US Deeply intrigued by USA market.

Thanks MTR, look forward to your updates. Which part of Atlanta specifically do you target?

 

You and Tenex need to get a room

 

Inner Perimeter, around the beltline. I have posted articles on why this precinct is so hot.

What is happening is many major companies have moved headquarters to Atlanta, this is creating jobs and a perfect storm for continued growth. If interested, google why they are moving to Atlanta

http://www.therealestatecompany.biz/10-companies-relocating-to-metro-atlanta-headquarters/

 

Just noticed your post MTR so will send you an article from one of the building publications I receive regarding the health of the building industry in Atlanta.I know you probably have every bit of info from all sources but,who knows,you might find some part of it interesting.All the best Terry.Demand Outpaces Supply in Atlanta

 

Thanks TerryN, good info, had not seen this.

Strong market conditions, good timing for building.
There are also many other booming markets in USA, Austin, we plan to also look at this market.

MTR

 

Yes,I think Austin is sitting at number 6 in the top 20 list MTR,so there must be heaps going on there as well.Houston and Dallas are 1 & 2 respectively and San Antonio at number 8 so Texas in general is powering at the moment.Regards Terry.

 

Apparently its going nuts, lots of jobs etc.
Makes a difference actually being on the ground.

The media coverage on Trump is massive here, interesting that we don't hear about all the jobs he has been creating and the effect on the US economy. Hate him or like him, its a Trump rally, shares going ballistic same as property.

 

Yes,I think Austin is sitting at number 6 in the top 20 list MTR,so there must be heaps going on there as well.Houston and Dallas are 1 & 2 respectively and San Antonio at number 8 so Texas in general is powering at the moment.Regards Terry.

It will be interesting to hear some stories from someone who is on the ground over there.I hope you kick a few goals while you're there MTR. Good luck Terry.

 

Thanks, we have spent the last 2 days viewing some of our renovations currently in progress.

We just got word from City of Atlanta regarding our 5 townhouse project, looks like we have some minor tweaks and it should then take 2 weeks for approval, fingers crossed. This one is an exciting project and the strategy we want to continue using moving forward. All fun and games, learning a lot.

Will post some photos on my return

MTR

 

I'll be very keen to hear about the townhouse project as we have done a few of these ourselves (son and I) over the last few years, and have done better than we usually do with housing.Having said that we don't ever make any great profit on any of our projects, but I find it more interesting and not so hard on my ageing body to work on our own stuff rather than the sub-contract bricklaying which has always been a very hard slog.One of the problems of living in a rural area.(lower profit margins) I suppose.We are back off to Coffs Harbour tomorrow to continue on with my son's two townhouse project.He poured the slabs last week and we have bricks arriving on Wednesday for the dividing walls (going face brick inside with these)Hopefully weather permitting we will make good progress from here on in after receiving quite a bit of rain and then extreme heat while preparing the slabs.I will take a few photos and post them when I get back in a few weeks.Terry.

 

@CK_Invest

The fee conversion is not the subject of discussion here. If you convert for free that's good for you buddy.

The risk of the volatile dollar (as I pointed out several times) is also a seperate matter.


Your point was to correct me when I said if an Aussie is converting at .7 to 1 they are losing buying power right off the bat.

Back in 2012/2011 when dollar was lurking around the parity, if building a house costed 100k (for the sake of example) your 100 k AUD had the buying power to build that house. Assuming that building cost has not gone up between then and now you will need an additional 30k AUD (if conversion point is .7 to 1 to build the same house. Kapish?

 

Re: Trump

Answer is somewhere between 26 - 28 min:



As you may have noticed travel ban didn't go anywhere - except creating chaos for few days!

Re: Why US?

I can't speak for broader market but I can tell you why few thousand Aussies have and are investing in American market.

Few real life examples:

Investor 1 (Me)

-entry price of development sites are in affordable range
- permit approval and building times are lot quicker
- building price is cheaper
- our target(end buyer products) are young professionals, families and FHB! They are happy to pay $10-$20k more - if location/school/product ticks box. $10-$20k may not seem lot but on sub $200-$300k end product - it bumps up profit margin

- record amount of $ invested by insitutuonal and private investor for infrastructure

If you have done that development you were planning to do in western Sydney - you would know what I am talking about!

And there are 100 other good reasons but I ll leave that for some other day when we meet in person again!

Key takeaways are

Quicker and higher margins
Low entry points
Not limited by choice of 3-4 states and 20- 30 suburbs


Investor 2

Cashflow:

Met an Aussie investor the other day:

Bought property in Detroit for $15k + spent $9k or so on rehab.

Net income on investment is $5k

This investor has 12 of above and on track to buy 50.


Source of funding for first 12:

Cash flow and profits from Aussie properties

His portfolio wil be debt free (assuming he is lender for his own portfolio) in 3-4 years! Ongoing rent will be just profits

Key takeaways

Drip fedding investment
Low entry point
Excellent position for passive income
Excellent position for organic growth


Investor 3

Cashed up retiree

Buying excellent commercial properties in strategic locations with long term and +++ net leases.

Owns upward of $15m worth of protfoilo sprawled across 6 states.

He started with $80k of Abandon commercial warehouse in Nevada.

Recycled few commercial over the period - use profits to accumulate.

He told me that he couldn't have done this in Australia.



I can't speak of others but I have to be mindful of

Available $$$$$$
Best way I can deploy that small amount of money to get best ROI
And steratgicially Invest /De invest fund to get to x number $



For me: it's not turf but game I play is important!

I always wonder why investors spend far more time worrying about things that they can't control and largley over look what they can control.

Buy asset at right value
Have an exit stretagy in place before acquisition.
Calculate numbers correctly
Allow contigancy for negative factors (in this case: Trump /Fx rate or let's say APRA or sensitive RBA interest rate swings)

What makes me uncomfortable for Aussie property market:

I believe market is at the peak of the cycle( others may disagree and I won't have energy to justify their counter arguments)

Entry level properties (on eastern seaboard states) will require circa $100k deposit

Lending climate is clouded (may put spanner in works for invest/de invest)

Limited choice of properties if we just banking on growth and population.

I do agree with population growth and long term growth!

 

@Be Developer

I am not sure if we have ever met or what western sydney development you were referring to but in any case I know you through some of the other members of the forum and I wish you luck. It looks like you have done your numbers and research so all power to you and I hope the last page of this topic is filled with stories of how much you made.

However, lets say if I wanted to invest in the US (assuming I had the cash and didnt need to borrow from American banks) here are a few things I will need straight away:


Where would I buy and what to build?
How much is required?
What are the laws around buying so you dont run into a con-artist that does a wham bam thank you ma'am
What are the planning laws?
Where do you find the architect and planners, where to submit the plans, where to find the right contractors, how to negotiate and sign, how to manage payment plans, what are the tax implications, what if something goes wrong, how do I engage agents to sell it etc etc etc

Here in Australia where I already have a lot of that information, if I try to build in the very city where I live in and manage the process, things are bound to go wrong and I will have to make quick decisions to fix them. And thats with the fact that I have a lot of info, finance and can be on the ground at very short notice.

Imagine I have to find all of that information, then try and manage the process from half way across the world!

I dont need to tell you the stories of the chinese investors who engaged the aussie builder who would send fake photos back to China for payment to get paid only to spend it at Star City. I am sure you have heard variations of these stories.

Now all of that aside, if a person convert money at 0.7 to 1 to do this investment and AUD goes to parity or above, thats the entire profit margin gone and thats assuming all the build went pretty smooth.

Re - Trump, he is a loose cannon. His presidency is A) a popularity contest (another trophy in his hall of fame) and B) to expand business opportunities for himself and his family. Otherwise the dude is a living joke. He is abolishing trade agreements and thinks its that simple to get jobs back in the US. This alone can send US into a massive recession. The reason is his protectionism policy will make everyone else to become protective and not to buy from the US and his thinking that he can bring manufacturing back to the US (where it has already been discovered that labour is too expensive, hence the reason why these jobs have gone elsewhere), he is going to send companies bankrupted. The whole thing is a circus show, and I am not even talking about his exec orders. He is an inch away from going into war with North Korea or Iran or "you take your pick" countries. 50% of his cabinet is made of army generals and he has the dude that refers to himself as Darth Vader as his advisor.

Of course there is always a chance that things will improve in the US but that chance is not based on facts, its based on random luck.

 

Tenex I can see why you're so confused and why you keep mentioning the past FX rate. I am referring to a scenario where one is purchasing today - you cant look at the past price and say you've lost money if you only swapped AUD to USD today to do a build over there. Apologies if this has made you confused.

This is part of the risk you take, if you want to minimise the FX risk you are so worried about, speak to your relationship manager at your bank. FX forward contracts for private banking customers are available where you can lock in the FX rate 6m, 12m or 2 years time from now so you can swap back to AUD with certainty.

Hope that helps.

..

On the view of U.S properties, rate rises are coming and without a doubt will have a negative impact on US property investing in general. One saving grace may be Trump and all the 'jawbs' he will supposedly create, togehter with all the infrastructure. Hence my humble (yet admittedly I have not much experience) view is places like Atlanta or even Detroit may actually see some increases. I really need to get over there on the ground though (plan to maybe later this year).

 

You clearly have no idea what is happening in US, no offence, but the economy is in recovery and real estate in most markets has been rising/booming since 2011. It takes a great deal more than luck to succeed regardless of whether you are buying in Australia, US or any other country.

Most successful investor I know is a Syd investor who now owns 44 properties in USA generating an income of $500K, this person has made a killing and still buying, why not? there is still pots of money to be made.

I have also reaped the rewards, and am continuing to secure properties. If anyone buys in US without doing their homework well what can I say, not too smart.

MTR

 

@MTR

I have no idea about US economy but at least I am not at risk because I am not investing there. Lets hope people who are investing there have the US economy worked out back to front because if it does hit the fan no amount of wishful thinking is going to work ☺

 

No one can predict the future and if you have no interest in USA market then you don't buy.

However I would be more concerned about Australian property markets, in particular Sydney market. The playing ground is changing rapidly, finance is tightening and when investors can not service loans they can not buy, market can go from low stock to over supply. I have been through 6 boom cycles now and after boom comes bust.

MTR

 

You can find oil in your backyard and the price of oil can go down so much making it not viable to pay for a rig and effectively making the whole thing redundant. There is an element of risk in everything.

Sydney and Melbourne are still under-priced when compared to the rest of the world. Considering the density of employment, healthcare, infrastructure, education, lifestyle, availability of food, pollution level etc coupled with weather and remoteness from the rest of the world there is every reason for investors both foreign and domestic to invest in particular in Australian property. Even if there is an adjustment, it will be minor.

Banks still have to make money and still will have to figure out ways of lending and a lot of buyers these days are cashed up any way.


Its still far less risk than going to a foreign country, learning the game over there, then trying to manage the process from Australia and even if everything goes as planned, something as simple as currency conversion rate can annihilate your profit.

Do you think that when interest rates go up in the US, as they have been indicated already, it wont have the same effect on those people whose salary remains the same but their loan repayment goes higher?

 

This is what most analyst and property doomsday advocates miss IMO. They've been calling a bubble for years and here we are properties still healthy as ever.

You can have statistics and data on everything from household debt, prices to supply demand, but none of these numbers place any value on the desirability of Syd/Mel as a city. Foreigners are still desperate to come and live here, and it's not just the Chinese.

I personally don't see much of an adjustment in Syd/Mel for the next couple of years. Only my 2 cents.

 

I am not calling Syd or Melb a bubble???hardly, I have already taken my profits off the table in both markets and I have been around long enough to understand that property is about cycles.

Out market has nothing whatsoever to do with whether you believe Syd or Melb is cheap compared to other markets around the world.

If finance tightens which is what is happening and investors can not get loans they can not buy, this is what is happening currently in Australia.... I am calling 2018, I think @sash pretty much called the same???