Canadians Snap Up U.S. Properties

  • jonathanb

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    Joined: 20 Aug 2010
    From: Waterloo

     Right on,

    Thanks for taking the time to post that!  

    If you don't mind, how many properties did you manage to snap up before it became less favourable?

    jon
  • Rickson9

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    Posts: 835
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    Thanks Jon. I only managed to pick up a few. In retrospect I should have been more aggressive. I guess hindsight is 20/20.

    The following speaks to my experience bidding in Phoenix right now: 
    "Metro Phoenix home prices continued to rapidly climb in May.  The median sales price of a home in the region is up 32 percent from May 2011, according to the latest report from the W. P. Carey School of Business at Arizona State University...More regular buyers and investors coupled with a shrinking supply of homes for sale are propelling metro Phoenix home prices higher."
    http://www.azcentral.com/business/realestate/articles/20120627metro-phoenix-home-prices-continue-rise.html

    And from my commercial realtor:
    "I am working on the CMA info and I ran a market stats report on the activity from 1/1/2012 to today compared to 1/1/2011 to 6/26/2011. I have it attached. It shows our inventory down 47% and prices up 30%.
    Meghan A. Thomas
    Transaction Coordinator
    GPCI AZ, LLC

    Although I don't really need the help, if the following article comes true, my profit will absolutely skyrocket (we can all dream can't we?):
    http://www.theglobeandmail.com/report-on-business/top-business-stories/economist-sees-canadian-dollar-sinking-to-86-in-2013/article4370816/

    When it comes to U.S. real estate and the stock market, my profit is positively correlated with the number of people who think I'm stupid. ;)
  • Rickson9

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    Rickson9
    As a semi-related aside, MoneySense magazine just finished interviewing me for their summer 2011 edition about investing in U.S. real estate.  It should be out in newsstands in a couple months.  I declined to answer some questions due to the fact that I am still buying.


    For those who don't get Moneysense magazine.  Here was my interview:

    "Be An American Landlord"
    http://www.ticonline.com/images/2012.moneysense.p1.jpg
    http://www.ticonline.com/images/2012.moneysense.p2.jpg
    http://www.ticonline.com/images/2012.moneysense.p3.jpg

    On an unrelated aside, what I learned about people after investing in the U.S. stock market (almost 15 years ago) and reinforced after investing in the U.S. real estate market (almost 3 years ago), is that those with the strongest negative opinions against what I was doing (e.g. "stocks sucks, real estate is better", "you're making a big mistake, U.S. foreclosures will eat you alive", etc.) usually have no experience and no financial success in that particular arena.  Funny that.
  • Rickson9

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    Joined: 27 Oct 2009
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    Americans Caught By Rental/Credit Squeeze

    One night last spring, David Hall returned home to his studio apartment outside Boston to learn that his monthly rent had spiked from $725 (U.S.) to $995.

    It would be much cheaper for the maintenance manager to buy a nearby starter house than to stay put. But his mortgage broker told him that while his credit score was good, it was not high enough to meet banks’ tough standards, he said.

    With credit tight, many consumers have no choice but to rent. Others who can afford to buy are also renting, because they view real estate as a lousy investment (irony). As demand has increased, rents in some cities have jumped by double-digit percentage rates.

    “We have falling incomes, rising rents and nothing but substantial upward pressure on those rents,” says Chris Herbert, director of Harvard University’s Joint Centre for Housing Studies. “And nothing in the cards suggests it will turn around anytime soon.”

    A recent Morgan Stanley research report states that the average credit score is 762 for a consumer securing a mortgage backed by government-sponsored enterprises like Fannie Mae. But 65 per cent of Americans have scores below 750.

    Consumers who cannot buy must rent, and that is where many Americans are feeling the pressure. A rent index from real estate data provider Zillow shows year-over-year gains for 70 per cent of the U.S. metropolitan areas, while its home value index rose in only 7.3 per cent.

    Only a few years ago, landlords in cities like San Francisco and New York were tossing in a month or two of free rent, sometimes with parking, to lure tenants into signing leases.

    Today, applicants are showing up at apartment viewings with copies of their unblemished credit reports and letters of recommendation from bosses and prominent friends, in the hopes of snatching up a place to rent.

    Equity Residential, one of the biggest apartment owners in the United States, has more renters with high credit scores than ever, vice-president of operations David Santee said on an April conference call with analysts.

    http://www.theglobeandmail.com/report-on-business/economy/housing/americans-caught-by-rental-credit-squeeze/article4392820/

    Disclosure: Just put in another bid on a short sale property in Phoenix, AZ.  Price isn't as good as what I was buying similar properties for in 2010 and 2011, but it should cash flow well nonetheless.  I informed the bank that if they counter at a price higher than my bid that I will walk.  #notbluffing
  • Rickson9

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    In A Twist, Both Home Prices And Rent Rise
    "Home prices across the nation continued their upswing in June, according to a new report from CoreLogic. Including sales of foreclosures and short sales (selling for less than the value of the mortgage), prices rose 2.5 percent from a year ago. That is not quite as high as the annual increases seen in April and May. With the first half of the year now on the books, analysts are asking if prices can sustain...

    "Asking rents rose in 24 of the 25 largest rental markets from a year ago, according to a new report from online real estate company Trulia. Rents are pushing double digit gains in San Francisco, Miami, Oakland, Denver, Seattle and Boston, and rents are rising faster than asking prices in 21 of the 25 largest rental markets year-over-year."

    http://finance.yahoo.com/news/twist-both-home-prices-rents-150627174.html

    If You Can Pull It Off, A House Is A Smart Investment
    "Investment opinions are like, um, noses: Everyone has one. Buy stocks, sell bonds? Go long steel and short copper? Buy sheep, sell deer?  It's pretty easy to see both sides of an investment argument. But it's hard to argue against buying a house now, assuming you can get a loan.

    http://www.usatoday.com/money/perfi/columnist/waggon/story/2012-08-09/housing-market/56920214/1

    There is a strange thing happening to my properties in Phoenix at the moment.  Specifically that property prices and rents are rising faster than I anticipated.  A year ago I thought that I had all the time in the world to collect property - I was wrong. 

    From my limited understanding one reason property prices are rising is the fact that banks are unwilling to lend money to prospective homebuyers unless they have spotless credit rating.  Although there are many investors who are flocking to Phoenix with cash-in-hand, it hasn't been enough demand to offset ostracizing the locals.

    Rent is rising for a couple reasons including 1) Americans have been shell shocked by the real estate meltdown and are literally fearful of owning a home and 2) Americans who aren't afraid to buy a home can't qualify for a mortgage under the new stricter lending rules.

    I can't see this continuing, but I don't know how (or when) it will end.  Either way, I think any investor who picked up U.S. real estate in 2010 and 2011 (and I know there are a few on this forum who did because I spoke with some of you), will do quite well either way.
  • Rickson9

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    Phoenix home prices surge higher in past year to lead nation

    Home-values in both the metro Phoenix and Arizona markets eclipsed the rest of the nation once again in June - and by a long shot.

    The latest housing report released Tuesday by CoreLogic shows Phoenix-area home values, including distressed sales, surged nearly 17 percent year-over-year in June -- the fastest rate of any metropolitan area nationwide. Trailing far behind in second place was the Houston metro area’s 4.5 percent increase, followed by the 3.3 percent rise seen in the Washington D.C. market.

    http://www.bizjournals.com/phoenix/news/2012/08/07/corelogic-phoenix-home-prices-surge.html
  • Rickson9

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    From:

    ChrisDavies
    The tax systems and immigration laws which prevent you from doing any work on your property are just two big reasons why there's a lot of landmines down there.


    Sorry, I was re-reading the thread and noticed this comment.  Having been involved in investing in property in Phoenix, AZ for almost 3 years now I'm not sure why the U.S. "tax system" is a landmine?  I've filed taxes for my properties for awhile now and haven't encountered anything yet.  What should I be looking for?

    Nor do I understand why "laws which prevent you from doing any work" is a landmine either.  Personally I don't want to do any more work and am happy to pay my PM to do everything, but that might just be me.  Perhaps the majority of people out there love screening tenants, doing evictions, repairing dry wall, fixing plumbing and all that, so I might be in the minority.  Any clarification would be appreciated.

    Giving the benefit of the doubt that you might have something useful to contribute.
  • Rickson9

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    As a general rule, in the U.S., the red states are pro-landlord and the blue states are pro-tenant. The most well-known of the pro-landlord states are Texas, Arizona, and Florida.  The most well-known of the pro-tenant states are California and New York. 

    http://en.wikipedia.org/wiki/Red_state

    Eight Landlord-Friendly States


    #4. Arizona

    Arizona has strict laws regarding noncompliance with rental agreement and nonpayment of rent. For example, if a tenant provides false information on the rental application, Arizona landlords have the right to deliver a written notice to the tenant and terminate the rental agreement within 10 days.

    http://www.investrent.com/blog/2012/04/03/8-landlord-friendly-states/

    Arizona is becoming more landlord friendly with the following recent trifecta of rental laws:

    1) The first allows landlords to enter a unit without the standard 2-day written notice in the event of a needed repair.

    2) The second bill deals with abandoned property. A landlord will be able to enter a unit without giving legal notice if needed to determine if the tenant has moved out. If there is no personal property of “material value” left in the unit and a “reasonable person” could determine that the renter has moved out, then the landlord can take over the unit.  The landlord will not have to store any perishable items.

    3) The third measure, which may be the most controversial, rolls back tenants’ legal rights regarding appeals of an eviction order or judgment for unpaid rent. This measure requires the posting of a much higher bond than what is required under current law.

    The Arizona Tenants Advocates are warning tenants that making a repair request means giving up the right to notice of entry for the rest of the lease; if a tenant moves out, they could be excluded from renting somewhere else for the next 30 days; and, if a tenant legally terminate a lease early, they still forfeit their security deposit.

    http://www.american-apartment-owners-association.org/blog/2012/04/12/another-state-goes-landlord-friendly/

    In addition, I have had questions about Phoenix's "primary industry" or "underlying economy". 

    Manufacturing. Major industrial products manufactured by companies located in the metropolitan area include aircraft parts, electronic equipment, agricultural chemicals, radios, air-conditioning equipment, and leather goods. Also financial services and banking. Regional headquarters of: American Express, Chase Bank, Bank of America, Discover Card Services, and Wells Fargo Bank. High technology and aerospace firms hold a considerable share of the manufacturing jobs.
    Phoenix is currently home to seven Fortune 500 companies: Allied Waste, electronics corporation Avnet, Apollo Group (which operates the University of Phoenix), mining company Freeport-McMoRan, retailer PetSmart and energy supplier Pinnacle West. Honeywell's Aerospace division is headquartered in Phoenix, and the valley hosts many of their avionics and mechanical facilities. Intel has one of their largest sites here, employing about 10,000 employees and 7 chip manufacturing fabs, including the $3 billion state-of-the-art 300 mm and 45 nm Fab 32.
    The city is also the 6th most populous city in the U.S. with over 4.2m Americans and growing. Phoenix is located at the center of market areas stretching along interstate highways from southern California to western Texas, Colorado, Utah, and Mexico. More than 50 companies provide motor freight service. Rail service is available from two transcontinental rail lines. The Phoenix metropolitan area economy benefits from air cargo service through Phoenix Sky Harbor International Airport, where American Airlines and American West provide wide-body freight service.

    Hope this helps!  All the best.
  • chu082011

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    Dear friends

    Thanks for sharing. I like Canadians Snap Up U.S. Properties  very much.  Very useful for me.

    Apart from that, you also can ref more resources at:  Fannie Mae interview questions


    Rgs.

     

  • Rickson9

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    Posts: 835
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    " In June 2012, bidding at these auctions has become far more competitive and 55% of these properties are now going to third party bidders and only 45% reverting to the lender. With the number of completed foreclosures also down 56%, this means far fewer foreclosed homes have been added to the REO inventory."

    "...within Greater Phoenix over 37% of the active listings already have a signed contract, typically waiting for the lender’s short sale approval. The number of active single family homes without an existing contract was down to approximately 9,011 for the Greater Phoenix area as of July 1. However 78% of this supply is priced above the current median sales price and 23% is priced over $500,000, so the scarcity of homes for sale is most severe below the median sales price of $150,000."

    "We can see that overall prices reached a low point in September 2011 and have risen sharply since then...The significant annual price increase over the last 12 months has now spread to the majority of Greater Phoenix. Examples include El Mirage (up 41% in average $/SF from June 2011 to June 2012), Mesa (up 26%), Peoria (up 20%), Maricopa (up 32%), San Tan Valley (up 36%), Tolleson (up 37%), Buckeye (up 26%), Laveen (up 24%), Litchfield Park (up 22%), Queen Creek (up 21%), Tempe (up 21%), Glendale (up 25%), Phoenix (up 34%), Carefree (up 40%), Avondale (up 25%), Florence (up 29%), Arizona City (up 30%) and Apache Junction (up 32%)."

    "Most homes below $250,000 that are priced realistically are attracting a large number of offers within a short time, and offers will often exceed the asking price. It is still quieter in the luxury market and active adult sector where supply is adequate but now falling to levels that are below average."

    "As prices increase, returns on investment for landlords diminish and at some point in the future we expect to see investor demand diminish also. This will accelerate if vacancy rates start to increase. However there is still no sign of any significant new supply of homes coming on to the market and those who anticipate a flood of bank owned “shadow inventory” are likely to be very disappointed."

    https://docs.google.com/open?id=0Bwb1PD4476rPcWxKSHB0TjROVzQ
  • Rickson9

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    Money managers such as BlackRock Inc, hedge fund Angelo Gordon & Co and real estate investment firm Starwood Capital, are beginning to cash-in on so-called shovel-ready residential land-tracts with most of the pre-construction and zoning approvals already in place.

    "We are coming out of the mother of all housing cycles, and residential land is the best way to play the ultimate recovery," said Michael Barr, a Paulson & Co portfolio manager, who oversees the Paulson Real Estate Recovery fund, which has under $500 million in assets for the $19.5 billion hedge fund. "Land is the highest returning component of the home building equation."

    "These returns are back-end loaded, and more of an opportunistic, higher risk strategy," said Dale Gruen, a senior portfolio manager for BlackRock Real Estate, which has raised a fund that invests in such lots. "Single family rental is one in which returns are a more moderate."

    The Paulson fund, whose founder John Paulson rose to fame and fortune by betting on the collapse of the subprime mortgage market, got into this market in 2010. Hillwood Development and Starwood got into the market even earlier. But new entrants are joining the hunt all the time given the ability to still buy land with development approval for as little as 30 cents on the dollar.

    http://finance.yahoo.com/news/investors-cash-land-deals-u-050156394.html
  • Rickson9

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    After losing 70 percent of their business in the housing crash, the nation's home builders are breaking ground again. New orders for homes are rebounding strongly, and housing starts have shown sustained growth over the past year. The demand is there; unfortunately, in some areas, the workers to build these homes are not.

    Dykstra sees buyers taking advantage of low interest rates and low home prices. He is building about forty houses a month now, but says he would build sixty if he had enough labor and contractor support.

    It's the same for Stephen Brooks, CEO of Grand Homes, also in Dallas. The shortage of skilled workers is hitting his bottom line. “The cost of housing going up very, very fast,” says Brooks. "You sell a house, and you typically could deliver it within 6 months; now the cycle time, today, with the shortage of labor it takes 9 months.

    http://www.cnbc.com/id/48926517

    Update: As I have posted, my DD on the 16 unit multi plex fell through as I didn't like the crime in that area.  As a rule of thumb, an 850 sq ft unit should rent for at least $700 per month, any less and it's likely that the area is sketchy.

    The search continues.  Have 3 bids pending @ 1.5% "rule".
  • Rickson9

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    Where is "Wealthyboomer"? I miss his insights.

    He's quite the contrarian!  He's posts were made as Phoenix real estate prices were hitting the best in history and shortly after he stopped posting was when Phoenix real estate prices spiked dramatically upwards!  Fantastic call!
  • Rickson9

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    2ndstory
    QUOTE (Rickson9 @ Sep 13 2010, 04:05 PM)
    Ultimately it will be fun to see who will be right - Buffett or the IMF!

    Who's usually right? wink.gif Rhetorical question of course.


    Buffett's Wager On US RE Pays Off

    "I don’t know if he’s lucky, smart or patriotic, but it’s worked out for him,” Cliff Gallant, an analyst at KBW Inc., said in a phone interview.
     

    “For the last two years, I’ve seen everything except housing moving forward in the economy,” Buffett, 81, told Betty Liu in a July 13 interview on Bloomberg Television. “In the last few months, the rest of the economy actually has flattened out. Housing is picking up." 


    The number of available U.S. homes has been declining, a trend Buffett has said was inevitable as new households form. Properties for sale fell to 2.39 million in June from an average supply of 2.93 million in 2011 and 3.22 million in 2010, data from the National Association of Realtors show.

    http://business.financialpost.com/2012/08/02/warren-buffetts-wager-on-u-s-housing-market-pays-off/
  • Darr

    Status: Forum Member

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    Joined: 4 Sep 2012
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    Rickson:
    As a US Real Estate investor, you will love today's following interview on Bloomberg:
    And for those only interested in RE: fast forward to the 7m:05s minute mark.
    http://bloom.bg/PhXCyt

    PS, you're always running the risk to give a lot of profits back in the currency translation (repatriation). Then again, the BOC will monetize as well.

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