How I increased my income

I have been searching for suitable properties for the last week, buy and hold for cash flow.

My focus is Atlanta, USA which is still a sellers market as prices continue to rise, good and bad.
Good if you own properties bad if you cant buy today as yields will continue to slide.

Bottom line is the money I take home on income from these 2 properties will be - $14,400 (US) or take home money of $18,720 Au $)

My plan is to buy another 5 properties which fit this criteria in 2018.
Once I have secured 7 properties my income will generate approximately $77,000-80,000 Au $

My Criteria
Cash flow from Day 1
Largish town homes
Good rental property with high demand
Growth - a bonus

Property 1 - $66,500
(I purchased another town home in this complex in 2016 for $35,000, yes prices have moved a tad)

2 bedroom/2 bathroom - Rent $950 per month
Good condition no work required. (property inspection conducted)
Gross yield - 17.14%
Net yield - 10.28%



Property 2 - $86,000
3 bedroom/2 bathroom - Rent $1050 per month
Good condition no work required (property inspection conducted)
Net yield - 8.7%

 

What are the holding costs in the US? Is there any land tax and/or other costs with owning investment properties?

 

@MTR - that goes against the strategy of spool many people who believe the 'MUST BUY LAND' mantra.

How are free standers ie no community levies performing compared to this segment of the market?

 

no stamp duty

County taxes = rates etc.

I have worked out my net income by deducting 40% off the total income. I have held properties in USA since 2011 so from my tax returns I can establish this is about right.

CGT is 15%, however if you sell to buy another property you don't pay CGT. Rules apply. I leave this stuff to my US accountant, I am not an accountant.

USA is very nice to its investors, just don't pay the taxes we have to pay in Australia.

 

Yes, but that is Australia, we are talking USA its a different beast. You can buy blocks of land for as little as $10,000 in Atlanta outer burbs, but its the build costs that wont stack up.

Currently it costs around $100 per sq foot to build in Atlanta. If I can buy homes/town homes at around $60 ish per sq foot then you are on a winner.

To think we were buying at $18 per sq foot in 2011.

 

Why wasn't I listening???

 

I could say the same, I am kicking myself that I only purchased 9

Its not too late though, there is money in it but window is closing due to market movement

 

Once you have a couple that are cash flowing in the US can you get US loans or do you still have to bring your own money.

 

yes you can source 8% equity loans, but foreigners can not source the loans US citizens source because you need a credit rating.

The loans comes with conditions and expensive set up fees, rules apply

I pay cash for my properties, I don't need the extra layer of paperwork

I have also used SMSF, I cant get anywhere close to these returns in Oz

 

I just found from my property manager that property number 2 will actually rent for $1000 per month that takes the yield to net return of 10.88%

 

well done.. i do wanna get in to america, but only been there on holiday once, dont know the area enough. maybe time to quit my job and go invest in the states.

im thinking texas or new jersey

have many friends in new jersey & san fran but god cali is expensive

 

From what I am seeing property markets across US seem to be flying, the economy is on the move again

If you want growth and cash flow then its a matter of looking at markets where there is a lower entry level, but have strong fundamentals, jobs, booming economy etc. Atlanta sweet as you have both.

Entry level for Texas will be higher, also apparently taxes are high, something to consider when it comes to cash flow.

I visited Atlanta prior to buying anything in 2011.

MTR

 

hmmmm GEORGIA ON MY MIND

 

24/7 at the moment, taking phone calls at 3 am aint too much fun. Its worth it when you consider the income

When I was developing in Oz it took 1 project nearly 2 years of build to achieve income of around 10k cashflow. I know which is easier

 

Jeez...leave some for the natives to buy.....

 

Yeah but don't forget the chunk of equity you created as well.

 

Yes, definitely agree with you.
Risk vs Reward.... something like that.

Developing property is a great strategy without a doubt, but you need lots of cash, time frame much longer, ATO is your partner in business unfortunately, and the old nutshell risk of markets turning.
On the flip side good chunk deals if you have lots of fat...

The cash flow play and growth in USA is a no brainer for me.

Also, there is the currency play, this could be a massive wind fall if you buy at today's rates???
Aussie dollar will fall to US68c, with economy stuck in slow lane: Westpac

 

You've done the very smart thing. You are doing what's best FOR YOU and according to your skillset. Not following anyone and holding what they say as gospel.

 

Thanks


I think I just muddled through it at the start to be honest

I had a couple of good teachers along the way, watched what they did and then started tweaking it to suit my scenario.

 

MTR,

Congrats on your 2 latest purchases, nice cash cows. You outbid me on the oakley deal

Just settled on my new atlanta property today


Paid $105k
Expecting $1200 rent or thereabouts

Have always loved this subdivision so couldn't pass it up when it became available.