Hi All,
I thought I would share with you all a latest deal that we just recenly closed for an investor.
It is a good way to share with you all what can be achieved in the U.S market as I know many people are trying to get more information and education.Recently we got a deal from a wholesaler at $525K USD it was for 25 houses in Texas and the only way he wanted to sell them was bulk as they didnt want to deal with 25 individual sellers. There was a massive discount on the homes though.
Anyway to cut a long story short, after all was said and done here is how the deal officially ended up (It just closed a couple of weeks ago):
Even with 4 of the 25 houses currently vacant the transaction is achieving a gross yield of 18.8%pa. Because the properties were purchased at a wholesale price , about $15K equity in each property, our investor also has the opportunity to make a profit selling the houses with owner finance. Based on current market values this would result in a net profit of around 83% on purchase price.
Here are the numbers for holding onto them and just renting them out:
Purchase price $465,000 (25 houses)
Purchase price per house $18,600
Monthly rent (4 vacant) $7,275 – 18.8% gross yield
Monthly rent (fully rented) $8,675 – 22.4% gross yieldHere are the numbers if you are to owner finance them: Owner finance (average per house):
Rehab $1,000
Selling price $35,000
Profit on sale $15,400
ROI 83%I just wanted to share it with you to see what can be achieved if you are willing to be patient, look outside the square box and create the opportunities by using proven techniques and strategies.
Regards
Chad
Providing Turnkey Real Estate Investments In The USA.
We also provide Owner Finance in a new emerging market.E-mail:[email protected]
web: http://www.gr8realestateinvestments.comON SKYPE AT: chaddylansimons
Sounds intersting Chad
I would love to know what area you can buy houses for this sort of price, even with a great discount.
The gross figures are one thing but the real figures are the net returns. For that you need to take into account 3% property tax, property management 8-10% if you can find someone to manage them. Plus maintance which at these prices whould be high as I would not expect that they would be in great condition.
It is important to look at all the figures and unless you know where the properties are located I would urge extreme caution. I believe in loking for good deals but not necessarly the bottom of the pile.
So chad perhaps you should redo your figures and explain why the sale returns should be at the figures you have mentioned.Finally while we are on the sales prices that will attract a 15% capital gains tax in the United States. The only way to avoid this is to use a 1031 exchange which means that you have to buy something of equal or greater value within 180 days of sale.
Nigel Kibel
http://www.propertyknowhow.com.au
http://www.changingplaces.com.au
Buyers advocacy
Australian and New Zealand The United States Property Researcher and educationNigel Kibel | Property Know How
http://propertyknowhow.com.au
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Nigel
I think every reader of the post and anyone who knows Chad and the Professional way in which he conducts his business understands that Tax will be payable on a capital gain.
Thankfully due to concessional Double taxation agreement we have with the USA not everyone will be taxed at the 15% rate you mention.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
New Shared Equity scheme has arrived – Email us for details.Richard Taylor | Australia's leading private lender
Richard
We should never assume anything. I am not pointing a finger at chad. It is important to remember that many people have purchased properties in the USA blindly and with poor advice. Some of those peope have been regular posters on this forum.
I would suggest that many people would not know about the 3% property tax in Texas.Nigel Kibel | Property Know How
http://propertyknowhow.com.au
Email Me | Phone MeWe have just launched a new website join our membership today
Well done chad. We thought that deal looked interesting when it came across in the email. What type of time frames are you expecting to turn around these types of deals.
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
Nigel,
Here are the final numbers on the deal on how it ended up. Straight from the investor themselves. The investor who purchased these deals has flown over to see them as well just for the record. Also my business partner Brian drove to Stamford and met with her business partner who is on the deal with her and he was also very happy with the deal. Here it was from the investor herself!
My two business partners and I recently purchased a package of 25 rental houses near Dallas through Gr8 Real Estate.
We are very happy with the deal as the houses are in good condition and have positive cash flow – even with 4 of the 25 houses currently vacant we are achieving a gross yield of 18.8%pa. Because we purchased the properties at a wholesale price we also have the opportunity to make a profit selling the houses with owner finance. Based on current market values this would result in a net profit of around 83% on purchase price.
Here are the numbers:
Purchase price $465,000 (25 houses)
Purchase price per house $18,600
Monthly rent (4 vacant) $7,275 – 18.8% gross yield
Monthly rent (fully rented) $8,675 – 22.4% gross yieldOwner finance (average per house):
Rehab $1,000
Selling price $35,000
Profit on sale $15,400
ROI 83%Thanks Chad and Brian for your patience and persistence in getting this deal through and I look forward to doing more business with you in future.
Nigel, the advertised Price was $525k, thats how we got the deal from our wholesaler, after all was said and done and due diligence was done, yes there was some minor work that needed doing and the rent rolls were not 100% accurate.
So we ended up getting the deal for our investor at $465K .I hope this helps. Not that I need to justify our services on this forum. I dont need to. Again, due diligence is important and we are on our investors side, hence why we got this down to $465K.
All the best Nigel
Don,
Sorry about the delay in replying. I dont get on here as often as i should these days. I used to get the e-mail sent to my e-mail address when a new post is put on but since the forum has been updated, I dont get the automatic e-mails anymore.
Anyway as for time frames on this deal. It took about a month to close Don. There was a bit of mucking aroung involved and negotiating etc. Due diligence on 25 houses can also take a while.
Don the reason why we get the returns we do is because we are mostly getting peoples problems and in many situations the sellers dictate the terms. With this deal we didnt want to sell the houses in bulk but that was the condition we got the houses under. The benefit was if were prepared to do in return it was given to us at an excellent price. The seller didnt want to deal with 25 individual sales.
So timeframes vary done depending on the situation surrounding the deal. To get the higher returns unfortunately takes some effort and pain along the way. Everyone who has done deals with us will know that its not always a smooth ride but thats the reality if you want to get the good returns.
The guys I work with get there hands dirty like the locals to get these returns. It dosnt happen overnight and there is frustrations along the way.
There were times when we thought we would loose this deal. The important thing is that the investor and ourselves need to work together as a team. This was certainly the case with this deal.
Hence why relationships are the key with our business model as we all need to work together for everyone to make money.
All the best with your journey in NZL. I did pass your details onto a editor from the API magazine.
Not sure if you were contacted.
Regards
Chad
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