Discussion for property investing in the US

No, only for tax purposes

 

that is correct
I have aligned my tax return date with my Aussie tax returns makes life much easier.

My new purchases will be a different story

 

no

 

How do the net yields in NYC compare to Philadelphia?
Would it be better to go straight to a unit in nyc if that is where you eventually want to stay?
Do you travel often to nyc ?

 

Another State to look at that is booming is Texas, only problem with this market is taxes, very high.

 

I liked texas.
People are so friendly
Great history

 

Hi Beano
Very difficult to source cash flow properties today in US only because in the main property markets have been soaring. Multi units is one way of achieving this and perhaps commercial property if looking at a straight buy.

What many Australian investors don't realise is whatever the gross yield is or quoted you need to take off at least 40% for all expenses.

The strategies for foreign investors that worked in 2011 wont work today, that is why we are flipping and developing, buying the land and building gives us a real edge with perhaps 40% profits, we have cash. US investors find it harder to source finance for if they are buying land. Profits way better than what we can achieve as developers in the Australian market today.

I recall investors who posted on SS forum years ago investing in NY, I think it was Rochester??, this is low end feeder stuff they all got burnt badly because they were buying inferior product in the hood. Very easy to do this anywhere in many States in US.

MTR

 

Yes, Texas is great, interesting I don't believe the oil prices has effected property markets, still continue to soar.

Higher entry level, wont be anywhere close to cash flow positive, what you like?

 

W

Flew into houston visted Dallas ,fort worth ,austin ,san antonia ..plus new orleans last year ...one of best holidays (along with the other usa locations)

Might just treat the usa for holidays then

Anyone on PC aiming to travel to all 51 states in the USA?

 

Yes they are. I only pay 1.02% in California.

 

that sounds good, higher entry level for California. Be interested in your story if you would like to share

 

It's nothing too dazzling! Saw an opportunity in 2012 when prices were low and the dollar was above parity and pushed hard to buy in the US as I believed it was a window (for Australians) that would probably close and not come back again for a long time, if ever. Bought condos in the mid to high $200k range that were renting at about $2000 per month (now around $2300 per month). Expenses:

1. Loan interest 3.6% fixed for 30 years (life of the loan)
2. Mandatory 20% down payment and P&I loan (due to foreign income i.e. Australian income for US purchase)
3. HOA fees (strata equivalent) started at $215-280 p/m but have since gone up by about $50 p/m.
4. Pretty standard insurance fees although they have a product called 'Home warranty insurance' where you can pay about $600 per year and it insures maintenance calls out for basically everything in the property paying only an additional $50 call out fee per problem! It's absolutely unbelievable! Problem with the air conditioning? $50 to call someone out to fix it. Electrical problem? $50 call out fee. It really allows good maintenance cost planning and I wish it was here!
5. Letting is very expensive with most brokers (agents) charging 5% of yearly rent to let the property and all they really do is leave a key lock box and process applications. This is because the tenant also has a broker (kinda like Million Dollar Listing if you've ever seen that) and the brokers share the commission. It's negotiable but unlike here, the good listing websites are generally viewable by brokers only so it's a very internal process.

Overall roughly $US 800- 900 per month positive which is obviously better in AUD as the USD rises against ours. Prices have since risen in USD (they're probably worth about $US400k now) so also with the drop in the AUD since purchase there's a "double gearing" effect.

They were good investments but not for the faint hearted as they come with problems of their own being in another country with different rules and a very, very weak PM sector with little to none of the protections we have here. My main consideration was getting them to positive cash flow in USD so was safe against dollar fluctuations. I built up a war chest in USD for unforseen expenses to prevent having to transfer money and to date there haven't been any major problems cash flow wise.

 

Andrew, absolutely brilliant story.

You are the only foreign investor I know of who has managed to source a bank loan at US citizen rates?

US citizen? partner?

I believe US properties will continue to soar as economy improves, nice to be holding this stuff or just playing in this market.

I know someone who has purchased 15 in Detroit, doubled his money, this person is holding, however 80% of the rent is gone due to the client base, this is not for the faint hearted.

My Atlanta stuff is now a walk in the park, did not start this way, but you just learn along the way and key is property management and selection of property type/location

MTR

 

Yep

Thanks. I don't believe I've done anything special but I learnt a long time ago that it feels worse to regret not doing something after an opportunity has presented itself then disappeared than it does to taken an opportunity and not have it quite work out. I'm far more scared of what I might miss out on than what can go wrong as I believe you can mitigate the latter with sound DD, risk management and decision making.

Cheers!