US Property

Im looking to buy some property in america but know little to nothing about how the system works.

I have a little over $800k in cash so can buy a few with cash to start. Im not really chasing equity just cashflow.

Some question i have are:

1. How to eventually obtain finance as AU foreign investor?
2. Are there any other property holding costs other than property taxes?
3. What is your opinion on forclosures.com? Im assuming the bank/state wants to offload these properties at a discount for the sole reason to either collect taxes as state or stop paying taxes as the bank.

 

Hard money lending is available for non residents however you will pay 7 - 8% interest.

If the property is managed well work on about 60% NET of the gross rental figures. This allows for insurance, property management, county taxes, repairs, vacancy etc.

I am not familiar with the website (foreclosures.com) but have bought many foreclosures over the last 8 years in the US. Foreclosures can be great deals. They normally require some renovations to make the homes rent ready.

The US market is a great place for any investors chasing cashflow. Returns are much higher than what you can achieve in Australia.

Here is an example of a deal I did this past week for 65k in Alabama. move in ready home. Rent around $700 -$800 month. County taxes around $500 year, insurance $700 year.

 

Thanks for the info

 

Karina who's renting these properties in general from a demographic and socioeconomic standpoint? And how stable are they in terms of rental payments?

I recall you used to invest in Geraldton? How do the US tenants compare?

 

@Lacrim, I would consider the property in the video a B class neighbourhood. In Alabama you are going to get a lot of govt employees, state, federal and military. In Atlanta its multiple applications on just about every home with some applicants coming from other states as well as there is a lot of inmigration to atlanta for jobs. All types of applicants, families, couples, singles, blue collar, professional.

In terms of stability with rental payments in the US based on the size of my US portfolio its going quite well. I have over 50 rental properties in the US that I collect rent from each month. A few late payers that have been there for years but they always come good, they just pay later in the month. Every now and then I have someone default with rental payments and move out but its an exception rather than the norm.

Of the 50+ tenants this month I have one that is 2 months in arrears and moving out on the weekend, 1 that is late (but she usually pays towards the end of the month) and everyone else has paid for the month of August.

Re geraldton I sold out 2/3 of the portfolio in the boom. Still have 1/3rd left. There is an oversupply of rental properties in geraldton right now, they built too many houses in the boom that they could not sell and turned into rentals. Geraldton tenants can be low income and problematic. Some are good and some have turned out to be really bad.

 

Did you use a website to locate your rentals or an agent?

 

It takes a lot more than just a realtor to make your US acquisitions profitable. Realtors generally just sell homes, you need a realtor, a rehab crew, a competant property manager, an attorney a CPA, an insurance broker etc .

Years ago I went over the the US and set up my own team that can manage the end to end process, the acquisition through to the closing, renovations to make the home rent ready, leasing and on going management.

 

Yea im thinking to live there for 6 months and see some of america at the same time.

 

Of the 50+ properties #karina are many of your properties in San Francisco and New York and are they very profitable when rented?
They are great cities and seem to be comparatively well priced per square foot compared Hong Kong (and other major cities like London) where the yield are now only 1.5pc and the cost is about $52k psf (The yield on term deposits are also low at 1pc and less)

 

Other than Zillow - what sites do you recommend for research?? Is there a corelogic equivalent??

 

In terms of free sites, zillow, trulia, redfin are the one's I find most useful.
Your corelogic (rpdata) equivelant I would say is the MLS available in each state (multiple listing service) which is generally only realtor access only. I can access the reports through my team that allow me to view sales history, comparable sales and rental comps.

The local county websites can also provide sales history. You would just need to identify which county (council) the property is located in, most of the free sites have this information and you can then search the address at the county website.

 

No I have not invested in these cities. The prices are way to high to achieve the cashlow I am chasing. My strategy is to buy low entry priced homes with high cashflow and lots of them to generate passive income, markets like Atlanta, Alabama have been my main focus but exploring some other markets currently as well.

Years ago I worked in a corporate job 9 - 5 and investing in US real estate has freed me from being an employee as I can live on the cashflow generated from the portfolio.
What I love about these strong cashflow properties is that once you build up a decent sized portfolio the portfolio itself through the cashflow/ rents generated can be invested into buying more high yielding properties without taking on additional debt thus increasing the cashflow even further with each acquisition.
We are so used to borrowing money to buy property in Australia its a refreshing change for me to be able to invest without having to take on extra loans/ debt and still keep growing the portfolio.
After a while it snowballs in that each new purchase takes less time to acquire as the cashflow continues to increase with each acquisition.

 

Ball park figure, what was your starting base capital, and what would you expect the minimum to be to replicate today? TIA

 

From your knowledge on US properties what is your opinion on Park Avenue Condos for Sale - Immediate Occupancy | 1110 Park Avenue ? (I am not in your league will not be buying 40 or 50 properties like you ...just one )
Looking at the cheap end of the condos .
I thought of buying one that I could rent out initially and when I retire I could use it as a retirement holiday apartment (along with my HK apartment)
What should I look for in Condos in NYC ?
I like the central park area but the ones adjacent to the park are too expensive for me
This block is cheaper as it is two blocks away from central park.
Anyone else who owns or rents a Condo in NYC please comment!

 

??


just the cheap end, eh?



Cheers,
Inertia.

 

For the more prestigious apartment buildings in Manhattan, buying also Involves going before and getting approval from the co-op board.

 

Great effort.

What do you find is the best way to move money there to make purchases? Or are the purchases all funded in USD by your current investments?

 

Its impossible to make profit on property in NY.

The property taxes are very very high.

Eg for our apt (probably worth $US2.2m+/-10%) we spend about $12k pa on property taxes and about another $12kpa on coop fees (eg heating, building repairs, insurance etc).

Yes there are some very successful investors on this site who are doing very well from investing in multiple properties in the USA......but they aren't buying one and done and this is their business with large time commitments to being on the ground etc.

15% LTCG in the USA is nice compared to Australia....however are you really planning on making property your day job?

Also be aware that the moves on the 30 year fixed recently have put a real dampener on capital growth and sales.

 

Yep and a lot don't allow rentals at all......there are often also restriction on the amount of mortgage percentage you can carry as well eg some are no mortgage over 50% (some are 100% cash only as well).

Our building is no mortgage over 80%.

 

The aim is to buy a condo with borrowings
Rent till retirement (when I move in)
Pay off the Mortgage between purchase date and retirement
So what is the net yield (after taxes and coop) of your condo ?
What is the vacancy rate and ease of leasing ?
The property management fees?