Forum Replies Created
Three words. United States of America (sorry thats actually 4 but you get the point!).
sonyasal wrote:Are you even in Australia?I thought this was an Australian based forum.
Do these changes have anything to do with Australian properties?
No, but I guess thats why the OP posted in the "Overseas Deals" section…
JacM wrote:Hi amboshAre you an Australian who invested in the US? If so, how did you go about it?
Hi JacM. Check through my recent posts in the overseas deals section. I did it through alot of time on the web and a quick visit to the US midwest in Jan10. Others offer a service to assist in the process.
Cheers
JoshInfo on Vacancy rates can be found here.
http://www.census.gov/hhes/www/housing/hvs/rates/files/tab4_msa_05_09_rvr.xls
While it be nice to build an income stream that equals or exceeds what you can make from employment in Aust, I am yet to see others that have achieved this via investing in US property. The only ones that seem to be making a living out of it are those that facilitate the process for others!
Hopefully this thread will bring actual investors out of the woodwork to talk of their successful experiences.doublekfarm wrote:Unlike Josh, I do have a problem with some companies charging my fellow countrymen ridiculous fees to just "join" their particular site, then make statements that you can make a guaranteed return of 40% or more?Perhaps I was being too generous with my comment. I actually do have an issue with those operators that charge a ridiculous up front fee in order to assist you. If their operations are transparent and you can clearly identify their fee structure than I am fully supportive of what they do.
Out of interest – where in KS are you buying doublekfarm? I looked at property in Kansas City (Missouri) but didn’t end up proceeding with it. Seemed high yielding though.
Other good sites are city-data.com (great source of info from locals), trulia for market stats/trends/last sale prices and yahoo real estate for vacancy rates in a city. Be careful of cities with vacancy rates >around 10%. There may be an underlying problem here. I dont use zillow as the values are severely inflated.
Nathan_b wrote:You can buy properties in sydney 2 bed units for $160k renting for $270pw+Houses $240k rent for $350pw.
Studios aint bread and butter so would only buy a 1 bedder if i was nicking it for very very cheap.
Nathan, ill believe this when i see a link.
No. Over the long term, the additional cost of fixed rate has proven to be not worth it.
Not sure what you mean? The stats quote local currency incomes to local prices. Forex issues dont even factor into these comparisons.
Hi,
Great question, and I think is one that needs to be asked!Browse the posts here and on some US sites. I have learnt more from the time on http://www.biggerpockets.com (a US property investing site) than any other source. Although I must say Real Estate Investing for Dummies (US version) was a good primer. Ive been investing in real estate locally for a while but that site and book taught me alot about how the market runs over there. Theres a great sticky on somersoft too. http://www.somersoft.com/forums/showthread.php?t=18101
If you are serious about this, you should really decide how you want to approach it. You can either go it alone (like I did), or you can use one of the many agents/facilitators that act as an intermediary to assist you in purchasing. From my research (on this site and in general!), I know of about 6-7 companies that assist foreign buyers with acquiring property in the US. Some of them run a great operation, and some seem less salubrious so due diligence is important. You are right that there is a real lack of people on here talking about their experiences with investing over there. There are far more people actually selling there services. I dont have an issue with that but it would be good to hear from those who have experienced it over the long term?
If going out on your own, you'll need to commit some solid hours of reaearch to understand tax structures, type of property (SFH vs MFH), building contacts with agents, solicitors in the US etc. The hardest decision is deciding where to buy. This is the part that I agonised over the most as it is tough to decide where to start. Midwest is quiet strong as far as cash flow goes, but some parts of the mid west are really struggling. You need to thoroughly research local vacancy rates, quality of schools, crime rates. I spent a few mths researching before I actually went over. You cant buy unseen. If going on your own, strongly recommend going over, unless you have developed some good contacts (through agents or someone you trust) first.
One of the main bits of advice I can offer is, dont invest over there thinking your going to clean up from day 1 on your investment. The positive cash flow that we all seek is achievable, but you are going to need patience. I'll give you an example:
Price $60k
Avg monthly rent $1k =12k yrNet after expenses $7.5k (exps 4k = prop taxes + insurance 1k, prop mgmt 1k, repairs 1k, vacancies 1k, annual accg/admin fees 0.5k)
Princ and interest of $5k
Net of $2.5k p/a if all goes well and you are only at 10% vacancies, which seems quiet low compared to some of the areas of the midwest. Like yourself, Im also having difficulty getting an idea of peoples experience with finding and keeping tenants in their properties so share your concern. Obviosly its great if you can pick up a property over there for next to nothing, but its worth nothing if it cant be rented for whatever reason (eg because you wont feel safe in the area without a german shepard and a 9mm, oversupply of rental property, bad schools and transport links etc).
I have completed my first purchase in the US and am happy with it so far, but im sorry i cannot offer you too much advice on my long term success as ive only owned my place for a few months. My place is a triplex and mfh (with 5 units) in upstate NY (not Buffalo). Avg prices were around 12k per unit. Hard to believe they can be that cheap but this is quiet reasonable for units in the midwest of the US. Yields are alot higher than single family homes but generally the costs are higher, and not to mention that that your tenants wont always be the best with multi's. As a foregin investor, you need to earn an even higher yield than a local does to make it profitable as we have property mgmt fees, travel costs, tax returns in both countries etc. Overall I am quiet happy with how it has gone so far. I found the property mgr's friendly and have not had any issues with the tenants yet (although my PM deals with any issues). As far as the units go they are old so I am expecting higher maintenance costs. The higher yield helps with this though.
I'll be interested to hear the opinions of some others on this topic.
Josh
Qlds007 wrote:RichardClosed a deal last week for a UK Citizen / Resident in Lancs at 5.82% fixed for 30 years.
Richard – was this on a US property? What state? If you can arrange USD finance for Australian's I would be interested to hear from you.This is a great article. I thought property was not able to increase more in oz until I saw this. Who knows where the top is.
Interesting about the US though.
Mortgages are 320% of the avg salary in Budvar per below. Is this sustainable (even by foreign tourism)?
I think we are due for a flatline but I doubt we will see a significant drop in Sydney as demand is too strong.
Also, what do you mean about property only goes up 30% of the time? This doesnt make sense to me thats all!
I own a block near Buffulo, NY. Not so much dodgy, just low socio economic. I was also looking at Cleveland, OH and noticed that the better cash flow returns were generally found in the cheaper areas.
Before I turned to the US, I was quiet keen to purchase in the Lakemba area as yields are great there. Decided against it though as for the $200k I was about to spend there (for $12k year rent) I could get 3 or 4 times that investing in the US….
I decided for the 3 us properties I have that for now owning them through an oz discretionary trust is more trouble than it’s worth. I’ll probly net about 5-10k per year max after repairs, deductible travel expenses, interest etc. It’s not worth setting up a trust to income split for that sort of money. If I grow my portfolio over there as is the plan, then I’ll look at other tax options. Not to mention the downsides of the trust make it less beneficial eg losses are trapped in the trust and can’t be passed onto unitholders. Also cap losses are trapped in the same way.
There’s more important concerns when setting up us prop investments. Namely – getting good property mgmt, llc setups, insurance and tenants!
Good luck.
Josh
A friend of mine had the foresight to purchase a condo in Niseko (ski resort on Hokkaido) about 5 years ago. It has increased in Yen terms (ignoring currency fluctuations) about 100% in time he has owned it. Obviously ski resorts in an area that is increasingly more popular to foreigners is a sub market that might be seperate from the remainder of the country but thats just his experience.
Refer here for more info…
http://www.globalpropertyguide.com/Asia/Japan/Price-HistoryI find it very hard to believe that structures (if of a reasonable quality) lose their value after a few years…
Josh
Playa Chicken wrote:Do you think the fact that all the US states are bankrupt makes any difference to which one you invest in?
I dont have updated stats but im pretty sure that all the states arent bankrupt. Most are facing massive shortfalls though.
http://freedomarizona.wordpress.com/2009/01/30/46-of-50-states-could-file-bankruptcy-in-2009-2010/
People invest there because the yields are significantly better than oz. Plain and simple. Of course basic finance knowledge tells you that > return leads to > risk so you need to understand what you are doing.
Richard
It might have just been the way you posted (alot of responses in a short period of time) that caused offence.In any event I personally like the quality of your website, fee structure, areas to invest in and overall strategy. I also like the way you hand out free advice to people on your site without even requiring them to sign up with you – this is why i emailed you for more info! Alot of the other operators of US property agencies could learn alot from you.
Keep up the good work.
Josh
Richard, I have to point out that you cant exclude your us income from your oz tax return. As an aust resident for tax purposes, you must declare it. Although you can claim a credit for any tax you've paid, not declaring the income in your oz tax return is illegal.
