Below is an exclusive video interview we conducted with Andrew Allan,  CEO of MyUSAProperty.  For our facebook fans, due to technical restrictions from Facebook on importing embedded vids, I will send a second post with the video!

In this video we ask Andrew about how you can reduce the risks of repairs and damage when investing in USA property:

To start your own USA property portfolio, go to:

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

About Mark Taylor….

The USA property market – Reducing the Risk of Repairs

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Getting a good property manager is one of the most important elements to having a successful US property portfolio.

Here is what to look for in terms of ideal capability:

• Collection and management of rental payments
• Tenant screening
• Advertising for new tenants
• Maintenance and call out services
• Regular property inspection reports
• Dedicated first point of contact for landlords
• Support with potential exit strategies, marketing your property when you want to sell

To start your own USA property portfolio, go to:

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

About Mark Taylor….

The USA property market – What to look for in a property manager

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- Arrange property insurance for replacement value

- Purchase a property with a Home Warranty where possible

- Purchase a property which has been fully rehabbed or is less than 10 years old

- Make sure you have a good property manager in place

- Worth noting that the USA is very, very reasonable to conduct any repairs or building work

I have personally completed two building inspections.  I would advise this even if you are buying a newly renovated or rehabbed properties.  Most properties that are bought from foreclosures and then onsold after rehab have a building inspection to protect the rehab company from buying a dog, but it is important that you understand what really happens in a rehab and also take your own precautions by getting your own inspections completed.

Probably, my main learning is this area is the resetting of expectations.  What does a full rehab really mean?  Does it mean a 1950s house will suddenly be transformed into a totally schmick property.  Well you could do this, but this would break one of the fundamentals principles in property renovation, don’t over capitalise.

So, from what I have seen, a rehab makes the property liveable, and gives it a cosmetic overhaul.  There will still be general wear and tear areas, which will get picked up on the inspection, so don’t be surprised by this.  The building inspections are very thorough and are designed to pick up every little fault.  Keep focused on anything that if left unattended will lead to big costs, or any major foundation issues.

The other thing to make sure if you can is that you have some kind of guarantee on repair work for a number of months in place.  This will cover you from initial niggles and tenant requests in the immediate phase.  The other thing to note if you are concerned about repairs is that the cost of completing repairs in the USA is significantly below Australia, in fact remarkably so!!

To start your own USA property portfolio, go to:

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

About Mark Taylor….

The USA property market – Risk of property damage / repairs

Technorati Tags: Investing in USA property, property damage, property repairs, USA Property Course

- Look carefully at the vacancy rates in your neighbourhood / region

- Purchase a property with a tenant/lease in place.  For untenanted properties, arrange to settle only when a tenant is found.

- Allow 3-4 weeks vacancy (Average holding cost $200-$300) in your financials

- Make sure you have a good property manager in place

To start your own USA property portfolio, go to:

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

About Mark Taylor….

The USA property market – Risk of no tenants

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Of course, there are risks and complications to be aware of, and yes there are certainly Australians who will get burned by taking shortcuts.

Here is an article from the Sydney Morning Herald that raises some fair risks, although as with the media it is very one sided!

SMH article

Here are some of the things to be aware of:

• Buy over the internet at your peril.  The house may look good but what about the area?   Make sure you can get insider knowledge for the region, the neighbourhood, the type of tenants and the vacancy rates
• You need to have access to a reliable property manager as tenants have a lot more rights in the US and it is not as sophisticated as in Australia.  Picking up cash in an envelope is still a common practice!
• Make sure you have the right structures and bank accounts set up so you can handle the US and Australian tax side of things easily.  Leaving this to a qualified accountant is the best option
• Know your strategy; don’t put yourself in a position where you need or expect to sell.  You should be investing for the medium / long term!
• Getting US loans will give you much improved cash on cash returns, but it is more complicated than Australia with each state and each bank having different criteria
• Don’t forget the basic principles of property investing and make your money on the way in and look for a long term strategy.  We don’t expect capital growth for a number of years…

To start your own USA property portfolio, go to:

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

About Mark Taylor….

The USA property market – The risks and complications

Technorati Tags: Investing in USA property, risks with USA property, USA Property Course

I recently had an interesting scenario which took me through the realities of tenants and contracts, as well as landlord’s insurance.

One of my tenants broke lease on the basis of “hardship” due to the loss of a job.  He had been a pretty average tenant in terms of payment, but nevertheless with 2 weeks notice, I was still looking at some rent downtime which I was hoping to minimise.

First, I had a good luck at my landlord’s insurance.  Mmmm, only covers you in a break of lease situation after the first 4 weeks of being empty and does not include the rental agent fee for releasing.  They also need evidence that sufficient action has been taken to try and get the tenant to pay and secure a new tenanat.  So not too much help in this situation.

So, time to try and get the tenant to pay out the rest of his lease or at least until  a new tenant was secured.

Tenant goes legal and says he is not going to pay.

Next step is a mediation point prior to going to tribunal, at which point it could go either way.  Interestingly, the court can rule in favour of the tenant in the event of hardship…

Eventually I go with a compromise agreement to avoid going to court and end up keeping the bond which gives me a  net loss of 2 weeks rent.  I also negotiated with the rental agent to forego their rental lease fee as there were issues in the way they handled the breaking of lease.

So, there you go.  A few tips and insights if you find yourself in the situation of a tenant breaking lease.

Mark

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