All Forum Posts by: Andrew O.

I haven't dealt with the issue of obtaining finance whilst an LPR living abroad. However the idea of an LPR living abroad, doesn't make sense.

I'm sure you have done your research, and maybe because the type of entry I received my experience and research differ from yours. But won't you lose you green card living abroad for that long? Any longer than 6 months and you have to prove that you are maintaining residency in the US.

As I stated, I'm sure you have the legal requirements covered, just remember the USCIS can be a cold and fickle bed-mate!

Andrew

I can definitely see what I would think of as an issue. The buyer having a down payment of around 9% and 3% equity. This would have to be seasoned, and no doubt a business plan with a solid strategy for adding value and the capital to support the plan is a couple of things I would look for.

I certainly don't have the ability to properly give guidance in this field, hopefully some of the people who are more experienced can offer their take.

I just realized that the sales price is $2.28M, what is the value? Are buyers closing costs usually 6-7% in this kind of deal?

Andrew

Edit: I type (read: think) too slow! I'm glad Wayne and Joe are here to give guidance.

@Steve Nazari

without wanting to continue hijacking this thread, how rehab costs run over initial estimates? Generally that starts with the rehabber not having a proper idea of the cost of labor and materials, it then moves on to old construction throwing up surprises you weren't prepared for (plumbing, electrical, structural problems not seen until things are opened up). Now on top of that you want to play with a pool, I hope you have good access just in case machinery is needed for any potential repairs.

Not saying any of these will happen to you, that's why I asked about your estimating/construction ability and experience. One thing I will say is value your time and money higher, you need to squeeze more than potentially $35k from this deal.

Andrew

Steve, how are you with estimating rehab costs? Rehabs can easily blow out to double your original estimate, especially if you are looking with a somewhat un trained eye.

On top of that your $35k profit for having $500k tied up for potentially 4 + months is kind of anemic, if the above happens (rehab estimate doubles) there goes all your profit. We would generally aim for $80k+ on this purchase price, and have a solid rehab estimate.

Be liberal with cost estimates, and conservative with comps and profit expectations.

Andrew

Wow, I didn't really bother getting my head around everything, but this really seems like such a big bother for little to negative returns, take what I say with a large grain of salt; just really seems like a headache waiting to happen.

Andrew

That;s exactly what just happened with us @Jenna Stonecipher

We got a new ISP, and their modem/router wasn't picking up signal over the phone line; I called our landlord he said to get them to send a technician, and if it cost anything he would cover it. The problem ended up being on the service provider's side, so no cost to us or landlord.

Andrew

I've seen this debate start up a few times, I'd have to go with no. I see it more as a liability, this goes hand in hand with my ideas on rent vs own. As much as I'd love to own our primary, it makes no sense for where I live, and I would be dedicating funds away from earning money.

When "qualifying" to be an accredited investor your primary dwelling's value is not included in the net worth requirement. I'm not sure too many here would be excited to buy their primary to try out the appreciation game.

Andrew

I feel dumb for perpetuating this thread, as many have pointed out there has been great advise offered, some of it actual ways to better your position, and some was adjusting your attitude to better your position; really seems you want to hear neither.

My brother is the same, my dad and I constantly worked our contacts to get him great job and business opportunities, but the motivation to start or continue these were never there, but the want for nice things still was. Thus many wasted opportunities, and an outlook that there is no chance to better his position. Whereas my dad or I could have run with any of those opportunities and made them a success...it's attitude.

You say you are impatient, I say you lack proper motivation. everyone is impatient to a degree nowadays, those with motivation will channel that to put the steps in place to better their situation. Those who couldn't be bothered putting the effort in, go to internet forums and whine. Look at the lawn care, you worry about it raining, think about it like this: "If it rains people are definitely going to need my services, if it doesn't rain, maybe not" the rain is beneficial! With the right attitude.

Your attitude, fix it.

Andrew

Using your numbers for cash flow only the deal looks good. It comes very close to the 24% gross annual return (2% guideline) using the higher repair and lower rent figures.

The 50% guideline you brought up is to make an owner aware that 50% of those gross rents you collect each month will flow back out in the form of various expenses (taxes, property management, repairs, replacements, legal, vacancy). So your $800 would over the life of the rental be closer to $400, $480 if you will be self managing (40% not 50%).

Back of the envelope analysis shows you making a net operating income of $5760 for the year if you self manage, a 13.7% ROI if you spent your $35k doing repairs.

Learning these quick guidelines for analysis is a good idea to qualify or disqualify a potential property. You then need to weigh that up with the variables that only locals would know: location, potential tenants for the area, potential job growth/contraction etc.

Andrew

P.S There are hundreds of threads showing the 2 quick guidelines for analysis. Search the "50% rule" and the "2% rule".

Hi Shane,

Could you post some numbers up? Whenever we have looked at similar deals (executive suites) the cap rates have not been that inspiring. As you brought out, between body corporate fees, maintenance fees and capital works there wasn't nearly enough return on our dollar.

The investing climate is different in the US to Australia, many people were burned trying to hold on to property for appreciation, the same did not happen in Australia. What have you found in terms of numbers that have you interested in long term stay accommodation?

Andrew