Australians trying to buy multi family

[Vince Madden]

Hey guys, we're from Australia and are looking to get into the US property market. The research we've done so far has suggested that we'll find it difficult to get finance in the US because we're Australian residents. However if we start up a LLC and perhaps buy a couple of cheap properties free and clear to put in our LLC we'll begin to strengthen the LLC and put it into a position to borrow. I have recently spoke to someone that has told me if we look at multi family building around the 1 million mark and we put down a 20-30% deposit on it then we'll have a far better chance of finance as the bank will be more interested in the performance of the building rather than focusing our individual details. If anyone has any advise it would be much appreciated

[Ian Ippolito]

@Vince Madden  I invest in US property directly/actively and also passively through syndications.

I don't know your risk tolerance, and that should be driving your investment decisions. If you are a conservative investor like me, I would recommend that someone in your situation of living overseas should not start off their real estate career by trying to buy and manage from there. 

It will be very difficult for you to get a good feel for the market (even if you visit in person a couple of times), and you will have to rely heavily or completely on third parties who are generally not financially aligned with your long-term interests. Once you purchase the property you will have to rely on 3rd party property manager, who may or may not be doing a good job for you. And there probably wil be no way for you to tell from overseas if you did any of this well or poorly, until very late in the process when it shows up as a problem on the bottom line and may be way too late to avoid a big problem.

I agree that for learning, active directly owned property is very useful. However, in my opinion, it's questionable how much you will be learning from overseas. The other advantage of directly owning property is that you can make more money because of the sweat equity you can put in. However, again, from overseas you're not really going to be able to take advantage of this.

If you aren't conservative and are more aggressive, then maybe you are willing to take these risks and these trade-offs are fine. If they are a problem for you then I would recommend choosing to invest passively, and avoid them. As @Brian Burke   mentioned, one of the main benefits of investing passively (at least if you do it correctly) is that you can take advantage of someone who has years more experience than you can ever hope to achieve. Also you can take the same money and diversify it across geography, asset class and strategy, rather than having all your eggs in one basket.