US RE Investment Opportunity

[jazy786]

With cheap US RE with exceptional returns being advertised almost every other week in major newspapers and free events happening at fancy hotels in GTA, I was wondering if the "expert" can shed some light about 'investing' in US RE. For e.g. are Cap Rates of 15-18% actually realizable? What about obtaining Financing? Is any one here who wishes to share their experiences? Which States/Cities are worth having a look? What are the key 1-5 issues/red flags to be aware off? Given the economic condition of the US and considering what the future might hold (e.g. inflation, eroding the US$) is it worth it?



On another note, am I allowed to connect with other people here for investment opportunities in Canada? i.e. I have investment funds to work with, however, looking to connect with the right /genuine like minded people. Accordingly, open to ideas, thoughts, and opportunities across Canada.



Sincerely appreciate response.



JK

[email protected]

 

[Rickson9]

Without going into the sordid details you can read about my experiences buying US RE at http://www.ticonline.com



Yields were good and prices were low when I was buying in 2010 and 2011. Since then, yields have fallen as prices have risen.



It was easy money back then.

 

[Rickson9]

Phoenix, AZ is no longer a sure bet.




"'It feels like 2005 all over again,' said Nick Bastian, a real-estate agent with Realty Executives ... 'I cannot find single-family homes within a half-mile radius of a
light-rail station; I've literally got waiting lists,' he said.


http://www.azcentral.com/community/mesa/articles/2012/03/29/20120329southeast-valley-housing-shows-signs-hope.html




`'Phoenix-area home prices are climbing so quickly in some areas now,
due to such low inventory, it`s hard to keep up,' said Tom Ruff,
real-estate analyst with online foreclosure service AZ Bidder and a
founder of the Information Market, which supplies data for The Republic`s Valley Home Values report. He said the prices on sales closing now, which were started 90 days
ago, are outdated. So to find comparable sales, buyers and real-estate
agents need to look at sales negotiated last week."

http://tucsoncitizen.com/arizona-news/2012/03/31/phoenix-area-home-prices-headed-upward/



Two years ago nobody was bidding against me. Today, I am losing out on full cash, over-list bids in 10+ offer bidding wars. I hope this is just a phase, but I have a disappointing feeling that it may continue.





The properties that I managed to buy in the last 2 years have spiked in price by at least 25% in 2012. It may be time to move on to greener pastures.

 

[jboire99]

FYI: http://business.financialpost.com/2012/04/03/tidal-wave-of-foreclosed-homes-about-to-flood-u-s-market/

 

[Rickson9]

I hope so! It would get rid of the tidal wave of multiple buyers at the moment! Or at least slow them down! Being outbid by a huge margin every single time is very frustrating right now.



I am now shopping for U.S. RE in other states right now.




"A shadow inventory of an estimated 1.6 million homes either facing
foreclosure or already repossessed by banks was being held off the
market in January, little changed from a year earlier, CoreLogic
reported March 21.



"Many states that don`t require court approval for foreclosures have
worked through much of their shadow inventory. In Arizona and
California, where banks take less time to repossess and resell
foreclosures because the process doesn`t require judicial review, 7% of
mortgages were delinquent at least 90 days or in foreclosure in the
fourth quarter, down from about 13% in 2009, according to the Mortgage
Bankers Association."
http://business.financialpost.com/2012/03/27/as-number-of-homes-for-sale-drops-bidding-wars-erupt-in-u-s/

 

[Rickson9]

"In the U.S., the Chinese are now the second-largest foreign buyers of homes, behind Canadians, accounting for $7.4 billion of sales in the 12 months ended March 2011, up 24% from the previous 12 months, according to the National Association of Realtors. Buyers from China and Hong Kong also spent $1.71 billion on commercial property in the U.S. in 2011, more than quadruple their investment in 2008, says Real Capital Analytics.




"Those numbers likely understate Chinese investment, as investors may buy property under business entities they've set up in the U.S., says Patrick O'Neill, founder of ONeill Group, a Hong Kong-based company that helps Chinese buyers find U.S. property."



http://usat.ly/HGHCWq

 

[Rickson9]

Flood of Foreclosures Still Fails to Materialize (I'm still hoping...)

http://finance.yahoo.com/news/flood-foreclosures-still-fails-materialize-133658271.html



MLS also shows a number of properties purchased for $35k, gutted, remodeled and then back on MLS for $60k. Like this:



Market Sale & Sale History

---

Recording Date:


08/30/2011


Document #:


20110723974






Sale Date:


08/18/2011


Document Type:


Special Warranty Deed






Sale Price:


$35,000


Owner Name:


Av Projects Llc






Price Per Sq Ft:


$37.59


Seller:


Bank Of New York M 2007-Oh2

Recording Date


08/30/2011


07/11/2011


10/31/2007


05/14/2007






Sale Date


08/18/2011


06/30/2011


10/30/2007


05/02/2007






Sale Price


$35,000


$36,000





$181,500






Document Type


Special Warranty Deed


Trustee's Deed


Special Warranty Deed


Special Warranty Deed





Buyer Name


Av Projects Llc


Bank Of New York Mellon 2007-Oh2

idth: 20%;">North Parc Eight Llc

Freegard Joshua L





Buyer Name 2





!h2












Seller Name


Bank Of New York M 2007-Oh2


Recontrust Co


Freegard Joshua L


North Park Village Llc

 

[Rickson9]

There are also a lot more HUD homes on the market; which Canadians cannot get access.



The flipping seems to be happening for properties under $300k and more aggressively under $100k. Unconfirmed. Remodeled homes offer poor returns from my point of view as an investor looking to cash flow the property.



I keep looking, but I'm slowly losing hope. I fear that the good times investing in U.S. RE are behind me.

 

[jeffjas]

[quote user=Rickson9]There are also a lot more HUD homes on the market; which Canadians cannot get access.







HUD homes become available to everyone after a 30 or 60 day exclusivity period. HUD homes can be a great cash flow or flip opportunity.

 

[Rickson9]

[quote user=jeffjas]HUD homes become available to everyone after a 30 or 60 day exclusivity period. HUD homes can be a great cash flow or flip opportunity.





Good to know. Thanks! I guess I haven't seen one that I wanted last that long in the current environment

 

[jazy786]

Recently I have also seen a lot of 'turnkey' solution being offered by 'Wholesalers' that provide SFH's to investors, with the property being rehabbed, tenant in, property management in place, all good to go.........however, when I compare the prices of such properties, there seems to be a huge premium that these property providers are asking for? anyone here ever dealt or bought a property from a Turnkey provider? Can you share your experience, or advice? Interested particularly for the Atlanta/GA area where homes are newly built (year 2000 plus) at very decent prices 60-75k. Please and thank you.

 

[Rickson9]

[quote user=jazy786]Recently I have also seen a lot of 'turnkey' solution being offered by 'Wholesalers' that provide SFH's to investors, with the property being rehabbed, tenant in, property management in place, all good to go.........however, when I compare the prices of such properties, there seems to be a huge premium that these property providers are asking for? anyone here ever dealt or bought a property from a Turnkey provider? Can you share your experience, or advice? Interested particularly for the Atlanta/GA area where homes are newly built (year 2000 plus) at very decent prices 60-75k. Please and thank you.




Speaking for myself, I've found the premium asked for 'turnkey' solutions to be too high. The premium destroys any value the property may have as an investment for me.



I have also looked in Atlanta, GA and there are bidding wars for the best properties (i.e. rentals that don't require 'muscle' to collect). The bidding wars are hottest around the properties that you're describing (i.e. built post-2000, less than $100k, east of I-75, north of I-20). I fear that that area has been mined out.



If you are looking to purchase real estate in Atlanta, GA I would strongly recommend that you read Hank Miller's blog at http://hounddogrealestate.com/blog/