US Multi Family Housing USA

Thanks @MTR

You are still valuing these on cashflow though aren't you; not on potential capital appreciation?

I am not interested in rubbish either. I don't want headache liabilities in
war zones hence the notion of this thread before I commit to going over to have a look. I am trying to tee up other activities whilst in the US before I book, so the information in this thread is useful.

 

Yes, cash flow for multi units, but then again it will come down to the location and it could vary from Street to Street.
I am not just targeting these BTW, there is other stuff which I am working on but has more to do with strategies to achieve higher cash flow, which I will mention another time on another thread.

MTR

 

If you haven't started yet then I suggest you buy and read "Buying America the Right Way" by Frank J Yacenda. I recommend the book and the person. He is the person you need to set up all your US structures and handle your mail forwarding.

 

Thanks for the book recommendation John.

Amazon tells me it's on the way

Look forward to reading it.

 

Hello from a Newbie,

Apart from the book already suggested, is there any other sources you, both MTR and John, would recommend to get a grasp of the US market?

 

There is a two day seminar on the Gold Coast in August specifically about investing in the US and I am one of the speakers. It will be attended by a number of property wholesalers from the US and all aspects of asset protection and taxation will be covered.

 

We just purchased our first multi unit (4) in Atlanta, around 14% net yields, this also takes into consideration our loan at 4.3%. Trying to get yields over 20% is going to be very difficult today.

 

Many wanting to know about financing deals in US for foreigners, you can access equity if you have properties in US, and also finance deals at a higher interest rate than the major banks in US.

The clincher is no bank or hard money lender will finance any property/deals in US unless it makes sense, it stacks up, no different to Australia and conditions will need to be looked at closely because they can also tack on points to the overall interest rate, I don't think many realise this.

If flipping properties some of these banks will charge a set period/timeframe which wont make it viable because penalties will apply and interest will charged accordingly.

If developing property banks will go through it with a fine tooth combe to ensure there is fat in it, no different to sourcing finance in Australia, except conditions wont be as favourable and you wont have as much choice.

 

Just read this @MTR Why the Wealthy Put Their Money Into Multifamily & Commercial Real Estate need to read again.

 

There are a couple of really good (long) threads on the Somersoft forum which you should be able to dig up quite easily. It helped with my decisions in 2011.

 

just read this. Massive undertaking. Warren Buffett may be kicking himself

 

There are still many Hedge Funds buying Single Family Homes (SFH), first time in history where they jumped into buying SFH, I think they saw the righting on the wall.

These Hedge funds go to the court house and buy volume hundreds. This has helped drive the price up and still soaring.

States such as Atlanta, Arizona, Texas, Florida, Las Vegas where these markets were hammered. The Hedge funds are happy with 8% returns for their clients, as foreign investors we have been aiming for much higher.

Also as the topic is multi units, many probably don't realise for this to work in terms of cash flow, this product is generally in C class areas, that is not bad but it means that the location is inferior as opposed to B grade.

 

I think only big players like you and bedeveloper are able to do..cold hard cash.

 

Not at all, without going into too much detail we have clients using SMSF funds and starting off with small amounts of cash.

If you can get the returns in US and then grow wealth playing with US $ its very attractive. US$ strong.

We are now identifying cashflow markets that are where Atlanta market was 3 years ago, there are at least 3, however they are appreciating which means CG is in play...as the Yanks would say, inventory is low. We want to get into these markets relatively quickly as we don't want to miss out on the cash flow play

We see lots of wealthy investors from West Coast, New York etc playing in these markets

 

Just been reading the Washington Post and other newspapers about what the Republicans are likely to do with regard to economic policy and social policy and their policy focus.
For the first 9 months, the Republicans have stated that they are going to focus on repealing Obamacare and giving out tax cuts.
Looks like the big infrastructure spend that Trump and Steven Bannon have promised (bridges, shipyards, ironworks) is not going to happen anytime soon according to incoming chief of staff Reince Priebus.
Republicans don't like big public spending and love tax cuts for big businesses and top earners (not for the ordinary worker)

Trump and Republicans immediate agenda is to roll back regulations (Obamacare, Wall Street oversight, environmental regs), slashing taxes, and push measures that weaken unions and worker bargaining power

That 'massive spending' to help workers who are displaced due to trade disruption, globalization, automation and technological advancement looks like it isn't going to happen anytime soon.

Plus the Republicans are hell bent on eradicating social security and Medicare.
Paul Ryan has repeatedly stating these goals for a number of years.
To eradicate 'entitlements' and social security programs.
With all this happening, will tenants be able to pay their rent consistently if security of work becomes ever more tenuous and with social safety nets being eviscerated?

That is a question I have in my mind now if I am thinking/considering investing in USA properties.

 

My personal view is if Trump massively increases spending on infrastructure this will create more jobs and we are also now seeing the US economy improving. Housing market has actually rebound since 2007. Also mentioned many times that he wants to inject money into the inner city areas, these are generally poor areas.
This with plans to keep manufacturing in US will be a major win for those on lower incomes and for investors who identify opportunities in today's market.


I am seeing the glass half full at the moment that is why I am buying in USA property market, I am also on the ground and see many opportunities for investors to make money.


Renter Statistics up to 2015:

• Growth in rental demand was largest for people with incomes lower than $25,000; a group that accounted for four million new renters over the past decade.
• Growth for people with household incomes over $50,000 accounted for 3.3 million new renters.
• There was an increase of 1.6 million renters for those with incomes over $100,000 a year.

Stats Source - go.homebay

 

Beanie Girl very insightful.....

I can't see the Republicans...helping anyone other than the top 5% of America and Big business.

What the people who voted him don't see is this:

1. Trump essentially rebranded things which are already in place. Take the wall with Mexico..it already exists just that it is a metal fence....he just needs to extend it

2. He will take on China and move things back to the USA. Well under such measures as the patriot act and other moves...this was already happening...securing oil supply...food supply....what technologies can be sold to China

3. Infrastructure spending will be okay but this will predominately assist states with big businesses. It might not trickle down as much to states without them.

4. The other point which Trump and co don't see is that Globalization has caused things to change...you can't unwind things like outsourcing without increasing costs. Will Americans be prepared to pay more for clothes, cars, etc without the increase in base wages? Me thinks the answer is no....

5. Rates in the US are on the way up....this will moderate things....

6. Finally....he can't just go to war with anyone......there are countries which the US will not dare take on...one of them is China....it will be catastrophic for both....

 

Here are some stats that may interest, these are gross figures and taxes can significantly impact on rental yield dependent on which State in US.


Screen capture Courtesy of Realty Trac

 

Rates are certainly on the way up in US, but the economy is also on the mend.

How will the US rates rising impact on Australian property? Any thougths?

 

It will affect Australia...money will flow back into the US as rates increase....Australia will look less attractive unless the rates also go up...