My property journey – USA property

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

My property journey – Mackay Strata Titling

The Returns

The valuation came in at $560,000, smack bang in the middle of the forecast.  Previous valuation was at $450,000, so I know have $135,000 of equity in the properties ( loan is currently at $425,000)

The refinance options have been looked at and we are able to secure a 90% LVR loan.  Net result is that I am able to take around $80k to make further investments.

The costs

The costs of the strata titling was in the $15k mark.  It was upped significantly by the need for a firewall which threw in an additional $10k.

Ongoing costs are:

• additional fees for body corporate insurance – approx $1000 p.a.
• Additional rates – approx $1000 p.a
• Additional admin costs for body corporate – approx $500 p.a.

So, you need to make sure you invest the released equity well to leverage the funds effectively

About Mark Taylor….

My property journey – Mackay Strata Titling

My property journey – Mackay Strata Titling

Mackay

It is celebration time as we have received from the council the sealed approval, so we are back on track to finalising the strata titling.  One of the new rules is that we have to get valuations on the duplex, so a good opportunity to see what we have created:

Project Valuation

I believe fair market value for this property as a duplex would be between $475,000- $485,000.

If the units were strata titled the market value would be in the $$530,000   to $590,000 range.

So in the $55k to $100k range of additional capital created through this work.  Overall costs will be in the $15k to $20k range so a return of 300% to 500%.

I keep learning as I go on this journey.  There are some additional costs now that I am running a corporate body, which needs a sinking fund contribution and a separate tax return as it is run as a separate business.

Meanwhile when this is finished, in the best case scenario we have reduced the LVR to around 70%.  My understanding is that I may be able to refinance up to 80% which would allow me to extract $50k, which would be enough to go again on another US property or 2 so I will be exploring this option….

About Mark Taylor….

My property journey – Mackay Strata Titling

My property journey – USA Update

Memphis

I am now getting through my first statements and sure one property is firing on all cylinders and the other has had a clunky start.  The standard of statements in the US are not quite the same as here, a few language difference and a rough looking spreadsheet in an e-mail rather than a professional looking pdf

The first property was rented on purchase and that is generating $300+ net per month into my savings.  Remember this is after paying off the P&I loan and all expenses.

The second property was not rented, although I had a rent guarantee on this.  It is now rented but there seems to have been a loophole in the rent guarantee, so currently I have a month of rent missing.  I am trying to get to the bottom of it, so I can let you know about these type of things.  No big deal in the grand scheme of things and I haven’t had to pay out any additional money due to the positive cash flow situation.

One of my club members went to Memphis  and I asked her to check out the properties.  Here is what she said:

“I went past your properties yesterday and took a few photos and a short video that I’ll send you when I get home. They look good and the area seems to be a sound choice.”

I will post the video when I receive it!

Florida

We have had a few shenanigans regarding valuations on the Florida property.  Similar to here, the bank approved valuers have gone ultra conservative and as a result the valuation came in lower than expected.

A few phone calls to the seller and my partners etc and we eventually agreed a new price and the deal is going through with an overall discount of $9k.

I have finally got the finance approved and in the final stages, banking, insurance, building inspections etc.  The finance has been very drawn out here, and one caveat to be aware of is that some banks demand a sum of cash to be left in a savings account over there as additional protection.  In my case it is approximately $3k to cover 6 months of costs.  So, remember to add this to your figures!

Atlanta

I am eyeing up Atlanta next, Stephen has just been on a reccie over there and we are now able to get finance and there are some interesting options in this city.

Cheers for now

Mark

About Mark Taylor….

My property journey – USA Property

My property journey – Florida Property

Here are some photos of the Florida property I am adding to my portfolio!

About Mark Taylor….

My property journey – Florida Property