All Topics / Overseas Deals / Considering US property investment – where to start?!?!

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  • Profile photo of SunnyGirlSunnyGirl
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    @sunnygirl
    Join Date: 2008
    Post Count: 3

    Hi all

    I currently own property here in Australia with a family member with a view to investing further in the near future.  For the last few months I have been looking at US real estate online just for fun, but now that we're considering the possibility of actually purchasing another property to rent out I suggested perhaps it may be worthwhile to look into the US markets as prices are comparably much lower than here, and there seems to be the potential for decent rental income.

    The only thing is, I'm stuck as to where to start my research!  There is such a multitude of information available online, I don't know where to start.

    I have been reading older posts on this forum regarding investment in the US market and hoped some of you could provide a starting point for my research.

    My biggest consideration is where to buy.  As the intention would be to purchase a property to rent out, any advice on particular cities would be great.  I would obviously want somewhere that can provide a decent rental income with a low vacancy or tenant turnover rate.

    So far I have looked mainly in Chicago, mostly because I have a friend who lived there and she spoke highly of a few neighbourhoods there.

    So any websites to start me on my journey would be great!

    Profile photo of give90give90
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    @give90
    Join Date: 2007
    Post Count: 54

    hi
    us property purchase has been my intention for some time as, on paper, they seem to pay for themselves, allowing further accumulation of property.

    i have been looking at southern texas which has had steady population growth and is still quite cheap to buy into. i have been looking at apartment complexes. i dismissed northern america after lots of research as all properties need a new roof every ten years to cope with the heavy snowfalls. factor that into a maintenance budget and it would really change your bottom line.

    however, i have just about decided not to pursue it further for several reasons;

    -our dollar has just dropped to about 82c from 98c us. that is a significant drop if you are looking at moving $100,000 or more.

    -whilst employment in the area looks good indicating reasonable tenancy rates, (from a distance), the states have lots of varied taxes, which when added to the base line, eat into the returns.

    -the major factor for me however, is the horror stories that i have read about american property management. dealing with issues like that from a distance would need very sound cashflow here to be able to cover the debts as well as plenty of time to be able to keep chasing things up. it is not a set and forget. so much so, that the only way i could see it working for me was to move over there for months at a time.

    -add to that that the area has suffered four major hurricanes in the last month and it has paled for me as an investment strategy.

    -there are also issues with australian taxation, american banking structures and foreign exchange rates, as well as silly things that would cause huge frustration like not all american banks (you need to have an account in the states) allow online funds transfer necessitating a cheque account. i haven't verified this one but i read it somewhere.

    in order to maintain/grow a credit rating there, all accounts need to be paid on time everytime. if they need to be sent here first (through an unreliable agent) and then be posted back, your bookkeeping would need to be pretty smick all the time.

    while i think it is probably possible to find good investments there, there are some good investments appearing here now that the temperature has dropped on the australian scene. given the amount of stress and education needed, together with very sound cash flow and bookkeeping, i have decided to stay here for now.

    in fact, i made an offer on a place here yesterday.
    all the best
    grace

    Profile photo of SunnyGirlSunnyGirl
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    @sunnygirl
    Join Date: 2008
    Post Count: 3

    Hi Grace
    Thanks for your comments.  I hadn't actually thought about the maintenance/replacement of roofs in the Northern states, so thanks for bringing it up!  I suppose living in Perth you don't give much thought to snow!
    But in Chicago I was looking more at apartments and condos.  I did also look at prices in Atlanta, but I'm not really sure how their market is.  At the moment it's really just me looking at a bunch of different cities, like I said, I don't really know if there are any particular areas I should direct my focus to.

    It's not a definite that this will be the direction we move in, but I'm still very interested in checking out the different resources available if any can recommend them.

    Profile photo of aussieinvestoraussieinvestor
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    @aussieinvestor
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    Post Count: 67

    I recently re-roofed a triple storey house I will be selling in Rochester.  It cost only $4,500 to reroof.  Over 10 years that's only $450 p/a.

    Property management is always a concern from abroad and is difficult, fortunately I've found a property manager that also project manages for me.  She has contacts within City of Rochester and recently fought and won a big battle involving a zoning change.  There are some good PMs but there are more shockers and rip-offs.

    Houses in Rochester generally sell from $40K to over $200K, depending on the area.  For example, one of my houses (a duplex)  that I am currently doing up will go on the market for $44,900 (with the re-roof).  One half is already rented at $550 per month, the other will rent for the same once complete, so $1100 pm or $13,200 pa minimum.  Taxes are about $2.5K pa, insurance about $600 pa.

    Based on these figures, returns are around 29.4% gross or approx 22.2% less taxes and insurance.  Allow 10% property management (on total rent) and the approx net return is about 19.3%.

    The other issue is finance if you're looking at NY State.  If looking at the lower end, cash is always an option but houses in WNY are very difficult to finance, especally the cheapies and especially for foreign nationals.

    My tip is to keep researching, talk to people in the US, book a ticket and go and look at the market on the ground and get a feel.  It's a tough gig and a lot of Aussies have been burnt.

    Good luck and feel free to ask any questions.

    aussieinvestor | Digital Revenue Pty Ltd
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    Profile photo of sapphire101sapphire101
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    @sapphire101
    Join Date: 2006
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    Hi Sunnygirl

    Probably best to refine your searching to one city. The US is huge and there are many many different markets even in the one city you choose. If your friend has ‘ on the street’ info from Chicago and knows property to some degree than follow that through.

    There are Aust. investors working in Texas ( Sherman, San Antonio, Houston) as Texas is very strong economically and hasnt swayed to the subprime fiasco anywhere near to the extent of Nevada, California, Arizona, Ohio, Michigan which have been hardest hit. Look up (google) foreclosures, state by state it’s not pretty. See Global Property Deals.com for Texas /Aust operators. Also contacts on this site through older OS/Texas forum posts

    Maybe parts of Chicago have also been protected as well, but then again maybe there are bargains waiting.

    I am in NYC at the moment and although it has been somewhat protected as well, foreclosures are on the rise in Manhattan for the first time hitting the middle class borrower. You may be able to find wholesaler websites as well such as http://www.myhousedeals.com which even if you do not subscribe will give a clear indication of deals that are available to those looking.

    Hope this helps
    Ian

    Profile photo of SunnyGirlSunnyGirl
    Member
    @sunnygirl
    Join Date: 2008
    Post Count: 3

    Thanks for your posts.

    Yes I would agree, it's much better to limit my searches to the one city, it's really just coming to a decision as to exactly where to start looking.  I really don't know what direction to take in that regard, I've been reading some articles on the markets in various cities.  For those of you who have purchased in the US, how did you come to the decision which city to invest in?

    In terms of finance, if I did this I would probably finance here.  I'm not sure if that's the 'wrong' way to go about it, but I expected it would be difficult to borrow from a US lender. 

    I will be in the US next year, I actually have family in Houston so I'll look into that market.  Thanks for the tip.

    Profile photo of AdrianinHKAdrianinHK
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    @adrianinhk
    Join Date: 2005
    Post Count: 12

    I have invested in a few countries now but am avoiding the US market for a number of reasons.  After the instability there, which still has a long way to play out and some prices have not seen their bottom, some commentators are saying that it will be many years before you start to see some real gains and confidence back in that market.  If you are just chasing yields then its really about your rental returns and perhaps your growth is not so important to you.

    Now more than ever would be a time to be extra careful in not being taken advantage of as an overseas buyer.  You would really need to have confidence in what was happening with the area you are looking at and who are the reputable people there to deal with or you may become victim to some type of scam.

    Unless you really have a burning reason to invest in the US I think there are plenty of other places to look where there is stability etc.  As an example I just purchased a beach front apartment in Malaysia for about $300,000 AUD with a 70% lend at 4.75% interest with a guaranteed net rental return of 7.25% for the next 5 years with a further 5 year option after that.  This makes the deal cash flow positive to the tune of almost $900 AUD a month guaranteed for 5 years without any hassles for me. 

    If anyone can find me a deal like that in the US or anywhere else I would love to know about it.

    If you want to tap into a network of Australian professionals in the US who may be able to help you find some direction, try the Advance Global Australian Network who link up Aussie professionals around the world with an online networking service.

    Cheers

    Adrian
    (Hong Kong)

    Profile photo of aussieinvestoraussieinvestor
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    @aussieinvestor
    Join Date: 2003
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    Sunnygirl

    You are playing with another huge risk if financing from Australia.  You will be exposed to currency fluctuations that can cost you thousands and even 10s of thousands depending on how much invested.  In Australian terms also, the value of your portfolio and yield will decrease as the AUD increases, however your repayments will remain the same.  Also, you cannot secure US property against Australian finance, unless someone on this forum has achieved this.

    aussieinvestor | Digital Revenue Pty Ltd
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    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
    Join Date: 2003
    Post Count: 12,018

    Adrian

    65% LVR finance available for Foreign Nationals at around 4.25% variable in the US.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of kamerukakameruka
    Member
    @kameruka
    Join Date: 2008
    Post Count: 49

    Hello
    Jason here and I have just come back from America looking at investment potential property and have loads of information on my website http://www.cashflowgold.com.au

    Jason

    Profile photo of xarpxarp
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    @xarp
    Join Date: 2009
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    SunnyGirl wrote:
    Hi all

    I currently own property here in Australia with a family member with a view to investing further in the near future.  For the last few months I have been looking at US real estate online just for fun, but now that we're considering the possibility of actually purchasing another property to rent out I suggested perhaps it may be worthwhile to look into the US markets as prices are comparably much lower than here, and there seems to be the potential for decent rental income.

    The only thing is, I'm stuck as to where to start my research!  There is such a multitude of information available online, I don't know where to start.

    I have been reading older posts on this forum regarding investment in the US market and hoped some of you could provide a starting point for my research.

    My biggest consideration is where to buy.  As the intention would be to purchase a property to rent out, any advice on particular cities would be great.  I would obviously want somewhere that can provide a decent rental income with a low vacancy or tenant turnover rate.

    So far I have looked mainly in Chicago, mostly because I have a friend who lived there and she spoke highly of a few neighbourhoods there.

    So any websites to start me on my journey would be great!

    Hi,

    I am also researching lately and I am going to invest in US real estate as a foreigner. I am finding lot of valuable information on trulia and then there is one great blog about buying property in USA: http://www.buyingpropertyinusa.net/ . It's written by a guy who just bought 2 properties in Las Vegas and Phoenix.

    I have a question for you as well though – I was looking at Chicago as well and it looks like a quite interesting market. What are the neighborhoods which your friend recommended you? Can you share that info?

    Thanks!

    Profile photo of Nigel KibelNigel Kibel
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    @nigel-kibel
    Join Date: 2005
    Post Count: 1,425

    Hi
    I am currently in Texas

    If you are looking to invest in the United States then do not look at the bottom of the market. Many people are buying in Detroit named by forbes magazine as the most dangerous city in the US to live. The same people would have brought in Buffalo.
    Texas is the fastest growing state in America.

    I am establishing on the ground services to assist safe investment in the United States for investors. I will be back in Australia just before Christmas and would be only to hapy to talk to anyone interested in investing here.

    Nigel Kibel | Property Know How
    http://propertyknowhow.com.au
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    We have just launched a new website join our membership today

    Profile photo of vselleckvselleck
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    @vselleck
    Join Date: 2009
    Post Count: 28

    Hi Investors

    There is an unprecedented opportunity to invest in US Property now with the Aussie $ so high against the greenback and US properties at record lows. I am part of a buying group putting in hundreds of ridiculous offers on foreclosed US properties, with outstanding results for investors. Most properties are returning over 20% net, after rental expenses at prices from $25,000 to $35,000 average.

    Thanks to my US buyers network we have support for all the legal, management and accounting issues, making this a easy experience for Australian investors. We are even doing vendor finance deals on blocks of apartments.

    If you would like to find out more on how you can cash in on this once in a lifetime opportunity, check out my website at http://www.888wealthcreation.com/pdf/us%20properties%20888.pdf

    I would love to talk to you about our experience and show you some sample properties.

    Many thanks

    Vincent Selleck

    Mortgage Broker/ Buyers Agent

    mbl 0403255510 [email protected]

    Profile photo of rschledererrschlederer
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    @rschlederer
    Join Date: 2010
    Post Count: 3

    Hello Everyone.
    It's with great interest that I've been following this and other threads regarding US real estate opportunities.
    I left Sydney in 2001 and travelled the world before landing here in New York four years ago. I live in Brooklyn and work in real estate in Manhattan, specialising in Chelsea and the West Village. These two neighbourhoods have seen some of the most sustained demand, due in large part to their cache: cobble stone streets, restaurants, galleries, night clubs and boutiques.
    This is the New York of Sex and the City and other movies, home to stars like Uma Thurman and Milla Jovovich. Vancancy rates for rentals in these neighbourhoods have run at less than 0.63% compared to a national average of 7%+.
    I'm not looking to sell distressed real estate at a crazy bargain, nor am I some shonky fly-by-nighter. I work days at an established boutique office on 23rd and Park.
    I'm curious to hear if there are any Australian investors who have or are considering more blue chip real estate opportunities. While NY has sufferred the recent collapse, it is currently levelling out and in fact, on average, has seen 7%+ increases over the last 12 months. This, as my fellow New Yorker's like to remind me, is the centre of the universe: fashion, finance, media, arts. It's all here in a great big melting pot.
    I have some incredibly detailed figures on market rental rates all through the city and links with lenders and lawyers both here and in Australia with experience in foreign investors. With the exchange rate as it currently is, at a 27 year high, and the market stabilising if not nosing upward, it seems foolish not to consider that New York pied a terre – which ironically enough, you can no longer get in Paris!
    Feel free to cantact me if you have any thoughts, comments or queries.
    Regards!

    Profile photo of CheevesFinancialCheevesFinancial
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    @cheevesfinancial
    Join Date: 2010
    Post Count: 201

    We have been getting a lot of inquiries from AU and UK for investment / income properties in Florida.  Real Estate Investors: be aware that Florida is VERY local.  Some markets provide a good opportunity and some just don't make sense.  You would see distinct differences with your own eyes.  Anyone pitching "appreciation kickers" or speculative buying don't belong selling real estate…IN MY OPINION.  Speculating on appreciation today is like trying to predict the weather in 10 years.

    Today's US investments will come from cash flow, IRR, Cap Rates, etc..  Put your money up and make an ROI.  Today we need to rely on old-school simple fundamental real estate.  In 3-5-7 years when you decide to sell and your property is worth more, that is gravy.  Achieving 10-15% Capitalization Rates is lucrative and the returns are unlike any other investment vehicle.  ROI's are inflated today in all marketing materials so do your own numbers, compare, and analyze.  If you do that you could find some really nice opportunities.

    I am a former small level executive with a lender in Florida.  Once the bank was forced into involuntary BK due to red financials during the collapse, I broke off and continued my investor services.  If you would like to see properties that we work with, please visit our website at http://www.MyRealtySource.com.  We target 2 main products:  Multi-Family Residential and Single Family Residential.  We buy in bulk and sell off individual assets at about 5-8% above our cost. 

    For anything 1-4 units, we purchase in bulk from the banks and wholesale.  Our prices are about 20-30% under current market value and about 75% of the prior note (which is pretty irrelevent these days).  Most of our 1-4 unit homes are 2005 built or newer.  Feel free to look at our site.  I would value any ideas and would be happy to address any questions.  We are pretty black and white and would certainly like an opportunity to show you if you ever came to the states.  CHEERS!! 

    Mike
    CFS

    CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
    http://www.CommercialRealEstateVoice.com
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    Profile photo of lawsjslawsjs
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    @lawsjs
    Join Date: 2002
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    Anyone interested in US foreclosure market should read my sisters posts on this. She has bought 15 or so in LV in the last year.

    http://www.somersoft.com/forums/showthread.php?t=66392

    Profile photo of bernie006@hotmail.com[email protected]
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    @bernie006-hotmail-com
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    hi robertim german,live in melbourne and would like your advice about investing in usa.
    where to start?do i need a bank account,address llc etc?
    people tell me so many different things.now i checked with the irs and all what wa said was wrong.
    can u pls advice me how to get started?i have a bit over 100 000 in cash.read all books by kyosaki and dolf the roos,and want to lern by doing now

    thank u in advance.my email is [email protected]

    Profile photo of CheevesFinancialCheevesFinancial
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    @cheevesfinancial
    Join Date: 2010
    Post Count: 201

    So a UK company is selling real estate on the other side of the world?  Investors, please do your research and work with good LOCAL professionals. 

    CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
    http://www.CommercialRealEstateVoice.com
    Email Me | Phone Me

    Profile photo of Nigel KibelNigel Kibel
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    @nigel-kibel
    Join Date: 2005
    Post Count: 1,425

    You have picked some of the worst cities to deal in America. But as my business partner tells me it does not happy how good the market is if you are dealing with a fool. I cannot understand why people keep throwing there hard earned money away. It does not take a lot of research to know that these are bad markets.

    Nigel Kibel | Property Know How
    http://propertyknowhow.com.au
    Email Me | Phone Me

    We have just launched a new website join our membership today

    Profile photo of speedy gonzalesspeedy gonzales
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    @speedy-gonzales
    Join Date: 2010
    Post Count: 149

    I agree with Nigel,

    These 3 cities in particular are the most depressed of all US real estate markets. There are far too many companies set up selling to investors who get sucked in by the low prices & high rent returns in these cities. Do your research, look at the demographics. The low & attractive prices are so low because nobody wants to live there….let alone buy them. No point getting excited about a 30% gross return when by the time vacancy & taxes are considered you have nothing left.

    You know I have looking at this forum for a long time now regarding USA investments and nobody has once mentioned the importance of the properties location according to the ISD (Independant School District) that your property is in. People in most US cities choose to live in an area according to the school district that your in which is pretty important if your trying to attract tenants. A quality school area would tend to attract quality tenants.

    I have just come back from the US on a trip to view property investment potential and would only put my money in Texas real estate

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