US USA Property Investing

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When I was buying in US in 2011/2012 got plenty of people tell me I was mad. Now I have people asking me to help them invest in US.

As far as investing in Australia, I wont stop doing this but I am only interested in strong markets, and I think we are coming close to peak in Syd and Melb.
Perth, Darwin falling markets, Brissy fragmented market, Adelaide economy not in good shape I don't see the growth anytime soon.

Shares well been a bull market too long, could be overpriced??

Time will tell

 

Haha I think it time that you updated your about me section! Last time you updated was when you had 22 properties Nah seriously well done and thanks for starting this thread. A lot of the prices in US are unreal and very tempting indeed!

 

Hi Ross,
I do own shares, I use a stockbroking firm in Sydney and the results have been ok. I'll continually use them for a while, but my returns in property have put the shares to shame (no indication of future results of course!). I'm just trying to gain some assets outside of Australia. Property is my passion, so this is really another opportunity to hopefully learn a few things about a new market. I have just finished reading the entire history of the US boom/bust patterns on the US land prices. Basically property is a nerd habit of mine lol!
Scott O'Neill

 

Great information, thank you! I have seen a few Australian buyer's agents start flogging the US property product. I would much prefer to know a US based investment advisor if anyones knows anyone?

 

What have you been buying in regards to shares? And have you also included the dividends (and franking credits)?
It may be that your share portfolio could use some tweaking. Well done on the property though.

 

Thank you ORAC for the kind words and great points


This might sound a little weird but basically, I hope interest rates go up and I hope things settle down in Australia. Why? I buy properties that won't feel the full effects of an economic downturn (e.g lower middle class residential properties in tight rental markets, commercial properties not exposed by tighter credit – medical (people still get sick), supermarket (people still eat), government leases (with long leases), Although no one is recession proof, these types of properties will ride out the bad times better than others. So, when the dust settles I hope I have positioned myself well enough to buy back into the markets at a cheaper rate. (maybe rents have gone up during the down times as well). I saw my father lose most of his money in mining towns and that was a great lesson for myself, as seeing the damage of a bad investment decision was terrifying. As a result, I always plan for the worst-case scenario and if I’m happy with that scenario, go buy the property, if not, run!


Re your points:

1) I'm looking to purchase a family home in 3-4 years time. If required, I will sell down a couple of my lowest yielding properties. Hopefully the Sydney market has softened by then as well. I can't justify buying in the Sydney market as much as emotion wants me to do so.

2) Good point, I have thought about selling my Sydney properties, however, I don't need to for cash flow or equity. So, why exit the market unless there was a genuine reason? I also have a business income that adds another layer of security if rates went up to 18% for example.

3) Like point two, I haven't really had any properties have performed poorly before. Since I’m 30 years old, i like the idea of holding everything for at least two more property cycles before cashing out.

I do like your message about getting too adventurous with investing. I have also seen many guys get greedy and take on large developments at the peak of a cycle. Many recent young property millionaires will fall into this same trap in Sydney I suspect. I'll always tread carefully so I never become one of them

Scott O'Neill

 

Ditto
Property has had an awesome run in some major capital cities, combined with the power of LVR, it certainly dwarfs shares. As they say if it aint broken why fix it

 

@Scott O'Neill pretty sure I read your first post on PC, you also run a very successful BA business, am I correct?
Congratulations, keep posting you clearly doing something right

 

I use Shaw and Partners. So they continually buy and sell down shares in many different companies. What are you recommending your clients? Are you a long term buy and hold type or do you look for short term gains?
Scott

 

I follow Thornhill. Looking long term. 10 years plus timeframe. No trading. Not speculating.
You have a good head on your shoulders for priperty, seeing what happened with your dad.
Re: Shares. I used Shaw way back (1990's) but don't use them now. I suspect they could be doing so many trades for you so they get brokerage...

I've now got a CommSec account... While I work for their parent company, I am happy to say that the experiences and interactions i've had with CommSec have been good.

 

Thanks MTR

Yes, I run a company called Rethink Investing.

Back to the USA, I just found this article. Full List: Where To Invest In Housing In 2017

What's your take on this list?

Scott O'Neill

 

Re: shares... its not about trading.

The Thornhill way is all about the long term and dividends collecting. A very quick summary that I stumbled across in the internet just now:
5 things I learned from "Motivated Money" - The Australian Dividend Investor

 

I have been investing in the US since 2015 and will share my experience.

In my opinion, you need to have a local team on the ground otherwise it won't work. I also feel like you need to manage your expectations and be flexible to change and the 'American way'. For example, some aspects of banking and paying bills/rent can be archaic. Also I don't focus on the exchange rate and don't consider it a factor for ROI. I initially sent AUD over to start my LLC but otherwise, I don't focus on fx. Once you have banking set up, you can operate 'like a local' using internet banking, using a debit card and send checks in the mail online etc. An LLC gives a level of credibility. Banking is easy to establish but must be done in person.

To break it down, choose what your investment strategy is. Do you want to gamble on a bubble market like California? In doing so, you may achieve some capital gains but will be faced with a higher entry point and low or no cash flow.

If you want cash flow, the Midwest states don't typically have much appreciation but are a lower entry point and have high cash flow.

Starting out, you would want to be a 'cash buyer'. Cash being either cash itself or using equity drawn from existing Australian property. Then look at options to refi the US property owned outright...rinse and repeat.

 

Thanks Jordan,

That's great information. I'm currently exploring the following markets: Boston, Atlanta and Florida. What are your thoughts on any of these areas? I'm spending two months in the US from July this year, so i'm planning to check out all these locations in person. Hopefully, I'll find a way to automate some of the issues you mentioned above. I have some family over there which could close some of the gaps

Scott O'Neill

 

Know you dont, they will rip you off as you are a foreigner and its easy to get ripped off

If you are serious about US investing fly over its vital. We did this and have had many investors do the same, will make the difference and network in usa

 

I sometimes feel like fb is stalking me on here or reading my mind as I didn't even research US properties but the company popped on fb for me. I looked them up and I couldn't find anything on them. Whats your thoughts @MTR ? Legit? Seems like an Australian based Buyers Agent specialising on US properties.

FB ads for ecommerce businesses

 

I would need the addresses to wirk it out

Looking at the pictures and prices they will be in mid west somewhere

Gross rental returns, half this to achieve net returns

Detroit is looking great for growth, but this market will require work to stabilise tenants etc not for me

 

Regarding those markets, I would be asking what strategy are you looking at? Also what type of property? Depending on these variables, they may or may not work for you.

When choosing a market, I would look at: price point/ROI, local taxes, cash flow & appreciation, landlord rights and the team on the ground.

The fact that you will be there on the ground is ideal and a great advantage. I did the same and made my investment at that point.

It's easy to get overwhelmed with all the markets to choose from. So again, I would say to decide what you want out of your US investment and then choose a suitable market based on your desired investment strategy.

 

I just doubled my money in about 12 months and its renting for $895 per month, 25% gross yield,
net yield Worst case scenario, approx 12.5%, just halved it.

My property purchase in 25 February 2016, 1400 sq foot condo, which is a unit in Oz language
5594 Fair Creek Way, Lithonia, GA 30038 | Zillow

Sold in April 2017
5646 Fair Creek Way, Lithonia, GA - Recently Sold | Trulia

The beauty is these properties are still going up in value, condos have higher yields at the moment.

I just purchased house still renovating it but the yield will be around 8%, however I am interested in the growth as you can see its a booming market, even in Sydney I have not seen properties double in 12 months.

Hard to get those condos everyone wants these or the multi units/blocks of units, higher yields

MTR

 

I will be looking for pure capital growth at this stage. From my initial research, getting a loan is going to be very difficult. So, there is going to be little to no debt to cover, just opportunity loss. I also like the idea of getting one property and not a few crappy ones due to the extra hassels in dealing with the US property admin. I'm looking forward to getting on the ground over there. Do any of you have some advice around choosing a good rental manager in the US?