Forums / Property Investing / Overseas Deals / Back from living/investing in USA for past 7 years. Ask Me Anything

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Viewing 20 posts - 1 through 20 (of 34 total)
  • Profile photo of dhillon2dhillon2
    Participant
    @dhillon2
    Join Date: 2007
    Post Count: 24

    Hi everyone, we are Kevin&Dani- we used to be pretty involved with this forum back when we were investing in Melbourne, and were part of RESULTS mentoring. However about 7 years ago we moved to the US for property investing. We still continue to live there, but are back in Melbourne for Christmas. So we just wanted to be open and see if we could maybe help any of you in this community.

    We do multifamily apartments there, with our current portfolio in Miami. However we recently moved to Houston in preparation for better educational opportunities for our 2year old son. We have some familiarity to cities beyond these two though- this past year we’ve traveled to San Diego, Dallas, San Antonio, Austin, Kansas City, Atlanta, Washington DC and New York; & we underwrite deals from Phoenix to Atlanta.

    Back when we started, we didn’t know what we didn’t know. So we’d like to give back to this community. If there’s anyway we can help, or share from our experience, please ask away :)

    • This topic was modified 2 years, 4 months ago by Profile photo of dhillon2 dhillon2.
    Profile photo of jackjack
    Participant
    @droggo11
    Join Date: 2016
    Post Count: 1

    Hey Kevin & Dani,

    Thanks for choosing to give back :)

    I want to do my first deal in the US soon and would appreciate any advice. I’m currently in the research phase. The areas that I’m mainly looking at is Austin and Dallas Fort Worth though I’m flexible on the location. I’ve been to most of the major US cities.

    I’m thinking either of buying a multi family house, renovating it and then flipping it or doing a small apartment building development from scratch.

    My question is which city would you recommend looking at for the best opportunities for short term flipping and any suggestions generally on getting started doing this in the US.

    Cheers

    Profile photo of dhillon2dhillon2
    Participant
    @dhillon2
    Join Date: 2007
    Post Count: 24

    Hi Jack,

    Congratulations on your plans! Austin and DFW are great markets. We were in DFW 3 weeks ago, and Austin in June. Some thoughts:

    – Generally US zoning and planning rules are much less restrictive than Aussie planning regs, hence US urban sprawl. Consequently areas don’t really ‘gentrify’, as developers would rather rebuild in a totally brand new area. As opposed to Australia where greenbelts around cities are much more heavily enforced hence the relative density of Australian cities and the support for areas to gentrify. What I’m saying is go to areas where there is infrastructure, job and population growth.

    So the southern states are a generally good bet. See –
    https://houstonagentmagazine.com/2016/12/21/texas-no-1-population-growth-will-real-estate-markets-follow/

    – Market Cycles,
    DFW & Austin have had HUGE price growth in the past 3 years. There are really sound fundamental reasons for this, but there is some concern about ‘frothiness’ in the market. If you’re flipping you really want to pay attention to that, as the end sales price is where all your profit is. Cashflow will see you through these times, so guess I’m suggesting my strategy. Then again, I’m biased. I’ve never flipped anything. Regarding market cycles check out this-

    https://www.realestateconsulting.com/the-housing-cycle-market-by-market/
    The reason I’m in Houston is because that’s the counter-cyclical play.

    – If you’re doing an active strategy such as flipping, you essentially have to be there. Otherwise it’ll be a coinflip as to whether the people working on your behalf are diligent or not (most aren’t). Myself and 4 other friends invested back in the US in 2011. The ones that made serious money (2) were the once that moved there; the other 3 eventually sold up having mixed outcomes because management was too troublesome.

    – I know two other Aussie’s flipping houses kinda around Kansas City, and another in San Antonio. I can put you in touch with em if you wish.

    Good luck!

    btw- I’m doing sharing a talk with close family and friends about our work tomorrow night Fri Dec 30th, 6:30pm in Scoresby. Its at my mother in law’s house so I won’t publish the address here, but PM me if you’d like the details.

    • This reply was modified 2 years, 3 months ago by Profile photo of dhillon2 dhillon2.
    Profile photo of dhillon2dhillon2
    Participant
    @dhillon2
    Join Date: 2007
    Post Count: 24

    Well that was easy!

    I’m back in Houston now- back on the hunt. Will be checking this forum less often now, but if any of you have any other questions don’t hesitate to ask.

    Good investing!

    Kevin

    Profile photo of snakecharmersnakecharmer
    Participant
    @snakecharmer
    Join Date: 2014
    Post Count: 7

    hi i am interested in property in michagan. any idea’s

    Profile photo of snakecharmersnakecharmer
    Participant
    @snakecharmer
    Join Date: 2014
    Post Count: 7

    hi i am interested in property in Michigan. any idea’s

    Profile photo of dhillon2dhillon2
    Participant
    @dhillon2
    Join Date: 2007
    Post Count: 24

    I’ve never transacted in Michigan, and I don’t think I know anyone that’s currently based there. So I can’t really say.

    What’s your thinking behind your interest?

    For starters, I’d say you gotta hop on a plane and build real relationships.

    I know this is a forum, so its weird to recommend another forum but the US based https://www.biggerpockets.com/ community is really vibrant. Maybe reach out to someone based there? However be careful, the US is full of sharks and conmen, so like I said, hop on a plane and eyeball anyone you intend to do business with.

    Sorry I cant be of more help.

    Profile photo of DeanCollinsDeanCollins
    Participant
    @deancollins
    Join Date: 2015
    Post Count: 372

    Why do you think USA banks are able to offer 30 year fixed loans but ALSO have no issue in you paying back the debt at any time you chose.

    I’ve never understood why paying back fixed loans to Aussie banks result in hug penalties….but in the USA they don’t care?

    Profile photo of dhillon2dhillon2
    Participant
    @dhillon2
    Join Date: 2007
    Post Count: 24

    Hi DeanCollins, with the obvious caveat that I’m not a banker (just a private investor) my thoughts on the matter-

    – The finance industry is soooo much more competitive here. You have financing options every shade of the rainbow. From hard money lenders, to community banks to National banks, to private lenders, to the US Govt effectively; there are just so many finance options here. This competitive environment is definitely good for the discerning consumer.

    – That said, the gold standard for the best type of debt you can get is not through ‘the banks’ per se, but Agency debt- debt which qualifies to be sold to Freddie Mac & Fannie Mae. These products are non-recourse have the lowest interest rates, 30 amortization etc. Best terms by far in the market. Having taken out 2 of these loans last year, they do have stipulation called “Yield Maintenace” – which essentially is a pre-payment penalty.

    Profile photo of DeanCollinsDeanCollins
    Participant
    @deancollins
    Join Date: 2015
    Post Count: 372

    I always thought it had to have something to do with securitization.

    This said…..who did you borrow 30 year fixed where you had a fee for pre-payment?

    We originally were with Citi, then Chase and now BOA…..when we refinanced the first 2 no penalty for prepayment (and nothing in the BOA docs as far as I know…..).

    We were with Citi and Chase about 3-4 years each so not sure if maybe we did it in less than 12 months etc…may have been a fee….?

    Profile photo of JaxonJaxon
    Participant
    @jaxona
    Join Date: 2014
    Post Count: 282

    Good Day Kevin&Dani!

    Hope you both are well, I had a few questions that I feel would benefit myself and others

    1. What is the best deal you’ve had in the States.

    2. What was the most troublesome and costly

    3. what has your stratergy been and how has this worked

    Kind regards

    Jaxon Avery

    Profile photo of dhillon2dhillon2
    Participant
    @dhillon2
    Join Date: 2007
    Post Count: 24

    @ DeanCollins – I think I might have misunderstood your original question. I’ve taken out loans amortized for 30years, but I don’t know of any non-recourse loan that has a 30 yr fixed term. The loan i referenced in my previous answer was a Freddie Mac loan.

    Profile photo of DeanCollinsDeanCollins
    Participant
    @deancollins
    Join Date: 2015
    Post Count: 372

    Loans that are a Fannie or Freddie 30 year fixed can still not have pre-payment penalty

    Likewise a Freddie or Fannie loan from any of the major banks should still be non-recourse.

    Non-recourse means you can walk away from the loan by giving up the property in a short sale and not owe anymore, obviously you lose your equity but most loans in the USA are limited to the value of the property (unlike Australia…..where the banks have you on the hook for everything they are short after sales/expenses).

    We’ve refinanced for lower rates twice over the last 8 years since we first purchased for lower rates (and once to acquire the apartment downstairs to do a combination). Apart from about 9 months when we first did the 2012 duplex combination we’ve paid extra every month with no penalties (around about $1-2k extra a month) with no pre-payment penalties with either Chase/Wells or BOA.

    Anyway not really important, just never understood why USA banks allowed 30 year fixed loans you can pre-pay as much as you want.

    • This reply was modified 2 years ago by Profile photo of DeanCollins DeanCollins.
    Profile photo of dhillon2dhillon2
    Participant
    @dhillon2
    Join Date: 2007
    Post Count: 24

    @jaxon, apologies for the late reply. I don’t check this website all that often now that I’m in Houston. I’m also in the middle of 2 deals, and last week I had the amazing privilege of being on a cruise ship with Robert Kiyosaki! An unreal experience. Anyway, if you want a more timely response email me- [email protected]

    Anyway, to answer your question-

    1) All the multifamily deals I bought in 2011 turned out awesome. They had a gross yield of 30%, net return of ~15%. Then doubled in value by 2015. I then refinanced these and pulled out all my money, and essentially have an infinite return. A great financial result. The cost was I had to move country, and leave all my friends/family behind.

    2) Some Aussies were interested in my work so they wanted to come on board. So I set up a syndication. I raised too little money for the deal- just enough for the downpayment, but not enough for the rehab. Consequently we got this rehab money through the monthly cashflow. So returns were aenemic the first 2 years. However, after a 2.5 yr hold we increased gross income from $420k to $540k. We borrowed against this increased value, and my investors got all their capital back (plus some) and are now getting an infinite return. So overall it was a great deal, but troublesome in that I should have been clearer on the strategy and, better managed my investors’ expectations. Investors were happy the result nonetheless.

    3) Strategy essentially has been some variation of buy & hold. Its worked inasmuch that the properties have become equity traps. I also pay less tax because of the depreciation, which is handy because I’m now answerable to the ATO and IRS, and I don’t trigger capital gains taxes which are hefty.

    Re: taxes, I heard a really interesting anecdote at a Tony Robbins event I attended in Dallas last year. If you take $1 and double it 20 times you get a little over $1MM. If you repeat that same process but this time take out 30% tax at each stage- instead of ending up with $1MM+ you end up with just over $30k. A staggering difference! So listen to the government, follow the laws, and know what is deductable and what isn’t.

    • This reply was modified 2 years ago by Profile photo of dhillon2 dhillon2.
    Profile photo of BjoernBjoern
    Participant
    @suoksa
    Join Date: 2015
    Post Count: 23

    Hi, do you know any good buyers agents in the US who work with clients in AUS?

    Also, do you have any other syndication projects planned?

    Thanks for all your input. Great that you decided to give back to the community here. This thread was a very interesting read.

    Profile photo of dhillon2dhillon2
    Participant
    @dhillon2
    Join Date: 2007
    Post Count: 24

    Hi Bjoern, apologies for the late reply. In the past 2 weeks I’ve been traveling to LA, Memphis and Dallas and just got back home. Also currently in the middle of 2 deals.

    Re: buyers agents- do you mean local real estate brokers? Or turnkey providers? In general I don’t use either, for deal flow I approach the selling brokers directly. However I do have friends that work in those fields. Happy to make an introduction if you wish, but I don’t think I’ve actually used any of their services? We just hang out :)

    Like I said, currently in the middle of some deals. Closed on 1 two weeks ago, in the middle of one currently. However we’d have to see if my investment objectives align with yours, or even if we’re a good fit.

    Was gonna make a trip back to Melbourne this June, but turns out my wife’s pregnant! So our obstatrician advised against travel. Feel free to private message or email me if you wish to talk further / or if you want specific introductions. And excuse my tardiness, I don’t check this forum all that often :)
    Take care, wishing you the best.

    Profile photo of dhillon2dhillon2
    Participant
    @dhillon2
    Join Date: 2007
    Post Count: 24

    It seems that I will be traveling back to Melbourne after all! Just for a week to attend a friend’s wedding and my mum’s birthday.

    I’ll be inviting some friends to my place to talk US property investing on Thursday night June 22nd. If any of you feel like coming over, please PM me and I’ll send you the details. Melbourne SE suburbs.

    Take care and good investing :)

    Profile photo of SitbonSitbon
    Participant
    @sitbon
    Join Date: 2017
    Post Count: 3

    Hi, with respect to the USA I’d be interested to know:

    1) Do you need to pay a type of Capital Gains Tax when selling?
    2) Are you required to be a resident to qualify for loans, for example, showing evidence of income through payslips?
    3) Are there reliable providers of property data to determine historic growth for an area, vacancy rates, balance of renters to home owners etc and generally inform where to buy?
    4) What sort of agency management fees generally?

    Thanks.

    Sitbon

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

    The answer is that there is often a withholding tax when selling a property in the United States. Make sure you deal with an American accountant that understands the Australian tax system. I have someone I can refer you to.

    If you are buying a house its very hard to get a loan from a normal bank. In most cases you will be dealing with hard money lenders. The exception is if you buy commercial property it is much easier to get non recourse finance but yes you still need to provide financials. I would urge extreme caution when it comes to buying house the results are mixed. The larger the deal the safer it seems to be.

    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 sydey99sydey99
    Participant
    @sydey99
    Join Date: 2008
    Post Count: 56

    Hi Dhillon,

    Sorry if I am asking the same questions asked by others, kindly excuse and point me the right links.

    This is a great area to gain a lot of knowledge.

    I am from Sydney and planning to buy an investment property in Texas or other states but not sure where to start.

    Below are the list of questions:

    1. How to open US bank account staying in Australia and move funds to pay for all expenses?

    2. Reading forums got this company – https://www.ofx.com/en-au/blog/buying-a-property-o… or https://www.afex.com/australia/index.php (Can we open an account and park the money to use for all the expenses in the USA and getting rental income once we purchase the property?)

    3. Do I need to setup LLC first and then start looking for property

    4. What type of LLC do we need to setup?

    5. Once LLC is done, I want to buy and Hold a place where no Renovation is required, What is the source I need to use to find a property

    6. Once we like the property, Can we hire a building inspector to get the property inspection report done with videos and photos to analyze the property condition?

    7. What sought of documents we need to ask Real estate agents before signing any paperwork?

    8. Any specific information need to pay attention for in the documents?

    9. How many days do we need to specify in the agreement to close the deal?

    10. Do we need to be physically available locally to close the deal?

    11.How do we issue final cheque to Seller

    12. Can we simply deposit the total funds required to complete the transaction to an attorney?

    13.Once we close the deal what type of documents do we get and are they electronic copy’s or paper?

    14. any other steps i am missing?

    sorry for asking all questions in one post

    Thanks,
    Raj

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