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- #51
I work in finance for an engineering firm
Purchasing Property in the US
- Thread starter Lyyynnnchy
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I work in finance for an engineering firm
bruceharmes
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CPA or Chartered ?
northman
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- Apr 21, 2009
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In regard to the "horror stories" like the one above, surely landlords insurance would cover the damage done by tenants? or do these people buy these places with no insurance to cover them? if so they deserve to lose it all. Also what sort of capital gains tax are you likely to pay when you to sell? will you pay this in US tax or Aus or both? Pretty surprised you didnt make the trip to check out these places before you purchased them, you must really trust the property manager! also you say you wouldnt go under 35k but in an earlier post state that you just missed out on one at 25k?
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- #54
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- #55
The problem with buying off a BA who charges a spotters fee is that all they care about is the sale. The lady who purchased off the BA would have had no communication with anyone apart from her property manager after purchasing and may have had no one guide her on insurance etc. With my service I will be in constant communication with clients after the sale until they decide to cease communication or until they sell the property. I certainly have LL insurance and it covers all damage done by tenants. I have the premium LL insurance and would reccomend clients do the same to cover all bases.
Yeah the one for $25,000 was an exception to the rule. Was really dissapointed I missed out on that one. The only one under $30,000 I have seen that I would buy.
You pay CGT in the US. If you have paid less than you would have selling a property in Australia then you make up the difference in your Aus tax return. The reverse also applies, if you have paid more CGT in the US than you would have in Australia then you get a credit on your Aus tax return.
bruceharmes
Debutant
I reckon if your going to buy in the US go and see the property yourself, I believe you have to open a bank account over there in person anyway, and walk around the neighbourhood at night. If you can't walk around the streets at night safely yourself what sort of tenant will you get ?
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- #57
My plan was always to buy 1 or 2 and then to go over before buying any more of them. Now that my trips to the US are tax deductable it makes it a lot more affordable
I was able to open my bank account over there over the phone/email with HSBC as I already had an account setup over here. Though from my understanding and from looking through the US HSBC website it is possible to set it up without going over there
bruceharmes
Debutant
Unless you actually goto the US you don't fully appreciate the racial and social divide which is very much sugar coated in media/tv/movies from US. The reason some of these houses are so cheap is because unless you fit the racial profile of the area you will not be welcome and potentially the area is unsafe to outsiders, the reason they aren't being bought by savy locals is the profile of the neighbourhood - looks like a great house in the photo but only certain people will be able to live there and feel comfortable.
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- #59
That is very much true however as much as possible can be done to ensure that the bolded doesnt happen. Research includes suburb demographics, suburb reviews and phone/email conversations with realestate agents in the actual suburb the property is located.
It's not all about just buying the highest grossing property. The property and suburb must both match certain criteria to ensure that there will be no problems renting it to 100% occupancy while also having reliable and long term tenants.
onlymagic
Debutant
Hey mate, how are things going with all of your setting up of the web site etc. ? put any more offers on any properties over there?
I just found out the other day that a family friends business partners sister (I know sounds like a stretch) is a real estate agent over there, and that the family friend bought a place over there very recently. I haven't had a chance to talk in depth to them about it yet but I was just wondering if your agent lives/works in the areas you are investing in or do they live/work elsewhere?
If they do live there what will happen if you want to invest in a different area/state, will you need to find a new agent? And in turn if they don't live there how do they organise things from another location?
I just found out the other day that a family friends business partners sister (I know sounds like a stretch) is a real estate agent over there, and that the family friend bought a place over there very recently. I haven't had a chance to talk in depth to them about it yet but I was just wondering if your agent lives/works in the areas you are investing in or do they live/work elsewhere?
If they do live there what will happen if you want to invest in a different area/state, will you need to find a new agent? And in turn if they don't live there how do they organise things from another location?
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- #62
No, no more offers, probably wont until the new year as I have a couple of holidays lined up over the next couple of months and you really do need to be readily contactable at all times between acceptance and settlement. I'll look to refinance in Jan/Feb and then purchase again soon after. There's no rush, it will be flat for sometime over in the US (well I'm hoping so, I want to be able to purchase over another 2 or 3 years before prices hopefully start to move upwards)
My PM has offices in most of the major cities around Florida and the US. Havent thought about what I'd do if I purchased somewhere he's not located.
Websites not up yet, I've been flat out at work. I have 3 weeks off over the Christmas break so will most likely sort it out then
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- #63
Well I've had enough of studying for the time being. I have a job that I like and that pays well so with my time hopefully being taken up by my US venture I wont have enough time to do any more study in the near future.
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- #64
Interesting, I ask because I work in the same field and found that doing CA/CPA (Something postgrad) was pretty important. Though I suppose depends on the industry and other sources of income.
Have you considered investing in further education like an MBA? Price wise there doesn't seem to be allot of difference between buying a house in U.S and doing that.
From a personal perspective I've seen the impact being asset rich and cash poor can have on someones life. The danger of loading up on property is the lack of liquidity, combine this with the time required to invest, the impact on quality of life short term can be quite negative. That said if you can find an acceptable balance between now and later and the long term return is greater than other asset classes, you win.
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- #65
I have looked at it and the company I work for would actually pay for most of it but having deferred uni a couple of times and only recently completing my degree I'd like some time off from study. I'm looking at travelling a bit next year, including heading to the US, so see no point in starting anymore study until I can commit.
Agree with your asset rich/cash poor, I have seen too many people struggling to service their huge loans in Australia. The difference is a lot of the time the people with these large debts are negative gearing or only receiving a minute return, this leaves them struggling from wage to wage or under huge pressure should they lose their job. With purchasing in the US, you are purchasing with cash so have you dont need to think about the repayments or if you do decide to refinance, a $60,000 purchase at 2.275% is less than $115 a month interest only, hardly a stretch even without a job.
Once settlement goes through for my 2nd property I will have invested about $100,000 into the US and will be receiving over $3,500 a month. I wouldnt call this "cash poor"
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- #66
I have been negotiating with a couple of my contacts in the US and have just secured a 30 day rental guarantee. Havent fine tuned anything such as what happens if it goes over but it's good to know they are that confident in the rental market.
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- #68
The exact same concern I'd have if I had a property over here. The rate is fixed for 5 years so there's a lot of security
My thinking (and I have only thought about it quickly) that is for property to start moving over there the economy must start to recover. Once it starts to recover and more money is being spent, rates should go up.
Would you not then be faced with incresaing interest payments (after your current 5 year fix ends).
Or do we assume that with the recovery of the US economy and housing market that rent prices will increase?
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- #70
As the loan for each property will only be around the $20,000 - $40,000 mark, I intend to pay the loan off before the end of the fixed period.
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- #71
The risk is no different to buying a property here in regards to interest rates.
I am assuming your time line would be something like
year 1 - buy property 1
year 2 - refinance property 1, buy property 2
year 3 - refinance property 2, buy property 3
With the high rents you are recieving it should work that property 1 and 2, clear the debt of propert 1 after year 2??? This would obviously continue to multiply?
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- #73
Thats pretty much the plan, though I'm hoping to purchase more than 1 a year
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How have you been going in terms of maintenance costs/tenant issues?
Moo
Premium Platinum
First up Lynchy - right time and situation for you to take a risk so good on you.
The only thing I would watch is the X-change rate ....wouldn't be factoring in a sub 1.00 dollar for some time.
The only thing I would watch is the X-change rate ....wouldn't be factoring in a sub 1.00 dollar for some time.
