Has anyone had eny axperiences in the US?
Can you share your stories, difficulties?
I have heard about agents in australia that can help you source, get insurance and finance abroad and returns are great.. from what i hear?
Does anyone know of any of these agents?
I am actually a first time buyer with about 200k to spend, nothing in Australia seems to have good stabe and high enough cashflow returns…
What are some implications / difficulties onen needs to be aware of when buying in the US?
Tax laws, legalities?
any input would be much appreicaited!
cheers!TokyoJoeMember@tokyojoeJoin Date: 2005Post Count: 60
Westsan is advertising properties in the US. Maybe he will post here. Personally, I would be taking at least one trip there before buying anything. I have many friends from the US who can vouch for different areas of the US, if you could let me know where you are interested in buying.
My online investing diary: http://www.retireyoungandwealthy.com/supermanMember@supermanJoin Date: 2003Post Count: 53
I have purchasing experience in the US. I have lived here for 4 years with my wife. A little over a year ago we jumped into the Californian market and bought in Lakewood, a city in LA County. Since I’m buying from within the US, I’m sure my experience is quite different from what you are chasing, but I’ll mention a few things.
For one, just about all transactions have two agents: the buyers agent and the sellers agent. But your agent (the buyers) is effectively free, because the two agents split the 4-6% commission (national average is now 5%) paid by the seller. The seller can negotiate that commission with their agent, but say they go to 4%. That would mean any buyers agent representing their client would be less motivated to push that property. So I’m planning on selling maybe this month and I will be going with 5%. This is a possible plus for you, a free buyers agent! But they paid a percentage of the value you pay, which is a definite conflict of interest, so you need a good agent.
As for when we bought, we only had 5% down and this was a huge problem. We put in 7 offers on various properties before getting lucky on our 8th. On the day that I found our home I saw 4 at lunch and put an offer on 3 of them, my wife having never seen them (that’s trust). Every time we were rejected it was because our offers were coming up against higher deposits, I.e. 10% and 20% offers. The reason this makes a difference is, it is less likely their pre-qualified loans will fall through. On one of those properties we got lucky and to give you an idea just how lucky… the day I saw that home was its first day on the market and my offer reached them that same day: 5%, full asking. They accepted the next day at lunch, but within the hour they had a 20% down offer $10k over. Having already accepted my offer in writing the sellers agent called my agent and begged her to be sure I was able to pay. For the 4 weeks of escrow the sellers were working against us, hoping to pull out for any reason because of the higher offers! So it was the 8th home we’d put an offer on and we only pulled it off by 1 hour. So… gist of it is low down will be hard! Try have 20%.
I assume there were stories like that in Brisbane during the peak of it. Things have settled a bit here now, but coming into spring they say it is picking up. I hope so this time round I’m selling. [biggrin]
As for getting loans… sh*t, I had a difficulty getting a loan from WITHIN the country, because my visa is non-permanent. So I fancy that would be difficult.
I don’t know anything about the returns on the other side of the country… but to be honest this sounds an awful lot like a “grass is greener on the other side” story. Sure Aus does cost more, but I read a lot about the market here and the concern is that it is going to decline. I’m trying to sell early before it does. Rates have gone up 6 times so far… in every consecutive RBA meeting. That’s 1.5%, but you know what? 10 year treasury bill yields (basis for mortgages here) have not yet moved. Greenspan says it’s a conundrum… I think it’s just lag. Yesterday the move began, 0.12% yield increase in 1 day, biggest increase since… 4 years or something?
Another thing… buying in NZ, as seems to be commonly mentioned on this forum , might make more sense. The AU and NZ economies are more closely aligned. But another factor buying in the US the dollar. Here is the history of the AUD against USD since floating (for trivia are you aware before floating the AUD was fixed ABOVE the USD, cool eh).
Now the reason I mention this is, if you download the full history (5MB) you will see that the AUD tends to vacillate within the 60-80c range. We are at 78.8c today, were at 79.8 on Monday. So you might be doing well if you purchase now and believe that the dollar will fall. But if you purchase in 3 months and the dollar is back at 70c at that point, you will be exposed to more downside risk. Read up about Warren Buffet shorting the USD. However, personally I think now is a good time to buy the USD.
The AUD is being driven up by resources demand (and our higher rates in cash accounts). China is the reason for most of this demand. If China slows AUD should go down and your return might well improve, but point is, it’s far more complicated now that you have exchange rates in the equation.
Here is a good article, 05/11/04 insight:
For spot rates:
For noon rates:
If the property is cash negative or needs maintenance down the track and you do all your calculations based on 80c… when it hits 60c, will the extra cost break you? Plus you need to pay $25 for each transfer here (ANZ), $14 back (Wells Fargo). The AUD has to be one of he most volatile currencies in the world! At one point since I’ve been here it was 48.5 and it was pretty much 80c this week. Imagine if you had to pump in $1000 a month at 80c, that would become $1650! Another possibility, you have a better investment opportunity in Aus, but the AUD might be so high at the time, you must take a loss in order to return your money.
Now I say all this because I actually have an option of not selling and instead renting out my place of residence when I return home… but I’ve decided not to. Mainly because I believe the US market is close to it’s peak. Unfortunately with the AUD high it is not a good time for me to send money home, so maybe I’ll be holding off for a bit on the bet that it goes lower; average it over a few transfers, in the mean time invest locally.
But the other reason I’m selling is complexity. The US and Australia have dual tax treaty agreements. Which means you will be lodging a tax return in the US and in Australia. I’ve not read up on earning in the US while living in Aus. I was concerned about the opposite scenario, but… ugh, taxation is ugly. And having to worry about a home (in my case in an earth quake zone) on the other side of the world… REIT’s in Australia are still yielding 6.7% (SLF) [biggrin] I think a margin loan on an REIT would be LESS risky than a US RE investment. 2-3 years down the track when the Aus RE market is looking more sensible, your money is already in the country.
Having said all that… good luck either way [cap]
hundreds of ways to skin a cat eh!
Thanks for the excellent responses guys!
There are an awful lot of things to consider aswell as options!
Will look into it!
btw- Who is Westsan?
I couldnt find a user name on the forums names WestsamoziMember@oziJoin Date: 2004Post Count: 262
It’s westan. Aka Westan Johnson. He’s a champion
OziFFCommMember@ffcommJoin Date: 2004Post Count: 627
FFCommwestanMember@westanJoin Date: 2002Post Count: 1,950
Hi allI have heard about agents in australia that can help you source, get insurance and finance abroad and returns are great.. from what i hear?
Does anyone know of any of these agents?
Yes i’m one of these agents But im living in NZ at the moment. We have a great team in the States who are doing some top deals for myself and our clients.
li21 when buying in the USA there are heaps of issues you should be aware of, the USA market is very unlike AUST and NZ (which are very similiar).
The USA is a huge country and its really hard to know where to start when looking to invest. I spent about 6 months reading researching before i made my first trip to the states. Its important to do reasearch before you invest there. For example a lot of areas have high vacancy rates at the moment.
a second issue is how do you know who to believe and who to trust. Never buy over the net. I was in one city where you can buy nice homes as cheap as $5000 but they were in areas that you would never get a tenant to live (as the area is way too rough). What happens is people buy this nice looking homes in bad areas and they then sell them on ebay for 25000 to people who haven’t done their research. So a good team is essential.
Thirdly finance is an issue for foreigners (thats us), in my first trip i couldn’t even arrange finance, i have now got some contacts for finance.
So li21 there are many things to be very wary of with investing in the States.
But the rewards are also there. We are organizing a USA information evening in Melbourne, Sydney and Brisbane in early April. There will be a charge as we are flying two guys out from the USA to talk. So come along and you will have your questions answered.
USA information evenings in Melb, Syd and Brisbane in early April, email me for more info. We find cash positive deals showing 15-25% Returns in the USA email me at [email protected] to join our database