I have come across an add with the above heading about Positive Geared USA Investment Opportunities. It is on the last page of Coast to Coast Business Advertiser Issue 231 – Oct/Nov 2005.
They show 4 houses for sale with rental returns of 22% – 25%. JohNett Developement Pty Ltd offer to sell you a property, take care of paperwork, US attornery, insurance, tax file numbers and open your US bank account. They have an office in Sydney. Ph (02) 94768160.
I am wondering if this could be a scam.
Does anyone know anything about this company or anything about property investing in USA???Thanks
Deb[cap]I have just come across this add also on the PI.com forum.[biggrin]
Cheers
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Property Finders living in NZ .
We are active in this market and buy Properties directly from the public. Maybe you want to sell?
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The properties are probaly in Buffalo.
Be very careful with people you don’t know.I would rather buy from Westan,Chad Simons or House hunters.
It’s worthwhile doing a search on the subject as their are some interesting reads on general property investment in the US.
Good luck !!!
hi deddrad
remember the old saying “if it sounds to good to be true, it usually is”
300 million people live in the USA and they carn’t find a woodduck there.
with such fantasic returns, why aren’t amercians investing, or are they just dumb.
don’t answer that one
somethings wrong?harry
Hi Deb,
If you are buying at those returns the properties must be fully rehabbed and the work just done and they must be in the good end of town. If they have not been fully rehabbed don’t buy them as the ongoing maintenance will kill the deal.
You can get fully rehabbed properties with current city inspection certificates with 25% returns in good areas with descent tenants anything less just aint worth the bother. Also you must see sales comparisons that justify the price before you buy, buying on yield alone can take your attention away from what the property is actually worth or buy subject to finance and an independent valuation will be part of the deal anyway.
If all of that stacks up and there is no reason why it shouldn’t then it is definitely worth a look. If the properties are in WNY and you need any further info drop me an email or PM.
Hey Deb&brad,
These propertys are all in Buffalo from this company.
Some of their propertys are improved but not all need it(I am told by the company)
Yes you do have to be careful of the areas you buy in Buffalo and especially who.I would give Westan a call if you are wanting help with the whole purchase from go to wo.You will pay full retail but;
.He has the reputation and integrity in this area.
His contacts do all that is needed in a rehab then do the management and pretty much everything.Regards Dematio
We’ve got 70 yrs on planet earth,Lets make the most of every day!
Luke Taylor | Hope Property Investing
http://hopepropertyinvesting.com
Email MeProperty Support,Strategist and Buyers Agent
Interesting topic. I guess you have to do your due diligence in every market. Yields don’t stand alone in a vacuum.
Life is like a box of chocolates – you never know what you’re going to get!
Here’s a piece of late breaking advice. Have the names of your property manager, the vendor and your real estate agent ready. Some banks which are otherwise prepared to do business with Australians (and there are few enough around!) will not touch properties managed by certain folks or bought from certain folks.
This is because some managers have a reputation for managing poorly, which damages your profitability and hence ability to repay the loan and some vendors have a reputation for shoddy properties which means the asset is not worth the loan. Only the bank can tell you which people they will or won’t deal with.
If the bank you choose doesn’t have these criteria, you’ve lost nothing, but you should check whether they plan to ask the question.
Hi Quiggles,
Who did you hear the late-breaking news from?
Cheers
Life is like a box of chocolates – you never know what you’re going to get!
Dobby,
Quiggles is one of the pioneers in terms of investing in US residential realestate. You would do well to take his advice.
Regards
AlistairI would hardly call it breaking news it has been the way for some months now.
Cheers Richard
Ph: 07 3720 1888
[email protected]
http://www.yourstatefinance.comSpecialising in US & IP finance.
Richard Taylor | Australia's leading private lender
Hi Deb,
Investing in USA is something that is not for everybody, with the distance involved you have to be very thourough with your due dilligence. We are lucky to be working with a company that buys property, renovates it and then property manages it all within the one company.
If you want some actual “LATE BREAKING NEWS” Tuesday 29/11 edition of the Buffalo News has run a big front page story about all the investors who are getting into the Buffalo area, buying property and on selling it without any real maintenance done. This is damaging the market and a lot of those who arent comitted to what they are doing are being run out of town. They are especially targeting international investors who are not aligning themselves with respectable tradesmen or companies.
There are a lot of people putting together companies in the Buffalo area to do things similar to GenesisREI the company we have an exclusive agreement with, however due to the fact they are not licenced and insured or working with reputable firms they are not getting the support from lenders as Quiggles was saying earlier. Banks have been looking at the PM, Vendor and realtor for the past 6-12 months however since the new Partiots Law came in in September a lot has changed.
It is becoming more difficult for foreigners to borrow in the USA, not impossible but bloody hard if you cut corners or dont have the right contacts.
Basically there are people here who have good and bad things to say about Buffalo and the surrounding areas. The biggest mistake people make is listening to people who have read a lot but never actually put their acquired knowledge into practice. I have reports stating that for Buffalo prices to drop 5% you would 1000 job losses and interest rates to rise to 25%. It states the projected growth in Buffalo is pretty much set in stone. (if anyone would like a copy of this report please email me)
To everyone who is bad mouthing Buffalo and other areas thank you and keep up the good work, I know where I will be buying and recommending my clients to buy. If you do your research correctly and are comitted to what you are doing you will always succeed.
If you are looking at using the services of a buyers agent make sure they are licenced and are fully insured. New laws will be coming in which may be a surprise to a lot of bird doggers and spotters out there.
Whatever you decide to do make sure it is fun and you have final say on everything you do and before you believe everything you read on these forums maybe do some research on the people that are commenting. There are a few very knowledgable people on this forum who can help you a great deal with your investing, there are also a few that will leave you chasing your tail. Good luck and have fun with your investing.
Regards,
Mic
[email protected]
http://www.househunters.com.auAustralian House Hunters.
Specialising in finding your perfect investment property throughout Australia, NZ and the USA or your dream home in Newcastle and the Hunter Valley. To recieve our free weekly newsletter or assistance with anything investing, [email protected]Hi Mic,
Thanks for the update on the Buffalo market. Do you mind sharing details on some of the deals you have purchased for yourself in Buffalo? I am interested to see just how profitable these properties are. I’m not saying they aren’t, just curious. From my research, I couldn’t quite see the HUGE cashflows everyone was talking about. I guess to be able to reasonably assess the performance of your purchases, you would need to have owned the properties for some time (maybe 6-12 months). If you, or anyone else who has purchased in Buffalo, would be happy to share a break down of ownership costs, net cashflows, pitfalls, unexpected costs, maintenance, etc… I would love to hear about it. I don’t want to see projected returns either as these aren’t always accurate and sometimes over estimated.
Regards,
OziHouse hunter can you sum up how you add value to finding the perfect investment property in the USA when it appears from Genesis website that you can just operate directly through them and they are on the ground in buffalo as you rightly point out,
I invest directly myself and have done in buffalo for the past 10 months, and now have an excellent team in place, i can see the value add in what genesis do, but dont use them as i go there personally and after some early hiccups are now in a strong position.
when the going gets weird the weird turn pro
Hi Guys,
Most of the properties we find for our clients thru Genesis are netting between 13 and 15% with gross around the 20 mark. We can find the 30 and 40% returns but you wont find a property manager to collect the rent or maintenance guys to renovate it. You could offer some work to the residents of the local crack house up the road but the guys there arent really motivated to help you. These 20%ers are what we call Brady Bunch houses, they are in nice conservative areas where everyone knows each other and have low crime rates.
If you look at our website Ozi it will give you some numbers to work with, all taxes, insurance property management etc are listed there with annual rents etc, all you have to add are your annual mortgage costs. On average a $40,000 USD property will put between $1500-2500 annually in your pocket after mortgage and before tax. As for ancillary costs like maintenance etc they are very minimal in the first couple of years as these properties are purchased renovated and have a rental guarantee.
Now Kiwi, everyone on this forum please take not of this person, he is someone who understands Rome wasnt built in a day and was willing to commit himself to a cause and stick it out. I know of many investors who got in there and bought quickly and didnt do their due dilligence properly and hoped to double their money straight way. They are now the people bad mouthing this and other areas because they didnt have the commitment and belief in what they were doing and were just being sheep and following everyone else hoping for the scraps that were left behind. If you are serious about the USA you will need to spend a lot of time over there, it is not something you can do over the phone.
We have been researching the USA for 18 months and only 6 months ago were we confident enough to share this products with our clients. We are now able to confidently assist our clients setting up bank accounts, credit cards, LLC’s, understanding the fico system, taxation, we have attornies and accountants, independant building inspectors and anyone else you may need during a purchase.
We have spent considerable time getting the system in place and we do this full time, if you think you can go into the states and do 6 weeks research and know what to do good luck. Kiwi and a couple of others I know of have gone in and stuck it out and succeeded, so many others havent.
As for adding value to Genesis properties you can still put on a carport and lawn locker as we are doing with one of ours in Lockport, air conditioners may help if they arent there. Genesis will get your property to rent ready stage with new kitchen and bathrooms if needed, paint, carpet and numerous cosmetic updates. Our independant building inspector gets to inspect the property before finalising the contract so if there are any structural or other issues Genesis have overlooked we can add them to the contract.
Investing is a risky business, especially on the other side of the world, Buffalo like other cities are cracking down on fly by night investors as I mentioned in my last post about the newspaper article. If anyone would like a copy of this article please email me, however cities like Baltimore, Cleveland and Buffalo have cracked down on these property flippers. They have set up databases to identify flippers and flipped properties. 5 years ago Baltimore set up the Flipping and Predatory Lending Task Force to control this practice. Property investing is not easy, it is like relationships, if it was easy everyone would have one.
I am not trying to persuade people from doing this however have a good hard think about it first and ask yourself is this right for me, and remember “proper preperation prevents piss poor performance.
Have fun.
Regards,
Mic
[email protected]
http://www.househunters.com.auAustralian House Hunters.
Specialising in finding your perfect investment property throughout Australia, NZ and the USA or your dream home in Newcastle and the Hunter Valley. To recieve our free weekly newsletter or assistance with anything investing, [email protected]Hi Again,
Didnt expect that many responses for the article, it just is easier if i post it here, its a biit long but good info.
Play fair.
Mic
CITY AIMS TO MAKE FLIPPING FLOP!
Published on November 26, 2005
Author: Deidre Williams – NEWS STAFF REPORTER
© The Buffalo News Inc.
Scott Rocheville learned a hard lesson about real estate last year when he purchased a four-unit property on Buffalo’s East Side.The listing in the online auction site included a picture of what he thought was a pretty yellow house, well-kept with a beautiful, manicured lawn and three of the four units already rented. What the Boston, Mass., police officer-turned-investor found after buying it sight-unseen was quite different. In fact, the Web site’s fine print warns “image does not depict actual asset.”
“From the get-go, I was thousands of dollars in debt,” he said. “I had to hire a lawyer to go to Housing Court with me and to evict the tenants who weren’t paying rent. There wasn’t any electricity coming into one of the homes, although a person had been living there for months.”
But Rocheville wasn’t the only victim. In cases like these, flipping — buying low-priced property and quickly selling it at an inflated price without making improvements — has helped create some of Buffalo’s most distressed neighborhoods.
The story is similar in Ohio, where illegal flipping has spread from Cleveland to its first-ring suburbs and officials have begun cataloging problem properties.
In Baltimore, officials established a Flipping and Predatory Lending Task Force five years ago.
But after modeling its anti-flipping effort on Baltimore’s program, Buffalo now has a weapon that other cities lack: Hilbert College students are building a computerized database to identify flippers and flipped properties.
“You can type in a name, and charts can show multiple sales and vast changes in selling price,” said Tim Parisi, a Hilbert senior majoring in economic crime investigation.
The new system will help prosecutors and Housing Court officials act more quickly. One company, for instance, had bought 66 abandoned houses and quickly resold many at inflated prices before more than a year of court activity could drive it out of Buffalo, said Michele Johnson, a task force member. The new system, which is computerizing now-separate city, county and state property and housing code records, will enable officials to zero in on such companies in as little as a month, Johnson said.
The Buffalo task force also is exploring two other options:
Limiting the number of properties an out-of-towner can purchase at city auctions.
Holding two-stage auctions: the first day for those who want to live in the homes, the second day for investors.
Buying a house and reselling it for a profit, even a big one, is not illegal. Such flipping becomes illegal when it involves mortgage fraud, predatory lending to buyers not financially able to take on the mortgage, or fraudulent advertising on eBay and other online auction houses, saidAssemblyman Sam Hoyt, D-Buffalo, task force co-chairman.
Lured by the ads, Rocheville decided to get into the landlord business so he could cut back on his work week and spend more time with his children.
“Real estate here in Boston is ridiculous,” he said. “I looked around, and prices in Buffalo were good, and I saw an opportunity to have some rental property to make some money.”
He hasn’t abandoned his property, but said, “It’s become a black hole for me.”
City records show D&N Properties bought the property for $14,000 in November 2004 and quickly sold it to Rocheville for $30,000, doubling its money in less than a month. On his first visit, Roche-ville found housing code violations, only one of the three tenants was paying rent, and the house needed major repairs.
Rocheville, who doesn’t want the site identified because he doesn’t want to invite vandals or scare off potential tenants, has been working with city officials and said he remains committed to repairing the apartments.
“Definitely,” he said. “I will try to get them fixed up and get them rented.”
Cities across the country are trying different approaches to keep such properties from becoming eyesores or ensnaring unsuspecting buyers like Rocheville. Cleveland has begun logging its problem properties. So has Baltimore, which used the data to close loopholes and prosecute unscrupulous investors.
Officials there say the data, so far, has helped to indict 104 people, including 100 who have pleaded guilty or been convicted. Sentences ranged from probation to 64 months in prison.
Baltimore’s task force has had to search records manually, but since August, Hilbert students have been using Analyst Notebook, software developed for tracking white collar crime, to build a computerized database, said William J. Haslinger, the Hilbert professor supervising the project.
The database will include the location of properties sold, dates of the sales, the seller and buyer and the sale price. The students will turn the data into charts that will spotlight properties sold over a short period of time with substantial changes in price.
“What they’re going to enable us to do is track the activity of people who are flipping properties,” said Kathleen Lynch, a Western New York Law Center attorney and a task force member.
>Blame to go around
Unscrupulous speculators aren’t the only problem, task force members say. They also point to the federal Department of Housing and Urban Development, online auction houses and the city’s auction process itself.
Lynch outlines the problem: A person buys an inexpensive HUD home with a government-insured loan, then defaults. HUD forecloses, but if it can’t sell the house, the property goes on the open market, where it might be bought for a pittance. The new owner then lists the property online, and the flipping begins.
That was the case with 41 Loepere St., purchased online by a California resident. After being flipped a few times, Lynch said, the property went back to HUD for just $10.
“HUD is aware of the problem and is working with us,” Lynch said. “There’s a growing number of HUD houses that are being sold to investors.”
Asked about HUD’s role, a spokesman noted the agency had pushed for establishing the task force and has a member on it.
>Solutions under review
Online auction houses add to the problem by broadening the base of potential scammers, creating an international market that otherwise wouldn’t have access to Buffalo housing. More importantly, Hoyt added, they don’t monitor their sites for fraudulent or misleading advertising.
“Somebody can advertise over the Internet a property ‘a short walk from beautiful Lake Erie in an upscale neighborhood, and it only needs minor cosmetic fix-ups,’ ” Hoyt said. “The fact is, it’s none of the above. The reality is it has 20 housing code violations, and it’s in the heart of the ghetto.”
Online auction sites acknowledge the Web contributes to the illegal flipping game, and they have agreed to look at ways to alleviate the problem, Hoyt said.
In Buffalo, more and more properties go on the auction block each year, he added, a result, in part, of an aggressive foreclosure policy that includes owners who fail to pay water and garbage collection bills.
In fact, at least six properties that Scott Wizig — one of the city’s most notorious landlords — purchased at city auctions in 2000 and 2001 were back on the auction block last month.
“There could be as many as 40 or 50 like that,” said Tracy Krug, a housing inspector.
Task force members and city officials, therefore, are considering the two options.
Limiting the number of homes an out-of-towner can purchase would help ensure the buyer will be able to maintain the properties, said Mike LoCurto, co-chairman of the task force’s legislative committee.
But potential problems loom for a two-stage auction — limiting the first day to buyers who want to occupy the homes then offering unsold properties to investors on the second day. Investors have warned that restricting their access to the auction might be illegal, said Louis J. Petrucci, a task force member and director of housing for the city’s Office of Strategic Planning.
City lawyers are analyzing both proposals.
“The point of these options is to keep houses off the foreclosure list and to keep them off the auction block and to keep them away from speculators,” Petrucci said.
e-mail: [email protected]
Harry Scull Jr./Buffalo News
Because of its deteriorated condition, the city now plans to demolish this
house at 144 Breckenridge St., which was flipped in the real estate market.Regards,
Mic
[email protected]
http://www.househunters.com.auAustralian House Hunters.
Specialising in finding your perfect investment property throughout Australia, NZ and the USA or your dream home in Newcastle and the Hunter Valley. To recieve our free weekly newsletter or assistance with anything investing, [email protected]Ozi,
I bought a house off of one of the guys up there that I met early on in the piece who is now selling to ozzies. I bought the house as a risk reduction strategy (so I thought) so that if my other team didn’t perform I could fall back on him. The house was a poor performer right from day one and I have since sold it but with interest,runnimng costs and clsoing costs I made an overall loss on the deal and as you say it never stacked up to the ‘projections”.
I bought it at a 30% yield which to me was nothing flash as I had another property at that time that was achieving 34% (and still is) so I think I got out of it relatively unscathed and learned a lesson the easy way.
The biggest problem was vacancy, evictions and ongoing repairs even though I bought it as a “remodelled” rent ready. He says the problem was property management even though I used his recommended property manager. I accept total responsibility for getting into the deal and don’t have any hard feelings towards the guy as he didn’t have a gun to my head when I bought it. If I knew then, what I know now I wouldn’t have bought it but that’s life.
I have many other investments up there that are performing far better than this believe it or not 60% yields with fully rehabbed property in good areas is possible but I do believe that at the end of the day some investors will be disappointed with the actual net returns they achieve as opposed to projected.
Hi bardon,
I have heard similar stories regarding vacancies. I know of 2 Aussies who bought earlier this year and their properties have been vacant since day one. We are talking a vacancy of 6 months here. What sort of cashflow is that? I am sceptical when anyone offers rental gauarantees. If the investment is so great, there shouldn’t be a need to back it up with a rental gauarantee. The purchase price is normally marked up to cover the rental gauarantee anyway.
Regards,
OziHow many more red flags do people need.
I’m mean really…lets just get serious and think for a minute. Just think!!!
Open Challenge: Is there anyone on the forum who owns an upstate NY property who has anything positive to say about the experience.
The catch: To comment you must not be receiving a commission, referal fee, fee for collecting a name you pass on to anothers list, fee for encouraging another to buy through cash for comment arangements, finance related fee, kick back from and agent, builder, renovation company, spotters fee, trailing commission, or be an agent selling these properties or be an interested party in companies selling these properties or any combination of the above on whatever level of this multi level arrangment. Be Honest!!
[email protected]
Property Finders living in NZ .
We are active in this market and buy Properties directly from the public. Maybe you want to sell?
Email now for information sheet and current deals.If you have joined the list since 16 Oct Please re send information.
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
Hey guys!
I was just thinking ???A few of us have given positive views about this area (Buffalo) and many others have given negatives.
I personally believe its the same as any other property investment,it depends on the strength of yr team.
How about we ask Steve Mcknight to comment.
—-i would be really interested in his views and I am sure others would too!Steve, are you able to shed some of yr experience for us?
Thanks in advance!Regards
DematioWe’ve got 70 yrs on planet earth,Lets make the most of every day!
Luke Taylor | Hope Property Investing
http://hopepropertyinvesting.com
Email MeProperty Support,Strategist and Buyers Agent
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