I went to a business seminar the other week, and a topic one of the speakers spoke about was investing in US property.
The types of deals advertised were:
Buying a $60,000 home that had a $600 per month rent.
On paper it sounds great, but i know how much people hype up stuff like this and don't tell you the fine print.
First of all would you recommend investing in US property?
Does anyone here have investment property in the US?
If so what kind of experience has it been?
Many of the people here have US investment properties – I'd wager a guess that at least 50% of them are at least slightly disillusioned, mainly due to the fact that its not the completely remote, easy to manage, hassle free investment they've been sold on. Often they'd have to deal with problems either in person, or at great expense.
if you want a remote, fully manageable experience I'd recommend Jay Hinrichs from these forums – he can provide high single digit returns (8-9% when we invested with him, not sure what it is now) guaranteed regardless of tenancy – essentially you're buying a note, not the real property – but still get half the equity upon sale. The best of all worlds, with modest and realistic returns, not the sky high tall stories others may sell to you.
if you're feeling more adventurous, I'd recommend Kyler Rice, who does what many may label "war Zones", but provides full management.
both seem to be very honest and reliable operators (although I haven't invested with Kyler personally).
the rest are, unfortunately, not always "complete package" providers – some will get you a good property and hold your hand all the way to the first tenant, and maybe a reasonable property manager with that, but after that you're essentially "on your own" – which is when, I think, most people start experiencing the vast differences between managing their investment locally and remotely in the US – tough, at least on the lower end properties. If you buy higher end properties, you'll most likely have an easier time at it due to the locales and tenant profiles, but returns would be far slimmer – basically a speculative play, which is more than a bit risky (but there are many here who can testify to have made a nice profit on theirs).
then again, you can always come invest with us in Japan – we provide a fully managed experience from offer to exit, including everything in between, with a far more comfortable business environment – although cannot guarantee growth of any kind – only 10-15% cashflow (net pre-tax).
best of luck!
Thanks for that in depth reply.
I'd never thought about real estate in Japan before. I guess as i am only new, and the US is the first thing in my face. I'll have to keep having a look, i'll go check out your site and read up on Japan a bit
Watch out for that most common of traps "If they speak my language, I'll be right" – the US market, while full of opportunity, is also a shark-infested pool at times. Be sure to run your due diligence on any company you may choose to work with – financial, legal and client references at the very least. I can only testify that, for us and our clients personally, the language barrier turned out to be a purely technical thing – once that's breached (with reliable employees, in our case, or with operators who know their local markets, in our clients' case), we found the Japanese business environment (not to mention the tenants and professionals one deals with on a regular basis) is one of the most sheltered, comfortable and honest on the planet. Think Germany, Switzerland or Singapore in terms of reliability and legislation. I wish the US will someday rise to the challenge – unfortunately, it still seems to be lagging far behind in those regards. And Japan's probably the most "by the book" country imaginable – you're talking a country where people were, until not so long ago, committing ritual suicide for failing in their duties. I've yet to see the Westerner who comes close to that sort of mentality.ausinvestParticipant@ausinvestJoin Date: 2013Post Count: 5Nigel KibelParticipant@nigel-kibelJoin Date: 2005Post Count: 1,425
There are still great opportunities to buy property in the United States however you need to be careful as to where you buy
You can purchase Apartment complexes with finance at 60% non recourse funding at around 5% and also make money by providing vendor finance into the;local market for a healthy return.SAHParticipant@sahJoin Date: 2012Post Count: 28ausinvest wrote:Check out
They have partnered up with Ray White Real Estate to sell there USA stock.
Just had a look at their website. The asking prices are insane on their Atlanta stock! (way high). It appears every property yields 8% so the asking prices seem NOT to be based on comparable sales but on the minimum yield an aussie investor with pay.
Here are just a few examples straight of the website. You can see the asking price is almost double the recent sale price.
328 Macland Springs Dr Dallas , listed at $110,367.50. This property last sold on 25th March 2013 for $58,000
6287 Hickory Lane Circle Union City, listed at $119,901.25. This property last sold on 4th Feb 2013 for $62,000
6697 Gina Agha Circle, Lithonia, listed at $114,210.00. This property sold on 8th April 2013 for $54,000
Thanks for that! Exactly the type of thing needed to be pointed out.KimberlyMember@kimberlyJoin Date: 2010Post Count: 44
To answer your questions….
1. I'd only recommend investing in US after you have done significant amount of research yourself regarding it. We spent money getting educated first.
2. Settled on a property with 3 other JVs in June 2013.
It was about a year of looking around because the market has moved significantly since the initial topic of US investing came up.
It has only been one month but total rent collected was approx $23,900 last month. Purchased at ~ $2.4million.
Still in stabilisation phase – still has significant vacancies.
3. In all honesty, there has been a lot of frustration and ups and downs.
All in all, so glad we went with it when we did. Looking forward to the stabilisation process now
I have sent you a relevant link to all this.
Z Highly doubt any US tenants will commit the ritual of Hari Kari over a US rental LOL…Matter of fact I would suggest that 95% of US tenats have never heard of this or even know the slightest about Japanese customs and rituals. I had one tenant in the south east ask if we spoke English in Oregon true story…. I digress. US market rebounding those that got in at the bottom are smiling right now.. still great buys historically like Nigel suggests.. Just be cautious….. My primary business partner is married to a Japanese lady and their family are major developers in Tokyo their company is traded front page of the Japanese stock exchange which is a big deal also major developers in Singapore they have had their eye on West coast US properties at 7% returns.
Did you buy B or C class multi… 10% gross will come out to 2 or 3% net… or worse depending on how much you need to feed this beast.. would be nice to get some imperical data from someone without any puffing and or sales pitch… what part of the US and or big city.. YOur experinces could be very benefical to the readers on this forum if you choose to impart actual data and experinces,Nigel KibelParticipant@nigel-kibelJoin Date: 2005Post Count: 1,425
I have also been looking at single family homes for around $55,000 in Florida purchased directly from the banks for wholesale prices. So yes there are great opportunities however it is important for you to know who you are dealing with.IlovehousesMember@ilovehousesJoin Date: 2012Post Count: 24
I would stay well away from Kyler Rice. His way of "helping" me was to place a squatter in a home that I foreclosed on and that was the last I heard of him. Similarly, Alex Franks from Charlotte, South Carolina. I lent this guy money and finally had to foreclose on him when he couldn't sell the property. Not an apology, email or word from him since. Has taken off to NY now. Probably has a lot of investors chasing him. The only one I would trust would be Jay Hinrichs whom I have met personally and have a lot of respect for.
Thanks, for sharing – I stand corrected re Kyler. As mentioned, Jay's the only one I've personally dealt with, and I also found him to be reliable and forthcoming.EngeloRumoraParticipant@engelorumoraJoin Date: 2010Post Count: 618FreckleBlocked@freckleJoin Date: 2012Post Count: 1,681Ilovehouses wrote:I would stay well away from Kyler Rice. His way of "helping" me was to place a squatter in a home that I foreclosed on and that was the last I heard of him. Similarly, Alex Franks from Charlotte, South Carolina. I lent this guy money and finally had to foreclose on him when he couldn't sell the property. Not an apology, email or word from him since. Has taken off to NY now. Probably has a lot of investors chasing him. The only one I would trust would be Jay Hinrichs whom I have met personally and have a lot of respect for.
It's the American way of doing business unfortunately. US business is renowned for its aggressiveness and uncompromising tactics. If you want to do business there you need to be hard headed and unemotional about any relationships.EngeloRumoraParticipant@engelorumoraJoin Date: 2010Post Count: 618
I believe that trust and relationships are the key to long term success in business. Most of us Aussies are very relational anyway.
Its funny stuff tho Freckle. Whenever I get a call here in the US its straight to business. Not even a "Hello".
I always start of with "Gday", "How was your weekend? "or "How is your day going?" and then get into the nitty gritty after discussing the day for a bit lol
Thanks.blackhotelParticipant@blackhotelJoin Date: 2010Post Count: 139
I own a condo in Pacific Heights San Francisco. I've owned it since 9/11. I do not use an Agent to find my tenants or manage it. I use Craig's List. At the start I was renting it for $1500-$1800 p/m, incl utilities, but in the past 18 mths I'm now renting it for $3,000 p/m + utilities. it's now plus, plus cash-flow for me. I have tenants every 12 mths and at the end of the lease, always June 30th, I fly over using freq flier miles and have a July 4th holiday for 2-3 weeks with my kids. The apartment is a junior 1 b/r fully furnished and equipped (it has everything) and I keep the electricity, phone, Internet and Cable TV in my own name and the tenants pay me approx $200 p/m for this. The only problem I have ever had was with one tenant. I admit I was a bit desperate as I was 2 days away from leaving and I rented it to a young guy. 3 weeks later I was receiving complaints from all the neighbours. He trashed the place with drugs, loud music etc. I employed a lawyer who served him with an eviction notice and he left. I flew over there to access the damage and the bill came to US$8,000, including my costs of flights etc. He paid the full amount. He also had to pay the rent until I found a new tenant. The biggest costs was the damage he did to the outside of the building. My condo is on the top floor and instead of using the toilet he would do it out the window. The building had to be re-painted. I take a 2 month bond because of the place being fully furnished. There is NO rental Bond Board in California, so you just bank it in your own account which I have in the USA. Not like in OZ where there is a max bond that you are allowed to take —- too many rules in Auzzie. While I'm in SF on holiday's I advertise the property and have ALWAYS rented it for another 12 months. In the US, you can do credit checks online and your tenants have to pay a non-refundble $25 application fee. If during the year I have any problems which do occur occassionaly I just search Craig's List for a suitlble tradesman to go and fix. So my experiences in the USA have been great and in the past 18 months my rent has gone up 50%, so I'm loving it. I am the perfert example of a sub-prime mortgage. I borrowed 80% from a US bank with no employment and no US residency. It was the easiest money I ever borrowed. The loan is now 4% fixed through BOA. I'm now in the process of sourcing for another SF condo.
While US service providers may be as you guys claim, I find that our US clients are some of the nicest, friendliest, chattiest folk around , to be honest! Maybe they're delighted at being able to finally build a real relationship with a professional, rather than being treated like a cash barrel with legs?
SF is one of the best rental markets in the world period. I am born and raised there. I would venture to guess you did not buy this Pacific Heights condo for anything under 400 to 800k US you just happened to have a tenant with money or means to collect on the rent that he paid why he was not in the unit.. your experinces are not normal for the US period
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