Cash Cows

Discussion in 'What to buy' started by --Michael--, 28th Nov, 2019.

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  1. Leeroy93

    Leeroy93 Well-Known Member

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    Hey MTR what are you referring to in relation to 'currency play'. Is it not just an unknown positive or negative outcome rather than an expectation of future gains? or are you referring to that fact the AUD dropped since the purchase?
     
  2. euro73

    euro73 Well-Known Member Business Member

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    I give you Exhibit A - cash cows

    2020-01-13 14.05.42.jpg 2020-01-13 14.07.08.jpg 2020-01-13 14.16.25.jpg 2020-01-13 14.17.22.jpg 2020-01-13 14.26.03.jpg 2020-01-13 14.57.47.jpg 2020-01-13 14.59.59.jpg 2020-01-13 15.10.56.jpg 2020-01-13 15.12.16.jpg
     
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  3. The lucky duck

    The lucky duck Well-Known Member

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    may I ask where you invest in?
     
  4. MTR

    MTR Well-Known Member

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  5. Kriv

    Kriv Well-Known Member

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    So what are the ‘cons’ of owning such an asset? With yields like these surely there’s a counterpoint. Does the tenant trash the property? Are taxes high? Vacancies long when a tenant moves out? Negative growth?
     
  6. Archaon

    Archaon Well-Known Member

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    5% growth would only be $2250.

    Net yield would be a more telling figure.
     
  7. euro73

    euro73 Well-Known Member Business Member

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    It’s a common theme on US property discussions here on PC that GROSS numbers are presented rather than NET . Over the past 2 years or so , there are several examples of US property owners claims of 30% + yields which have turned out to be Much lower when the NET veil is lifted ie after real costs are exposed . I don’t really understand the deliberate deception - often the NET is still quite good. There doesn’t seem to be any need to guild the Lily - yet it continues to happen. No one would accept GROSS figures for any Australian yields as an indicator of anything .... so why should US figures be any different

    imagine someone failing to consider council rates , property management fees , water , insurances , body corporate fees , letting fees etc on an Australian property . Wouldn’t hold water ...

    Are we to believe these US cash cows have no expenses whatsoever ?

    At least the one in this thread isn’t 100+ years old in a derelict part of Detroit . Looks like a nice property .
    Still ....

    #NETUSONLYPLEASE
     
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  8. Mick Butterfield

    Mick Butterfield Well-Known Member

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    I have properties in a couple of markets in the US and have owned since 2011. I would say deals with net returns of 10-11% are still quiet easily achieved. I have had minimal tenant issues over the years also.
     
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  9. euro73

    euro73 Well-Known Member Business Member

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    10-11% is typically what I see things wash out at when I review the numbers as well... sometimes a touch more. So while it isn't 37% it's still very impressive...... begging the question ; why do most of the more visible proponents of US properties on these forums promote misleading GROSS yields ?

    Separately, if you've owned for 8-9 years and are getting 10-11% NET yields today, were the net yields lower in the earlier years of ownership, or have they always been at those levels and haven't improved over that period?


    #NETUSONLYPLEASE
     
  10. MTR

    MTR Well-Known Member

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    Its not passive
    Different time zones
    More maintenance issues, this is where using your own contractor/maintenance person is the way to go, otherwise use property manager and be selective and get them to manage everything.

    When I started in Atlanta in 2011, every second house was a foreclosure, we had some tenant issues as people were struggling and sometimes difficult to collect rent and economy was in freefall etc. It was a bumpy road, but within 2 years this seemed to calm down. Rents started to slowly rise, investors from around the world were buying and prices started to rise from 2011
    Today its a landlords market, multiple applications. Its just a sign of the times.

    These homes that I purchased at $35000 are now heading over $200,000 USD. I have 10 in Atlanta. The thing is today you cant achieve these numbers as prices have risen too high, inventory is low.

    I have moved onto other markets where hopefully can repeat this.

    To answer your question, US provides many opportunities to achieve cash flow, it does not have to be high risk, but it will come down to investors researching and would recommend a trip to investigate product etc
    Also perhaps biggerpockets a great forum to start with
     
  11. MTR

    MTR Well-Known Member

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    If you started in 2011 this is huge as AUD was on parity with USD. Now if you financed deals in US then you have USD very nice.
     
  12. Mick Butterfield

    Mick Butterfield Well-Known Member

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    I have no idea why people would be quoting those high yields. My yields at my initial purchase price were more like 15% but that is just not possible anymore where I have bought. I bought 2 last year in Alabama and they are returning around the 10% net. Very happy so far.
    Yields have decreased due to the higher prices in Atlanta I bought 2 properties for $100k US (at parity) in 2011 and these prices are more like 250 - 270k (US) now. Rents in this time have gone from $795 PM to $1,025 and $900 to $1,200. Both have great, long term tenants.
     
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  13. Mick Butterfield

    Mick Butterfield Well-Known Member

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    That's it. It was great timing in hindsight but back then I had everyone trying to talk me out of it. I ended financing 2 houses last year using my other ones as security. The combined rents should pay of the loan in around 10 years without tipping anything extra in which I will look at doing in the future.
     
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  14. MTR

    MTR Well-Known Member

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    Everyone on this forum quotes gross returns.... why don't they quote net??
    its the formula investors use on PC...….of rents pa, divide by house price x 100%.

    I have quoted net returns on other threads, given up doing this as its ignored.

    I thought I would rattle the cage;).....

    What's truly mind blowing is the capital growth....

    Here we go

    Those $35,000 USD are now worth $200,000 USD and they keep rising.
    How much in AUD around $2.9M...
    (don't forget 15% CGT in US, or use the 1031 exchange and defer cgt and keep growing cash flow and properties)



    I am not selling
     
    Last edited: 15th Jan, 2020
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  15. Brady

    Brady Well-Known Member

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    @euro73 don't get so razzed when people post figures.

    No issue with someone stating what they purchased for, spent renovating and what it's renting.
    This is pretty much first questions people would ask.
    If there is more interest go ahead ask more, it states gross.
    Even if % wasn't stated most would do the exact same calculation and work out the %.
    Anyone who takes gross figure as money in the bank deserves to lose shirt of their back IMO.
     
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  16. euro73

    euro73 Well-Known Member Business Member

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    I'll let you know when I'm razzed
     
  17. MTR

    MTR Well-Known Member

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    My Ugly Duckling

    https://www.redfin.com/MI/Detroit/19164-Winthrop-St-48235/home/98528679

    I like this one, purely on the numbers I purchased 18 months ago, it is truly an ugly duckling, do I care...

    $32,000
    $800 per month
    30% gross...…
    Lets assume 15% net (property taxes, repairs, property management)

    What I like about this property is it has a stable tenant who has been in the property for 2 years and now just renewed lease for another 12 months.

    Warning
    This market is higher risk than Atlanta, its taken me 12 months just to work through this process. I purchased 10 to start with.
    I need another 12 months to review the numbers.
    I have tenants on WhatsApp, just to keep the property managers in line..

    My portfolio is stabilised which is massive. I would not recommend financing in this market.
     
    Last edited: 15th Jan, 2020
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  18. MTR

    MTR Well-Known Member

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    Currency AUD vs USD
     
  19. KinG3o0o

    KinG3o0o Well-Known Member

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    you wanna talk about cash cow,

    how about Apple ?
     
  20. euro73

    euro73 Well-Known Member Business Member

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    Are you comparing Apple to Orange? :)
     

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