NSW Tenant Paid my House off in 3.5 Years

Discussion in 'Property Analysis' started by MTR, 10th Dec, 2018.

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  1. MTR

    MTR Material Girl Premium Member

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    Hi Everyone

    Please ignore the Prefix, this property is in USA, but could not leave this blank



    Here is the background history on this property

    14 Emerald Pines Dr, Dallas, GA - 3 beds/2 baths

    Purchased this property in 2011 from a Realtor/wholesaler, my first property purchase in Atlanta.

    I have had the same tenant from day 1, in 2011. She has given notice last month and I expect a rehab will be required ($3,000-5000) and the rent today will be approximately $1300 per month.
    Very sad that this tenant is leaving, as she was the best tenant anyone would want, not only did she pay for my house, but she called twice during this period for maintenance issues. :eek: I wish they were all like this

    Here are some quick numbers
    Over 7 year period tenant paid approximately $84,000 rent, however, 3.5 years to pay for the property $42,000

    Current value of the property today $150,000 (USD)

    Purchase Price - $42,000
    Rent - $1000 pa ($12,000 pa)




    [​IMG]
     
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  2. TopCat

    TopCat Active Member

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    I need to ask, how in hecks brain can an Aussie purchase an overseas property?

    I have read a few things in the past (agent / finance based in AU), but how does someone go to house hunt, finance, legal & government/council costs?

    I do know NZ is "drive away no more to pay" (no purchase tax, signed contract of sale is only propert cost due (exc banking / legal).
     
  3. MTR

    MTR Material Girl Premium Member

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    I made my contacts prior to flying to US, researched the market/s of interest

    We viewed many properties and established price of house by dollar value per square foot and determined what was a bargain this way. But of course everything was a bargain then

    All cash buys, no finance, however I could finance today if I wanted to leverage

    Taxes- county can be viewed on zillow, other info like approximate rent, estimated value and surrounding properties all available on zillow

    At end of day if you have the time and understood what tools are available its not difficult
     
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  4. Karina

    Karina Well-Known Member

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    Ditto @MTR ,
    Here is one of my 2011 Atlanta US purchases. I ended up buying this one after one of my clients passed on it due to it needing a termite treatment. Was no big deal installed a sentricon barrier for around $500

    Address: 6730 Manor Creek Drive Douglasville GA
    Paid $42,800
    Current value $180,000
    Rehab $10,000

    Rented to the same tenant from 2011 to 2017 at $1000 - $1100 month.
    Tenant recently moved out leased it for $1295 month.
    Rent collected approx $84000+

    All figures above are in US dollars.

    In 2011 - dollar at parity so $1 US was roughly worth $1 AUS.

    Value in Australian dollars today $180,000 $US x 1.38 (to convert to AUS today) = $248,400 AUS

    Rent collected in Australian dollars (using todays exchange) - $84000 US x 1.38 to convert to AUS dollars = $115,920

    Total current value + rent collected in AUS dollars = $364,320 AUS from a $52,800 investment including rehab. Crazy numbers. That's roughly 7 times what I paid for it.

    The deals were so good I ended up buying 55+ properties in the US.

    manor creek6730.jpg



    Here is one I just closed on last Friday for $76,500 in Montgomery Alabama. Rented it for $950 month tenant moved in Friday, 1 week from closing to leasing.

    Video footage
     
    Last edited: 10th Dec, 2018
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  5. MTR

    MTR Material Girl Premium Member

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    @Karina loving the numbers.... 55.... go girl

    I am at 20....:p
     
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  6. Propagate

    Propagate Well-Known Member

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    So, are you guys still seeing big opportunities out there at the moment? I can understand the huge increases immediately following GFC, interesting to see @Karina still buying, is there an expectation that these sort of super-gains will run on a few more years yet?

    Looked into it a couple of years ago but wasn't in a position to be able to do anything. Just in the middle of a sell off right now so we can move PPOR then maybe 1-2 years time we'll be ready to run again but pretty intrigued in looking to the USA this time rather than Aus.
     
  7. Karina

    Karina Well-Known Member

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    My strategy is to reinvest the US dollars generated by the portfolio into acquiring more rental property for cashflow. I am targeting manageable properties that are easy to rent and have good cashflow. The capital growth is secondary to me as I don't plan to sell. I am interested in the passive income. Atlanta has a very strong rental market and further increases are expected in values according to forecasts. Alabama's rental market is steady (not as strong as Atlanta's) but solid in the right locations.

    The US market was grossly undervalued after the GFC. Its still undervalued in many locations. I am about to settle on a property in alabama for 88k, the insurance replacement cost is $245,000. You cannot re build the home for the purchase price. Nice looking home and great location.

    I prefer to buy with cash than leverage, reduces risk. I think the US housing market is a great place to park money for a high rate of return.
     
  8. Propagate

    Propagate Well-Known Member

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    Thanks @Karina that's kid of where my heads at at the moment. We're moving in January and I intend to knock over the bulk of the new PPOR loan throughout next year, beyond that I'm thinking if USA properties can still be sourced similar to your example then period cash buys with income re-invested into similar would be a good strategy to super charge our retirement pot.
     
  9. Karina

    Karina Well-Known Member

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    The Alabama deal is current so yes they are available at that price and there are opportunities in other states across the US as well, these are just the markets that I am focusing on as I have my teams set up in Atlanta and Alabama. To get it right in the US market it takes more than just buying a good property you need a trusted support team on the ground to make the venture profitable. Financing is fairly expensive for the non resident so I think cash is best at least when you are getting started in the US and building the portfolio.
     
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  10. mickyyyy

    mickyyyy Well-Known Member

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  11. New Town

    New Town Well-Known Member

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    ha ha... I loved it so much I bought 55

    Hi, I've heard in some states there are large annual state taxes (like $50k pa in NY?) - is this a concern where you invest?
     
  12. MTR

    MTR Material Girl Premium Member

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    My guess is these properties are much lower end price points in comparison to NY
    Atlanta taxes pretty good really, per house paying on average $2000 pa
    Detroit lower entry level but taxes averaging around $1200 pa per house

    I believe Texas has High taxes

    When I started buying in US in 2011 it was all about the cash flow, you could only achieve great cash flow I you were purchasing in cheaper States such as Florida, Atlanta, LV, Birmingham. Growth has been a pleasant surprise
     
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  13. Karina

    Karina Well-Known Member

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    The markets in Alabama I am buying in have really low taxes, I believe Alabama is third lowest in
    the country for taxes making it an attractive cashflow market leaves more rent dollars in your pocket. Taxes are about $500 year per property.
     
  14. MyBe

    MyBe New Member

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    What is the tax assessment cost for these?
    I have heard it can be very expensive upto 10-20% of the property value
     
  15. Karina

    Karina Well-Known Member

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    I assume you are referring to county taxes (equivelant of our council rates)

    I would say in markets like atlanta and detroit you are looking at about 15% of your rent in county taxes.

    I really like Alabama as taxes average about 3 - 5% of rent. One of the lowest taxed states in the country. Leaves more cashflow for the investor.
     
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  16. Niche

    Niche Active Member

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    These look like a great way to get some positive cash flow happening early however i am assuming you wouldn't recommend this method for people starting out due to the increased risk in investing overseas
     
  17. Karina

    Karina Well-Known Member

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    I would recommend positive cashflow investing to any one at any stage of their investment journey. You need to select a manageable asset that is going to attract a decent tenant and provide stable income. Don't buy the bottom of the bottom based on price you will only end up with head aches. Looks for a decent home in a decent neighbourhood/ street.
     
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