Investing in the USA

[CanucKiwi]

Webinar recording posted!

For those who missed it or want to review it, the recording of the first webinar is posted here:

http://www.michaelanger.com/webinars/

Again, it's not a fancy web page or anything. I just had to come up with something quickly given our time-lines and the amount of work that Matt and I have on at the moment.

As we go along, I plan to add to that page; posting answers to the most common questions we're getting, posting future webinar recordings, etc. For now, though, we just needed to get the recording posted before the second webinar so that people who may have missed it can catch up.

[CanucKiwi]

Thanks, Michener... it's good to hear that people are getting something out of it.

[Michener]

Personally, I'm interested in investing in the USA and am looking forward to hearing how we can work together, CanucKiwi. There are numerous others interested too; hence we are looking forward to your next webinar, and also to fleshing out the details on how we can work together.

Keep those webinars coming.

Cheers,

Michener

[CanucKiwi]

Hey Ben,

Thanks for your feedback. I do realize that it was a bit general and long winded on the first webinar.

The general nature of the info in the first webinar was because we have to consider that we're talking to a mixed group of attendees who may or may not have achieved a certain level of investment experience. So, we thought it would be appropriate to start out laying a common foundation and build up from there. (For some people, this may also have been the first time they're hearing anything about investing in the US.)

The long-windedness may also come from the fact that we were barely conscious at the time, given it was 2am - 3:30am after 48 hours of running around at a frantic pace with Kieran and Willie. I apologize for that. (not being sarcastic... I know it can be boring for more experienced investors to sit through the basics all over again.) We will try to be aware of that on the next two webinars, for sure.

Originally it was going to be one webinar, but we realized it would just be too much for one, so we split it up. Our plan for the webinars then looked like this:

1st - lay the foundation; cover risks and basic info
2nd - talk about the specific systems we have set up, how & why they work
3rd - talk about additional factors; grants, investor networking groups, legal structures, tax implications, etc

Here's the thing - if you want a proven system rather than expensive hypotheticals, we're giving away the blueprints for free. If you want to check out and use our blueprint but DON'T want to work with us, that's 100% OK by us. We won't be vindictive or competitive or defensive about it.

I'm serious in saying that, because we make our money through our property investing results (for ourselves and our current CDN clients)... NOT from selling "top secret information about how to make money on property". (Besides, it's pretty common knowledge that people who sell information on how to do something almost as a rule make FAR more money selling information than from doing whatever it is that they're selling the information on.)

Sure, our systems aren't the only way to make money, but they are a very safe and proven way to get lifetime cashflow. If it adds value to people's lives but they don't want to work with us, then hey... where's the harm?

We don't "have" to make any money on these webinars because we're not investing anything other than our time. That's exactly why we're just testing the level of interest before we spend money on establishing systems for NZ investors to join us. No interest? No cost.

Our costs are $0 to run the webinars. Matt already has the webinar account to work with our other Canadian investors, and Matt is a former executive at Carlson Wagonlit Travel before he was made redundant and moved into property investing, so he knows people at the Hilton who realize that the market value of a conference room from 2AM - 4AM is $0, so they let us use it for free. This keeps us from disturbing our families while they sleep.

Now, if people understand our blueprint and DO want to work with us, we can talk about that with them. We are simply testing the water, as I said. It might not be economical if we only have 2-3 people who want 1 property each to go ahead now and organize a bus tour or whatever, so we're not going to put carts before horses. If we show people our model and there IS interest in working with us, we'll pursue it appropriately. If not, we've had a few coffees and late nights, and maybe kept some Kiwis safer through giving them info they may not have been aware of.

Would we like to work with 100+ NZ investors and set them up with insane cashflow properties? Of course! We're not going to shove it down people's throats though, or use underhanded, unethical mind-control NLP tricks to do it. The world of "wealth gurus" is overrun with that sort of behaviour, and I think we can all spot it a million miles away. If you ask us, we think it's TOTALLY unethical to try to get people to invest by activating subconscious emotional triggers to get people hyped up about what SHOULD be a sober, rational, and fully informed investment decision.

Personally, we think it insults the intelligence of the audience to pitch things to them using emotional "buy" triggers. We're not gurus, and don't want to be. Our futures don't hinge on closing X number of sales, because there will be food on our tables regardless, due to our regular investing activities.

No good accountant or professional investment advisor would advise their clients to invest in something by getting them all hyped up about it while hiding the potential risks and playing up the exaggerated benefits. They have professional standards of conduct that would see them lose their license pretty quickly for that. Unfortunately, there's no license needed to become a wealth-guru pitch-man type character.

In keeping with that level of professional ethics, we're laying out our investment blueprint, similar to how any licensed investment advisor would take their client through an investment prospectus and discuss the benefits and risks in depth, and let them decide with a clear head if it's something they want to look further into investing in. If so, that's just the start of the process... we'll talk from there and answer all specific questions, rather than telling people to whip out their credit cards on the spot. We'll even take people on a tour, just like we did for Kieran and Willie. I have offered the same to other investors who are not "famous" like Kieran (you can confirm with Beryl if you wish) so we're not playing favorites... but good business intelligence says we don't go booking any tours or whatever in advance of confirming interest first. A bus tour type thing may also not work for everyone either, so we also still have to work out how NZ investors will need us to work with them. We honestly haven't sussed that out yet.

Do we have a financial interest in bringing more investors onboard? Yes... of course. It would ramp up our business volume and profits in a number of ways (more investments, better discounts, more negotiating power, etc), and generally bring more and bigger opportunities to the table for everyone. In kind, your average licensed investment advisor also has a financial interest in selling you an investment (a commission or a flat fee)... but they, as licensed professionals, owe you a duty of care to make sure that the investment fits. While we may not require a license, that doesn't preclude us from voluntarily holding ourselves to the same standard as a matter of ethical and sustainable business practice, just because so many others don't.

Sorry if I said the same thing a dozen different ways. All I ask is that you don't lump us in with the high-pressure-info-selling-stage-guru types with "sell or starve" sales agendas without knowing us.

If you still think our integrity is questionable and we're only after your dosh as quickly as we can get our hands on it, you should definitely run the other way, just as you should whenever you get that feeling from anyone. If you check out the rest of our model and want to work with us, or talk with those who already do/have, I promise you'll find that's totally not the case. Sure, we're excited and passionate about real estate and getting great returns... I think we all are... but our next meal doesn't hang on hawking properties to all and sundry, so we're not approaching it that way. If we were, we probably would have focused on "the deals" first to hook people in (sell first, then explain & handle objections), rather than the systems that make them tick, and the opportunities if you're interested (explain first, then invite further discussion).

If it's no longer of interest, that's fine, but I do hope you'll join us for at least the second webinar. You still won't find us pitching though.

[ben9465]

Just a bit of feedback on the webinar I found it very longwinded and covered a lot of general facts about property investing while not really supplying much info about USA. Basically it seems you want us to believe your "systems" are the only way to go. If your desire is to buy do up properties , renovate them, rent them out and sell for a profit to NZers just say so, rather than lead us to believe that your just trying to help us out, i have better things to do than listen to long winded sales pitches.

[CanucKiwi]

(Apologies in advance - very interrupted while writing this, and no time to re-edit it... sorry if I repeat myself or am not clear.)

Hi Michener,

Glad you enjoyed the webinar!

We're preparing for the next one at the moment. While we (separately) have both done some public speaking to investor's groups, Matt and I are not professional presenters or high pressure sales pitch men, so thank you for looking past our less-than-perfect delivery to see the value of the content. As I said at the beginning of the first webinar, it's all relatively impromptu to just get the info out there, rather than to dazzle people with surface decorations on top of hypothetical information.

In retrospect, after having run the first webinar, of course there are things that I think "I really wish I'd remembered to mention this and that"... and... "I wish I'd worded that a little differently so it would be clearer" but of course we did go 37 minutes over-time as it was (thank you to everyone for sticking with us!) and at 2am - 3:30am there's not so much energy left in the mental & physical reserve batteries, particularly after the 48 hours we'd just had. We are taking the list of "I wish we had..." ideas and rolling as much of it as we can fit into the content of the next two webinars, given that we only have a short space of time between them to prepare. Keep in mind that we're also running our day-to-day investments and businesses at the same time.

As for what we're offering... (now, admittedly, this will sound absolutely crazy and/or B/S to anyone who has come to expect that everyone in the world is selling something with a formulaic, predictable, NLP-laden hardball sales pitch at the end of every webinar or seminar) we haven't exactly put together any sort of "offer" for NZ investors per-se at the moment. We HAVE been working with and providing turnkey properties to Canadian investors, so perhaps we can translate that over to NZ and sort out a way to work with NZ investors. We are speaking with some specific people in NZ about that, but there's nothing set in stone as of this very minute. I hope that we can open the door here, because as you mentioned, the opportunities are very good, even when the prices are near market value. So no, we aren't pitching anything right now, just as I said. We don't want to disappoint, so we may start pitching soon if that's what people want... do you need a kitchen food slicer by chance?

Here's what it's all about...

There are a lot of sources in the market selling hyped up information... information which, with a little research, can be found for free or very cheap. We don't sell information, we produce cashflow results. You can't go to the grocery store and say at the checkout "I don't have any money to pay you, but I can give you some really great information". I suppose you could try it and see what sort of response you get.

[Remember, though, that while information may be free, experience can only be earned, bought or donated. As Brad Sugars says, "the most expensive advice you can get is free advice from a poor person".]

Instead of information, we have a results system that works in the real-life-world (not hypothetically) to generate cashflow positive properties that are easy to tenant and easy to manage. We don't need to hide any downsides or talk in hypothetical terms because we have real-life results to show. We can talk about not just the Good, but also the Bad and Ugly without worrying that the Bad and Ugly will scare off potential investors. I think a lot of hypothetical info is a bit thin on the Bad and Ugly, that's all.

The Good is, of course, what we see in the bank account every month when the rents come in.

The Bad (risk) is avoided and/or mitigated by our systems and management.

The Ugly... well... while not nearly the worst of the worst, our houses are probably not going to be featured on the cover of Home & Garden Magazine any time soon, but investors who'll never see the places don't care, as long as the money keeps coming in.

Our economic interest in doing these webinars is simply this:

If we tell people for free about our system and the actual cashflow outcomes and we get a good level of interest from NZ investors, we may look at investing in the infrastructure to make our deals and teams available to NZ investors the way we have with Canadians. Until we know that it's a worthwhile venture, we aren't going to rush into anything in a big way as far as NZ is concerned. (A lesson I learned in my lifesaving-courses a long time ago that also applies to business is to always determine the depth of the water before you dive in head-first. It can save your neck!)

So here's the upshot of the whole thing. We're happy to give away our information for free. Then, once you know exactly what we do and how we do it, if you want the benefits of our systems and experience to generate REAL cashflow results, we are available to working together to develop a massive cashflow stream for you. First, we want to prove to you what we have going for us, and also prove that we're not out to make ourselves wealthy without directly making others wealthy at the same time. That is, if there's enough interest in it for us to go down that road. (Who knows... maybe information *is* a better seller than real results, because only 5-10% of people ever do anything with what they learn about building wealth. I'll personally take "results" over "info about results" any day.)

As for your questions about the property sheet numbers in the webinar -- those are examples of the types of Turnkey properties that we have made available to Canadian investors. The "Purchase Price" is the price they would be available for from us if we were to sell them... not our acquisition price. (Sorry if I was unclear about that in the webinar. As I said, it was impromptu not rehearsed, and with a little more sleep I would have perhaps been a little sharper.) This is why "Renovation Cost" is $0.00. EVERY property I've seen in the US has needed varying amounts of work, most often a LOT of work. Even a pristine house (which I have never seen, and would be rarer than hens teeth) will need to pass all the certifications and inspections regardless. For these, we've already paid for, project-managed and completed all the renos, passed all codes, done all the various government inspections (there are several hoops to jump through), achieved all Certificate of Occupancies, etc and that's all included in the price that was shown. Initially we were looking to sell them, but based on the net yields we're deciding if we will let them go to investors or keep them. If it will help Kiwis get up and running in the USA, then we can once again make them available to NZ investors. For now, they're paying us very well just sitting there.

Purely for comparison sake.... if we were offering those properties as "non-turnkey", the Purchase Price would have been lower, there would have been a Reno Cost Estimate specified for each of them (below the price), and there would have been estimated Rents (rather than actual) and an estimated Net Yield at the end (rather than "Actual" as specified). Matt used to offer those sort of deals to Canadian investors, but they are less popular as it's far more management intensive than the "cashflow positive from day 1" type turnkey investment. Most investors these days will jump 10 feet in the air to get an already-cashflowing 20% net yield anyway, so why put in all the work and go through the negative cashflow period to try to save a little at the end? Top investors use investments to fund their lifestyle... not the other way around. They just want passive income in their bank account at the end of the day, so that's how we put together our properties. (It's sort of the equivalent of offering a box of ready-to-eat breakfast cereal, or selling the raw grains to someone who thinks they can make the cereal cheaper themselves. Most people will just eat the cereal and get on with their day, while a few (for some reason) want to spend their whole day making breakfast. In the end, the breakfast result is the same, but the work required was exponentially more for those who feel the need to "DIY" the whole process that someone else is already doing more economically anyway.)

Here's a real-life example of what happens when you DIY something and you really you shouldn't. Another Canadian picked up a "raw" property in March (not bought from us, but they are in our investing community) and it's still vacant because they insist on doing the necessary renos personally themselves (?!?!) while living 2 hours away and across the border. We can clearly see that DIY just doesn't work for them (it's too much to manage). They only see the illusion of savings by doing it all themselves. They were talking about throwing the house back on the market at one point just to get rid of it as-is. They insist on not using our already-tried-and-tested systems, and they're getting burned by something that's a lot more work and trouble than they ever imagined. On the other hand, Steve King emailed Matt and I yesterday because he's already secured an approved tenant for a house we haven't even purchased or renovated yet. Forget tenanting them before the paint has dried like I said on the webinar... we're now tenanting them before we even OWN them! Our systems provide a list of highly-screened and approved tenants lined up for our properties. Over dinner two nights ago, Kieran had an "aha moment" when he identified exactly what our secret tenating weapon is... we will talk about in the next webinar for sure.

The difference in result from Turnkey vs. DIY systems is that we're getting huge cashflow piling up in the bank every month from a number of properties while the DIY investor I just mentioned is getting tax bills on a vacant rental. It's all a matter of systems and experience.

In the second webinar, we are going to talk about how to replicate what we've got going.

As for buying properties... we have network connections that provide property deals to us. I haven't had to write an offer on an investment property in over two years. The deals flow to us now, rather than us having to look for them. Steve's in charge of the supply of deals. His newest saying is "we pay cash and close in 2 weeks" and motivated sellers seem to appreciate that. It's not a matter of price vs. terms with us... we get our price and our terms... they get their closing date and that's all they care about in most cases. We're not really calling on properties from lawn signs or other agents' listings... those sorts of properties are picked over a hundred times before we see them.

[Michener]

Hi CanucKiwi,

Thoroughly enjoyed your webinar, and my thanks for the info you shared online. I know you are stressing that at this point in time you are offering information only, though I think we're all expecting that you have something to offer which you'll make clear fairly soon (if it isn't already pretty clear).

The property that you used as an example last night - was that a property you purchased directly from an agent for the asking price? I bring it up because I used Google Maps to view the property via StreetView, and a link appeared that led to an advert where the property in question was offered for sale (dated 16 Sept 2009), for the same price you mentioned last night. Quite amazing that there are properties in the US you can buy at asking price that are still significantly cashflow positive.

Is your main strategy to look for properties like this, or would you concentrate more on sourcing properties via mortgagee auction or other means at bargain prices?

Look forward to the next webinar.

Cheers,

Mich

[CanucKiwi]

Thanks everyone who was on the webinar! We had a much higher turn out than expected... and that's despite some of the technical trouble that some people reported with the software on their computers and not being able to hear us.

I hope you got some good value out of the first webinar (out of what we expect will be 3), although it was more of an overview and look at the considerations you need to factor into your plans. It's truly impossible to cover every possible aspect and get into the very finest of details in only 1.5 hours, so we will be looking in greater detail at the risks (and how to reduce them or avoid them entirely), operational and management aspects over the next two webinars.

We did get some great questions sent in from attendees, and we will be replying to those as well online. Some of the questions are also relevant to the discussion we will have in the upcoming webinars, so we'll answer briefly online and in greater detail on the call.

I do apologize again that we (Matt, Steve and I) were totally shattered and possibly incomprehensible at some points. Simply due to the timing of everything, we had literally just finished our 48-hour whirlwind tour with Kieran and Willie through our areas of the US and Canada. It was also 2:00am - 3:30am here for Matt, Steve and I, so we were really burning the candle at both ends (and maybe even in the middle too, somehow!).

As I said on the call, in response to the massive attention that US investing is getting lately, we are putting "timeliness before fanciness" and getting this information out there without necessarily glossing up our slides with extra graphics, or rehearsing and polishing our presentation in advance. (The worst thing that can happen is for more "Mum & Pop" investors to unwittingly put their life savings in peril based on incomplete or misleading information without understanding the real risks... while we take our time getting some impressive photos together!)

Once we have the webinar recording posted online and your questions answered, I'll post here again with the address for you to link through to those.

[CanucKiwi]

I'm doing a free webinar for you.

Disapointed to see even canadians cant get loans, was hoping to swing off that to buy , (myself canadian born, kiwi bred). So what area you recommend to invest in, and whose a good property manger and real estate agent to start getting some ground work done before flying over!

(If you can't be bothered reading, go here to skip everything else below!)
https://www1.gotomeeting.com/register/790647192

There's been so much interest in this (way more than I expected) that I've been asked by Beryl Colley in Wellington to do a live webinar this Wednesday night at 7pm NZ time 30 September 2009. (It will be 2am for us here! ugh!)

It was originally just going to be a "set the record straight on all the hype and half-truths and answer people's questions" but I don't believe in just pointing out the problems and not offering a solution (that's called "complaining" after all)... so we've decided that we're going to talk about our entire process on how to set up successful cashflow positive rentals safely. It won't be full of "pretty" slides (we're not being paid for this) but we will show you everything we do in full detail. I personally think the US is WAY safer than NZ right now for rental property investors who know what they're doing, and WAAAAY more dangerous than NZ for investors who DON'T know what they're doing... and I'll talk about why that is too.

I managed to rope my business partner Matt into it as well. He's the guy who started a lot of what we're doing now, and together with our whole team we've fine-tuned it. So you've got both of us, and we're going to see if we can bring in any other team members if we can trick them into staying up until about 3am.

I promise there's no hype, no sales agenda... we're not selling any sort of information product or seminars or whatever. There won't be any big pitch or push for you to spend any money, so don't worry it just being another "sales seminar". We're not charging anything nor are we getting paid to do this in any way -- I'm just sick of hearing about all the baloney that's being fed into the market right now, and Beryl asked me to be the voice of reason and show real PROOF that there's a way to make safe SPENDABLE money, rather than talk in theoretical terms and hyperbole about what you "can" do in theory, but probably can't do in real life... at least not safely or often enough to make it worthwhile... or how to make theoretical equity gains (which is not "cashflow forever").

If you want to hear about everything we're doing, and ask questions live, you can sign up here:
https://www1.gotomeeting.com/register/790647192

If Matt and I can stay up from 2am - 3am to tell you the plain truth about the US market and tell you for free how to replicate our cashflow property successes, then you can afford to show up at 7pm on Wednesday.

I hate to sound like a "hype salesman" but this is simply the truth -- the webinar software package that we're using does have a limit on the number of people who can receive the broadcast, and the "seats" are being filled up fast after the webinar was announced in an email from Beryl last week. I'm not handling the responses, so I don't know exactly where we're up to, but tonight on our catch-up Beryl said she was really surprised at the response so far. (not sure if it was "one of the biggest webinars" or "THE biggest webinar" she's ever had... like I said, there's more interest in this than I expected.) The US is a hot topic among property investors these days, it seems.

Now here's the pitch... for 3 easy payments of $29.95 I'll throw in a Slap-Chop and a ShamWow! haha! j/k!

I'll be gone for the next day or two, as I'm showing another very prominent Auckland-based investor around on a personal tour of our investments and systems in the USA leading right up to the webinar. I will try to check my emails intermittently, but please don't count on a timely reply as our schedule for the next 48+ hours is very structured and busy.

[micheleco]

Disapointed to see even canadians cant get loans, was hoping to swing off that to buy , (myself canadian born, kiwi bred). So what area you recommend to invest in, and whose a good property manger and real estate agent to start getting some ground work done before flying over!

[ben9465]

Where to go is the question Ive been trying to sort out for the last 2 months. I heard of unfinished new homes going cheap(28 000) in Orlando, where you finish them off for say 20 000 and rent them out. Also Las vegas appeals as it was once the fastest growing city in the USA, although this may not now be the case, but may again be once the credit crunch and property inventories have cleared. There are apparently land constraints such as lakes, mountains reserves etc that may limit expansion. This together with the high growth rate returning and exceptionally low current prices may lead to great capital growth over the next 10 years and also a healthly rent cashflow in the meantime.

I was not so keen on the north as I heard of costly vacancies where pipes freeze or furnaces need replacing but am keeping an open mind as to where to invest. Thank you for the offer of a tour , just yet I am not sure if I will venture north. At present I am thinking of Orlando-Houston -Vegas and maybe San Diego although it may be too dear for decent rental cashflow.

Thanks for info on mortgages, like you say there is nothing wrong with 100% cash , just those 5% USA mortgages would be great if foreigners could get them.

Regards Ben

[CanucKiwi]

Hi Ben,

Mortgages... unfortunately... are a no-fly zone right now for non-residents of the USA if you're looking to the banks. We've been trying to crack that one open for quite some time, to no avail.

You can look at private lenders (sometimes called "hard money"), but be prepared for them to ask for 2-3% up front, and 15% interest... plus 3 months interest penalty for early repayment. We haven't because... well, 15% net yield - 15% interest = more of what I've already got in NZ + a business trip to the USA!

My business partners and I have several LLC's and we can't get finance. Even if we have a US resident as a member of the LLC, they won't look at it. The current rule (which can change at any moment, of course, when they realize that it's totally KILLING their property values) is "No Lending To Non-Residents!". Doesn't matter if your LLC has 10,000 Americans and 1 non-resident... no soup for you!

Your options are to: Get a US partner you REALLY REALLY REALLY trust... they hold the property in an LLC, and you do a Joint Venture with the LLC, and have the JV agreement registered as a lien or caveat on title (this will probably vary by state). We haven't gone down this path because we're not desperate for mortgages. We start off with the assumption of 0% leverage right from the start, so our deals and yields aren't hinged on getting finance, or getting a specific rate. If we do, it's just icing on an already-sweet cake.

Cash is king more than ever. Everyone I know, myself included, is investing 100% cash (well, other than our US-citizen friends of course). We're getting 15% - 40% yields with a 0% LVR, so if at any time we're able to finance the properties, even to say, 50% LVR at 5% interest, we'll be looking at around 25% - 75% Net cash-on-cash yield, which is nothing to complain about.

They used to have LOTS of finance options for foreigners, until the whole banking melt-down. Now they're xenophobic towards anyone who wants to borrow money... it was one of the responses that they came up with in their moment of panic.

Maybe the plan is to discourage foreigners from buying, so that half the country isn't owned by overseas landlords. If that's the agenda, it's working to keep *some* people out -- namely those who can't adapt their thinking to buying 100% cash, which is hilarious to me, because "all cash" is the way 99.9% of investments other than property work every single day (you've got Share Options, and you can margin Forex and Shares, but how many "nest-eggers" are really doing that sort of risky stuff?). Those who recognize that the opportunity is so unimaginably bigger than this one temporary obstacle of "no mortgages" are undaunted.

One day finance WILL return (it will have to if the US is to be able to grow again and have any institutional foreign investment). When it does, overnight we foreign investors will be able to (at least) double our portfolios and cashflows, or buy our dream homes on the beach with tax-free money that other people are paying back. (I'd probably never go over 50% LVR myself, just to know that I'll never have to worry about losing it all.)

Interesting anecdote: We were originally declined for SECURED credit cards even! You know -- the ones where you give $500 to the bank, and they give you a credit limit of $500. No deal! Don't want to know you! My business partner persisted and finally got a hold of someone with the authority to make a decision and she (some level of manager) agreed that it was ridiculous and worked out a secured credit card for him. I wouldn't be surprised if he had to put down $1,000 to get a $500 credit limit though.

Where were you looking at going to? I'd be happy to show you around our areas, if you're interested in a guided tour. I can also introduce you to the management team and make sure you'll be looked after. "Money follows the management" is the saying.

[ben9465]

Thanks for your info on investing in the Usa. I am intending to go there in a month or 2. Just a question on finance avaliability. I believe it is next to impossible to get a mortgage without a social security number is this the case? I am going to bring over around $us 300,000 and buy maybe 3 houses in a llc I will set up. Do you think a bank may give me mortgages as it is a company with multiple rental property income streams.?

[Hillbilly]

THANKS for Info Canuc Kiwi. You are in the right place at the Right time...I like your real examples, of real properties.
We bought in Rotorua in a similar depressed market-$40k for a house that netted 20%.
It's now triple price so we have had BOTH cashflow, and capital gain. Those that buy now may have NEITHER.
Sorting out boring stuff-Like does a Nevada LLC (company) pay less tax than a California LLC? And is there no Capital Gains Tax if I have a company with an overseas owner? Easy questions if I can find right people to ask...
Not so many foreclosures at moment they say.

[CanucKiwi]

Hi Orkibi,

Agreed -- it will be 2-5 years until we see the US start to grow again in property values. I'm personally feeling like strong growth probably won't be seen until closer to the 5 year mark... maybe even 6-7.

I do respectfully disagree that there's no need to rush, though. When there's good thing going that is guaranteed to eventually end, there's never a moment to waste. I don't want to end up regretting the opportunity lost, like the days of finding actual Net cashflow in NZ.

Since I'm not investing for capital gains right now, I really don't worry too much about the "no growth for many years" thing at all. I'm only using this opportunity to pick up as much property as I can -- essentially I'm HOPING that there's no growth for 2-5 years. Everything I buy pays me monthly, so I don't want the bargain-buying season to end. About an hour ago I got an email from the property manager telling me how much money he just deposited into the rent account today. That's what I'm investing for.

I'm happy to take a 15%-40% ROI for life day in and day out, whether times are good or bad and do my roller coaster riding at the amusement park.

There is a lot of talk of vacancy in the rental market, but when you've got solid management on the ground there are a LOT of things you can do to make yourself more-or-less immune to this problem. First of all -- don't buy where vacancy rates are astronomical in the first place, or where "low" vacancy rates are based on some superficial attraction in the area (vacation spots, etc -- this is the key reason for the sunbelt value collapse).

I would be concerned about rental vacancy if I owned rentals in Detroit, for example. (Detroit is, of course, making headlines in this respect... refer to my thoughts about that.) Instead of taking the tabloid headline approach to picking or avoiding areas, I always buy based on economic fundamentals -- money has to be flowing into the area for legitimate, ongoing, sustainable reasons. Is it a stable and boring work-a-day city? Yes. Ok, give it a big tick in that box.

Once you've bought in a economic fundamentals-driven area, you can do a lot on the marketing front to get attention, and you can do a lot on the house to make it more attractive to tenants. Honestly, we have a waiting list of tenants on our books.

The national average at the moment, as well as the market I'm investing in reports an average "10% vacancy". We have 0%, and I sleep very well at night knowing that we can maintain that, or at worst a slight increase.

Key reasons for our 0% vacancy, and why I'm confident that low vacancy is sustainable in any market;

- Our places are rented out well in advance of an expected vacancy to the best tenants we can find. We have literally been standing in the driveways of a couple house that we were renovating discussing next steps in the reno plan, and people have walked up to us right off the street asking if they can apply to rent from us. They know we do a good job on the properties, they recognize our manager's rental-application phone number (there's a sign in the window of every property AS we're renovating it) and they will ditch their old landlord to move into one of our properties. Of course we still screen everyone very carefully... when people are lining up for your houses, you get your choice of tenant.

- We get government-guaranteed rent (social assistance clients on low incomes) and full security deposits that is sent directly to us every month; the money never goes into the tenant's hands. If we lay a formal complaint against a bad social assistance tenant and can verify our claim, they could stand to lose their financial assistance FOREVER, and they know that... so they play by the rules.

- The 10% vacancy is not across the board for all properties -- in my view, 9 out of 10 vacant houses in our area seem to be the low-low-low end "slum-lorded" stuff that hasn't been renovated or even tidied up in 20 years or more, and the landlord doesn't care... also low-end high rise apartment buildings with vacant units count in that score as well. All of these things are due to failure to buy in the right area (buying a falsely high yield), and failures of management. A bad area can lead to a failure of management, because good managers won't serve you in bad areas.

- Vacancy is HUGELY mitigated by good management and people skills. Treating tenants like human beings, and letting them know that they're respected is not "rocket surgery". Giving them a small but appropriate gift on the anniversary of their tenancy, or even just a call to ask if the place needs any minor work... do all the switches, faucets and door knobs work properly, etc. but still drawing a firm line for the "I want I want..." tenants. [example: I've even seen one tenant's son high-five our property manager when we went around together. (it was another investor's property, but I was with him that day on our way to see a bunch of other houses). They're glad to see him show up... they're glad to give him their share of the rent. He knows it's always a professional relationship... but a good manager makes your rental customers feel truly valued and thus they stay.]

- If times ever get REALLY, REALLY bad, and we start having trouble getting calls from quality prospects (which would definitely be the opposite of the reality so far), given that our Net Yield is 15% on our lowest-yielding properties, we can still cut the rent by as much as 33% and still be clearing a Net 10% spendable cashflow. On others where our Net Yield is currently more like 30%, if we're forced to cut rent by 33% and accept a 20% Net Yield, yeah it's a pain, but we're not dying or anything! Not saying we'd have to go that far, but we could, and still have our heads well, well above water financially speaking.

In contrast, if I cut the rent by 1/3 on any of my NZ properties, I'd be bankrupt in about a month! Even a 10% cut would make for a seriously uncomfortable situation.

If I sound emphatic and enthusiastic, it's because I am! I'm in a rush to make some absolutely MASSIVE piles of hay while the sun shines. I'm passionate about property investing and I'm loving every single minute of it! (In case that doesn't already show through in my posts... haha!)

There will be a day when this once-in-a-century opportunity is going, going, gone. The US government is throwing everything it can at putting an (indirect) end to this opportunity by fixing their economy. Eventually, things will turn around and I would like to be sitting on a couple hundred properties by then, rather than a few left-over scraps I scrambled for at the end. When the wave of strong economic times returns, then I might start to think about what capital gains can do for me... or I'll just raise the rents and not eat the goose that lays the golden eggs.

How quickly could this be over? All it would *really* take is for the US to increase it's immigration volume sufficiently, and I think it might only take about 12-24 months of opening the flood gates a smidgen to have a large enough population influx to soak up the property oversupply and send prices back up again. There are billions of people who would love to have a shot at a life in America. Of course, huge immigration is potentially fraught with other problems, but you can be sure it's an idea that has been tabled as at least a small part of the solution.

Another reason to get into more property ASAP is the coming wave of inflation that I believe we will see. Governments around the world have, and still are, pouring massive resources into their economies. Ordinarily, massive amounts of liquid capital available at such low interest rates would have huge inflationary pressure. Once the global economy turns around, it will have booster rockets attached, and governments will then be doing everything they can to haul all those loose dollars back in. Financial policies of governments often have slow reaction times in the market though, and they can't move too quickly (huge overnight interest rate jumps) or too suddenly without warning either. This means the recovery will come swiftly, but efforts to cool down the overheated recovery will take some time to kick in. Real estate and gold are two fantastic inflation-protected asset classes, but gold doesn't pay me a return every day simply to own it.

The way I see it... good times, bad times, low inflation, high inflation, any which way I'll win in property. I don't have to worry if I'm wrong in my inflation pick, or whatever. If I'm wrong... I win (cashflow), if I'm right... I win bigger (cashflow and capital gains). *shrug*

(The only place I lose, and everyone has problem in every investment class, is in how tax rules never account for the fact that inflation is a big part of your capital gain, even though you can't to spend inflation at the grocery store!)

As long as my Net Yield stays above 10% and vacancy stays at 0%, or relatively low, I have a HUGE amount of buffer to work with in all respects. Even if I had to deal with a 10% vacancy on a 15% cashflow, I'm still making 13.5% Net Yeild on my weakest performers.... so forget dropping the rent by 33%.

As I said, I respectfully disagree that there's no need to rush... I'm doing a LOT of rushing right now so I can do a lot of relaxing later.
Procrastination in the most critical moment for action won't help me reach my goals.

Of course, for "upward market only" investors looking for capital gains, this *is* the time to sit on your hands. No disrespect at all to those who choose that strategy -- it may very well be my strategy one day too. I simply prefer to be an investor for all seasons at the moment because I feel I have more control of my life that way.