US USA Investing

Discussion in 'Where to Buy' started by AP121, 8th Mar, 2018.

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  1. hash_investor

    hash_investor Well-Known Member

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    Are there so many of them?
     
  2. Jordan Sinclair

    Jordan Sinclair Well-Known Member

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    Many possible tenants or many houses? Yes to both in certain markets
     
  3. hash_investor

    hash_investor Well-Known Member

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    talking about tenants
     
  4. Jordan Sinclair

    Jordan Sinclair Well-Known Member

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    I have found tenants are plentiful and I can always make the property an AirBNB in the interim.
     
  5. C-mac

    C-mac Well-Known Member

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    @Jordan Sinclair I'm only in Atlanta, GA at the moment but am looking to expand.

    I eliminated many of the midwestern states based on economic fundamentals (Michigan despite efforts is failing, Wisconsin similar), severe county taxes (hello Illonois - yikes - wouldn't touch that state with a barge pole!), or just generally poor quality property stock for my price brackets (I really liked all three 'C' cities in Ohio but most houses are older with mouldy and concrete-cancerous basements built on poor foundations). That said, I really think Indianapolis is worth a look-in and great deals to be done in that city.

    I want to keep going in GA, if not there then probably Alabama.

    Please don't think Im an expert - very very far from it, am just starting out! - but these are just my observations. Oh and Ive listened to 100+ episodes now of the Bigger Pockets podcast which is PHENOMENAL for ramping up your learning fast, on USA residential markets and fundamentals. Cannot recommend it enough! You'll learn that Americans can make deals work in many more states than most Aussies feasibly can.
     
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  6. Gaka

    Gaka Member

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    I am a tiny, tiny fish compared to some of the long term members on here who have already given advice (and only have one IP in the US), but these three points to investigate mentioned above are crucial when doing your homework.

    When you work out the market you want to get into, research the hell out of it. It's very different to Australia.
    Pros:
    *Renos are so cheap to do over there compared to here. Carpets, new laminate floors, paint, basically a new kitchen besides cabinets, some window furnishings, new garage door and some other bits and pieces came to $20k.
    *Taxes are cheap (was $600 now about $1000 with house valuation increase).
    *Most stuff now can be done online when paying bills. *Great yields compared to Australia.
    Cons:
    *Some things cannot be done online and phone calls need to be made at inconvenient hours to match their time zones.
    *Setting up a US bank account is not easy unless you walk into one over there, however some of the other US investors are I believe using Australian accounts now.
    *Setting up an ITIN is a hassle.
    *Getting finance from our bank was like pulling teeth when they found out what we wanted it for and couldn't get as much as we wanted.

    If you are up for a challenge, then it's very rewarding.

    If you are getting in now, I imagine you plan to keep it for the long term. Keep in mind there may be a recession looming 2019/2020 and prices could crash again so it may be worth holding off until then before buying in the US.

    For what it's worth, we are selling our US IP because we feel it's time to get out. But we were never planning on collecting properties over there, again very small fish and risk-averse. I wish I had the balls to pull off what some of the folks on this forum have achieved with their US properties!
     
  7. iloveqld

    iloveqld Well-Known Member

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    @Gaka you did much better than many of us, and helped me personally on making decision on my next venture ;) will go overseas instead of inter-state
     
  8. C-mac

    C-mac Well-Known Member

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    I think if you are looking at entering the US market this year, timing will be everything. Yes, US cpuld go into recession, but I believe theres a 90% chance Aus will too. The data doesnt lie (go watch Martin Norths latest video on his YT channel called DFA to see what I mean).

    Thing is; Forex-wise, itll matter which one goes into recession first... ideally youd time it to get your AUD out of Aus whilst we are still clocking 0.70 - 0.73 forex rate. But if the Q1 data that will be released in April puts us in a technical recession, along with continued weak economy, our dollar will weaken against the greenback. I believe Aus will go into recession before the US does.

    This is the challenge for us AU established-property-portfolio folks who are looking at the US. When to pull the pin? Getting equity releases is harder and the downswing is corroding equity anyway. I suppose one could sell an AU property and cash out debt here and take the surplus to buy a US one outright?

    If so... does one try to sell before or after the labor win?? I still believe that despite all of the hardships facing the AU property scene, there will be a *mild* spike/run-up of buyers who will want to get in to buy a NG-enabled existing-dwelling. Could that be the window of opportunity that a seller who wants to cash-out for top (well... best possible) dollar needs?
     
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  9. MTR

    MTR Well-Known Member

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    This may give an idea on what is happening in US market. Remember there are 50 States, they don't all fall back at the same time, same as they don't all boom at the same time, and most importantly there are also different entry points

    For example San Francisco is much higher entry point than Atlanta. My guess more investors would be buying in the cheaper, lower entry States.

    When I started purchasing in US market in 2011 I was buying for cash flow, did not expect growth. Nothing has changed other than my income has increased. Growth was a bonus.

    If you are buying for cash flow with a view not to sell, then does it matter whether the market goes south? You could always take a bet each way, sell some in boom times, no one went broke taking a profit. Keep some for cashflow



    House prices continue to cool, in a sign the market is slowing down
     
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  10. Gaka

    Gaka Member

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    Happy to help and good luck! We had some family members telling us we were making a huge mistake but so far it has paid off.

    Absolutely, that's why we are selling. It will clear our debts (both the IP and PPOR) which will make life a lot easier should either of us lose our job.

    Very true, it just depends on your strategy and ours was very different to pretty much everyone else on here. I was pointing that out because I didn't want my post to sound like it was a sure thing.

    We wanted to buy two smaller properties but the bank wouldn't give us enough. If they had our strategy might have been completely different. But we were told if you got to your tenth property they pretty much paid for themselves. We discussed it and decided it was just too great a risk for us to take and in hindsight I'm glad we were knocked back for more money or we probably would have been out of our depth with two at once. However plenty of you guys on here are acing that strategy.

    I received a PM asking where we bought so I'm adding it to this message too. We bought in Las Vegas.
     
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  11. MTR

    MTR Well-Known Member

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    Different strokes for different folks
    Did Emma source deals for you?? If you care to share
     
  12. iloveqld

    iloveqld Well-Known Member

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    And never trust anyone tell you number of properties will help you, only your net numbers count and sometime, only you cash in hand really counts ;)
     
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  13. wylie

    wylie Moderator Staff Member

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    I'm curious to know if these are annual taxes? In Las Vegas?

    And also curious to know how much you bought and sold for (if you are happy to share)?

    And transfer duty (on purchase) and agent fees (on sale) take such a big chunk of money here, that prices have to increase a lot before anyone here makes money, especially those looking to get in and out in a short timeframe. What sort of costs are faced in the buying and selling in Las Vegas?

    For us, we've long wanted to develop a block we have had for many years, and we are doing that now. Then we will sell some property. Land tax has just gotten ridiculous, because the land value keeps increasing but the threshold never seems to move. We've been paying it for a few years, but it is so high now that it is the biggest expense for us.

    Is there land tax in the US or just the tax you mention above. What is it called and what does it cover? Do you have quarterly rates and utilities like we do here?
     
  14. Gaka

    Gaka Member

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    No, I don't know an Emma. I was given contacts by a friend who was also looking into Las Vegas but bought a condo in Florida instead. I went to Vegas for a few days to look at properties, open the bank account etc and did not have a buying agent. Dealt directly with the estate agents.

    The tax we pay is called Real Property and Special Taxes and is paid to Clark County. This year our taxes are $270 per quarter payable January, March, August and October. That's the only tax per se and is a house and land valuation. Then there's HOA (community body corp fees) which were $360 last year (HOA fees in Vegas were a lot cheaper than Florida which we also looked into). Sewer is $240 a year (separate billing to taxes) and trash removal is another $250 year (also separate).

    Bought $72,000 plus $20,000 renovations. AUD was at 92USD from memory but may have been a bit higher. Our line of credit was $100,000 and we didn't spend all of it. We were not able to get a traditional IP home loan from our bank. I'd have to go back and work out exact figures if you want on what we spent in AUD.
    Selling: Haven't sold yet, but are aiming for $250-260k.

    We bought a foreclosure so I'm not sure how it varies if you buy a normal property but buying costs were about $2500 from memory. I have not received closing costs yet but am budgeting $5000.

    One other point, if you are buying a house that's around 20 years old in Las Vegas, make sure it does not have Kitek plumbing or that it has been retrofitted since. It was the one problem I found with houses in Vegas. There have been class actions to do with that. Other cities had Kitek too but not the problems Vegas had. It's to do with the PH levels of the Vegas water
     
  15. MTR

    MTR Well-Known Member

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    Interesting point .........when you purchased I assume AUD was parity or higher than USD, today tack on 42% , nice profit on money play

    When I looked at LVeg in 2011 houses were around $50-70k foreclosure? Lower end stuff what are they achieving today?

    Atlanta went from $35k to around $180k largish SFH. I recall Atlanta was lower entry point at that time to LV

    I pay around $2k each property county taxes each year, was half this in 2011.

    But both have had significant growth

    Florida has gone nuts, as have many of the lower entry states.
    I was attracted to this State as well

    Two years ago Jacksonville for cashflow, but today not sure? As prices keep rising

    Texas is good for growth, but taxes are high
     
    Last edited: 27th Jan, 2019
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  16. Gaka

    Gaka Member

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    Yeah the dollar has been kind. $250,000USD is currently $348,000AUD minus about $25,000 CGT. So a nice profit, but heaps of people did way better investing in Australia with the recent year's gains.

    Our place was definitely on the lower end but I also saw worse and there was even worse than that. The agent refused to take me to areas where we could get shot which I wasn't complaining about. You could get run down condos for $10k or $15k at the time. We couldn't afford in Summerlin but that would have been nice.

    It was a lower entry point but houses were much older and we didn't want the hassle of potential ongoing maintenance costs. Some on here have invested in Atlanta and done terrific, though. Atlanta houses are beautiful and have much more character than the desert cookie cutters in Vegas.

    Yeah it sucks how much it has increased.

    We looked at Texas but it was out of our price range. But it was our second choice. Looked at Florida but it was more condos, HOA fees were higher and black mould and hurricanes were reasons why we didn't go any further. I don't know what their taxes were like because we crossed it off pretty early.

    Where abouts have you bought in the US?
     
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  17. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

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    We use our excess funds (approx.$US800 p/m) to either pay down further US debt or as monopoly money to ensure the exchange rate is never a risk. For anyone investing in the US I would personally advocate for using enough of a deposit that movements in the dollar pairing will not create issues. I think taking on a debt that requires you to transfer money to the US every month is fraught with danger.
     
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  18. MTR

    MTR Well-Known Member

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  19. ellejay

    ellejay Well-Known Member

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    I'm reading this thread from Atlanta! Been visiting the places I brought. I really like this city and it seems to be buzzing
     
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  20. MTR

    MTR Well-Known Member

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    It is buzzing
    Though I think it will be the beltline that will continue to outperform just my thoughts so much money getting pumped into this precinct

    But I love Atlanta as a investment/rental market, has so much going for it
     
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