Invest in NZ - not in US properties is my mantra

[Dean@Massiveaction]

@Donna, I don't know, but I am sitting with Andrew and none of us buy property to onsell, he never said anything like that :-)

[donna]

What did Andrew tell me Dean? I don't want to hear from you what he did not tell me....I want to know what he said he told me - is that clear enough?

Cheers,

Donna

[Dean@Massiveaction]

?? Weird statement, you ask him?? I am just saying he never said we buy property to onsell because we have never done that. That model sucks and doesn;t help investors.

[donna]

More weird IMHO that you don't want to provide an answer Dean. You say you are sitting with Andrew so what did he tell me? As we know it goes something like "I didn't say that I said....." so what did he say Dean?

cheers,

Donna

[Dean@Massiveaction]

No Donna, you made a statement that is total fiction. i simply corrected you. You are free to ask Andrew whatever you like. I am simply making it clear that we do not buy property and onsell it, which is what you said. So your recollection is completely wrong, if you want clarification on your conversation you can ask Andrew any time you like. :-).

[TheLiberalLeft]

And I get Perry threatening to use uppercase for being ever so slightly off topic. Hmmmm. What was that again about consistency?

No offence to either of you, but the he-said, she-said thing, isn't riveting reading. I'm going to have to do some work at this rate.

[Shane D]

Andrews Waite told me that Dean Letfus and co - have acquired (access to)* 200 odd US properties to flog off to anyone who will have them. Personally I wouldn't touch them with a barge pole.

cheers,

Donna

Donna and Dean,

I believe this disagreement between you too is the result of (1) Donna not fully understanding the business model being used by Dean. And Dean not helping matters by being stand-offish and not offering full disclosure of the business model he is using promoting USA property investments.

There are different flavours of the "Buy USA Property" marketing employed by Dean and other "agents" but basically its goes like this.....

First some background info.
Dean and others "property promoters" are agents or middlemen for property companies on the ground in the USA. These companies buy foreclosed (mortgagee) properties. These lists of properties are then forwarded to the agents or middlemen. The agents are usually "property educators/promotors" i.e. people with a good client database of willing investors.

Agents then offer the property lists to their clients in other countries such as NZ or run tours to the USA with interested potential investors. The USA property companies then pay the agents/middlemen a commision for each property bought by the property educator's clients. Usually $1,300 - $1,500 USD.

So Dean was telling the truth when he said he was not onselling the USA properties to his clients. What he did not disclose was that he makes a commision from every property bought by his clients. I am fine with someone adding value and making a profit from it if full disclosure is given.

The problem is there are SO MANY flavours of the "BUY USA property" business model. You have to be VERY careful with some of them. Actually some of these company's selling tactics would make BLUECHIP management blush. Bluechip were amatuers compared to some of stuff presently going on in the USA.

But don't think I am being totally one-sided...I am talking about the worst tactics..but there are also some absolutely stunning bargins being snapped up too by investors that are spending time on the ground to learn their markets and establish strong teams (real estate agents, renovators, property managers etc).

Lets start with some of the worst bunsiness models then progress down to the best.

Turnkey (everything done for you)
The turnkey model is usually snapped by new investors looking for a TOTALLY hands-off property buying experience in the USA. Usually it involves the purchaser buying a newly renovated property with a tenant already in signed up for the property. The property management is also taken care of by the company selling the house.

This all sounds great but this model also means the purchase will pay more for a property as LOTS of people are "clipping the ticket". It is not uncommon for mark-ups of 100% - 200% or more on the price the company purchased the house for. Some examples I have heard. Company buys foeclosed house directly from bank for say $15k. spend $10k renovating the house. Puts a tenant in the property and then sells the house for $55k. The company may even offer 50% finance. Can you work out why they can offer this???

A more "mild" business model involves the agents/middlemen introducing their investors to these cmpanies selling foreclosed properties. Fully disclosure is given to the buyer i.e. the middleman is making a commision of $1,500 USD, the company selling the property is making a markup of say $4000 USD. The company will usually even help introduce a team of renovators to get the property ready for a tenant. They may even have a property management team in-house. Personally I would find a small independent property manager NOT associated with the company selling the houses. Too much potential for conflict of interest when the company selling you the property also manages it.


Anyway that's enough for now. My head is hurting just thinking about all this.

Shane

[spaceman]

^Shane .....don't know why you're dissing on TURNKEY ......sure it's most likely to give you the least return, but that's a trade off for having to do the least work.

As long as you understand that the less work you do the smaller you return will be what's the problem???

Not going to invest in the US myself, but good luck on your trip there and remember poidh

Cheers
Spaceman

[donna]

Thanks Shane. Yes like any market do the hard yards and you'll find a bargain (though as mentioned I wouldn't be doing so in the USA) and worse if you get caught up with these 'property promoters' if what Shane says goes.

Dean, it's not that hard to be open and honest mate. I guess the 'secret squirrel' approach is due to protecting your patch in a market that's becoming crowded with other 'property promoters'. I get a few each week approaching me for advertising and I hear it's becoming quite ferral amongst the competitors.

Cheers,

Donna

[Dean@Massiveaction]

There hasn't been any secret squirrel approach at all Donna, I simply corrected your statement. You didn't ask me anything else. I am on record all over the net as stating our model involves proprietary fees that would otherwise be paid to a realtor. It was your statement that wasn't correct.

[Shane D]

^Shane .....don't know why you're dissing on TURNKEY ......sure it's most likely to give you the least return, but that's a trade off for having to do the least work.

As long as you understand that the less work you do the smaller you return will be what's the problem???

Not going to invest in the US myself, but good luck on your trip there and remember poidh

Cheers
Spaceman

Spaceman

I am not dissing the turnkey products. Actually like you eloquently put it, its probably the best product for most kiwi/assie investors buying from abroad. And the company's putting together these products (and the agents/middlemen) should make a healthy disclosed profit.

I am just saying do your due diligence on websites such as willow.com. Search the property's sales price history and comparible sale prices in the area. Because there is potential for these companies offering turnkey products to really jack up the prices in BLUECHIP-type schemes.

Am I wrong to piont out the potential pitfalls??

Shane

[spaceman]

DUDE!!!!....you said it was the worst business model....

Lets start with some of the worst bunsiness models then progress down to the best.

Turnkey (everything done for you)....

Sounds dissingful to me.

I don't think "turnkey" is the problem ..... you've got to accept that the ticket has been clipped and you're, as the final purchaser, the last one to get the profit.

Ratbags that turn a comfortable 20% yield into 10% by hiding their huge markups, and still try to convince you that 10% is super is a different story.

Cheers
Spaceman

[Shane D]

Spaceman,

You put these things so much better than me. Can I send my future posts to you for editing in future? :-).

Shane

[Shane D]

I would like to add that I think it is fair for Dean to be making healthly commisions from investors he introduces to properties in the USA. I get the feeling he has done the hard-yards and spent the time on the ground in the USA reseaching the best markets and companies to work with.

Dean's reseach should be able help NZ investors avoid the "rabag" companies.

[spaceman]

I would like to add that I think it is fair for Dean to be making healthly commisions from investors he introduces to properties in the USA. I get the feeling he has done the hard-yards and spent the time on the ground in the USA reseaching the best markets and companies to work with.

Dean's reseach should be able help NZ investors avoid the "ratbag" companies.

No probs ..... happy to be your editor @ $100 per time.

That's $100 you owe me...... 15% discount is offered if you pay in beer


Cheers
Spaceman