All Topics / Overseas Deals / Does investing in the US actually work?

Viewing 13 posts - 1 through 13 (of 13 total)
  • Profile photo of Peter GerolymatosPeter Gerolymatos
    Participant
    @petergee01
    Join Date: 2016
    Post Count: 9

    It’s happened to many Australian Property Investors:

    “Went to the seminar, got sucked into the hype, bought 1,2, or more “cheap” Turnkey U.S. properties with projected ROIs of 15%-20%, used my Super and savings to do it, and now 3-4 years down the road the reality is that I paid too much, I’ve lost money, I’ve had to rehab the property at least twice at $10K per time, the Property Manager stole my money, and now I can’t even sell the thing unless I take a 50% hit.”

    The thing is, owning Rental Property in the U.S. can be profitable. I’ve done it.

    Unfortunately, many Investors are giving up and are turning to the people from whom they purchased the house in the first place to try to get rid of the headache. The problem is, these people are just buying the place back at deeply discounted prices, putting lipstick on a pig, and then turning it around and re-selling to other Australians and repeating the whole process.

    There has to be an end to this sad state of affairs. As the owner of a successful mid-sized Property Management company in Kansas City and an integral part of the largest single-family-home Property Management Franchise in the U.S., I’ve personally had to rescue hundreds of Australian Investors from the disaster they bought into, and helped them turn their house into a stable, profitable, investment. I’ve done this for people who have purchased property all over the U.S., and the key lies in Management.

    I’d like to meet you, learn about your experiences, give you a forum to vent, and ask for your bucket list of investment requirements. I have a plan on how we can collectively get rid of the pain.

    Please note:
    • I’m not selling any product or property
    • I’m not asking you to pay anything (unless we meet at a location with drinks and food)
    • I’m not offering to buy your property
    • I’m not going to teach you how to invest
    • This is definitely NOT a feel-good/back-slap/high-five/motivational seminar

    What I am doing is suggesting a way in which we can collectively dictate OUR terms for OUR properties so we can make OUR money. Please join us

    Hope to see you there!

    Regards,
    Peter.

    Peter Gerolymatos | https://www.linkedin.com/in/petergerolymatos
    http://www.meetup.com/AUS-USA-IPSG/
    Email Me

    Better Management = Better ROI

    Profile photo of jayhinrichsjayhinrichs
    Participant
    @jayhinrichs
    Join Date: 2011
    Post Count: 1,177

    Peter this exact same thing has been happening to West coast of US investors for the last 25 years.. same concept.

    houses in California are negative cash flow… they cost 500 to 1 mil you can buy a house in the mid west for 30 to 70k

    price of a car here in the US.. west coast investors buys it.. has no clue as to how tough the rental pool is does not understand the demographics … IE they have money to invest so they never lived or mingled with these folks that rent.

    the rush from AU to us has basically come to a halt. because of the reasons you mention and the exchange rates.

    back in 2010 when I first got on this site there would be hundreds of posts a day.. now your lucky to get 2 in 2 weeks there is no audience to speak of any more on this site.. I fyou want to talk RE get on Biggerpockets in the US.. lots going on there.

    Profile photo of BennyteeBennytee
    Participant
    @ten_burner
    Join Date: 2006
    Post Count: 242

    Im still in KCMO with a business partner of mine, to be honest its worked out well for me, However I went over there a number of times to sort my own things out and met the right people. I have a good property manager who I have actually become good friends with in the last few years, so that has helped.

    Profile photo of CL1706CL1706
    Participant
    @cl1706
    Join Date: 2010
    Post Count: 11

    Hi Peter
    It seems that most of the negative stories that come out of US Property Investment are from those who have purchased via buying groups, who are in this to make themselves a dollar first and foremost.

    I’ve been fortunate enough to be purchasing property on my own, sourcing my own Property Management and its been a runaway success. I have spoken to people who have bought via buying companies and paid 30% more than the very top end of what the market dictates.

    Good Luck assisting those who need your help – the key is to have the right people on the ground in the US.

    Profile photo of Peter GerolymatosPeter Gerolymatos
    Participant
    @petergee01
    Join Date: 2016
    Post Count: 9

    Hi Ten, CL1706 .. You’re both absolutely right in saying that having the right people on the ground is paramount to a successful investment. Click here to see another article I wrote about Screening your Property Manager.

    I appreciate your responses, and welcome any tips and tricks you may have that can assist others.

    Peter Gerolymatos | https://www.linkedin.com/in/petergerolymatos
    http://www.meetup.com/AUS-USA-IPSG/
    Email Me

    Better Management = Better ROI

    Profile photo of jbelmorejbelmore
    Participant
    @jbelmore
    Join Date: 2011
    Post Count: 48

    I must have been very lucky as we went through a buying group but survived the experience. I met the property manager at a dinner as they had come out to Australia for a working holiday and the properties have been managed well for the last few years and I wish I had more. I agree the property management is the key to making investing in the US actually work.

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,750

    I’m in the process of selling my private US portfolio and bringing the money home.

    I’ve made excellent growth returns, but the aggravation of dealing with rental management companies and the revolving cost of turning properties when tenants leave (or are evicted), has been a constant frustration.

    Finding a good rental manager in the US is even more important than finding a good deal on paper.

    – Steve

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

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

    Hi Steve

    I agree with you. I have found some excellent property managers in Daytona Beach. Most Americans promise the world and do not deliver. Finding great apartment complexes are still good buying however without the right management it can be a nightmare. Due your due diligence carefully

    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 Peter GerolymatosPeter Gerolymatos
    Participant
    @petergee01
    Join Date: 2016
    Post Count: 9

    It’s great to hear positive success stories, and it’s clear that good management is critical to the success of an investment. But what is the definition of “good management”? It’s something that has remained nebulous and vague, and can range from an emotional definition (“They really understand me”) to an analytical one (“They hit my ROI targets this year”).

    This is what I’m trying to pin down. What works for John may not work for Sally – regardless of where or what they bought. So how do you set the criteria for “good management”? After all, once you’ve gone to all the seminars, done your homework, talked about it with your significant other and friends, and finally zeroed in on a property that you’re comfortable buying (usually sight-unseen), it seems incredibly foolish to not invest an equal amount of research and time into the person / company entrusted with managing that property, and making sure they’re “good managers” ..

    Peter Gerolymatos | https://www.linkedin.com/in/petergerolymatos
    http://www.meetup.com/AUS-USA-IPSG/
    Email Me

    Better Management = Better ROI

    Profile photo of jayhinrichsjayhinrichs
    Participant
    @jayhinrichs
    Join Date: 2011
    Post Count: 1,177

    I’m in the process of selling my private US portfolio and bringing the money home.
    I’ve made excellent growth returns, but the aggravation of dealing with rental management companies and the revolving cost of turning properties when tenants leave (or are evicted), has been a constant frustration.
    Finding a good rental manager in the US is even more important than finding a good deal on paper.
    – Steve

    Steve its really not so much the property management its the tenants… What AU investors do not realize is the lifelong tenants in the US are a pretty transient bunch.. they know the system and by and large could care less about the owners properties.. The only way to mitigate this is to buy UPPER end properties in the best markets.. of course those only return 4 to 8% at most.. So the attraction is not there but that is what most US investors are happy with and properties of this quality usually appreciate over time.

    But there was some good plays over the years.. I bought 54 homes in Atlanta at the bottom and doubled my money.. but then again I live here and I don’t buy through any buying service.. I buy right from the auction companies.

    Were I saw AU investors get totally hammered was buying low end crap.. thinking because on paper it was suppose to make money but not understanding the tenants are completely unrealiable and a constant problem. even Super man could not manage these folks

    Profile photo of MTRMTR
    Participant
    @marisa
    Join Date: 2004
    Post Count: 663

    When we were buying in US/Atlanta we were buying what I would consider B grade properties in 2011/12, South Atlanta as this pocket provided the higher cash flow.

    The criteria was to buy larger homes that generated over 20% gross yields.

    I can tell you that on average each year after expenses these properties generate 10% net yields, confirmed by my US accountant, so there is significant slippage.

    I still hold 9 properties in Atlanta and we have achieved significant growth, we were buying at between $35,000-50,000 (foreclosures) no mark ups on the properties, we just had them renovated to be rented. These properties now retail around $120,000-150,000 in current Atlanta market. We were buying at $18-20 sq ft, I believe it costs around $70-90 sq ft to build today.

    We had some teething problems initially with tenants and property management. This seems to be going very well now and I wont be selling these as the income is excellent with the weak Au$. I agree property management is key, but I would also expect that it is important to buy decent properties.

    What we are now seeing in Atlanta is the rents are starting to rise significantly and very high demand and county taxes are also rising because of the increase in the value of the properties.

    My experience overall has been great, but I do understand why many got burnt due to the sharks operating and ripping people off.

    We still have not been able to source suitable finance in US, there is hard money lenders but rates are way too high.
    If anyone has worked this one out please let me know.

    MTR

    Profile photo of bernie006@hotmail.com[email protected]
    Participant
    @bernie006-hotmail-com
    Join Date: 2009
    Post Count: 12

    Well I think as with everything, get information then make a decision.
    Unfortunately if you never been to the usa it is very difficult to make decisions.
    I bought 2 houses in vegas in 2011.
    Costs 70000 and 80000 dollars after renovations.
    Today they both return approx $25000/year.
    Return is great.
    in 2011 1au $ = 1.10 $ us
    Houses worth today approx $us200000 each.
    great experience. But hard.
    management lied and ripped us off in beginning.
    example “$2500 charged for broken waterpipe!!
    Agent just lied and stole our money.
    now we have our fifth agent and many rules in play (example agent needs our permit if damage is over $150)
    We are buying soon more properties in usa.
    You just struggle to get 20 or 25% return plus capital growth in australia

    Profile photo of John CarneyJohn Carney
    Participant
    @americapropertysource
    Join Date: 2010
    Post Count: 15

    Hi Peter,

    AGREE! The PM is the key player on any investors team, local or in the USA. I have extensive experience facilitating the safe purchase of USA real estate assets for Australians. The success or struggle seems to boil down to how well the investor communicates with their managers over time. It’s easy for people to complain on forums and assign the blame to the property management company who THEY hired. Foreign investors have to understand that they are also accountable for the success and failure of their investment.

    My advice to Australian investors buying USA real estate is to recruit a property manger for your team who has experience working with out of area and overseas investors. Profits and growth will follow a strong professional relationship between the investor and US property manager.

    Foreign investors must establish an effective communication system with their American property management company. It is up to the investor to call, not email, their pm when they have a question or concern. There has to be a response protocol and a face to face communication option (Skype, Google+, WhatsApp) on both sides of the pond.

    It’s important to match your management company to the asset as well. Companies who specialize in class A property are not going to fair well in a class C neighborhood.

    It doesn’t matter where your investment property is located. Effective communication with your team is important and you must have a system in place to test and measure goals, profit and growth.

    Here’s a link to video FAQ that I filmed to address this specific issue;
    ‘What to know about American property management’

    Invest well,

    John Carney

    John Carney | America Property Source I johncarneyonline.com
    http://johncarneyonline.com
    Email Me | Phone Me

    Work Hard. Play Hard. Profit Hard.

Viewing 13 posts - 1 through 13 (of 13 total)

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