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The topic of this post is why I started my business… Several years ago a UK Investor was referred to me because they had been taken advantage of by not only the company they had purchased nine homes from, but also three property managers in 18 months. The investor had $400,000 tied up into 7 vacant homes in need of rehabs and 2 occupied homes that were in need of repair… it was a very bad situation.
I worked with them by providing video inspections of their properties, helped them find a new property manager and a reputable contractor.
We went out weekly during the rehabs to provide construction update videos and long story short this investor managed to turn things around.Anyone investing in the US needs an unbiased advocate that can be their eyes and ears in the market place. The US market has some great opportunities but it also has a few unscrupulous Realtors, property managers and contractors. Here are some suggested guidelines…
1)Be sure to always have someone other than your Realtor inspect the property you’re thinking about buying. 2)Just as important as the property have a clear picture of the neighborhood you’re buying in 3)Do a great deal of research on the company you’re buying from. 4)Make sure the taxes have been paid 5)Be cautious if the company wants to place the property in a LLC and then sell you LLC instead of doing a real estate closing 6)Always make sure the property has a clean title / title policy.
Be careful and good luck!
Buying tenanted property is a good option but always try to find out how long the tenant has been in the property. I’ve seem many times a tenant placement company will put someone in right before the property is sold so there is no track record of payments to look at.
If possible have someone go out and evaluate the property, Ideally when the tenant is there and then they can ask if the tenant is happy, are there any problems with the property, how long they have been there and so on… This is something I do for my clients all the time and its very helpful information.
I realize this is an older post but I’d recommend to anyone buying property in the US to look into setting up an individual LLC for each property you buy. If for some reason you are party to a lawsuit and all the properties are owned by a single LLC your potential losses could be very great. If you establish an individual LLC for each property your losses would be limited to the assets of that LLC.
I’m not an attorney but I know many that have given this advise. I also have spoken to an investor out of the UK that lost one of their properties in a lawsuit. If the would have had all their properties in one LLC it would of been a lot worse.
Food for thought
I have worked with plenty of investors coming over for property tours and have done video of the properties and surrounding areas for them prior to the trip. I know some unethical companies will route their tours around the bad areas very close to the houses they are selling.
I’d always suggest doing your own research even if you do go on a property tour.
Well there is something to be said for slumlords when it comes to collecting rent. I know an investor that owns a couple hundred houses, he and two other employees collect rent in person every month. He has very little issues with any tenants because they know he isn’t fooling around.
Texas accounts for around 3.5% of the Foreign Investor market in the US and Austin doesn’t show up in the Texas numbers. That of course doesn’t mean there are no opportunities in Austin, just not many international buyers looking there (Florida accounts for almost 40% of Foreign Investor market) Hope this helps.
In some of the larger US Cities such as Chicago, Detroit and Atlanta to name a few it’s important to find a property manager that is relatively close to your properties and has employees that will go by the rental if there are any issues (Such as paying rent on time)
In the Detroit market some property managers in neighboring cities expect the renters to always mail in or drop off the rent to the office and that doesn’t always happen…
So then the property manager tells you they have to start the eviction process and it will cost you a few thousand dollars to legally evict them. Then after that’s all over (Months later) you have to advertise, pay another month’s rent for tenant placement and cross your fingers that this tenant pays.
Save yourself the headaches in the major cities and when interviewing you next property manager ask them this simple question… Do you have an employee that will go knock on the door to collect the rent if the tenant is late? Some tenants know how to work the system and if there is nobody knocking on the door for the rent they’re not going to pay it.
