So, I welcome another property to my USA portfolio, a few more on the horizon, so watch this space.

I am continuing on with the same strategy, a mix of some high positive cash flow with some potential good capital growth options.

This is another Memphis one; market has moved in the last 6 months, around 20%.  Lots of demand amongst investors for this area. So, not quite as sharp as my first 2, but still coming in at 20% Gross yield.

By using leverage (I have a P&I 7 year loan), in year 7 I will be returning 28% cash on cash return excluding purchase fees and 21% including all fees, plus I will own the house outright. In the meantime, it will be returning 6.5% cash flow + principal pay off approx 11% return) per year.

Short video below for you to see the property:

Click here to start your own US Property Portfolio

About Mark Taylor….

My property journey – USA Property

Technorati Tags: Memphis, US property

As is expected with any emerging market with good opportunities, you are going to get your share of spruikers and fly by nighters.

SMH article on USA property Spruikers

So, my advice is to tread carefully.  You need to build a team around you who can help you enter this market whilst minimising risk.

Have a good look into who you are dealing with the and their values.  Make sure you have someone looking out for your needs and your money!!

Of course, you need to be aware that the media does like to make a fanfare of things, but in my experience there are some sketchy operators.  Having said this, don’t let the media hype stop you exploring this opportunity, but tread carefully.

Mark

• To start your own USA property portfolio, go to:

http://www.keystosuccessclub.com/property/usa-property

About Mark Taylor….

USA Property Spruikers

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To start your own USA property portfolio, go to:

http://www.keystosuccessclub.com/property/usa-property

About Mark Taylor….

Positive Cashflow Properties – Latest Memphis Deals

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By Stephen McClatchie

At times during the economic cycle there is pressure on rental yields especially during times of tightening rental markets. Rental yields may be as low as 2 or 3% and you may end up with a serious cashflow deficit. It may take some time (sometimes many years) for the rent to increase.

In some instances, where minimal equity is available the residential property is illiquid. This means that if you need cash fast, you cannot sell off a bedroom or two. A house or a unit may be slow to sell if the market is sluggish.

The turnover of tenants in your residential property may be higher than you desire 

About Stephen McClatchie….

 The Cons of Investing in Residential Property

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By Stephen McClatchie

For most Real Estate investors, residential is the natural place to begin investing.

Historically, the residential property market is more stable than the share or bond markets. Owner occupiers and investors are less likely to panic and rush off and sell their property as equity investors would do in the share market.

Stability in the market provides SECURITY to the investor.

With the right choice, a property can provide solid capital growth. If you can gain solid capital growth, you can only continue to grow as a great Real Estate Investor.

Not only that, there is constant demand for quality rental properties, providing you have invested in the right areas.

The residential property market is one most people can relate to, understand and readily access information about. If Real Estate Investors buy rental property in the area in which they live, again, they can physically monitor the local market knowledge and they can decide/determine which is the best up-and-coming street or suburb in which to buy.

If you decide to buy an investment property interstate or in a regional area your reliance on a quality property manager becomes more important to ensure that you are maximising your properties potential.

An OUTSTANDING benefit to buying residential property is that some financial institutions will let you borrow the FULL amount and even add the cost of the purchase onto the loan depending on your current financial situation. At the very least you will be able to borrow a large percentage of the properties purchase price compared to other asset classes such as commercial or industrial real estate.

What this means to you is that less money is required from your own pocket while you get to use more of other people’s money to use as leverage to create wealth.

About Stephen McClatchie….

The Pros of Investing in Residential Property

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The USA property market has some other additional benefits compared to Australia.  One of these is the simplicity and low cost of transacting.  In Australia, we have some pretty brutal transaction costs, particular in reference to stamp duty.  Even legal fees can mount up.

In Australia up to 5% of the value of the property can be taken up with transaction fees; a big hit that you don’t get back.  This also applies when you sell; one of the reasons why refinancing has historically been a popular way of extracting capital growth, although since the tightening of bank lending policies this has become much harder, meaning alot of property investors can’t get their hands on the value of the money

The USA on the hand you could expect transaction costs to be minimal due to NO stamp duty and a simple legal process 

About Mark Taylor….

The USA property market – Low transaction costs

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The USA property market represents a unique opportunity due to a combination of factors:

• The collapsing of the value of the USA property market and a large amount of foreclosures resulting in very low capital requirements.  Property in the range of USD30,000 to USD100,000.
• Properties can now be bought significantly below replacement value
• Exceptionally low entry transaction costs (no stamp duty!)
• Rental demand and rate remaining strong leading to high yields of  20%+
• Best AUD/USD exchange rates since the AUD floated in 1983
• Low interest rates and the ability to secure US loans as an overseas investor further improve cash on cash returns

About Mark Taylor….

The USA property market – The opportunity

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Obviously the state of the economy and the implosion of the US property market has been well documented.  As a refresher, the abundance of subprime loans which were in layman’s terms poorly secured launch was the catalyst for a global financial meltdown.

In terms of the US property market, it meant massive defaults and a market crash with capital values reducing to 50% to 75% of the peak.  One sign of the state of this is the number of foreclosures, a foreclosure being when a person defaults and the bank fire sells the property in an attempt to get the loan off their balance sheet and recover some value.  Interestingly enough, the number of foreclosures is still increasing and will probably peak in 3 years or so.

One of the contributors to this is that it is relatively easy to default and walk away due to different regulations in this market; combine this with the massive decrease in property values, even people who can cashflow may be better off financially simply walking away.

Meanwhile people still need to live somewhere, hence renting is the only option; this demand means that rental amounts have remained at similar levels, which combine with the low values means for new entrants to the markets, the property is cashflow positive. The actual amounts will depend on the state and the property, but 10% + is more the norm than the exception.  Compare this to Australia where above 5% and you are doing pretty well.

About Mark Taylor….

The USA property market – Cashflow positive properties

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By Alex Henderson

Australian Property Market Forecast 2011

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Thought I would share my USA property journey with you…  It ITHere are certainly a few nuances to buying in the USA!

So first of all the buy strategy:

1) 1st property; Take advantage of the ”1st home” loan (4.5%) for a property in Florida.  My logic is that we can get some capital growth potential whilst taking advantage of the low interest rates which should still ensure positive cash flow.  LVR 60%.  Looking for something in the $100k+range which should get us a solid house with a good standard of tenants

2) 2nd/3rd property in Memphis.  Minimum property value of $40k + which means properties > 1950s and in good condition, fully renovated. Positive cashflow properties on P&I loans which will mean pay off in 3 to 5 years depending if we can top up repayments.

About Mark Taylor….

My USA Property Journey – Buy Strategy

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