your own research.  Plenty of information and tools out there to help with this.

    All the best

    WI

    I would be looking at areas in US that got hammered as there will be many more opportunites for upswing/growth.
     
    Why would you purchase in Texas when yields are not much better than Oz, so much risk….. by the way, if you are purchasing only 1 property, give it away… you need to be purchasing multiple properties to cover costs, legals, interest, fudge factor ….. etc.

    For example you can purchase  in Atlanta a property  that sold in 2003 for $130,000 for 38,000, building costs in Atlanta currently $70-90 per sq foot, I am purchasing on average $25 per sq ft.  now you are talkin….. Buy 10 of these grossing over 21% and you will be sitting pretty

    WI

    Those opportunities you speak of could be many years away yet WI and the opportunities you speak of…have been/are already happening in Texas.

    #1. Employment Growth in the US
    # 1. Lowest Cost of Living in the US
    # 1. Population Growth highest in the US

    Some interesting reading in this link written by Dr Mark Dotzur. Chief Economist at Texas A&M
    http://recenter.tamu.edu/pdf/1983.pdf

    And yields not much better then OZ….c'mon now your really kidding yourself. If you were talking yields in California then yes we could all agree !! I am sure once staceymac starts she will continue building her US empire once she see's it work for herself and builds confidence.

    Profile photo of kingsrkingsr
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    Stacymac,

    How can I join this 'buying group' that you mentioned?

    I'm in Sydney and am looking to travel to USA in the next month. Please PM me details.

    Thank You

    Profile photo of lawsjslawsjs
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    Karina,
    The yields you get are still very new. 20% will not happen over time and that is without factoring in airfares. The stuff you are selling is great, but be realistic with the yields – especially for newbies. Yes you will do better than Oz, but as Jay and Alex both will confirm the yields with even basic repairs will leave you slightly better than ‘quality’ Oz commercial stuff. ATL cold and wet in particular will not help. Add in some improvements and you are talking line ball. The way to get around that it of course buy in bulk, but I really caution people starting out that the US is going to be ‘very’ easy money, worth doing IMHO, but not the great panacea. You _might_ be lucky, but as I have said before the US is about:

    1) Buying a property – relatively easy (assuming you avoid a major rip off).
    2) Repairing a property – unless you really know what you are doing that can be very (or just unnecessarily) expensive.
    3) Managing a property – usually extremely difficult and any failures with any one person will lead to many returns to (2).

    Jay makes a point of saying 8-12% net and that agrees with my experience and ‘gut’ feel. And that is without airfares. Without spending time in an area you are placing a lot of trust in the managers and frankly unsupervised US managers are not in anyway going to perform as you would expect an Aussie manager would. They will do what is easy for them and not what is necessarily (at all?) in your interests.

    Fortunately there are enough decent people helping aussies buy to make the avoiding rip off bit a lot easier than it was, but for anyone starting out, I think the way to make this work is NOT buy one – you may be lucky, but you may not. It will take as much effort to run 4-5 as 1, but the averages will make the returns a lot more palatable in the long run. Jay says allow 50% of the rent as a true ‘net’ figure – I think that is a bit harsh, but he has a lot more property than I have experience with in many different areas and it is certainly conservative. My worst building was around 40%, my best is around 95% if I am anything to go by:) Steve M advertising 30% net is only remotely achievable with very ‘non-normal’ methods and I would not in a million years recommend anyone buy anything like some of those high yield places. You will end up walking away from the investment just happy the bills and phone calls have stopped.

    I have been contacted by a few (5-10?) people who are clearly asking for some sort of help with management issues. These are guys starting out with places in GA/TX & similar and want some magic bullet. All I can say is that my experiences have been exactly the same as theirs and Jay’s and Alex. My sister (emma) is trying to rewrite the US management rule book by training people in Aus management style, and the idea is promising but I will believe it again in a couple of years time. Proof and puddings etc:) Alex and Emma have VERY strong views on avoiding cold and mould and there is a lot to be said for that. Alex is now (mainly I think?) buying back in SC (he grew up there so knows it inside and out) and Emma will help you buy what you want, but a strong preference to avoiding anything cold (she likes Vegas) – problem is, people are star struck with headline grabbing returns, and they are becoming less common. Jay has an interesting concept which I quite like, you in effect ‘partner’ the building and get a lower return, but his group solves the day to day problems for you. The more experience you have I think the more you will realise what a good deal that actually is. Of course, I only own in places where you can’t get flood insurance (beachy) and to top it all off are slap bang on the San Andreas fault line, so don’t listen to me if you _really_ want something. If you are starting out though, I would make it my business to contact people who are 12 months or so further down the track than you and ask for their experiences. 5 years would give you a real idea, but there won’t be many people with that experience in the areas you wish to buy – particularly as a foreigner.

    I only mention Jay, Alex and Emma as they are the people in this market I know enough to comment on with lots of experience in this. I am not having a go at anyone by omitting them – find who you are comfortable with – I don’t buy these things, so don’t just listen to me:)

    Profile photo of usainvestorusainvestor
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    Lawsjs

    but for anyone starting out, I think the way to make this work is NOT buy one – you may be lucky, but you may not. It will take as much effort to run 4-5 as 1, but the averages will make the returns a lot more palatable in the long run.

    I couldn't agree more that unless you are prepared to buy multiples and prepared to stay for the long haul (5+ years and possibly more than 10 years) you are likely to waste your time. I also think that unless you are a seasoned Australian property investor you really shouldn't be entering the US market as it's simply a completely different market both, in the attitude of the management companies and also the way that the market behaves in respect to capital gains.

    I have already commented on the standard American management agreements elsewhere but the bottom line is that they are writen to benefit the management company not the landlord with a financial costs upwards of 1 and 1/2 months of rent for placement of tenant and renewal of lease, respectively.  You are alreaady down to just over 10 months rent for the year. The one group who are making a lot of money out of the whole US debacle are the management companies as illustrated by the many new entrants to the field.

    Regards

    Profile photo of Alex SCAlex SC
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    usainvestor wrote:

    Lawsjs

    but for anyone starting out, I think the way to make this work is NOT buy one – you may be lucky, but you may not. It will take as much effort to run 4-5 as 1, but the averages will make the returns a lot more palatable in the long run.

    I couldn't agree more that unless you are prepared to buy multiples and prepared to stay for the long haul (5+ years and possibly more than 10 years) you are likely to waste your time. I also think that unless you are a seasoned Australian property investor you really shouldn't be entering the US market as it's simply a completely different market both, in the attitude of the management companies and also the way that the market behaves in respect to capital gains.

    The game of monopoly is my advice if you guys are aware of this.One house does nothing multiple in same area does better. Marketing coming back. To be safe I am saying 8 to 10 years.

    I have already commented on the standard American management agreements elsewhere but the bottom line is that they are writen to benefit the management company not the landlord with a financial costs upwards of 1 and 1/2 months of rent for placement of tenant and renewal of lease, respectively.  You are alreaady down to just over 10 months rent for the year. The one group who are making a lot of money out of the whole US debacle are the management companies as illustrated by the many new entrants to the field. That's a line of crap sorry.I run a management company and total pain in the ass. I manage now 134 properties. With a staff of 4 people. Which included a full time handyman on staff as well as the three ladies. So yes we do have to pay their salaries.

    Trust me when I say any one who opens a  property management company is crazy. We did it out of necessity ,as a wholesaler saw the need to control the operation from start to finish for the  investors.

    Alex

    Regards

    Profile photo of CL1706CL1706
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    Like a couple of people here, I am heading to the USA in late March with a view to spending two weeks in a city, and purchasing two or three properties as a starting point.

    Are there people here who had genuinely done this and made it work, and are willing to talk about it?

    Please direct message me if you have experiences (positive or negative), or are heading to the USA and would like to form a bit of a ‘discussion group’ prior to your trip.

    Please don’t contact me if you’re trying to spruik your business.

    Profile photo of Alex SCAlex SC
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    CL1706 wrote:
    Like a couple of people here, I am heading to the USA in late March with a view to spending two weeks in a city, and purchasing two or three properties as a starting point. Are there people here who had genuinely done this and made it work, and are willing to talk about it? Please direct message me if you have experiences (positive or negative), or are heading to the USA and would like to form a bit of a 'discussion group' prior to your trip. Please don't contact me if you're trying to spruik your business.

    God to love the last line of his post.Sorry had to take a rip at you. Their would be some Legit teams that can actually send you clients that are currently buying from them who are from Australia. No offense but that is not spruiking if it comes from an Australian client that is happy with the team they are dealing. Sorry not sure what you call it in Australia but we call it solid referrals here.

    Coolest thing about owning a investment company is that we can pick and choose who we want to do business with as well.It usually takes one email or call to make that choice.

    Food for thought,  the ship runs both ways my friend ..

    Alex

    Profile photo of worldinvestorworldinvestor
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    "Jay has an interesting concept which I quite like, you in effect 'partner' the building and get a lower return, but his group solves the day to day problems for you. The more experience you have I think the more you will realise what a good deal that actually is.".

    Lawsjs

    So would you personally buy this product?

    I have no real idea whether it is good or bad, however as an investor what I do not like is that I have no control on what is purchased, also I expect there are upfront fees inbuilt in the purchase price of the property. 
     
    I become the bank and fund the deal and this company gets a share of the equity when the property is off loaded.

    What happens if the deal goes sour, the property actually loses money, no growth, do they also wear or do they walk. My money, my risk……

    WI

    Profile photo of CL1706CL1706
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    Alex SC wrote:
    CL1706 wrote:
    Like a couple of people here, I am heading to the USA in late March with a view to spending two weeks in a city, and purchasing two or three properties as a starting point. Are there people here who had genuinely done this and made it work, and are willing to talk about it? Please direct message me if you have experiences (positive or negative), or are heading to the USA and would like to form a bit of a 'discussion group' prior to your trip. Please don't contact me if you're trying to spruik your business.

    God to love the last line of his post.Sorry had to take a rip at you. Their would be some Legit teams that can actually send you clients that are currently buying from them who are from Australia. No offense but that is not spruiking if it comes from an Australian client that is happy with the team they are dealing. Sorry not sure what you call it in Australia but we call it solid referrals here.

    Coolest thing about owning a investment company is that we can pick and choose who we want to do business with as well.It usually takes one email or call to make that choice.

    Food for thought,  the ship runs both ways my friend ..

    Alex

    Alex,

    You’ve taken my post the wrong way, or maybe you are just trying to protect the business you do there.

    I’m looking to do this on my own, and was posting, in the hope of hearing from others who feel they can do this without the assistance of teams based in the US. I’m sure you do a great job, for the people who you assist.

    Not sure exactly what you mean about the ‘ship running both ways’ in reference to my post.

    Its just like having a ‘No Junk Mail’ sign on your letter box. Doesn’t mean I don’t want to consume – it just means I would like to do it without turning my Inbox into a sales conference.

    Profile photo of kylermricekylermrice
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    Two weeks?  good luck finding everything u need to lock down a good experience in that time frame.  going to need at least a real estate agent

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