Forums / Property Investing / Overseas Deals / Global Real Estate Investing Basics – Part 3 – Strategy & Team

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  • Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    (Originally published on REI Wealth Monthly) –

    International Property Investing Basics, Part 3 (PDF)

    (For Parts 1 & 2 Click Here)

    main takeaways – Assuming you’ve chosen your target market well (part 1) and got your financial and legal cornerstones in place (part 2), the next step would be to build the best possible team to represent you on the ground. These professionals advertise their services readily enough, but the best way to confirm their quality is reliable word of mouth reference. Once you find these guys, make sure you have a few, to ensure you’re getting the best prices too – and when you analyse your deals, make sure you don’t lie to yourself, as we all tend to do, and idealize conditions. The best ways to do this are by listening to your carefully chosen and filtered team members, and by analysing worst case scenarios without beautifying them.

    Agree/disagree? Have something to add? Would love to hear your thoughts!

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
    http://www.nippontradings.com
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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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    Ziv  whats Up??  this forum has died if you have not noticed.  maybe we can resurrect it

    Profile photo of Nigel KibelNigel Kibel
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    As I have mentioned most of the companies have been promoting to people without money. So if you cannot buy in Australia buy some cheap crap in America. Now that the dollar has dropped and many of these people have lost there money

     

    If you dont have $60,000 to $100,000 do not waste your time.

    We partner with our clients to make money and help them build a portfolio. In my view America is an exciting market to be in but you need a plan and vision and also you must be working with the right people on the ground.

    Nigel Kibel | Property Know How
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    Profile photo of Long JohnLong John
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    Ziv whats Up?? this forum has died if you have not noticed. maybe we can resurrect it

    Tends to happen when you cripple the tools the forum community need to communicate. They thought they’d upgrade the back-end and all but rendered the front-end barely usable.

    Profile photo of jayhinrichsjayhinrichs
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    Long John… I have always had problems with this site… spell check would not work.. What specifically are you alluding to if you don’t mind sharing.  ( I know see that spell check is auto  and is working that should make me look better)

    this was a very vigorous site and very active a few years Ago I was just assuming that the AU investor has turned off from the US market and I think that for a few reasons.

    1. your dollar dropping.

    2. Hedge funds in US buying up hundreds of thousands of homes and targeting 5 to 7% returns… thereby taking inventory from US wholesalers

    3. those that still are in the Turnkey game in the US the yields have gone down substantially.. Although yields from most marketing companies and providers are best case scenarios and rarely  take all expenses into account.

    4. And or as Nigel so eloquently eluded to many got snookered into buying low end Ghetto houses with promises of 30% returns and not only did those returns not materialize they lost money.  Then they tell friends and the next thing you know sales go way down which is what I have seen.

    There are still deals out there and there will always be deals in every market condition.

     

    Profile photo of Long JohnLong John
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    Long John… I have always had problems with this site… spell check would not work.. What specifically are you alluding to if you don’t mind sharing. ( I know see that spell check is auto and is working that should make me look better) this was a very vigorous site and very active a few years Ago

    From a technical point of view this site has never been that great. Like you said the previous version had a lot of functionality problems that never got fixed even after many requests. This new version isn’t any better and may actually be worse. Implementation has been a disaster in anyone’s book. If McKnight ran his empire the way he runs this site he’d be broke inside 12 months. There’s a limit to peoples tolerance with these things. McKnight’s attitude doesn’t help either. If you’re not telling him what a great guy he is and kissing his hand he soon gets the pip and if you criticise him he tends to spit the dummy and chuck you out. He forgets that people come here to commune with others in the game not pay homage to his efforts. Given that this is his primary hunting ground for his product marketing you’d think he would put a bit more money and effort into providing a quality experience. He might be getting a bit too comfortable in his old age.

    I was just assuming that the AU investor has turned off from the US market and I think that for a few reasons. 1. your dollar dropping. 2. Hedge funds in US buying up hundreds of thousands of homes and targeting 5 to 7% returns… thereby taking inventory from US wholesalers 3. those that still are in the Turnkey game in the US the yields have gone down substantially.. Although yields from most marketing companies and providers are best case scenarios and rarely take all expenses into account. 4. And or as Nigel so eloquently eluded to many got snookered into buying low end Ghetto houses with promises of 30% returns and not only did those returns not materialize they lost money. Then they tell friends and the next thing you know sales go way down which is what I have seen. There are still deals out there and there will always be deals in every market condition.

    I tend to think the US market has run its course for the time being. The general flow of things is you get the risk takers come early adopter types who have a go first. They are followed by the herd as the first wave solve most of the initial problems then you drop into a steady flow for a while until you have maximum interest. After that you see a steady waning as market fundamentals swing against the foreign investor.

    You are left with 2 types of investor after that. The early adopters who got their feet on the ground and are making a buck and the rest who got it wrong and either lost a dollar or two or who are trapped with non or poor performing properties and can’t extricate themselves without a bit of pain.

    There’s also an awareness I think that the punters are becoming very hedgy now as they watch the elite pro players leave the field (such as yourself). Guys like Nigel and Engelo may actually do alright through this next phase as punters realise that employing expertise will pay dividends in an increasingly difficult market.

    Profile photo of Nigel KibelNigel Kibel
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    I was based in Texas at the height of the boom. There were opportunities to make money even in a market like that

    Now I believe that the opportunities are better than they have ever been. However they are different. I focus on commercial properties because you can borrow and therefore leverage. Even if there were cheaper 12 months ago  it mean means that your cash on cash returns are higher. Also most of the commercial loans are non-recourse which means the loans are based on the asset rather than the borrower. So if you have a 40% deposit you can borrow 60%. So investing in the United States is no different to anywhere else it is a matter of changing your strategies as the market changes. So we look ahead and see many other opportunities as the market improves.

     

    In terms of a lot of companies getting out of the US market why is that surprising most were only in it for the quick buck and were quite happy to sell there clients crap. Many people who have brought in America will have lost money many do not know it yet. Success in the American market comes down to who you are dealing with. There are very good people on this forum. I have a great business partner on the ground in Orlando. If I did not have 100% faith in my business partner I would not be in the market.

    Nigel Kibel | Property Know How
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    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    Tend to agree – as with every market, the US as well is prime hunting grounds for low level investors and operators when things are booming, and once the hype dies for whatever reason, you’re left with the serious ones – we see this in Asia as well (The Philippines seems to be going through the same boom phase now, for example – I think in two or three years you’ll see many disappointed and far less operators around).

     

    bottom line, like I was trying to say in the first part of this series – choose your markets based on fundamentals, and not on any current cycles – and choose your team according to the same fundamental guidelines – then you should be able to ride any booms and busts and make the best of them, instead of following shiny object syndromes and those who promise the skies. There are good deals to be had in any market – jay, I’m sure you haven’t stopped working your market, for instance – nor have you ran out of clients – you just have to work harder to get deals and/or clients these days, but that’s just the way things go – there’ll always be ups and downs, no?

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
    http://www.nippontradings.com
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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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    Nigel I here ya on the Ghetto buys that people made and agree 1000%…… when you were in Texas I was in Atlanta.. and we had these same discussion what was better invest in a market that got hammered or one that trundled along.. As it turned out we did far better in Atlanta than anyone buying at the same time did in Texas.. Although to be fair the Texas market is finally moving a little as the herd mentality is focusing on Texas.  I do a ton of Bizz in Orlando  I close at least 5 to 10 loans to investors each month who are buying cash flow properties and my loans are all non recourse as well…

    And since this site has basically boiled down to you and I   and in the old days we could not talk about product or what we do.. But you do with every post and now I through in my product as well.. At least we can all come out into the open and talk about our deals. Even though I don’t think many people are watching or reading this based on the traffic….

    I do not know who Long John is but he is pretty spot on from my perspective… both about how clunky this site was and is. and to how the market is perceived by investors in AU>…

    Back in the boom days of this site you had Top Rental returns being one of the top dogs.. No one has heard from them in a year or two. Their properties were jack up in price .. But the Atlanta market did rise so those that bought from them are probably OK maybe not make a profit but can get their money back.. those that bought in lessor markets I am sure have suffered.  The hedge funds put most of the companies in Atlanta out of bizz.

    Since its obviously only 2 to 4 people looking at this site.. Can you please post what the Orlando partners are buying I am assuming you are just getting a fee for bringing in investors and have no ownership interest in these deals? Is this correct assumption or are you a principal that would be important info for your countrymen.. Also since its only us girls here why don’t you go ahead and describe exactly what your investing in IE Multi family,,, Small commercial ,, larger commercial… office Flex  what is Commercial in your lexicon.  And how exactly do your partners in the US structure these deals are you doing PPM’s  506 C or 5o6D  or just ownership in LLC>.. Since your putting debt on the properties obviously the investors are not coming in as secured lenders.

    So lets go ahead and get into specifics here maybe we can increase the amount of people that are interested in reading and you can make more sales for your US partners.

    I have had a few AU folks contact me and ask about you… I tell them I have not met you in person. and I have no clue as to what your investing in. So I have nothing to say good or bad…

    So if you show me yours I will show you mine :)

     

     

    Profile photo of jayhinrichsjayhinrichs
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    Zmagen  I love the shiny object metaphor … And yes if I look back at my 35 years  of doing real estate and through 3 distinct booms and busts here in the US.. with the 08 crash one of epic proportions. I have always moved to the next shiny object.

    What I have done vis a vi clients is I have moved to working with fewer clients and give larger returns to attract the bigger players.. I am bringing my investors in as Owners of a company that we create.. Minimum investment 500k… so completely different model. I only have 4 clients presently but that represents about 4.4 mil in capital.. and as such I have 4 companies and we are true partners Instead of me running a company and making a profit per deal.. I just bring these folks in as partners and we create returns that are 1.5 to 2X what any one could make on their own.

     

    Profile photo of EngeloRumoraEngeloRumora
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    <div class=”d4p-bbt-quote-title”>jayhinrichs wrote:</div>
    Long John… I have always had problems with this site… spell check would not work.. What specifically are you alluding to if you don’t mind sharing. ( I know see that spell check is auto and is working that should make me look better) this was a very vigorous site and very active a few years Ago

    From a technical point of view this site has never been that great. Like you said the previous version had a lot of functionality problems that never got fixed even after many requests. This new version isn’t any better and may actually be worse. Implementation has been a disaster in anyone’s book. If McKnight ran his empire the way he runs this site he’d be broke inside 12 months. There’s a limit to peoples tolerance with these things. McKnight’s attitude doesn’t help either. If you’re not telling him what a great guy he is and kissing his hand he soon gets the pip and if you criticise him he tends to spit the dummy and chuck you out. He forgets that people come here to commune with others in the game not pay homage to his efforts. Given that this is his primary hunting ground for his product marketing you’d think he would put a bit more money and effort into providing a quality experience. He might be getting a bit too comfortable in his old age.

    I was just assuming that the AU investor has turned off from the US market and I think that for a few reasons. 1. your dollar dropping. 2. Hedge funds in US buying up hundreds of thousands of homes and targeting 5 to 7% returns… thereby taking inventory from US wholesalers 3. those that still are in the Turnkey game in the US the yields have gone down substantially.. Although yields from most marketing companies and providers are best case scenarios and rarely take all expenses into account. 4. And or as Nigel so eloquently eluded to many got snookered into buying low end Ghetto houses with promises of 30% returns and not only did those returns not materialize they lost money. Then they tell friends and the next thing you know sales go way down which is what I have seen. There are still deals out there and there will always be deals in every market condition.

    I tend to think the US market has run its course for the time being. The general flow of things is you get the risk takers come early adopter types who have a go first. They are followed by the herd as the first wave solve most of the initial problems then you drop into a steady flow for a while until you have maximum interest. After that you see a steady waning as market fundamentals swing against the foreign investor.

    You are left with 2 types of investor after that. The early adopters who got their feet on the ground and are making a buck and the rest who got it wrong and either lost a dollar or two or who are trapped with non or poor performing properties and can’t extricate themselves without a bit of pain.

    There’s also an awareness I think that the punters are becoming very hedgy now as they watch the elite pro players leave the field (such as yourself). Guys like Nigel and Engelo may actually do alright through this next phase as punters realise that employing expertise will pay dividends in an increasingly difficult market.

    Hey Long John,

    Thanks for the mention.

    I remember reading a couple of years ago other getting mentioned as the key US guys like Jay, Alex, etc…

    No my name pops hahaha

    To be completely honest with you I have not received and inquiries or business from any “punters” from the forum lol. We have assisted a few investors that have been burnt buying through shady operators and that’s pretty much it.

    A few investors did come forward and wanted “something for nothing” for which I happily offered my time and assisted them but decided to stop as it was not feasible with having my own real estate business to run and with being in the office 100+ hrs per week my time has become increasingly valuable to me. SPRUIKER ALERT http://www.engelorumora.com lollol

    Our group has been doing a lot of business with institutional buyers in the US and we have established some amazing relationships with individuals that have open sales channels world wide.

    It took over 8 months of my PA and myself hammering down emails and calls to open these doors so our model now is no more dependent on selling just to Australian investors or single investors, although this is my most favored way of doing business.

    Thanks for reading and have a great day.

    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"

    Profile photo of Nigel KibelNigel Kibel
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    https://www.youtube.com/watch?v=KaIarcW477E

     

    Above is a webinar on a deal we did a few months ago. It was an office building for 1.42 million with $660,000 and the balance with vendor finance at 4.75% for 3 years. I really like apartments but this was such a good deal. We have a government tenant on half rent fr 12 months and need to let just another 5000 square feet out of 37,000 the building will then be returning 35% cash on cash. We are currently looking at a large apartment complex.

    With the above deal we put together a master LLC with partnership agreements and each individual had their own LLC. We own a property management company so we manage the property as well.

    Like you guys my first thing is to look after the client. I have clients wanting to do flip deals we buy from the bank and make them money. I am not concerned about the companies pulling out most of them target people without money. If I did not have a business partner I trusted 100% I would not be dealing in this market. If you deal with Jay or Engelo or my company you will know that we are transparent and have our clients best interests at heart

    Nigel Kibel | Property Know How
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    We have just launched a new website join our membership today

    Profile photo of EngeloRumoraEngeloRumora
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    If you deal with Jay or Engelo or my company you will know that we are transparent and have our clients best interests at heart

    Thanks Nigel,

    There is no other way.

    It will never be smooth sailing but as long as the team comes together to assist and resolve the issues this is very important.

    It takes a lifetime to build a reputation and only 5min to loose one hehe

    Thanks and have a great day.

    ps. The above mentioned deal has some very luscious numbers

    EngeloRumora | Ohio Cashflow
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    "Make a PASSION an OBSESSION and you'll never work a day in your life"

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    Very nice deal breakdown, Nigel – thanks for that info!

    Here’s one of ours – http://nippontradings.com/japanese-property-deal/

    No finance available for non-residents, unfortunately, unless sourced in your country of origin – but with affordability (and, as a result, diversity) starting at $20K and returns for cash purchases at 8-17% net pre-tax, still very attractive. And, of course, the tenant base is absolutely heaven – no trashing, hardly ever any payment issues, and long tenancies (4.5 years on average, with 15 and 20 year tenancies not uncommon).

    Would love to see some more comps from anyone who can afford to publish them – don’t be shy, folks! :)

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
    http://www.nippontradings.com
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    Ziv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    We actually have a thread on that topic here – I’ll reply to your comments there – but essentially they’re very speculative, Sam (John/Freckle/etc…), to say the least – while I don’t profess to knowing what the future will bring, current indicators are actually pointing in the opposite direction – and certainly there’s not much to justify your doom and gloom prophecies as far as Japan is concerned (I’m a very small expert on other markets).

    But, as mentioned, let’s leave that for that other thread – I honestly just wanted to see some other numbers (as skewered as they may be considering whatever the future may bring, which could be anything).

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
    http://www.nippontradings.com
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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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    Ziv,,,,, I think the play in the US has gone to value add.. as opposed to buy and hold.

    I don’t know anything about Japan other than one of my business partners is Japanese and her brother is a major developer in Tokyo in fact his company is listed on the front page of the Tokyo stock exchange ( which is a big deal I hear) I know its a billion dollar plus company.. they do condo’s in Tokyo and have moved to Singapore as well.

    the rural or semi rural Japan I have no clue about.. However from what I know about the Japanese culture I can all but assure anyone that there is a radical difference between the average US renter and the Average Japanese renter..And that difference is one of respect continuity and longevity.. the US renter has none of these qualities by and large unfortunately.

    Investors looking to get into the US right now I would recommend quick in and out deals with those you can trust

    JLH

    Profile photo of Nigel KibelNigel Kibel
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    Hi Jay

    I agree with you 100%

    I think value add is the way to go. There are always top quality commercial deals available. However as the market changes we have to keep up with that and offer our clients solutions

    Nigel Kibel | Property Know How
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    Profile photo of EngeloRumoraEngeloRumora
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    We have a buy and hold market here in Toledo.

    Thanks guys

    EngeloRumora | Ohio Cashflow
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    "Make a PASSION an OBSESSION and you'll never work a day in your life"

    Profile photo of Steve McKnightSteve McKnight
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    I was told today that US employment is only 200k below pre-great recession levels.

    Not sure if that is true, but if so, it demonstrates a labour recovery which while painful for those in it, has been quite swift really.

    In the markets where I am active for the Fund I set up, Texas yields are 7% to 9% (falling slightly), Florida yields are 8 to 10% (falling quickly), and Atlanta yields are 8% to 9% (steady). These are advertised and pre-negotiation.

    I have been an active investor in the US since the end of 2009 and note broadly:

    1. Prices started to recover in residential by late 2010
    2. New residential construction began in late 2011
    3. Commercial property started to increase in mid 2013, and significantly from Dec 2013

    A good example of the recovery is that industrial property in Ft Myers could be acquired at $20/psf at the bottom of the market. It has slowly been absorbed where last year it became hard to find anything of quality below $30/psf. Now it is hard to find anything of quality below $40/psf. While replacement is still $80 to $100/psf, you can see that stock is being absorbed and prices are on the rise. I am told that tenant inquiry is up sharply too, and whereas it was very difficult to lease 10,000+sf warehouses, now there is a shortage of such properties.

    – Steve

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
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    Profile photo of Steve McKnightSteve McKnight
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    Number of employed persons, rather than the tables shown above, or so I was lead to believe.

    Like I said, I haven’t verified it but just thought it was interesting.

    It might be a misquote of this article:
    http://in.reuters.com/article/2014/04/17/usa-economy-employment-idINKBN0D30JF20140417

    – Steve

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
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