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There is a reason why banks don’t lend or only lend at a low LVR. Banks are very good at assessing risk. At least they should be since that is their job. When a bank lends you money it needs to make sure to get it back from you and earn interest on top of it.
Australian banks will lend in general 80% because should you not be able to make the payments anymore they will put the property on the market and should get at least 80% below the market value (the amount they lend to you) back from the sale. So they believe that Australian property is quite safe. This also explains why they lend 50% or less for share investment.
So the fact that US banks don’t lend on their own properties or lend at lower LVR should be an alarming factor and reflects the risk of US properties.
I only use cash at this point in time, however I believe it is extremely difficult to get mainstream finance on resi property as a foreigner
The fact that you are a foreigner in the US doesn’t have much to do with the difficulty of getting finance. Like I said the US needs other countries to pay off their debt and they need foreign cash to do that. However I have heard from people that they do lend but I think it depends in the area you are investing in and only less than 70%.
In Australia Chinese foreigners can borrow 80% and more with insurance. All they have to do is proof they have regular income.
The same reason people in Australia sell property.. to realise a gain, retire, death, divorce, perhaps its their investment strategy.
There must be a lot of gain realists, retirees, deaths, divorces, etc in the US and only in certain areas.
What is your net yield?
I am not saying that investing is US property is good but it’s not as good as everyone tries to make it to be.
superAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auSome members are being pretty rude on this thread. I am a new user and didn’t get to see the old forum but like the look and feel of this one.
It’s simple and clean and easy to use. Of course there are a few issues and fixes that can be made to improve the functionality and experience of the site. That’s why this thread is here for: To point out issues members are having and not complaining like high school children.
If you don’t like the site there is always the stylish somersoft forum, that has been stuck in 1990, that might be more your cup of tea.
Steve, the issue I had was finding out how to make my first post. Maybe put a “create post” button on top. I think someone else pointed this out already.
I also have a question about the “thumbs up/down” and “star” rating system. Why do some posts have one or the other?
superAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auHere is one in Brisbane City. Under contract.
http://www.realestate.com.au/property-unit-qld-brisbane+city-115644295
Price: $250,000 neg
Rent: $360 per weeksuperAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auI saw a post on this forum not so long ago which was posted in 2006 that is talking about +ve cash flow properties in the US.
https://www.propertyinvesting.com/topic/4385123-usa-positive-cashflow-properties/This is 2 years before the financial crisis. So the US has been full of +ve cash flow properties for over 8 years now… where are all these +ve cash flow properties coming from?
I am not trying to be negative and I believe that there are +ve cash flow properties in the US but here are some of the reasons that deter me from US property.
People are reporting 30% gross yields in the US. I wonder why the tenants don’t borrow (even at 10% interest) and buy these properties instead of renting. An example I saw was a property that cost $50,000 and was being rented out for $300 per week. Borrowing at 10% would cost the tenant less than $100 per week in interest. 1/3 of the rent. Seems weird to me why they would pay these high rents and not purchase the properties.
One reason could be that banks won’t lend to them because they don’t meet their lending criteria. That would be a worry to me. How can they afford $300 rent per week when the bank thinks they can’t afford $100 interest.
Maybe the US banks don’t lend for these properties because of whatever reason they might have. So as an Aussie you will need to borrow locally by using cash or equity (I doubt that Aussie banks will lend to buy US properties).
So essentially you are helping pay off US debt or transferring it to Australia.
Also why would someone sell an investment that pays 30% yield?
Agreed, on another note (not trying to be negative) I don’t think I would want to tie up 42K in most of the properties that have been listed, not sure you would get it back easily.
Actually I would prefer to tie up my money in Australian properties than in US properties that US investors don’t want themselves.
Dirranbandi has population of 437 people, although it positive cash-flow, in my experience the rent and value will most likely be the same 5 years from now.
That’s 9.2% yield for 5 years. Doesn’t sound too bad to me even though these properties are supposed to be examples only and not investment advice.
Just out of curiosity. How much capital and rent growth has there been in the US in the last 5 years?
superAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auhttp://www.realestate.com.au/property-house-qld-dirranbandi-116828331
Price: $85,000.00
Rent: $150 per weeksuperAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auNone of the other members want to contribute to the list?
http://www.realestate.com.au/property-house-qld-east+innisfail-116014499
Vacancy: 1.7%
Spend $5,000 and rent it fully furnished for at least $300.
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This reply was modified 10 years ago by
superAndrew.
superAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auhttp://www.realestate.com.au/property-house-qld-miles-116356347
Note: close to mining area.
superAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auI development the application for my own use but am working on a more user friendly online version. Can’t tell you for sure when it will be ready. I am in the process of doing a property development and haven’t had much time for anything else.
Use this spread sheet as a guide if you don’t have your own:
http://www.passgo.com.au/investment-property-analysis-tool.html
with these inputs:
Property value (1) $210,000
Deposit (2) $42,000
Rent p.w (3) $280
Capital growth rate (4) 3%
Inflation rate (5) 2%
Interest rate (6) 5.50%
Income tax bracket (7) 30%
Property expenses (8) 25%
Purchasing costs (9) $0
Borrowing costs (10) $3,000Property expenses are estimated at 25% including management fees, etc. (see the notes section)
superAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auHey Ben
I am developing a positive cash flow property finder tool and am using that. I don’t have an online version of it yet but am working on it.
For maintenance and repair I would make a provision for $800. Usually maintenance and repair mostly go towards kitchen and toilet related problems but there are of course others too.
superAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auSorry Engelo, can we please use this thread for examples of Australian positive cash flow properties that are currently for sale only? There are numerous other threads on US properties.
There have been a lot of positive cash flow US properties for a few years now. I also agree that for established Australian Investors they could add value to their portfolio.
I personally don’t know much about the US property market and economy. At least not enough to make a confident prediction of the market and therefore to commit in investing my money. I also never invest in a market that is generating a lot of buzz. But that is just my personal preference.
superAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auIn QLD the company will have to pay $32,000 in stamp duty when purchasing the property.
When you will sell the property to the company you won’t have to pay CGT since it is your PPOR. However when the company owns it, it will have to pay CGT at 30% if you decide to sell it in the future.
Other issues to take into consideration will be legal. The property will be a company asset and therefore should the company get sued, a third party could have a claim on it.
These were just off the top of my head. There will be other things to take into consideration so it would be better to consult with an accountant.
superAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auActually it is not that easy to get money out of china. There is a $US50,000 annual limit per person for Chinese to transfer money overseas.
superAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auIs the family home worth 400k or is it the cost of the renovation?
The company will have to pay stamp duty when it buys it. The amount depends in which state you are located.
superAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auA property crash is bad for people who have to sell their properties or can no longer afford their debt payments.
For everyone else it is an opportunity to pick up bargains.
My rules are:
- Don’t borrow more than you can afford to pay the interest on your loans for 2 years using your savings while having no income coming in; and
- Buy properties that will always be in demand. No matter what happens to the economy or the property market, people will need to live somewhere and pay rent if they can’t afford to buy. e.g. no luxury properties but properties that are affordable by most.
superAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auAssuming you make 30k per year and have $50,000 cash and no other assets or partner that also has a salary.
2. How much would I get to claim back on $450,000 (my current income is very low only 30k)
Is it really a good idea to maximize your interest deduction when GLEN is only making 30k and paying roughly $2,300 in tax per year. Borrowing 500k (100%) at 6% will cost you $30,000 in interest alone. That’s all your salary. At your current income level I would recommend borrowing no more than 200k.
Oh ok I understand steve, so it is the interest on loan that is deductible. So for example if I wanted to buy an IP as my first purchase for $500,000 10% deposit with offset interest only structure. Live there for a few years,
If you live in your IP, it is not regarded as an IP and you can’t claim the interest as a deduction.
superAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auHere are two properties that are positive cash flow:
75 Simpson Street Somerset Tas 7322
55 Martin Street Wynyard Tas 7325
Negatives are that it’s located in Tasmania and capital growth will be minimal.
superAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auHi Terry, yes Multiple Unit Development.
This would be my first development and I already own the land.
It was more a question to find out the importance banks place on presales. Assuming most units are already presold (10% deposit collected) and the numbers stack up would they lend at high LVR’s?
superAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auIf anyone is interested in testing the tool PM your email address and I will add you to a list. Alternatively just keep an eye on this forum. I will announce on here when the online version will be ready.
superAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auWhat would be cool is a mobile app that calculates returns on the fly. (Similar to Jamie’s spread sheet – http://www.passgo.com.au/investment-property-analysis-tool.html) When your at home opens, you could simply open the app, punch the price and rent return, then it spits out a feasibility report (eg, shortfall, yield etc)
This would be quite easy to make. I think there are some apps already out there that do this.
superAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auThanks Jamie :)
Am trying to generate a discussion and get some more info from the members:
- Whether they have come across something similar before (I couldn’t find any similar services, except people that would find properties for you)
- Whether it would offer any benefits to established investors who already have a current system in place and not just be a “magic” tool for starter investors.
- What people would be skeptical about and what features would they like.
- And any other info that can help me develop this product for the people that would use it.
What I like and what I am interested to know might be completely different to other investors.
superAndrew | Property Analyser and Finder Tool
https://property-analyser.com.au-
This reply was modified 10 years ago by
