17159 Albion St, Detroit

Good last minute try!
Cries Desperate, but try another technique that might actually work.
As discussed very well above, this is Purchase price to Rent ratios.
33,000 Purchase price for 17159 Albion St Detroit.
Rent 900 pm (or 10,800 per annum).
Rent to Price ratio is 3.1 years.

 

I don't think there's anything desperate or last minute about it. From the first minute I have simply asked you to justify your claims. You wrote this, did you not?

"In just 3 years and a month, this property will be paid off with rents".

It's the 6th line down in case you cant find it.



I'm also waiting for an answer to my question about why you sell these for 33K instead of the 80-85K you say they're worth. That can be found on the very first line in the 2nd paragraph in case you can't find it .

 

I transact 10 plus properties a month.
I can acquire 1 property a month from my cash flow into my portfolio. Organically.
9 others I secure from stressed sellers (via probate, auctions, sheriff deeds, redemptions etc)
I let go to my investors for a 3K facilitation fee.
Simple. Investors see value in the model, I see value too.
All are distressed under market transactions at 65-75 cents to a dollar deals.
None Retail.

Check it out on my signature.

 

Riiiiiiiight....so 33K represents 65-75 cents on the dollar for a property you say is worth 80-85K?

if these are truly worth what you say, you could do 1 of these deals and make 50K profit . 10 of them per month would make you 500K profit per month ...

500K profit from Month 1 would enable you to purchase 15 x 33K properties the following month, and when you sell them at 50K profits ( each) you make a 750K profit that month

750K profit from Month 2 would enable you to purchase 22 x 33K properties the following month, and when you sell them at 50K profits you will make a 1.1 Million that month

1.1 Million profit from Month 3 would enable you to purchase 33 x 33 properties the following month, and when you sell them at 50K profits you will make a 1.65 Million profit that month

1.65 Million profit from Month 4 would enable you to purchase 50 x 33 properties the following month, and when you sell them at 50K profits you will make a 2.5 Million profit that month

2.5 Million profit from Month 5 would enable you to purchase 75 x 33K properties the following month, and when you sell them at 50K profits you will make a 3.75 Million profit that month

3.75 Million profit from Month 6 would enable you to purchase 113 x 33K properties the following month, and hen you sell them at 50K profits you will make a 5.65 Million profit for that month

5.65 Million profit from Month 7 would enable you to purchase 171 x 33K properties the following month , and when you sell them at 50K profits you will make an 8.55 Million profit for that month

8.55 Million profit from Month 8 would enable you to purchase 259 x 33K properties the following month, and when you sell them at 50K profits you will make a 12.95 Million profit for that month

12.95 Million profit from Month 9 would enable you to purchase 392 x 33K properties the following month, and when you sell them at 50K each you will make a 19.6 Million profit for that month


I can go on and on.... but in the same time it takes to have a child you could have made close to @ 20 Million US if your claims about the value of these properties are to be believed...... quite a bit more actually, as Ive calculated these at 33K each - but if you are getting them for 30K each as claimed, rather than the 33K you sell them on for, my estimates would be conservative...... Either way, in anyone's language that's a whole lot more money than making 3K per deal , 9 times per month. ie 27K per month


So again I ask... why do you work so hard for peanuts ( relatively speaking ) when you could be making a faster and larger fortune ?

I mean...if those numbers are right, I'll seed you the first 500K US today and you can buy me 15 properties... like right now. And I'll even give you 50% of the profits in 9 months time. I'll take $10Million US, and you can keep the other $10Million US for yourself..... just one condition - if you cant deliver the profits ( I'll even give you an extra 25% ie 3 months , so you have a total of 12 months instead of 9 months ) you owe me my 500K back + another 500K US. ie a total of $1Million US. So you risk just $500K of your money for a potential return of $10 Million of my money in 12 months.... That's a 2000% return on 500K in just one year. Deal of a lifetime. Will set you up for this life and the next. What say you?

 

Thank you - I will not comment on rants like these,

 

He makes a valid point.

 

After reading this post I took it upon myself to ask my US CPA some questions about state tax to help clarify the points raised in this discussion.

The information below is my understanding of the information he provided me. I recommend anyone considering investing in the US use the services of qualified professionals and do not rely on forum discussion for tax information. The information below is not advice. No liability accepted.

As I understand it.
State tax for Detroit is 4.25% , the general exemption for Michigan is $4050, so only amounts above this rate would be subject to the state tax payable. For the purpose of the property discussed its quite possible that after depreciation state tax payable may be minimal or actually be $0 if the net income fell below $4050 for the financial year.

The federal US tax return allows a deduction of up to $10,000 per year for state tax payable so you are already receiving the deduction on your US return. Its no different to getting a deduction for say council rates or insurance as to how its treated. I would think a state tax credit on the Australian return would be a double up in deduction hence why its not applied at the ATO level.

In terms of the ratio (number of months rent) = purchase price this is commonly used in the US. (In this example 3.1 years of rent equals purchase price). I actually learnt this from my US clients who refer to this all the time when assessing a deal. I do not feel there was any misrepresentation intended by the poster in noting this. Just because Australians may not be familiar with the measure does not mean its misleading or incorrect. Its a tool used to show how many months rent is equal to the capital outlay (purchase price)

In summary I would say its not the role of the poster @GentleChief to work out the tax payable as the tax payable is not determined by the property itself but the investors overall holdings/income in the US and the structure they have in place.

In terms of Australian tax you can't get away from the fact that you have an obligation to report any foreign earned income to the ATO. Yes you get a tax credit for the federal tax you paid in the US, and you should already have received a credit on your US return for any state tax paid / if any to the value of up to $10,000. I have clients that put properties in their spouses names via LLC's as the spouse does not work resulting in a $0 tax bill to the ATO. There maybe others on higher tax rates that need to pay additional tax to the ATO. Its not a one size fits all and hence the tax cannot be calculated against the property itself but the individuals personal circumstances.

In terms of depreciation the US tax system is very generous. Irrespective of the age of the property you can depreciate the entire building over a period of time. I believe it used to be 27.5 years but recently changed to 30 years if I am not mistaken. My CPA works off 80% of purchase price to determine building vrs land value. No depreciation schedule needed.

I just want to point out I am not licensed to give tax advice and the information provided above is my understanding of the topics discussed on this thread. I cannot guarantee the accuracy of the information. You should verify all information with your own CPA as to how it affects your personal circumstances.

 

Amen

 

Amen too!

 

See - it's not hard to provide basic guidelines as a framework for people to start with. If that information had been provided from Day 1 the conversation could have been focused on the US opportunity itself rather than the lack of information provided.

Separately , I would also put it to you that any suggestion the Property Chat audience is educated in American property terminology ( rental ratio or rent to purchase price ratio or any other version of same) as a defence ( defense for the US readers) for the non disclosure is a bit of a stretch. This is an Australian site with largely Australian readers and the poster knows it. Anyone posting here should tailor their comments towards Australian readers , especially when they use an Australian SMSF as the example. The poster has on numerous occasions excluded information relevant to the cash flows... the poster has on numerous occasions been asked to furnish the thread with that information and has refused to do so. In other words- this isnt the first time .

Anyway... it only took forever...but now we know. How about in future, the tax considerations at least get a mention?

 

In 2011? I paid $999 for Steve McKnight's basic information package on the USA.

Its taken me JUST 6 years to refine my property management maintenance strategy in Atlanta...LOL.... "Rome wasn't built in a day" …. as they say.....

…. and understanding complex US tax laws... that's never gonna happen, I regularly email my US tax accountant regarding various issues.

Now back to this property...…at around 16.05% net return.... its a great deal every day of the week.

My best deal to date in Detroit was 17.87% net return.





MTR

 

Amen again, I would like to reiterate that we concentrate on finding only good foreclosed wholesale deals in locations that a tenant is a family in a stable neighbourhood. Profit upfront, with equity on purchase for 65-75 cents a dollar. We have several US interstate and Australian/Asian/Middle Eastern investors who invest to profit on the very bottom line purchases. Buy with profit and earn a cash flow stream.

That is the Goal. Buy Low. With Profits upfront. That is the side of the transaction we only truly concentrate and help investors on. And help with rehab, tenant placement and Property management handover. Oversight.

Our 12 member, full-time crew on the ground help with that. And we spend a remarkable amount of time in County/City/Tax auctions. Probate and Sheriff foreclosures.
The team is in touch with people who have been served notices. We work within a model to help the owner stay or even become the tenant. Fair Ecosystem. Karma. We believe in. Not disruption which is the Favorite term of IT these days.

Investors are doing Flips purely based on the Purchase price and Retail comps.

I am an Aussie and hence on this forum. Live a majority of my time in US Detroit.
I otherwise call Sydney Hills Dist home, when not in Detroit.
Love the cash flow and hence on the ground here.

For instance currently, an Aussie investor is working on closing a 24 unit apartment building which requires a new roof, rehab of all units and reglazing of the carport.
He understands that he is buying a 200K property for an 750 - 800K reval eventually when fully occupied. Rents are 575 per unit, After the 300K rehab. Draw equity Rinse and repeat.
(deal details sensitive, hope you understand, but will give the comps of the neighborhood property to analyse, shall post here on PC when deal is inked and finalised)

 

Geoff,

Most of my homes are in Atlanta. I went over to the US in 2011 and set up my team of realtors, contractors, attorney, CPA, insurance broker etc. I lived in my realtors home for a few months and we would view 20 -25 homes a day searching for the very best deals in the market, together we set the standard of the types of homes we would purchase and the areas we would buy in. I have had the same team in place for 8 years now and we have purchased, renovated and leased more than 500 properties in that time. There are no short cuts here, you either put in the work, spend time on the ground and find your own trusted team or you team up with a service provider/facilitation company that already has everything in place similar to what @GentleChief is offering in Detroit and what I have created in the Atlanta and Alabama markets. The advantage of using a team that has some volume in the market is that we have some leverage with our service providers to offer discounted rates to our clients and as a group each and every client becomes important to the service provider. If you are an investor on your own buying 1 , 2, 3 properties you have little leverage over the people servicing you however if you are part of a larger group your business needs to be maintained to a certain standard as you are part of the group that brings in big volumes to the service providers.

In terms of taxation I pay taxes both in the US and AUS. I have invested through LLC's and used a discretionary trust. I have quite a large US portfolio that I have been accumulating over the years 50+ properties so its expected that there would be some taxes to pay. I continue to accumulate properties and am about to close on another one in Atlanta at the end of the month.

The thing I love about the US market is that once you build a foundation of cashflow positive properties the cashflow generated from that portfolio can be re-invested into buying additional properties without having to take on debt thus continually growing the overall cashflow.