Miami indeed is a great place to invest in. i think the long term investors are not at risk as property prices always go up in the long run. on the other hand, the investors who want to spend for short term might me anxious about the recession that is anticipated to hit this year.
For comp sales in the US try Zip Realty and they usually give a comparison of 3 – Zillow, Eppraisal and one other I cant remember. Also maps give comps for the last 3,6,9 mths.
<moderator: delete advertising>
Just checked in on this site to see if this thread was still going.
Hope things work out with the waterfront BB and great that it came back on the market at just the right time. Let us know how it goes.
Cheers
VERY IMPORTANT ADVICE
In my opinion, it is NOT a good time to invest in the US. If I had not already paid a non-refundable deposit on a waterfront REO single-family home, I'd change my ticket and get the hell out of this country and not bother coming back until there are very clear signs that the market is stabilising.
Two reasons for this negative assessment:
Reason 1:
As people following my posts know, I was the highest bidder on a waterfront single-family home in Surfside (a very upmarket neighbourhood on Miami Beach). Last year I bid over $280K, but was out-bid by some guy who offered $350K. However, the winning bidder backed out of his purchase during the inspection period, and so the home came back on the market in early January. At that time I got into direct contact with the listing agent, and offered $305K. A few days later she informed me I should make a better offer if I really wanted the property, so I offered 331K. I then heard nothing back for the next 3 weeks, so I assumed I hadn't bid high enough. Suddenly, out of the blue, I found out the seller (BAC bank) wanted to sell me the house. This was just a few days before I was due to return to Miami, so the timing was great. I arrived, paid the 10K deposit, and began the long waiting process (2 months) until the date the bank has written on the contract as Closing Date (March 23). During this waiting period I went to HSBC and opened a Premier Account, and applied for my mortgage (I had to pay them $485K to do an appraisal of the house). In the end, they only offered me a 70% mortgage of $238K (the amount they say the property is worth), which is $166K. This means they are only willing to loan me 50% of the total price. I told them that whatever they wanted to give me was OK by me. I then waited another week, at which time they gave me a long list of ridiculous (and expensive) further inspections I needed to pay for (a structural engineer's report on the sea wall, plus one for the foundation and house walls, plus a mould and termite inspection). These will come to well over $1,000. This is all fine by me, but the clause that blew me away is the one that states I must have the house completely renovated before they give me the loan. I told them there's no way I can renovate the house at the moment as it still belongs to BAC, and they certainly aren't going to renovate it on my behalf. <moderator: delete language and personal comment> I've spoken to SOOOOOOOOOOOOOOOO many other people here who've been given the exact same run-around by banks that I now have a very negative opinion of the short-term future of US property. If it's almost impossible to get a loan to buy an REO, then who is going to buy all these REOs? The only thing that can happen is that prices crash so low than everybody can affort them without needing loans. Anyway, I'm happy with the one purchase I've made (since I love the house and location) and will be paying cash and having no more dealings with imbecile banks in the US. As soon as I've bought the house and done some repairs I shall be saying goodbye to the land of rude Yanks and not be returning until house prices are so low they start treating foreigners with respect.Reason 2:
Read the Case Shiller statistics that came out today. Everywhere is still going down rapidly (except Washington, but I guess they're awash with crony money). The double dip is definitely here.Hi BB,
I spent some time today looking through the Case Shiller stats as well as a <moderator: delete language> of Google News articles. It really is looking to be like the expected "double dip"… I'm curious to know were you expecting it this early in the year?
Prices are likely to continue to fall… how far into the year to you predict falls? And when do you think you will see yourself return to buy?
Cheers,
Wow, BB!! What a huge learning curve…what can I say? I've followed this thread, wishing you and your family the best – relocation wise – hoping you have found a new area of wealth creation.
Take care and please come back…you have many cyber friends in this community.
Hi BB
Sorry to hear that the banks gave you the run around over there and wasted your money. I was wondering what happened to your beachfront property so thanks for your post.
BB, I am very sorry to hear of your experience but am not surprised. It only confirms that it is not at all easy for non US citizens to obtain finance. The process of working towards a crredit rating is the only way that a reasonable loan can be obtained in my opinion. Obtaining a credit rating is also not an easy task but I will achieve mine within a six month period. I am also living here for that period so have the incoming and outgoing expenses to support a rating.
All of the inspections you mentioned are legitimate but the rehab requirement points to the fact that you would need to pay outright for the property and receive your mortgage funds at a time when you had finished works. This is not unheard of and is really a lender advising that we are not prepared to approve your loan at present but can see that we would be happy to do so once you have carried out repairs.
Your comment on rude yanks is nothing like the experience I have with the majority of Americans that I have learnt to know over the 14 years I have been coming to this country. Most are extremely polite and helpful and I think that term might relate to a tone of voice and attitude that is usually characteristic of certain areas of the US. These people do move to other parts of the States and bring their attitude with them. The dialect and attitudal differences in the US are far more noticable than in a country like Australia where we basically all talk the same. Bad experiences tend to make a person notice things that would otherwise not be noticed.
I would be very interested to know if you checked the Appraisers website for a history of the value of the property you purchased.
Property prices in my area of the US are rising slightly due to buyer demand and this is not only in the bottom end of the market. I work very closely with a Realtor who has been, on the whole, a buyers advocate for the past couple of years but is finding that he is now receiving many calls from sellers wanting his services and houses are selling within days. Not so many bargains and time to spread my purchase area a little wider.
Does not sound that bad. If the finance hurdle had stopped you from closing it would be a major pain in the ass but sounds like you have the option of getting finance once the work is done and you are not looking at purchasing a second short term so apart from the initial surprise and frustration suonds like not such a bad situation.
Hi All
I'm not posting very often, so was surprised to see how many responses my last post received.
I thank you all for the time you've taken to read and respond.
Also, I hope my unfolding story is of educational value to all those considering coming to the US in the near future.
As Mojorising pointed out above, the trouble HSBC has given me is no train smash, since I will be paying in cash, and am not in any rush to get financing at present due to the continued negative trend of the housing market (ie. I won't be buying any more homes until my next trip here, from October 2011 to April 2012).
However, that does not detract from the fact that I feel slightly abused, simply because the HSBC mortgage officer I was dealing with misled me. I've since spoken to his supervisor (in New York) who has informed me that they almost never lend on REO purchases, simply because they require that the houses be in perfect living condition before they grant a loan (and obviously most REO's don't fit that bill). If the guy I've been dealing with at HSBC had just told me that in the beginning I wouldn't have wasted a minute of my time, a cent of my money, or an iota of my hope waiting on their loan approval.
And now I wish to explain some of my bigoted comments on the people of the US. I've already made statements such as "rude Yanks", and perhaps even worse, though I don't recall exactly how derogatory I've been.
I've lived in many countries in the past (UK, USA, South Africa, Mozambique, Taiwan, and China) and have come to the conclusion that people in the US are the meanest. (Interestingly enough, that's what my mother warned me of a few months back, because my parents emigrated to Florida in 1987, but hated it and gave up within a decade).
Americans may love to say "How R ya?" and "Have a great day" but it's just talk. The US is a country of iselfish mmigrants (whether you're talking about Europeans who moved here 100 years ago, or South Americans who arrived last year), who are by and large just out to help themselves. This does not mean that you're not going to be treated according to the rule of law, but it does mean that you should be prepared for the following: getting treated rudely by immigration, customs, air hostesses, policemen, sales assistants, and firemen (that list is comprised from personal experience). Also expect underhanded behaviour from landlords, mechanics, real estate agents, and second-hand car salesmen (also personal experience).
Although I have no experience as a landlord yet, I advise that all of us potential landlords expect the very worst from our future tenants (in the building I'm currently renting in, 3 out of 20 apartments are being occupied by people who stopped paying the rent over a month ago and are awaiting eviction).
None of what I've written above in any way changes my long-term goal of buying lots of houses and making a lot of money when property prices eventually rise. All I'm saying is:
1. I won't be growing old in the States (I'd much rather be in Europe, Australia, South Africa or New Zealand)
2. we must all be prepared for headaches during our five or ten year US-property adventures.But I guess proplems are par for the course whenever you're trying to make a buck. Buying property in China certainly wasn't a joyride.
Having written so many warnings and so much negative sentiment above I'd like to end on a high note: the winter weather in Miami is phenomenal. Warm and sunny every single day. Also, the parts of Miami that lie along the intercoastal, or on the islands just offshore, are safe, family-friendly, and offer a great lifestyle. You can't go wrong investing in places like these.
British Buyer wrote:Hi All
I'm not posting very often, so was surprised to see how many responses my last post received.
I thank you all for the time you've taken to read and respond.
Also, I hope my unfolding story is of educational value to all those considering coming to the US in the near future.
As Mojorising pointed out above, the trouble HSBC has given me is no train smash, since I will be paying in cash, and am not in any rush to get financing at present due to the continued negative trend of the housing market (ie. I won't be buying any more homes until my next trip here, from October 2011 to April 2012).
However, that does not detract from the fact that I feel slightly abused, simply because the HSBC mortgage officer I was dealing with misled me. I've since spoken to his supervisor (in New York) who has informed me that they almost never lend on REO purchases, simply because they require that the houses be in perfect living condition before they grant a loan (and obviously most REO's don't fit that bill). If the guy I've been dealing with at HSBC had just told me that in the beginning I wouldn't have wasted a minute of my time, a cent of my money, or an iota of my hope waiting on their loan approval.
And now I wish to explain some of my bigoted comments on the people of the US. I've already made statements such as "rude Yanks", and perhaps even worse, though I don't recall exactly how derogatory I've been.
I've lived in many countries in the past (UK, USA, South Africa, Mozambique, Taiwan, and China) and have come to the conclusion that people in the US are the meanest. (Interestingly enough, that's what my mother warned me of a few months back, because my parents emigrated to Florida in 1987, but hated it and gave up within a decade).
Americans may love to say "How R ya?" and "Have a great day" but it's just talk. The US is a country of iselfish mmigrants (whether you're talking about Europeans who moved here 100 years ago, or South Americans who arrived last year), who are by and large just out to help themselves. This does not mean that you're not going to be treated according to the rule of law, but it does mean that you should be prepared for the following: getting treated rudely by immigration, customs, air hostesses, policemen, sales assistants, and firemen (that list is comprised from personal experience). Also expect underhanded behaviour from landlords, mechanics, real estate agents, and second-hand car salesmen (also personal experience).
Although I have no experience as a landlord yet, I advise that all of us potential landlords expect the very worst from our future tenants (in the building I'm currently renting in, 3 out of 20 apartments are being occupied by people who stopped paying the rent over a month ago and are awaiting eviction).
None of what I've written above in any way changes my long-term goal of buying lots of houses and making a lot of money when property prices eventually rise. All I'm saying is:
1. I won't be growing old in the States (I'd much rather be in Europe, Australia, South Africa or New Zealand)
2. we must all be prepared for headaches during our five or ten year US-property adventures.But I guess proplems are par for the course whenever you're trying to make a buck. Buying property in China certainly wasn't a joyride.
Having written so many warnings and so much negative sentiment above I'd like to end on a high note: the winter weather in Miami is phenomenal. Warm and sunny every single day. Also, the parts of Miami that lie along the intercoastal, or on the islands just offshore, are safe, family-friendly, and offer a great lifestyle. You can't go wrong investing in places like these.
Hi Steve,
I am very surprised to see your latest posts. I had booked a ticket to Miami to explore housing market as you did for three weeks. Do you mind to have a chat once I land there on 1st March? My email is [email protected]. Anyone is out there and want to have a coffee together, just shoot me an email.
I have followed this thread for a while and learned a lot from you guys. I really appreciated all posts you guys contributed.
Since the very beginning I wanted to invest in US housing market, I developed my own strategy. I would buy a few positive cash flow properties in some industry oriented cities such as Kansas City ( and I did buy five houses in Kansas city in cash and am getting $4,000 rent per month), then get a loan to buy two or three 300K houses in Miami ( I was hoping to get a 60% loan). My rent should cover the interest. If this strategy works, I do not mind to wait another three to four years until housing market fully recovers. Now, it seems that we foreigners won't be able to get a loan there, I have to change my plan a bit.
Anyway, I really want meet some guys from Australia in Miami.
Jack
I am not suprised at BB’s experience, my NY partners have told me for MONTHS that banks will NOT lend to foreigners, and as BB states certainly not REO property’s.
I have made mention on a number of occassions that Miami is not a good place to purchase…as the sheer volume of bank owned property.
I have a US partner based in Denver who is a 30 year + real estate guy who will NOT even give the name of a real estate agent in Miami because it is such a BAD investment.
Despite this many aussies continue to make the trek over to Miami….good luck is all I can say.
There are better cities to invest in that WILL give you positive cash flow
Jeff
I agree with Jeff that there are many better places to invest that Miami but what BB is inputting into this board is at least his personal opinion and experience rather than all of the spruiker posts seen here these days.
I have friends who have tried Realtors in both Miami and Orlando with less than satisfactory experiences but Florida is a good place to invest. The mindset needed is that you will receive cash flow but will have to wait for appreciation. This appreciation may take five or more years so you need a very long term view.
ActToday wrote:I agree with Jeff that there are many better places to invest that Miami but what BB is inputting into this board is at least his personal opinion and experience rather than all of the spruiker posts seen here these days.I have friends who have tried Realtors in both Miami and Orlando with less than satisfactory experiences but Florida is a good place to invest. The mindset needed is that you will receive cash flow but will have to wait for appreciation. This appreciation may take five or more years so you need a very long term view.
Hi Judith,
Are you still in FL? If yes, would you mind to email me your phone number? so when I come to FL, I want to buy you a coffee and have a chat about investing in FL.
Cheers
JackI wish to clarify a few things.
Once again, all are just my own opinion, and I don't wish to get into any arguments with anyone about which place in the US is the best to invest (besides, I haven't looked at anywhere except Miami).
I shall summarize my main observations:
1. Property prices in Miami are very low compared to similar cities around the world (I'd compare Miami to Sydney, Sanya in China, and Cape Town in South Africa). You won't get much for 50K, but in the 100K to 150K you can find decent housing in good areas.
2. Miami is a stunning city with great weather and beaches. It is teeming with cashed up immigrants and tourists. These are just some of the reasons why prices shot up here by a higher margin than anywhere else in the US during the boom times (according to Case Shiller stats). Due to very lax lending standards, Miami has suffered one of the worst price crashes. Therefore I still feel that this city offers either the best, or one of the best, opportunities for price appreciation.
3. Despite the above, prices probably have room to fall further. Why? Not because they aren't already cheap, but simply because banks aren't giving loans very easily. Stats came out earlier this week showing that 32% of all property purchases in January across the US were made in cash. Since interest rates are so low that everyone would love to have a 30-year fixed interest loan, you can bet all those purchases were REO's that banks refused to give loans on. Considering the state of the economy, most people don't have any cash at all, and have bad credit histories, so there's only a tiny fraction of the population who are in a position to buy homes. Add to this the huge shadow inventory of REO's still to hit the market and you can see why the majority of the people who have the ability to buy houses are still waiting for prices to fall further.
4. However, if you already have a ticket to Miami, or anywhere else in the US, you might as well dip your toes in the water. Make a single purchase so that you can learn the ropes. Despite my experience with HSBC, I still believe it's possible for foreigners to get loans here, even on REO's. However, make sure you buy a home priced above 130K. Of the 3 banks I've spoken to who will loan to foreigners, HSBC was by far the strictest (in terms of wanting to see resumes, bank statements, reference letters etc.) Perhaps I was stupid to have tried HSBC in the first place. They're too big, and the decisions get made in New York. It's better to use local banks whose loan officers know the individual suburbs of Miami and will understand that you've made a decent purchase.
5. I think the bottom of the second leg of the double dip will be in the second half of this year. Prices probably won't rise much next year, but as soon as all the REO's are out of the system (perhaps early 2013) there'll be a sudden surge in prices (about 20%) due to pent-up demand, and because all sales will be by home-owners, not banks. Home owners keep their houses in good condition and refuse to sell too cheap, hence my prediction for a sudden jump in prices. After this surge, prices will rise continuously for several years (to at least double the prices of the lowest time) because there won't be enough inventory (builders have almost stopped building new homes over the past few years) and because of population growth. After about 5 years of price growth, things will slow down as more and more new homes come onto the market. If the banks have truly learnt their lesson this time they'll keep demanding 10% to 30% downpayments, which means prices won't crash next time. However, if they still give out loans with only 3% down, we'll see an exact repeat of this housing bubble pop.
I think I can shed some light on the plight of those trying to buy REO's that need renovation. Homes that need extensive Renovation are bought 2 ways 1. with cash fixed up then refinanced to pull ones cash out of the deal. or 2. they use a private money or Hard money lender.
I am a hard money lender with our Niche' lending to fix and flip investors. Or fix and hold like your attempting to do. Any decent real estate agent or mortgage broker should have told you that you would have never gotten a conforming loan from a bank for a house that needed major repairs. What you were looking for is a construction loan, that would roll into a perm.
In addition when buying investment property in the states the last properties that will bounce back significantly are Higher end homes. Virtually all loans being sold in the secondary market are sold to Fannie and Freddie or backed by FHA. The loan limits in 98% of country is 425k. Any loan above that is classified as a Jumbo and the folks buying these properties have to have full documentation which most self employed people do not have. Its the self employed that drove the high end market using stated income loan products commonaly called ( Liar Loans here in the states). There are only so many doctors dentist attorneys that can show substantial w-2 income to qualify for these properties. And in fact a lot of them are being sold for cash. However a cash buyer is a very astute buyer and is not going to over pay.
The construction to perm loans exsist however are primarily avaliable for owner occuppied transactions.
This leads me to comment on all the TURN KEY CASH FLOW companies offering properties to overseas investors. I loaned to many of the folks who source and rehab these homes and then sell them to the end buyer. I have done well over 2,000 of these loans in the past 6 years. we loan 100% of cost and 100% of rehab. And we base our loans on ARV After repair value. We only loan to those folks that are in the business and have good track record we would never loan to an individual who does not live within 25 miles of the property. These properties that we loan on are predomiatly low value homes ( 50 to 100k) however have huge rates of return Vs a Vi rents to cost. We loan in Detroit, Indianapolis, Memphis, Jackson MS, and parts of Florida and Georgia.
Having seen the trials and tribulations first hand of out of state or off shore investors trying to manage their property manager to varying degree's of success or failure. I am changing focus from just pure lending to getting back into the equity side. We currently have about 200 homes in our portfolio in the above mentioned markets.
<Moderator: delete advertising>
[email protected]
503 789 2451 cell phone.I have been reading the posts on this board for quite a while, although haven’t yet found the time to sit down and respond.
First of all, I am American myself, although have been outside the country for the last few years myself, and I am a professional real estate investor myself.
I can only agree with British Buyer – no matter what the banks might tell you, as a Non-citizen and resident, you are not going to get a mortgage in the U.S. Even for me it is a huge struggle, and I own bundles of properties. The main reason being that I work for myself, I have several LLCs that I use to invest in property – something they do not like to see.Hard money might be one thing to consider as a previous poster mentioned, as long as you know what you’re doing as they can get very expensive.
Florida as an investment – I happen to believe that there is a great opportunity right now, predominantly at the lower end of the market. I think the properties selling around $40-$50K and bringing in $400-$500 a month in net rental income are good deals, and a lot of them had very high sales prices back in the day. For the higher market (150K+) this may well fall a bit further, as there is not a lot of financing available for buyers.
Another opportunity that we’re active in are properties in places like Detroit and Indy – sure there are risks with it and we’ve had our share of problems but as part of a portfolio they are useful as the net yields is higher than 15% on average.
highincome property,
You make very good points, I have funded probably 250 plus deals in both Indy and Detroit, Although I would not buy or lend in the city of Detroit as Wayne county tax's are really bad as has been posted before as well as if the tenants do not pay their water bill its attached to the tax bill, I have closed transactions for my clients that were buying REO's and have seen 2k plus water bills.
We have a very nice book of business in Indy as well.
I recently bought ( August) 2 courthouse steps properties in Western Florida… They were very good deals. And I agree the place to be in the states right now is the lower end rentals.
What I have seen in the past and the thing that out of state and foreign investors really need to be aware of is that managing your property manager is the biggest component of a successful investment.
The other main issue I see is the misrepresentation of true Cash flow and thereby squewing the rates of return. Most of the USA wholesaler or Turn Key companies grossly understate vacancy rates, and on going maintenance. Granted most houses are rehabbed prior to investors buying them and most are done well, However any rental property from New construction to older homes is going to have on going maintenance costs. And No property stays occuppied 100% of the time. In addition when tenants move out the average turnover of a property to get it rent ready will be 1500 to 2500 dollars. Paint ,Carpet other sundry items. There are always exception to the rules, and if you do better thats great but its best to use realistic numbers going into the transaction so your not dissappointed later. The double dip is happening to some extent however its not really affecting the lower value properties they have pretty much bottomed out.
I have lived through 3 of these corrections this one is by far the biggest and again on the low end homes now is the time. I am not saying they are going to sky rocket because they won't but they will start crawling back up as US banks start to loan on investment properties again. This is one of the main reason's so many of these exist. US citizens can only get 10 mortgages and thats for only the high net worth and strongest borrower that has substantial liquidity. 4 is the max 95% of americans can have on the Credit report. And being a hard money lender, hard money is only used for short period 6 months or less. So what has happened is that most of these low value homes are going for cash. The US investors are snapping them up using their IRA ( retirement accounts). But there still is not enough general credit to keep up with the amount of REO's.
As investors from all over the world come in and buy these properties they are helping to stabalize the market and that in its self keeps values up and will on the rebound allow for some gentle inflation or appreciation of the asset.
My company is diversifying from the debt side back into the equity side. We are buying about 20 homes a month. With Jackson MS., Memphis, Indy, and Suburban Detroit as our target markets… Our goal is 500 this year, and in my opinion we will see these opportunities for another 24 to 36 months as there is a lot of shadow inventory out there yet to be cycled through the system. We cherry pick for certain, just because its cheap does not mean its a good deal. At the end of the day our goal is 5000 houses. And we will be bringing in Foriegn investors as our partners as well as US investors. Our program gives the best of both worlds. We take all the risk of running the asset, Investor never gets a cash call or deals with maintenance or vacancy. And we all participate in the upside as partners. And I bring my investors in at the True cost. My investors will be in our homes for 30 to 40% less than they could buy them on their own through Turn Key companies or other marketing companies.
[email protected]
503 789 2451Jack, I'll be here in Fort Myers until March 24 then back to Oz for three months after which my visa will be approved…hopefully….and then back here for at least two years. I love Florida! You can call me on 239 565 5747
I've looked at a few properties priced under 50K, and although the houses were in OK condition, the neighbourhoods can only be described as "bad". Therefore, if you're looking to spend less than 50K in Miami I'm guessing you're going to be dealing with Section 8 tenants. This may be difficult to do from afar, so you'll probably need to use one of the many companies touting their services on this website.
Personally, I still prefer the idea of 150K houses, since you can go to a regular bank and get a 70% loan, and at low fixed-interest rates. Just make sure that you're buying a house that is in good enough condition to get a loan on. The reason my Dream Waterfront House doesn't fit this bill is because the house is in bad shape. Basically, I'm buying it for the land, and I intend to do major renovations on it and sell it for either half a million soon, or one million in a few years (since land along the intercoastal on Miami Beach is as rare as hen's teeth).
The advantage of buying one house for 150K, as opposed to 3 for 50K, is you will have much less hassle from tenants (3 times less, on average). Another advantage is that the more expensive houses are dropping in price faster, because not many Americans have enough money to pay cash, or good enough credit history to get a loan.
One more lesson I learnt in China: location, location, location. In the time it took for my properties in Wuhan and Nanning (both state capitals) to increase 2 times in value, my Shanghai properties went up nearly 4 times. That's why I prefer cities such as Miami over cities like Detroit, and it's also why I prefer to buy 150K houses, not 50K.
Of course, if you're really worried about getting funding, you could always buy from a regular seller. That way, you can first make sure the bank will give you financing, and if they give stipulations about the condition of the house, the seller will assist you in getting the house up to standard before the sale goes through.
There are so few decent REOs coming out at the moment you may find that buying a regular sale is more practical anyway.
I've no idea when the huge shadow inventory of foreclosed homes will hit, but when it does we all need to make sure we're ready for them.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
