I came across this full page ad in the Melbourne Age and thought-I wonder how many suckers they will trap with this sort of advertising.. "I brought 7 positive cash properties after I attended the event".. How could this fail.."78k USD cash flow positive annually" I'll have 10 thanks.lol
I don't know what you could possibly purchase for $30,000 as per advert in USA today, my US properties in Atlanta have tripled in price since buying in late 2011/12, perhaps Detroit, the hood? Apparently even Detroit has experienced growth, still would not buy these. Also Au$ has dropped significantly, it may be the rubbish in US that investors are off loading. The income is attainable due to the money play, my 8 US properties give me an income of $120,000 gross. Unfortunately the boat has sailed, hope no one gets suckered into this, always been too many opportunists in this market. MTR
There are still many opportunities in the US market. However you need to trade property rather than just buy and hold. There are some exceptions you can buy commercial property and still experience strong yields and I do a lot of fix and flips into the local market. However you need to do your due diligence carefully. The other point I would make be wary of any company offering to sell you properties in lots of different cities.
@Coota9 speak to karina at www.selectamericanhomes.com she has sound knowledge of US property market.
@Be Developer Thanks for the link but as MTR has stated above the U.S market has well and truely sailed..not really part of my investment strategy anyway.. I'll keep my focus on investing in the best country in the world..OZ the lucky country!!
Hello all - Well - what can I say - another seminar and unfortunately people will get suckered in. Some questions I would have are: What is this Markos experience in the USA? what is his track record of success? Another salesman that will push clients into 'cheap as chips' real estate without understanding the real costs of investing in the USA. I will say to anyone - understand the following before investing in the USA: 1. Exchange rate AUD V USD - you are buying a US property so be sure to understand the exchange rate difference with AUD around 78 cents currently 2. Structure - you will need to set up an LLC in the relevant state as well as a bank account, this can cost quite a bit, we set them up from here for our clients as well as bank accounts 3. Due Diligence: check crime rates, do a zillow check, title search, building inspection before you buy, if possible fly there to meet the team, you need a team on the ground to be successful 4. Property manager: you need a reputable property manager to collect the rent - property management there is not like Australia - sometimes they collect rent with cash - try collecting rent in a c-class neighbourhood in the ghetto 5. Control the cash transfer - we has seen major fraud with a certain aussie promoter misappropriating funds of investors - these clients never saw the property that they purchased, they are in the promoters name and the promoter is in jail. 6. What is your strategy growth and yield or just yield? many properties are focused on yield only - whats the point? consider NET costs after acquisition costs and structure costs i.e LLC and accounting/ tax/ PM fees 7. You need to appoint a US CPA to lodge your tax return, if you have multiple properties, you need advice on structure of the LLC to limit the amount of tax returns. Tax return costs will vary based on complexity. Appoint an accountant who understands both US and Australian Tax Law. 8. Think outside of the box - just limit your investment to property - think about development funds, there are a few out there that I have been involved in and they are performing extremely well. 9. You can obtain Finance from lenders up to 60% LVR/LTV - if you have a property with no loan you can refinance and cash out, rates are around 6.99-8.25% which has been attractive for Aussies in the last 18 months. We know assist in finance across the states which is interesting. This is a general list and wold be a number more that Redwood covers on its website https://redwoodadvisory.com.au/us-property/. Mods delete if inappropriate If you are going to seminars like this with someone 'marketing' US real estate, remember if it sounds too good to be true then seek a second opinion. I know alot of people that have done well with US Property and I have previously, however, there are quite a few that invested without full knowledge of what are the real costs and unfortunately its ended poorly. Hence its important to partner with the right team on the ground that can assist you from day 1 to closing...and when something goes wrong you need a team to assist you to fix the plumbing etc .... Hope that helps... Cheers Ivan
Great post Ivan - it isn't all beer & skittles in the US. The exchange rate has dropped significantly since the highs a few years back, making these properties significantly more expensive than previously (is this the CG that the spruikers are pushing?). US operates under different legal system to OZ as you point out there are particular ways of doing things there.
I don't know exactly what the spruikers are claiming in terms of CG, however if you are buying today in USA it would cost you perhaps 25% more because the $Au is currently weaker against US$. I know when we were buying in Atlanta the $Au was on parity and some cases I was buying at $1.06, so purchase price was lower due to the strong Au$. CG in USA is all about the property prices moving due to the strong demand by foreign buyers, hedge funds and the improvement of US economy and US banks now lending to home buyers in USA. Creating massive demand will continue to push prices up. The fall of the Au$ is a bonus in terms of cash flow, rental income when converted from US$ to Au$ is attractive when bringing the money home. For every $5000 US$ I convert to Au$ I am actually bringing back $6250 income due to the money play, so making an extra $1250, depending on the exchange rate on any given day. Taxes/accounting and structure is all part of the planning strategy and needed to be considered before buying, same as when buying property in Australia. Using finance to purchase properties was always a "no go" zone for me because at the time any of the loan contracts I viewed were dodgy at best and just added another layer of complex paper work and fees. Did people get burnt buying in US, of course they did, I have seen some of the properties foreigner investors have purchased, they paid too much money and purchased in the wrong areas and to make matters worse could not source the right property management company so they lost money. I know some of these investors that just flipped these properties just to get rid of the ongoing headache I don't plan to sell any of my properties, as my initial cash investment of $500,000 is returning around $120,000 pa, I can not possibly achieve anywhere close to this in Australia. Moral of the story.... does not matter where or what you buy, homework is required otherwise you may get burnt. MTR
For that price and yield, they will likely be in struggle st USA... Which makes aussie struggle st look like heaven.
I am buying cheapie a at the moment, townhouses in Atlanta, they have not moved as much as houses. Paying $39,000, 10,000 Reno and around 12%-13% yield. It's very attractive due to the currency play and I don't have any headaches, we have a gun re agent. It's not for everyone, that's why many did not jump in.
Haha there must be a graphics design firm out there that specialises in designing websites and print advertisements for property spruikers as they all look the same!
