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Investing properties overseas ? Sick of price doubling in 7 years if it acutally happens. Too slow.

Discussion in 'Where to Buy' started by Kangaroo, 4th Nov, 2015.

  1. Kangaroo

    Kangaroo Well-Known Member

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    In Australia, the average price of a house or well located unit can appreciate by nearly 100% , during a time span of 6-7 years, provided you time the markets correctly in terms of when/where/how much to invest nationwide and get out of the markets correctly as well to avoid the long stagnation.

    Lots of people have done it. Just out of curiosity, has anyone done this overseas ? Lots of Australians have overseas connections and for sure people can be familiar with the property market with at lease ONE other country. Instead of juggling among a handful of Australian cities over 1 mil population, should extending to ONE other country give us lots more to play with ? Several PCers have done this with US, Russian markets beautifully.

    If you have done it, what is your success story ?
    If you have not done it, what are the major hurdles ?

    Like to hear any comments.





     
  2. Blacky

    Blacky Well-Known Member

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    It is possible. But again market knowledge is essential. For every property which has doubled in value I have seen as many halve in value.

    Some pitfalls.
    1) Market knowledge. Its hard to follow multiple markets in Australia at once. Let alone trying to follow a market internationally. Often there is nothing like having a 'feet on the ground' view of what you are buying. This is a difficult and often costly process for international markets.

    2) Processes - At least in Australia you have some idea of how the market operates, how to buy, sell and finance a deal. Even if between states there are minor difference in process - ultimately you know how it all works.

    3) Leverage - Finance is rarely available for foreign or non-resident buyers.

    4) Team - Getting your team right in Australia often takes time and several 'false starts'. Multiply this difficulty.

    5) Time - It takes a lot longer to find, negotiate and settle a deal when you are not on the ground.

    6) Currency - Over the last few years we have been in a position when the AUD has been strong. This has allowed us to have a much stronger purchasing power. As the AUD falls the AUD return strengthens. Buying now with a lower AUD changes the risk.

    7) Laws and standards - If have the Australian Law book - throw it out. It has no place here.

    8) Lots of others. Like anything it is a learning process.

    I assume you were referring to me about our Russian purchase. I sold it as all being good. The reality of the matter is that had we invested into Russia - without finance - we would currently be sitting on a 60%+ capital loss. Add in delays with completion, costs of purchase (flights, accom etc) and we would be looking down the barrel of $100k loss.

    It is not without risks. It is not for the faint hearted. It is not easy.

    Blacky
     
  3. lynchy

    lynchy Well-Known Member

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    I purchased a 2 unit apartment building in Palm Beach, Florida for $35,000. I sold it for $89,000 about 12 months later after receiving $1,800 per month rental income.

    Don't ask me why I sold it, big regret, especially when the AUD was at $1.05. Although I did buy it when the AUD was at $1.07.

    Contrary to the above, I found it exceptionally easy. I had never been to the US, I was 25 years old, I never saw the property, never had a vacancy and never had any problems with my tenants.
     
  4. Biz

    Biz Well-Known Member

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    Dayum! Got a link? I would happily buy it for 89k with that rent return!
     
  5. lynchy

    lynchy Well-Known Member

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    Long gone, sold 2 or 3 years ago.
     
  6. York

    York Finance Broker Business Member

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    Just out of curiosity did you ever look into it again at a later stage to see if there were deals that were still viable? I mean, you did quite well in such a short time frame. Didn't it ever interest you to try it again maybe with a little more exposure? Sounds very lucrative. Especially with those returns.
    Also did you have any issues with residency/citizenship?
     
  7. lynchy

    lynchy Well-Known Member

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    No issues, anyone can purchase property in the US

    I did keep looking in to it however as there is no lending (my purchase was a cash purchase, you can however refinance after having owned the property for 24 months), property prices had gone up and the aus dollar had fallen, it was no longer a viable option for me.

    I had to sell because I broke up with my gf at the time however if I had held I would have refinanced, kept my money in USD and continued to purchase. Such an opportunity wasted.
     
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  8. lynchy

    lynchy Well-Known Member

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    Such different rules in a lot of states in the US to that makes it a lot more favourable to the buyer / landlord

    In Florida, for Mortgagee sales

    The bank must bring the property up to a decent standard in regards to outside finishes before the city will let the sale go through ie replaced windows, doors, basic landscaping etc

    If a tenant is 4 (or maybe 8, cant remember) in rent arrears, you can call the sheriff who will evict the tenant and change the locks at the citys expense.
     
  9. Propagate

    Propagate Well-Known Member

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    We didn't invest overseas per se, but have an overseas IP by default.

    We're from the UK, moved out here in 2007.

    Bought our UK PPOR in 2000 for 73k GBP - at a time when prices had just rocketed and we thought we'd bought right at the top of the market, but it was our first house and knew we'd be there for a good few years.

    Turns out it was just the start of a boom....

    In the first 18 months it went from 73k to 85k GBP

    In the next three years it went from 85k to 120k GBP

    By the time we left in 2007 it was valued at 185k GBP

    So, that's about double-and-a-half in 7 years?

    BUT.....

    ...along came GFC. Value dumped to about 140k GBP, nothing moving at all over there for a few years. It slowly crept back up and has sat around the $160k GBP mark for the last 3 years or so.

    So, 150% gain in the first 7 years, then a 15% drop in the next 7 years. End result, 15 years later it's sitting stagnant at just over double. Fine with us, but would not have been nice if it was bought in 2007.
     
  10. Ozzie in Texas

    Ozzie in Texas Well-Known Member

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    At the end of the day, it isn't about how quickly you can double your money..........it's about how best do you achieve life balance.

    To invest in the Australian property market at the moment requires you to take out a massive loan which ties to you an endless never ending cycle of juggling to make sure you meet your huge debt.

    Or.......maybe, just maybe.........do you take stress out of your life......and say, I would rather a better quality of life without the huge debt and still make a profit without killing yourself because you are buried in debt.

    Debt is an illusion.....like a mirage in a desert. I don't remember who said that first........but truly it is..

    If you need to work harder to service the debt you have acquired just to prove whatever you want to prove.........and all you have achieved is to continue to work harder to service that debt......you have been defeated by the game that lenders play.

    Play the game in your favour. Do it in a way that makes it ok with you.

    My parents, like many others, lived their whole lives building a property portfolio. My parents are asset rich and cash flow poor. I have wished better for them. I would rather they sell one of their properties so that they could take care of themselves and just enjoy and value whatever days they have left on this earth. Instead, they hold onto this Aussie madness that holding onto property..........at whatever expense...........is about proving something.....or ensuring their legacy to the next generation .......or whatever.

    The truth is, my parents are in their 80s. I am in my 50s, And the only really benefactors to my parents sacrifices in this scenario are my children. Thank God, they will be OK........but seriously, what a waste of my parents life and mine.

    I am sorry. But I do disagree with you. Do you want to stress out about how to manage a million dollar plus loan to service your investments in Australia........or perhaps, just maybe.......there are easier ways of building your wealth without lining the pockets of banks/lenders who really don't care about how you manage your family, finances and overall stress.
     
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  11. MTR

    MTR Well-Known Member Premium Member

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    Nice, why Palm Beach?? I think good option, sunny climate. You got the timing right, the only way to buy now is if you have US$.

    I was seriously considering Florida after going to Steve McKnight's seminar on US property, he was buying in Florida at the time $25K+ I think he had more than 20 at that time 3 years ago.

    MTR:)
     
  12. MTR

    MTR Well-Known Member Premium Member

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    Hi Kangaroo

    I did post on SS and PC some time ago, this is the original link from SS
    Buying in Atlanta - Somersoft Property Investment Forums

    Fast forward today - from my original purchases in USA/Atlanta 2011.

    I now have 9 properties USA/Atlanta, initial capital investment of $500,000 (Au$)
    Value today, if I were to cash in the chips and with the current drop in (Au$) would be close to $1,400,000. (4 year investment)

    Rental income - $125,000 gross income US$
    If you look at currency play US$ converted to Au$ - $150,000 (approx.) gross income

    MTR:)
     
    Last edited: 4th Nov, 2015
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  13. MTR

    MTR Well-Known Member Premium Member

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    This is what happens when investors focus on capital gains and ignore cash flow.

    Steve McKnight to a degree helped Aussie investors to open their eyes to the importance of cash flow.

    Unfortunately investors who are not prepared to manage debt and ignore cash flow they may end up the same way as your parents, sacrificing today for tomorrow.

    I agree with you I don't see the point to this, may as well just keep at the day job, pay off the one mortgage and retire on super and part pension, it would sure be less stressful.

    MTR:)
     
  14. MTR

    MTR Well-Known Member Premium Member

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    Not to mention, no stamp duty when buying and I pay less tax than in Australia. Also because renovation/rehabs are required and buying at such a low base the depreciation on these properties add significant deductions, make it very attractive.
     
  15. Ozzie in Texas

    Ozzie in Texas Well-Known Member

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    Absolutely true.

    Australian regulators have it the wrong way round. When you buy "as is" in the US, you know that you are buying at a significant discount. You know up front that reno is required and the property has been priced accordingly.

    Alternatively, it is encumbered upon the property seller to prove that their property is worth the average market value of its neighbours. Any defects or faults found after the agreed price has been reached, the buyer has the choice of demanding that faults be rectified to justify the asking the price ....or the seller has the option of offering a discounted settlement price .......or the buyer can walk away without any significant losses.
     
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  16. geoffw

    geoffw Moderator Staff Member

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    We lived in England for a few years, 1988-1990. We bought a terrace house for GBP50,000. There was a big slump a few years later, and prices stagnated. We sold in 1998 for GBP55,000. We probably could have done a lot better if we had been able to renovate- property management wasn't sufficient to let us know the poor state of the place. Also it was the beginning of a boom- there were cranes everywhere when we went to sell, but the logistics of renovating and managing from afar were too much.

    I see now a similar property would be about BGP 190,000 - a growth rate of around 5% pa, but in fits and starts. It would have required, I think, about a 12% growth rate to double every 7 years.
     
  17. samiam

    samiam Well-Known Member

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    got a couple of units in Asia where I was from, total 100k, paid cash. may not been the wisest decision made. good CG (worth 250k or more now; in 5/6 years) but pretty much dead money as not easy to get money out (through corruptions) n pay significant tax here :confused::confused:
    better to invest in transparent system. lesson learned. :rolleyes:
     
    Last edited: 5th Nov, 2015
  18. melbournian

    melbournian Well-Known Member

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    Regretted that I never entered the us property market .
    I did do ips in U.K. , malaysia and Indonesia but that was only when the AUD was high and it's not heading above 1usd anytime soon As for ringgit and Indonesia rupiah they're basically low ball currencies so can't see any appreciation there.
     
  19. Ozzie in Texas

    Ozzie in Texas Well-Known Member

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    Even with a weaker AUD, buying in the US is still a viable proposition. As MTS said, you can still buy a portfolio of a few properties in the US, for the same price as buying just one in Australia.
     
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  20. melbournian

    melbournian Well-Known Member

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    I own a 2 ips in shoreditch from 2009 which really are worth quite a lot in terms of currency exchange. Still thinking whether to offload to free the cash reserves