US Deeply intrigued by USA market.

I was about to buy in Brisbane, but a good friend of ours recently moved to Atlanta GA and that got me thinking.. With median house prices at something like $400,000 AUD, and rental returns typically 6-8%, logically it seems like an intelligent move to invest in America (especially now since its becoming great again #maga).

I might be wrong though.

I am engaged in serious research into Bris/Melb now, but this opens up an entirely new front. US property laws, taxes etc.

And to think, America has 50 states. Compared to Australia's 6. A lot more cities.

Of course one of the biggest challenges would be the distances (I'm in Syd). Buying sight unseen from say, Zillow, I imagine would require adequate caveat emptor. Or I could flyover? Who knows.

 

MTR/those who've invested in the US...are any banks lending to foreigners at 70/80% LVR plus who DON'T have a track record or existing property in the US?

I wouldn't be game to go all cash in the US at present (that time has well and truly passed) but if one can access lending, that would def be a plus.

 

I have posted some of our deals on PC if interested review the numbers, we are also developing, starting with 5 townhouses in Atlanta inner city in Feb/March.
We are only buying in the beltline Atlanta, which is the inner hub currently transforming into a trendy precinct with the help of government infrastructure spending. Old Factory units transformed into swanky apartments etc.

The reason the markets are booming is that everyone is buying, recovery started in 2011 and we also have Hedge Funds buying by the bucket load they have not stopped., I guess they see the writing on the all. Inventory in Atlanta has gone from 60 to 30 due to pent up demand.

When you say median house price is $400,000, dependent on State, could be much less/more??

We have contractors/builders on the ground, project manager and we have networked with the right people to source the deals. Its competitive, when a good deal comes along you pretty much have to sign off on it within the first 4 hours.

Currently there is growth in this precinct but it is also the beginning of the building cycle, and developers are jumping in.

Developing does not make too much sense for me in Australia at the market.

I just sold my last 2 development projects in Melb and ploughed the money into USA. Building time is much shorter time frame and the development I will post in Feb/March has around 40% profit, try finding that in Australia at the moment. Feel free to pm me if you want to chat about this further.


Overview Maps // Atlanta BeltLine

BeltLine Developers Plan Beer Gardens for Southwest Atlanta

 

Yes, can get 70% LTV (their word for LVR) at in the low 8's. Can get a bit lower interest at lower LTV. Can also do whats called a portfolio loan (their word for cross collaterising) across multiple properties with different parameters. They'll also lend on renovating in a much different way to Australian banks.

 

Not sure why you would not use cash?? this is one way to shoot your competition out of the water.

I have just injected over $500,000 cash into the Atlanta market and all our deals will make 20%+. With developments I expect to easily double my money in a very short time frame.

I have personally purchased some blocks and 2 have doubled in a 6 month period, its just a crazy market, in particular the beltline of Atlanta, not offloading these, I will be building, one will become my home/office as I will be moving over probably the end of 2017.

There are ways to source finance, but the devils in the detail, if it were easy everyone (foreign investors) would be financing.

Banks do not lend money unless the deals stack up and the property criteria is very strict.
Hard money lending is also available much higher interest rate, however, the deal must stuck up or the property must meet their criteria.

Here's the clincher so many ways to make money in US, if you have cash you can become a hard money lender...

So many ways to skin a cat in US market, its volume, population, markets, strategies which we don't use here can work extremely well in US market and now we have the Trump rally, who saw that one coming.

I expect trillions will be pumped into infrastructure, Democrats talking trillions this morning, Trump will have his own agenda and with economy starting to soar I can only see the glass half full.

 

Hmm, I'm tossing up between Dallas, Houston or Atlanta. These cities all appear to be doing well in population and economic growth.

The first thing that comes to mind, would be the same sort of approach I'd take in any other Australian capital. Look for 2nd hand freestanding houses close to the CBD (<10km radius), in good suburbs with low vacancy rates. It seems to work well here, but I wonder if this would as applicable to 'Merica.

 

Okay decided on Atlanta GA, is it easy to rent out a properties generally? I'm getting mixed data. Some sources say 8% vacancy rates which seems very high by Australian standards.

 

Hi GE

Texas is great, however taxes are very high and entry level is higher than Atlanta. I did not jump into this market in 2011 because of that very reason, however this market has experienced growth? spectacular, same as Atlanta and still growing.

Did recently look at Texas again, I was also told that anyone can become a building contractor/builder, and lots of dodgy operations. Just another layer of risk

If you are buying to hold, take 40% off gross yields, you will find it very unlikely to be cash flow positive today.

The strategy used in 2011 wont work today. We are manufacturing growth today because this strategy will work well or alternatively you need to buy multi units (quads), the numbers will likely work for growth or commercial property which requires a specific expertise.

Everyone man and his dog is after multi units. We just purchased one recently, I am pretty sure its been posted.

I have now 13 properties in Atlanta, read my thread on it if interested.

Rents have been rising, started about 2 years ago, and there are multiple applications to choose from when leasing. The trick is to keep the same tenants as long as you can. I guess same as in Australia, keeps the costs down.

I only know a hand full of investors who have managed to succeed in the USA market and the formula is this:

1. Buy the right product in the right location
2. If holding - property management is key
3. If flipping - (see number 1), and the numbers have to stack up
4. If developing - make sure you have developed in Australia first
5. Network with the right people in USA, how do you find the right people?? Lots of effort, time, energy and flying over regularly and also network with investors in Australia that have already made their money in USA and piggy back. That is what I did when I started.

MTR

 

Interesting. I would not be developing now, more like buy and hold. Not much of a speculator/flipper either.

40% of gross yields? As in for example, 7% gross yield is 4.2% net yield? I get that there are PM fees, but what else could be taking up so much?

 

Yes 40% gross
At current aud$ value does not stack up as a hold, Detroit market will be much greater

maintenance/repairs
pm fees
insurance
HOA fees? (similar to strata fees)
letting fee
county taxes

 

That's interesting. What kind of net return would stack up as a hold for you?

 

when I was purchasing over 20%+ gross yields

 

what apps / websites are best for browsing the NYC-manhattan market?

i know redfin is probably the most used app but I can't see anything in manhattan on that app

 

Yeah. I'd probably be happy with 8-10% gross yields in a good location. (High demand, population growth, jobs etc.)

I'm concurrently researching Brisbane and Melbourne as well. Going to buy something soon, just not sure which, since they all seem to have their benefits.

 

Great, all the best, keep researching and watch out for our new deals in US

MTR

 

USA already gone up a lot. Had friend who bought near Soho in Manhattan in 2010 at parity for around US$900k. Now worth around US$2.5m at 75c.

 

Yes. Nice. I must say you have a seemingly savvy bunch of friends in general.

 

Ah there's always savvy people out there. Check out this guy. Bought 94 assets in USA in last 4 years. Most have gone up 3-10x. So much for the Australian property boom.

The key for me in all these financial games is to keep eyes wide open and to stop focussing in my own backyard and to stop just patting myself on the back. Eg am I happy my property has doubled? Well yea, but also it is a time to reflect why there are ones that have gone up 20x in the same time and mine hasn't.

Michael Drapac: the man who has made a fortune in US property

 

Contrarianism wins out again. Buy what nobody wants.

 

condo or co-op? im wondering what its like for foreigners trying to get into co-op buildings

nice gains for your friend, I have mirrored returns (purchased one for $700k in 2010; now probably worth $2.1m) out in hong kong, low rates + QE + commodities / china downturn was the recipe lol