US Property ( including struggle streets) are booming

Many Aussies got burnt buying in Rochester, NY many years ago. There was a prominent poster of SS buying up.

Not sure what the attraction is with NY.

USA property market is not the Australian property market and the rules are different.

MTR

 

Agree.....anything north of New York City is a dead zone. Have friends with country places that are selling for the same price 10 years later after deciding they've had enough (and taking a while to find a buyer). This said....getting out of the city for the weekends is a great idea.

There were at least one or two Australian "industry buyers" snapping up 20+ places in crown heights/fort greene and doing nice renovations to rent that are sitting pretty BUT I wouldn't want to be managing them and although we considered moving out of Brooklyn heights apartment to a house or house + rental in PLG we've decided the amenities drop wasn't worth it.

This said.....fixed 30 year mortgages are AWESOME and 10/1 are super competitive as well (way better than Australia) so if I was 10 years younger I'd probably make the sacrifice for long term capital growth especially if the right duplex with 2 floor through rentals became available at the right price but we'll probably be out of here by 2025 so not worth the agro (though getting another $500k tax free on PPOR would be nice....).

 

Hi MTR

I just wonder why you invest in Boston and Atlanta? What about Los Angeles, CA and Brooklyn,NY ?

Did you buy foreclosures or from owner?

which lender in US you borrow the money?

 

I was buying in 2011 purely for cash flow in Atlanta, as property prices crashed as much as 70%, did not expect the growth, that was a bonus

These are typical of what I was buying, I purchased 9 in 2011/12.
Purchase price of this one was $34,000, you can see Zillow estimate today is around $149,000 renting for $1300 per month
6120 Course Side Way, Lithonia, GA 30058 | Zillow

Today I am buying anywhere in USA that makes sense in terms of cash flow, flipping, developing.

Most of our properties are in Atlanta.

Boston property was purchased at auction, well below building cost, we are doing a condo conversion, it will probably be a hold as cash flow will be strong and Boston is one of the hottest markets in USA.

But as I mentioned we will buy anywhere that makes sense.

I am currently sourcing equity release loan on my properties, only way foreign investors can source finance.

Interest rate around 6.5%, foreign investor rates, which is pretty good, however the fees are expensive. I think its worth leveraging because I am seeing the growth


MTR

 

A lot of Chineses are migrating to USA in the last 5 years and this causes the house price increase. According to List of U.S. cities with significant Chinese-American populations - Wikipedia, the two cities which the largest Chinese are New York and Los Angeles. In New York, Chinese tends to go to Brooklyn (How Chinese families are showing investment wisdom in a hot real estate market).

It would be good to invest in cities where demand is high. So, I narrow down my research into these two cities for prop investments in USA.

1. New York

House price has been grown significant in the last 5 years due to Chinese migration. Median house price reahed $1.4m in 2017 , from 1m in Sep 2012. Median rent is $3,900.

However, there is still chance to invest into NY under $500,000. For example, East New York (EYN) (Brooklyn) is well known for criminal records and the black's residents. Many infamous areas similar to ENY has growned significantly. Expectedly, the ENY area potentially grows in the next 10 years when the black moves out due to afforability.


2. Los Angeles

House prices in Los Angeles has just rebound to the prices before financial cricis in 2007. Median price is $785,000. Is it a good and safe chance to invest in Los Angeles.

 

Account for exchange rate as at 2011 and 2017, you achieved a significant unrealised gain.

U$34,000 --> A$34,000 @ 1:1 (2011)
U$149,000 --> $A212,000 @ 1: 0.7 (2017)

Ratio: $212K/$34K = 7 times

 

Not necessarily. Its good to invest in growth markets where you can make money, buy volume, and cash flow positive. This mitigates the risk.

This a much higher entry point. You need to consider cash flow and currency play and whether this will in fact stack up for you. It will be hard to hold because the net yield is not worked out the same way we work this out in Australia, it will be less. You wont know this unless you already own/rent property in USA.

When you mention strong markets and Chinese buying I get this, but I assume you are not on the ground, as I mentioned many times the world is buying and growth is happening in many markets. Atlanta properties have had an increase of 300%+ and still growing in a short time frame. Currency play is a bonus.
It is not uncommon in many markets at the moment to see spectacular growth, ie Florida, LV, Arizona, Atlanta etc etc. Not high entry points.

Wherever you buy I strongly suggest you fly over and check it out the market, really important to do this.

MTR

 

Hi MTR

Can I ask how Geography and Regional Administration in US ? How to compare it with Australia?

In Australia, we have Council of City. Each council administrates few surburbs. In US, how does this work? i.e. Is a county i.e. Brooklyn county is equivalent to a City Council in Australia? East New York is equivalent to a Suburb?

 

Have anyone bought short sale or foreclouse in US? What do you think about this one?
41 Essex St, Brooklyn, NY 11208 | MLS #2955158 | Zillow

 

If i recall cypress hills is actually a pretty rough area, not for my liking though others may have more insight.

 

Yes, African-american is popular there. High crime. Does not sound good.

 

And the Politically Correct award for 2017 goes to....

 

County (United States) - Wikipedia

 

Thanks MTR!

 

Sister/Brother in Law did well. Sold some properties HK in 2010/2011 and enough $$ to buy 10+ properties in those struggle street in California.. they call it Mt Druitt of Sydney properties. some of them are pack of duplex and triplex. One of them was purchased for 145k USD ( 1 to 1 parity then) and was rented for $600/wk..that's 20% return. Today their US rental is over 200k per year USD, no mortgage on them. Their US return is bigger than Aus properties using much small capital.
They're now building granny flat on some of them which will further increase their yield

 

Is still good time to invest in US? Markets are inflat now.

 

Thats brilliant, they killed it
Just cant get these returns in Oz
I expect they have had spectacular growth

I never thought of building g/flats

I wonder if I can do this with any of my properties

There is a huge rental demand in many States

 

Yes great time but it is not 2011, different strategy is required now IMO

 

The way they told me g/flats approval were similar to Aus.

Yes they told me all properties are more than tripled since 2011, plus the benefit of exchange rate variation to their favour... When they purchase those multi-units, some units may take longer to fill tenant, but in recent years they have no problem getting tenants...shows US economy picked up big times.

 

Right
I have never had a probkem renting, rents have increased considerably since my original purchases


They could access equity now and use the funds for g/flats...perfect way to go