Atlanta or Houston or ……..???

I have purchased all my properties in Alanta. I have also posted the properties I have purchased, just search some of my posts.

The yields are very attractive, Atlanta hands down.
 
If you read some posts by jayhinrichs he mentions Texas and that the taxes are too high, this would wipe out your cashflow, too risky.

Cheers, WI

Investing Novice,

I can't comment on Atlanta although many posters seem to be having success there…a matter of the right contacts. We operate in the Dallas metroplex and when you consider Dallas versus Houston….one thing to consider is the cost of insurance. It will cost you at least $100 a month more to insure in Houston compared to Dallas. Houston being down on the Gulf they get hurricanes and that brings lots of rain (in Houston when it rains I mean it really rains !!) and resulting flooding which is why the insurance costs more. In Dallas our biggest insurance events are wind and hail. So taking into account cashflow…Dallas comes out better then Houston

Well done staceymac,

Fully recommend to go and have a look to get some idea of the area you intend to invest in….nothing better then seeing first hand. I am sure if most people had a look where their $30K gets them….they wouldn't be able to get out quick enough !!

Your also spot on….the team on the ground you leave behind to look after your investment is paramount…..anybody can buy a property…it's managing it thereafter which brings success. It is always disappointing to hear about us Aussies getting ripped off in the US market….happened around 5 years ago in Rochester NY and is happening again today in the normal bad foreclosure markets of AZ, NV, FL etc etc….. Funny thing is a lot of the companies flogging off these properties also have a past of selling overpriced Qld investment properties a few years back…you know what they say about a leopards spots !! Point is….you can be scammed in real estate in ANY country….comes down to doing your due diligence to make sure you don't get caught

I would be looking at areas in US that got hammered as there will be many more opportunites for upswing/growth.
 
Why would you purchase in Texas when yields are not much better than Oz, so much risk….. by the way, if you are purchasing only 1 property, give it away… you need to be purchasing multiple properties to cover costs, legals, interest, fudge factor ….. etc.

For example you can purchase  in Atlanta a property  that sold in 2003 for $130,000 for 38,000, building costs in Atlanta currently $70-90 per sq foot, I am purchasing on average $25 per sq ft.  now you are talkin….. Buy 10 of these grossing over 21% and you will be sitting pretty

WI

Karina,
The yields you get are still very new. 20% will not happen over time and that is without factoring in airfares. The stuff you are selling is great, but be realistic with the yields – especially for newbies. Yes you will do better than Oz, but as Jay and Alex both will confirm the yields with even basic repairs will leave you slightly better than ‘quality’ Oz commercial stuff. ATL cold and wet in particular will not help. Add in some improvements and you are talking line ball. The way to get around that it of course buy in bulk, but I really caution people starting out that the US is going to be ‘very’ easy money, worth doing IMHO, but not the great panacea. You _might_ be lucky, but as I have said before the US is about:

1) Buying a property – relatively easy (assuming you avoid a major rip off).
2) Repairing a property – unless you really know what you are doing that can be very (or just unnecessarily) expensive.
3) Managing a property – usually extremely difficult and any failures with any one person will lead to many returns to (2).

Jay makes a point of saying 8-12% net and that agrees with my experience and ‘gut’ feel. And that is without airfares. Without spending time in an area you are placing a lot of trust in the managers and frankly unsupervised US managers are not in anyway going to perform as you would expect an Aussie manager would. They will do what is easy for them and not what is necessarily (at all?) in your interests.

Fortunately there are enough decent people helping aussies buy to make the avoiding rip off bit a lot easier than it was, but for anyone starting out, I think the way to make this work is NOT buy one – you may be lucky, but you may not. It will take as much effort to run 4-5 as 1, but the averages will make the returns a lot more palatable in the long run. Jay says allow 50% of the rent as a true ‘net’ figure – I think that is a bit harsh, but he has a lot more property than I have experience with in many different areas and it is certainly conservative. My worst building was around 40%, my best is around 95% if I am anything to go by:) Steve M advertising 30% net is only remotely achievable with very ‘non-normal’ methods and I would not in a million years recommend anyone buy anything like some of those high yield places. You will end up walking away from the investment just happy the bills and phone calls have stopped.

I have been contacted by a few (5-10?) people who are clearly asking for some sort of help with management issues. These are guys starting out with places in GA/TX & similar and want some magic bullet. All I can say is that my experiences have been exactly the same as theirs and Jay’s and Alex. My sister (emma) is trying to rewrite the US management rule book by training people in Aus management style, and the idea is promising but I will believe it again in a couple of years time. Proof and puddings etc:) Alex and Emma have VERY strong views on avoiding cold and mould and there is a lot to be said for that. Alex is now (mainly I think?) buying back in SC (he grew up there so knows it inside and out) and Emma will help you buy what you want, but a strong preference to avoiding anything cold (she likes Vegas) – problem is, people are star struck with headline grabbing returns, and they are becoming less common. Jay has an interesting concept which I quite like, you in effect ‘partner’ the building and get a lower return, but his group solves the day to day problems for you. The more experience you have I think the more you will realise what a good deal that actually is. Of course, I only own in places where you can’t get flood insurance (beachy) and to top it all off are slap bang on the San Andreas fault line, so don’t listen to me if you _really_ want something. If you are starting out though, I would make it my business to contact people who are 12 months or so further down the track than you and ask for their experiences. 5 years would give you a real idea, but there won’t be many people with that experience in the areas you wish to buy – particularly as a foreigner.

I only mention Jay, Alex and Emma as they are the people in this market I know enough to comment on with lots of experience in this. I am not having a go at anyone by omitting them – find who you are comfortable with – I don’t buy these things, so don’t just listen to me:)

God to love the last line of his post.Sorry had to take a rip at you. Their would be some Legit teams that can actually send you clients that are currently buying from them who are from Australia. No offense but that is not spruiking if it comes from an Australian client that is happy with the team they are dealing. Sorry not sure what you call it in Australia but we call it solid referrals here.

Coolest thing about owning a investment company is that we can pick and choose who we want to do business with as well.It usually takes one email or call to make that choice.

Food for thought,  the ship runs both ways my friend ..

Alex

Alex,

You’ve taken my post the wrong way, or maybe you are just trying to protect the business you do there.

I’m looking to do this on my own, and was posting, in the hope of hearing from others who feel they can do this without the assistance of teams based in the US. I’m sure you do a great job, for the people who you assist.

Not sure exactly what you mean about the ‘ship running both ways’ in reference to my post.

Its just like having a ‘No Junk Mail’ sign on your letter box. Doesn’t mean I don’t want to consume – it just means I would like to do it without turning my Inbox into a sales conference.