All Topics / Overseas Deals / Investing in US property market now – best way?

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  • Profile photo of bardonbardon
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    @bardon
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    Post Count: 557

    Yes it would be good if some could post sucess stories in WNY or other areas for that matter. I posted my loss making exercise earlier.

    I do agree though that well informed investors could take advanatge of the current slump and pick up some good deals if they were that way inclined.  The AUS/US exchange rate is at record highs and it would be a reasonable expectation for the US $ to stop slipping but hey the FED is still pumping so who knows this time. I dont think teh US downturn is out of balance I think that the world is now getting back to its normal balance with China once again retaining its place as the biggets economy.

    I'm heading out to NYC this summer and got myself a nice room in the Waldorf Astoria at a good rate becasue of the exchange rate.

    Profile photo of bardonbardon
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    @bardon
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    Post Count: 557

    Bank of America, National City, and American International are all at 52-week lows. Countrywide Financial and Wachovia are almost there, too.

    Oh and those home builders? The ones Wall Street experts fell all over themselves to re-recommend earlier this year? Don't look now but they're faltering again:

    Arrow Condo and single-family home builder WCI Communities recently plunged as low as $1.45. The company is losing money hand over fist and Standard & Poor's just downgraded its corporate credit rating deeper into junk territory, citing concerns over the firm's liquidity. A bankruptcy filing can't be ruled out.

    Arrow Standard Pacific — a California-based builder — went for $6.50 as recently as early April. It's worth a bit over $2 now. No wonder: The company lost $216.4 million in the most recent quarter thanks to a steep sales decline and hefty impairment charges.

    Home Depot, which recently reported its first annual sales decline, will fire 1300 workers and close 15 underperforming U.S. stores.
    Home Depot, which recently reported its first annual sales decline, will fire 1300 workers and close 15 underperforming U.S. stores.

    Arrow Larger builder Centex is getting close to setting a fresh 52-week low, while shares of home improvement retailers Home Depot and Lowe's are hitting the skids again. The problem? Home Depot's same store sales are falling at a greater-than-6% rate, while Lowe's reported an 18% year-over-year drop in first-quarter profits.

    Frankly, this should not come as a surprise to you. I have repeatedly warned you that many of these stocks were "value traps." That's financial jargon for stocks that look cheap … but that will probably get even cheaper — and in some instances, disappear entirely.

    So what's going on? Why are many financial stocks and home builders faltering again? How did Wall Street get these sectors wrong … again?

    I blame it all on …

    A Toxic Cocktail of Higher Interest Rates,
    A "Hands Off" Fed, And Endless Capital Raising

    I think these threats are rather straightforward — a toxic cocktail of bearish developments that underscore why I've been warning you not to buy the B.S. Wall Street has been selling …

    Higher long-term interest rates: I don't know if you've been shopping for a mortgage recently, or if you've been following the price action in long-term bonds. If you have been, you've probably noticed something: Long-term rates haven't been falling along with the Fed cuts. They've been rising. And naturally, since bond prices move in the opposite direction of interest rates, bond prices have generally been declining.

    U.S. long bond futures topped out at around 121 earlier this year. They're going for 116 and change now. Thirty-year fixed mortgage rates bottomed out at 5.48% in mid-January, according to Freddie Mac. They were recently up to 6.01%.

    And what about all those Fed rate cuts? Have they helped? Well, a 30-year fixed loan went for 6.38% in September when the Fed started slashing the funds rates willy-nilly. So that means 325 basis points of Fed cuts have bought you essentially 37 basis points in long-term, fixed rate mortgage relief.

     

    How could this happen? Why haven't fixed rates plunged? Because the Fed cuts have helped underwrite a dramatic bout of commodity inflation!

    Just consider a simple example: The price of a barrel of crude was $80.57 on September 17, the day before the Fed first cut the funds rate. It topped $135 a barrel this week — a gain of 67.5%. Import prices are now rising at a 15.4% rate, the highest in history. The Consumer Price Index is now climbing by just under 4%, and even that figure is likely understated.

    Bottom line: The Fed's "Let's throw easy money and rate cuts at every problem" approach to monetary policy has cemented in the minds of bond traders and consumers that the Fed could care less about fighting inflation.

    A recent University of Michigan survey found that consumers expect inflation to run at 5.2% over the next year, the highest 1-year expected inflation rate since 1982. A separate measure of the difference between yields on nominal 10-year Treasury Note yields and yields on 10-year Treasury Inflation Protected Securities (TIPS) is now running around 256 basis points. That's the highest since August 2006, a red alert warning from the bond market that investors think the Fed is losing control.

    Naturally, none of this is good news for potential home shoppers. They've gotten little bang from the Fed's rate-cutting buck, and now, long-term rates are starting to climb. Meanwhile …

    The Fed is shifting into "neutral." We've established that long-term rates are not going down due to concerns about inflation. But what about short-term rates, the ones the Fed controls more directly? The news has been better there.

    The Fed's cuts in the federal funds rate have helped bring down the London Interbank Offered Rate (LIBOR) and the prime rates quoted by major banks. That has helped lessen the magnitude of rate and payment adjustments for many adjustable rate mortgage holders. It has also lowered the rates on things like home equity lines of credit, which usually track the prime rate.

     

    But even here, the news is getting grimmer. The Fed is belatedly realizing that it has helped turn smoldering inflation into a five-alarm fire that is burning out of control. So policymakers are signaling that they're ready to abandon their policy of rate cuts and shift into "neutral."

    For instance, Fed Vice Chairman Donald Kohn said this week:

    "With the information now in hand, it is my judgment that monetary policy appears to be appropriately calibrated for now to promote both rising employment and moderating inflation over the medium term."

    Another Fed governor, Kevin Warsh was even more strident in his anti-inflation speak, saying:

    "The inflation news since last summer offers little solace. Oil prices are near record levels, food prices have risen rapidly, prices for a wide range of commodities are up, and dollar depreciation is among the causes pushing up import prices. Some indicators of expected long-run inflation have also risen."

    The message coming through loud and clear? Don't count on us for more rate cuts. If anything, the focus is now shifting to when the Fed will start HIKING rates.

    Financial firms can't stop "Dialing for Dollars." If you think political fund raising is out of control this election year, you should see what's happening in the financial markets. It seems like every few days another bank, broker, or insurance firm passes the hat around, seeking billions of dollars to shore up its capital base.

    The credit market damage is so severe that some of the largest U.S. banks on the NYSE are raising billions of dollars in an attempt to stave off insolvency.
    The credit market damage is so severe that some of the largest U.S. banks on the NYSE are raising billions of dollars in an attempt to stave off insolvency.

    Sovereign Bancorp just raised $1.9 billion through the sale of stock and debt. National City raised $7 billion by selling common and preferred shares. UBS is raising $15.5 billion by selling rights to purchase shares. And AIG is topping them all, raising a whopping $20 billion via various stock and debt offerings.

    The problem? These financial firms are being forced to offer exorbitant yields to attract investors. They're selling shares at sharp discounts to current values. And they're dramatically increasing their share counts. Result: They're massively diluting the value of the stakes that current shareholders own and raising their cost of capital. That, in turn, will pressure future profitability.

    As if that weren't bad enough, every new capital raise seems to be accompanied by a "This one is the last, we swear!" pledge. And then a few months later, another dilutive deal gets announced. It's a total joke!

    The fact is that many financial firms — even NOW — continue to underestimate the depth and scope of the housing and credit market downturns.

    So the next time your broker tries to serve you up a heaping platter of home builder or financial shares, tell him to take a hike. There are very few true bargains out there (unless you're looking overseas), and the big picture trend still looks down for these mangy dogs.

    Profile photo of AussieRodneyAussieRodney
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    @aussierodney
    Join Date: 2008
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    You could try these guys: http://www.indy-cashflow.com/

    Daniel is based in California & I believe he is partnered with a property manager in Indianapolis.  He has been very up-front with me, although I haven't yet stepped in to the US market.

    Profile photo of give90give90
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    @give90
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    Warning; don't buy us investing ebook advertised here.
    to my great chagrin, i sent off the $30 for this ebook  last week (advertised on this site) and have not received it or even a reply to several emails chasing it. Appears to be dodgy……
    this was the listing;
    Hi Alan,
               I have invested in the US Property Market and I have also written an ebook about this if you want to go ahead and invest in the US I suggest you read my ebook and that may help you decide if it's for you or not. Yes there maybe some good deals at the moment and great ROI but my ebook will give you all the details the good, and the not so good to US Property Investing and how to go about doing it the correct way being an Australian investor. My website details are below.

    Good Luck!
    Best Regards,
    Donna Cox
    http://www.seekingfortuneinnewyorkstate.com

    Profile photo of Don NicolussiDon Nicolussi
    Participant
    @don
    Join Date: 2005
    Post Count: 1,086

    probably safe to invest locally at the moment. Even select areas in NZ offer some very high yields at the moment.

    http://www.cashflowproperties.co.nz

    Don Nicolussi | Mortgage Broker - Home Loan Warehouse
    http://homeloanwarehouse.com.au
    Email Me | Phone Me

    "I think of finance as a technology, a way of getting things done." Robert Shiller

    Profile photo of bardonbardon
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    @bardon
    Join Date: 2004
    Post Count: 557
    Don. wrote:
    probably safe to invest locally at the moment. Even select areas in NZ offer some very high yields at the moment.

    http://www.cashflowproperties.co.nz

    Some interesting deals there Don.

    Profile photo of henry13aucklandhenry13auckland
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    @henry13auckland
    Join Date: 2007
    Post Count: 40
    give90 wrote:

    Warning; don't buy us investing ebook advertised here.
    to my great chagrin, i sent off the $30 for this ebook  last week (advertised on this site) and have not received it or even a reply to several emails chasing it. Appears to be dodgy……
    this was the listing;
    Hi Alan,
               I have invested in the US Property Market and I have also written an ebook about this if you want to go ahead and invest in the US I suggest you read my ebook and that may help you decide if it's for you or not. Yes there maybe some good deals at the moment and great ROI but my ebook will give you all the details the good, and the not so good to US Property Investing and how to go about doing it the correct way being an Australian investor. My website details are below.

    Good Luck!
    Best Regards,
    Donna Cox
    http://www.seekingfortuneinnewyorkstate.com

    Hi, give90:

    Have you received the ebook? I actually wanted to buy the ebook before I saw your reply. Thanks.

    Let me know the final result.

    Regards,

    Profile photo of give90give90
    Member
    @give90
    Join Date: 2007
    Post Count: 54

    hi henry
    yes i did eventually receive the ebook. the author apologised  and said that she had been overseas. i did post it on this forum or thought i did but it must have been lost in the ether.

    are you looking at investing in the states?

    Profile photo of henry13aucklandhenry13auckland
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    @henry13auckland
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    Post Count: 40
    give90 wrote:
    hi henry
    yes i did eventually receive the ebook. the author apologised  and said that she had been overseas. i did post it on this forum or thought i did but it must have been lost in the ether.

    are you looking at investing in the states?

    I am not ready to make investing at this moment even I sensed US probably is good place to buy property  in the next few months. The market there is hitting bottom and the exchange rate is good.

    I actually paid attention to this topic when I saw a online forum in which somebody in US mentioned to buy REO properties and archieve real positive cashflow.  He bought houses at US$70K-140K. Not quite sure the areas he bought them and what was the exact procedure to buy REO properties.

    I asked him a few questions. He suggested me to stay local as US is too far away and it is difficult to find reliable property management agent. It could be difficult to pick up these steals without seeing them. He even suggested me to wait until OZ&NZ property market crash like US now.

    A bit confused to know the ridiculous low property price in US while knowing they earn good salary and enjoy low interest there. I did not go there before. I want to get more knowledge before deciding to give it a try.

    Is the ebook useful?

    Profile photo of donnacoxdonnacox
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    @donnacox
    Join Date: 2008
    Post Count: 3
    give90 wrote:
    Warning; don't buy us investing ebook advertised here.

    Can I just say I did resolve a dispute……because the link didn't work for you at the time – you did RECEIVE the ebook once I got onto it, and as you mentioned I did apologise for the inconvenience. No I'm not dodgy – far from it……thanks for rectifying this later down the track.

     If anyone else wants to buy my ebook ………you do need to right click on the downloadable link to get the ebook once you have paid for it.
    For everyone that has purchased ….thanks and I hope you have found it very informative.

    Best Regards,

    Donna Cox
    http://www.seekingfortuneinnewyorkstate.com

    Profile photo of avi_shalom27avi_shalom27
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    @avi_shalom27
    Join Date: 2008
    Post Count: 3

    Hi everybody!, a lot has been written here about account setups, ITINs and SSNs but I am curious as to the US process of refinancing after purchase as a *foreign investor*.  If anyone can help in this regard I'd be very appreciative.
    Success to you all

    Profile photo of aidanqaidanq
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    @aidanq
    Join Date: 2003
    Post Count: 5

    Hi avi_shalom27, henry13auckland,

      financing right now in the US is possible, just takes a lot of effort and persistence.  Being a non-resident & the current credit crunch makes it difficult. I found that finding deals where you take over the existing finance or get owner-finance is the best way to approach it.  So in some cases you can assume a current mortgage, which means there is no bank application to be made. You still get to leverage and the whole transaction is very quick. There are also pre-foreclosure deals out there where you get equity and cashflow. I've been purchasing in Texas this year and it's been working well so far.

    rgds,
    aidan

    Profile photo of aussieinvestoraussieinvestor
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    @aussieinvestor
    Join Date: 2003
    Post Count: 67
    donnacox wrote:
    Hi all,
    As Steve Mcknight suggests there are a lot of things to consider when you are on the otherside of the world….especially the point about quality of the management, this is a major concern to watch out for and I can only relate to Upstate NY as this is where I purchased my properties (and Richard take your point well done if it's worth $2m now – you have owned this for 25 years and you probably have a Social Security Number which means you are classed as a resident of the US) its different if you are doing this as non-resident starting out now.
    Property managers are really a nightmare when it comes to communication ….I do know this as I had went through 5 within just 3 years.

    It is very difficult to borrow as a "foreign alien" which is the term they use for non US resident ….Im' not saying it can't be done but it's even now extremely difficult for US residents borrowing ….I have just vendor financed one of my properties to a US resident because he could not get a loan because of the sub-prime lending disaster.
    Property laws are very different to Australian laws and litigation is very high over there so you do need to set up a good structure for asset protection ….it's all in my eBook if you need to know more.

    As I suggested previously my eBook is a great read if you are thinking about investing in the US Property Market, and as Richard Taylore suggested personal email access is an "absolute bargin" especially when you have someone that has done this as a "foreign alien" and knows the real facts! 

    Best of Luck
    Donna Cox
    http://www.seekingfortuneinnewyorkstate.com

    Hi Donna

    I think Richard was being a tad sarcastic about the personal email bargain!!!

    I have been investing in WNY for over three years and have made some good money, although at times it's been very tough.  I'm currently cashing out however, with two duplexes left, (one on contract).

    Like Richard, you can have FREE personal email with me if you have any questions and I will answer them based on my experience only.  Just send me a PM and I'll gladly pass on my experiences, good and bad.

    Cheers

    Peter

    aussieinvestor | Digital Revenue Pty Ltd
    http://appliancewhiz.com
    Email Me

    Profile photo of Robert GavinRobert Gavin
    Member
    @robert-gavin
    Join Date: 2008
    Post Count: 10

    What are people's predictions on where the US dollar will go over the next year?

    Profile photo of neplusultraneplusultra
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    @neplusultra
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    Allan

    We are an Australian company specialising in assisting Australian Investors purchase residential property in the US.

    We can organise bank finance with a US bank, also prperty managers. Would be happy to have a chat with you about our services.

    Corey

    Profile photo of henry13aucklandhenry13auckland
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    @henry13auckland
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    Post Count: 40
    aidanq wrote:
    Hi avi_shalom27, henry13auckland,

      financing right now in the US is possible, just takes a lot of effort and persistence.  Being a non-resident & the current credit crunch makes it difficult. I found that finding deals where you take over the existing finance or get owner-finance is the best way to approach it.  So in some cases you can assume a current mortgage, which means there is no bank application to be made. You still get to leverage and the whole transaction is very quick. There are also pre-foreclosure deals out there where you get equity and cashflow. I've been purchasing in Texas this year and it's been working well so far.

    Hi, aidanq:

    Thanks for sharing your knowledge. Regarding "—finding deals where you take over the existing finance or get owner-finance is the best way to approach it.  So in some cases you can assume a current mortgage, which means there is no bank application to be made.–, can you give more details? How to do that?

    Also, how you manage your +CF properties in US while you are not there?

    Cheers,

    Profile photo of aidanqaidanq
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    @aidanq
    Join Date: 2003
    Post Count: 5

    Hi henry13auckland,

    Quote:
    "Thanks for sharing your knowledge. Regarding "—finding deals where you take over the existing finance or get owner-finance is the best way to approach it. So in some cases you can assume a current mortgage, which means there is no bank application to be made.–, can you give more details? How to do that?"

    Sure. You can do it in one of two ways that I am familiar with

    – Purchase via owner-finance: so the owner acts as the bank and you don't need to apply for a mortgage. This avoids a lot of hassle and also avoids bank charges and loan setup fees. This can save quite a bit
    – Do a 'Subject-To' deal: this is where the current existing mortgage stays in place and the title gets transferred to you. However because the existing mortgage stays in place, again you do not need to apply for a bank for finance. Subject-To deals are used widely in the US. However, they are like any other deal in that you have a monthly payment to make. See http://www.lakerealty.com:80/subject%20to.html or http://www.reiclub.com/articles/subject-to-deals

    Quote:
    "Also, how you manage your +CF properties in US while you are not there?"

    I try to avoid have 'just tenants' as this can be problematic. Not to say that this doesn't work for investors, it's just that this seems to be as aspect that goes wrong a lot of the time and can require time and cash to get it right. I've opted to gets occupants to take out a lease option. So they have an interest in the home as they want to own it and have an option to purchase it. They also agree to carry out all maintenance, so I avoid the cost and hassle of a prop. mgr. To get all this organized you do need a team on there on the ground to make this work. PM me if you need more info.

    rgds,
    aidan

    Profile photo of willdavies1willdavies1
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    neplusultra wrote:

    Allan

    We are an Australian company specialising in assisting Australian Investors purchase residential property in the US.

    We can organise bank finance with a US bank, also prperty managers. Would be happy to have a chat with you about our services.

    Corey

    allan – what are your details, i am keen to find out more about your services.

    will davies

    Profile photo of WJ HookerWJ Hooker
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    @wj-hooker
    Join Date: 2007
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    Suggest you go to this site as posted by weath4life and start worrying.

    http://www.youtube.com/watch?v=kunB4SnAh4g

    Profile photo of marx3bullmarx3bull
    Member
    @marx3bull
    Join Date: 2009
    Post Count: 86

    It is possible for foreigners to invest in US but the rules for them cause problems. You need someone reliable who is experienced in US real estate market. That would be very helpful for you.

Viewing 20 posts - 21 through 40 (of 44 total)

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