Forums / Property Investing / Overseas Deals / Property In North Dakota -Whats The Catch??

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  • Profile photo of gazmatazzgazmatazz
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    @gazmatazz
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    Hi all, I'm hearing more and more about these companies which are selling short-term hotel rooms in North Dakota in the US. I can see the appeal as us Aussies are so used to the mining story and its success. But anything (and anyone) that talks about  returns of 20-30% net on an investment spells SCAM to me. So does anyone know the true story? I seen those guys at cashflow gold selling the stuff and I also heard of a bunch of groups in Singapore doing the same. That place seems to attract the suckers like nowhere else for some reason… Can anyone shed some knowledge on this place as an investment area?

    Gazz

    Profile photo of washingtonbrownwashingtonbrown
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    @washingtonbrown
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    If it's soooo good – why do they need to sell it to Aussies! Surely all the Americans would buy?

    At one property expo I exhibited at recently….about a third of the stands were all selling US properties.

    That made me worried!

    Regards

    Tyron Hyde

    CEO

    http://www.washingtonbrown.com.au

    Profile photo of gazmatazzgazmatazz
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    Yes, interesting point Tyrone. The fact they are selling US property doesn't scare me as much as the returns they are promising!! Seems crazy to think that people ACTUALLY believe they will get a 30% yield!! If this was the case, surely these spruikers would just invest millions and then retire within a matter of a few short years??

    Profile photo of FreckleFreckle
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    It's your typical gold rush story. Fast boom and even faster bust. You'll get 30% for the briefest of times. Just like in the gold rush days it's the guy selling picks and shovels that make the real coin not the gold digger.

    Profile photo of Nigel KibelNigel Kibel
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    I would not buy hotel suites in Australia why would you buy them in America

    Nigel Kibel | Property Know How
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    Profile photo of Joel.MacdonaldJoel.Macdonald
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    Looks great on paper… So much land, so much short term demand for housing…But how do you know when supply catches up with supply and slows down?

    And once that happens, what other industries can that local economy currently support outside of the oil & gas industry. Can these other industries absorb all of those jobs if oil & gas slows down?

    A bit too volatile for my liking and not enough diverse industries present in these little country towns. 

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    @zmagen
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    These guys are banking on you taking their guarantee for the next 4-5 years – you will, indeed, make 25% – they'll make much more – then, if and when everything blows over, as it likely will, you're left with nothing, and they're laughing all the way to the bank (because they haven't built these places to last much longer in any case, and guess how much less than your purchase cost it cost to build – profit no. 2). If you're really into that sort of potentially here today gone tomorrow type of investment, go for Aussie mining towns – you'll find building standards are more than slightly higher – and if you pick a good industrial zone, and not only mine-dependant one, you might even keep getting decent returns out of it when the mine dries up. 

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
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    Ziv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

    Profile photo of jayhinrichsjayhinrichs
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    One cannot buy or invest in one hotel room,,, one could be a member of an LLC or corp that owns the whole building… Need to make sure investment structure is legit other wise we will be reading about all those that thought they owned a hotel room in the nd.

    Profile photo of Big MelBig Mel
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    Our new (3rd) phase of New Executive Hotel Studios about to be launched in Watford City,North Dakota with NO building permit problems, work will start straight away, and the prices will be price of $49,950 plus costs & booking fee. We have 12 units on site already with another 48 within the next 30 days then the balance of 204 operational by mid-august. Units will be rented out as they come online. 164 sold already ….. So where is the con?

    Profile photo of FreckleFreckle
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    Big Mel wrote:
    . So where is the con?

    The con is that in a few years they won't be worth didly. Every man and his dog is trying to flog accommodation on this resource play that I doubt has 5 years in it.

    Profile photo of jayhinrichsjayhinrichs
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    big Mel  how do you structure these transactions one cannot just buy a hotel room in the US… are you doing a condo and selling the individual rooms as such.. Or are you just selling an interest in a 501c type offering   can you elaborate for the general public      thx

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    @zmagen
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    Would love to hear from anyone's who's bought into any of those – it must be three years at least since I noticed the first one being promoted…any takers with some success (or other) stories to tell?

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
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    Ziv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

    Profile photo of Joel.MacdonaldJoel.Macdonald
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    Freckle,

    I think the resource play has more than 5 years in it.

    US are looking to over take Qatar as number #1 exporter by 2016.

    New type of "horizontal fracking" drilling is unlocking huge deposits in Shale areas that the so called "Peak Oil" experts didn't account with their "running out Oil" predictions in the late 2000s.

    If managed well by the Obama admin, this could be the one saving grace for the US economy and we are only at the beggining.

    From a real estate play you really need a strict exit strategy, this is not a long term hold investment!

    scotthochgesang
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    I got my last email promoting these ND hotel units at least 3 months ago. Anyone know what is going on there on the ground given the crash in world oil prices? I suspect that companies are going under, guarantees will not be met (with the guarantor going bankrupt) and that property prices are falling now. The risk of investing in an area solely dependent on one industry – same in Australia as the US.

    Scott Hochgesang
    Balmain Property Guy

    Profile photo of Nigel KibelNigel Kibel
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    I could not agree with Scott more I know many people who have lost money in Australia and am personally dealing with 3 clients who were sold into North Dakota and the developer seems to have kept the money. So be very careful who you deal with.

    I deal in Orlando Florida and I know many companies are flogging this crap in North Dakota to their clients. With the price of oil falling I cannot imagine that North Dakota will be that profitable. So repeating Scotts comments never invest in any market that is only about one industry. I deal in Orlando because the greater Orlando area is 2.1 million people and yes they have a lot of tourism with the theme parks but also many other industries.

    There are great deals in the United States but remember if it looks to good to be true it normally is

    • This reply was modified 4 years, 6 months ago by Profile photo of Nigel Kibel Nigel Kibel.
    • This reply was modified 4 years, 6 months ago by Profile photo of Nigel Kibel Nigel Kibel.

    Nigel Kibel | Property Know How
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    Profile photo of jayhinrichsjayhinrichs
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    Nigel one needs to simply google US public companies that provide housing in the Oil industry and you will see that they have pulled back by over 80% their stock has tanked etc etc. Now these companies are US public companies will survive over time however the mum and pop developers who rushed in and sold hotel rooms I bet the majority of those will go under.

    One cannot buy a Hotel room in the US one can buy a condo or maybe you call them strata’s but not a hotel room .. one would have to invest in the company that owns the rooms.. Just like you do your deals were your doing a REg D PPM type filing bringing in investors in a pooled investment. your not selling one store in your shopping center or one office in your office complex or one apartment in a Mutli you may do.

    When this stuff first came out I wrote on this site that those doing this needed to exercise caution.. however the quote of returns were just to tempting to many… I am sure some are working just like I am sure some have lost ALL their money and will never get it back… Kind of like over paying for a Ghetto dog in Detroit or Rochester.

    Profile photo of ArgyleArgyle
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    Hi gazmatazz,

    I was told a seminar that North Dakota was exploding because of oil. We were encouraged to invest there. However, the Saudis are unhappy about the USA’s growth in market share. That’s why they are flooding the market at the moment. They’re hoping to drive the fracking (no that’s not an expletive) companies out of the market. If they succeed, North Dakota will take a dive. I’d avoid it until the situation is clearer if I were you.

    Argyle
    Phone Me

    Profile photo of Nigel KibelNigel Kibel
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    I have been approached a number of times and asked would I be interested in selling property in North Dakota and I have always refused to touch it. Anty property market that is reliant on one industry it taking a huge risk and with oil at $46 a barrel many will lose a lot of money. It may look good on paper but many Australians brought in mining property in Australia because it looked good on paper and in some cases they have lost more than 50% of there value.

    America i a great market however stick to fundamentals, what is the local economy like, does the states have jobs growth, Is the population growing and does the market have diversity in the jobs market.

    Nigel Kibel | Property Know How
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    Profile photo of EngeloRumoraEngeloRumora
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    North Dakota is not sustainable.

    Like with any market depending on 1 industry.

    There are better areas to invest in the US.

    My picks are Ohio, Michigan and Indiana.

    Low values, fear still overpaying mum and dads and no institutional buyers

    Feeling like kids in a candy store all day haha

    Thanks

    EngeloRumora | Ohio Cashflow
    http://ohiocashflow.com/
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    "Make a PASSION an OBSESSION and you'll never work a day in your life"

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