After looking at US housing for a while now and going through the countless number of threads on this site I have come up with a few questions that, those that have gone before me may have encountered? My intention is to do my research and hit the ground later this year purchasing several properties in a singular location after finding a suitable management team happy to spend several weeks- a couple of months to make sure this is done right.
I have a reasonable amount of cash and have seen smaller properties i.e.. 1-2 bed units/co-op etc that have been foreclosed, selling bank-direct from $15kUSD. Estimated rental return clearing $300USD/mth after costs/HOA etc. I know this is area-dependent but are these figures reasonable i.e.. $15k down and $300/mth rent from bank stock?
Other questions I have:
When Purchasing US housing as a foreigner is it better to have the deed in your individual name or set up a LLC within the states to deal with this?
I do not require finance, but am interested in its availability to foreigners, the associated LVRs and interest rates?
Finally…. location location location! I am aware that there are multiple thoughts on this one but somewhere with a larger population to industry ratio is something that I am interested in. Not necessarily capital cities but more regional centres. I am happy to hear peoples’ thoughts on this?Mick, i will let others answer a lot of your other questions but in relation to finance Yes it is now possible and we have more and more lenders coming on stream.
Been hard work but we now have formal agreements in place with a number of institutions and are starting to close deals with regularity.
Minimum loans, locations, type of properties are all barriers but can be overcome.
Loans can be variable or fixed and in most case there are no pre-payment penalties so most clients are taking the 30 year fixed rates. Rates can vary from 4.5% fixed in AZ to 6.75 in CA.
Maximum lvr 75%.
Certainly been an interesting journey (We closed over 100 loans between 2004-2008 before a 3 year absence when the GFC wiped out the FN market) and we are now starting to work with some very interesting lenders.
Good luck in your investing journey.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks Richard!
75% is much higher than I would have expected.
So it appears that an LLC is the way to go and finance is certainly achievable.
One last question that is more heard of in the stock market…..
Are people considering the Sovereign risk?
Is it conceivable that the US will either end foreign investment within its RE industry or lock those that are already in, in for a set period not unlike what occurred in Dubai post GFC?Don’t see the point in an LLC – unless you have very serious tax issues to contend with. Provides no more security than your own name (hard and very exxy to serve papers on you in Aus) and is look through from a tax/liability perspective and immediately adds $’s to your tax returns each year.
I am intrigued with richards finance offer above. Sounds almost too good to be true though I would take at face value what anyone says – initially. I would be interested in details if you have them richard?? PM??
My ‘opinion’ is that people get carried away with LLC’s and structures unnecessarily. The easiest thing in the world to do is build up legitimate expenses. You don’t need a team of accountants on both sides of the Pacific to do it on your behalf.
Thanks lawsjs. I have two houses in my name for the reasons you say but I thought I might have been poorly advised as everyone seems to use LLCs.
It's better you do, it's more for legal purposes than for tax reasons.
Richard: I asked you a while back to send me your lending guidelines. I have clients looking and if you have what you say you do, I can refer you some business.
The only skepticism I have is the 4.5% interest rates. Primary homeowners in the U.S get that. Why would an institution offer international investors 4.5% adjustable or not? Lenders are investors. Put yourself in the lenders shoes as an investor. Higher risk, higher yield. Aussie investor borrowing money for U.S property. What is the aussie's experience in real estate, let alone in the U.S.
This can't be private money because the average structure for hard money in FL and AZ is 12/4… 4 points / 12% interest. I don't need to know your source, but I'd love to see a final HUD showing an international transaction. You can black out borrower info for confidentiality… But that product should be bringing you boatloads of investors
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeMy thoughts on LLC’s as they relate to the Off shore investor…
my answer is it Depends!!!
If your buying low end cheapy properties. your chances of getting sued by a tenant are remote to the extreme. And its better to just get an umbrella insurance policy they are cheap and they will step in and Pay in the event of some calamity…
NO CREDITOR in the US is going to go after any AUSSIE unless your talking large money,,,,and again the umbrella policy will protect you there.
Just a data point I have never been sued in 37 years and owning well over 300 rentals in the US… Had battles on evictions but never sued for the dreaded slip fall or other negligent type claims.. And if I was I would turn it over to my insurance company ( see comment on umbrella policy)
Although I do hold most of my properties in LLC.. I have 20 or so in my name as US banks will not loan to LLC’s, only commercial banks will do that.
I echo Cheeves comments on the rates quoted for non owner Occ loans, and Non recourse to boot….
what I see actually closing is 50% down 8 to 10%… I was at a RE investors function in LA Wed. Night and my co panelist was doing these loans.. Although his capacity is limited.
And of course my last comment is in my humble opinion super low priced real estate in the states is a very risky adventure
for any investor other than one Like Kyler who lives and works it… It is my opinion that out of area investors should look at higher value ergo better tenant propertiesJLH
Jay, your last point I could not have said it better myself
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MePriced accordingly low income rentals are just as good as any investment.
Super low priced real estate in the states is a very risky adventure
for any investor other than one Like Kyler who lives and works it…If I can do it successfully for myself why wouldn't it be the same for my investors. After some research and networking, I have been able to make the numbers work that i guarantee so many months rent for the investor till the initial investment is paid off. Still making close to 15% to 20% ROI
I love my ghetto properties
If you can work the numbers and the numbers work and there is a system in place good money can be made.
Kyler after speaking with you the system you have in place sounds pretty good. People like guarantees.
EngeloRumora | Ohio Cashflow
http://ohiocashflow.com/
Email Me | Phone MeF@#$ THE REST WORK WITH OHIO CASHFLOW TO INVEST
Kyler: LOL @ I love my ghetto properties. One of my biggest investors is out of New York City and they buy every building in East Orange NJ that yields them a 10% + Cap Rate. Personally, if I invested in E. Orange, I'd want closer to 20% but it just doesn't exist in areas in close proximity to NYC.
For 10%, I would rather go to Medellin, Colombia and wear a billboard sign on my chest saying "I HATE PABLO ESCOBAR AND HIS ENTIRE FAMILY" rather then investing in a warzone that gets me 10%. Get me 20% like you get and I'm in. Problem is, I don't have a plan for it like you do. Sounds like you have a really good system in place and have a niche that works. That's what its all about. Different strokes for different folks. I tell every one of my international buyers who come to me with information overload from reading, meetings, and classes that they need to find a niche they like. There is something to do in every niche. You just have to have a plan.
FYI, I've been to Medellin several times. Absolutely love it (love the housing market too
But if you walked around with a sign about Pablo, you would be torchered, beaten, stoned, waterboarded, violated, and maybe 3 years later killed!CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone Me
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