Australian investor looking at entering US residential market

[Mohit Khanna]

As a 40-year-old Australian investor, I've built a strong real estate portfolio focused on the local market. My strategy has always been to buy in the right market cycle, renovate for value-add, rent, and refinance to release equity. This approach has worked well for us so far. All our properties currently yield over 6.5% gross return, with a borrowing rate at 6.5% and 20% deposits. Most of them have appreciated by over 35% in the last four years, providing us with solid equity gains. Plus, the rental income is covering the mortgage payments on most of them, which helps keep the cash flow balanced.

Now, I'm looking to expand into the US residential real estate market. My focus is on properties that are slightly positive in cash flow, while also offering capital appreciation potential, and ideally being self-sustaining in the long run.

During a recent visit to LA, I didn’t quite feel confident about the current state of things there. San Jose and the Southern Bay Area were appealing but may be outside our current budget. My gut tells me that Texas, particularly Austin and Houston, could be where the next wave of growth and expansion occurs, mainly driven by strong business and job creation trends.

Here’s what I’m looking for in my US investments:

1. Free-standing houses with a good land component, at least 3 bedrooms and 2 bathrooms, and in well-maintained condition.
2. Budget : Will have to keep a factor of safety for the current exchange rates of AUD.USD = 0.68 so will cap our budget at 250K- 300K.
3. Yielding over 6%, with a slight cash flow positive outcome, while also offering medium-term capital appreciation potential.
4. Holding for at least 5 years or more, with a view towards steady growth.
5. The long-term goal is financial independence, reducing reliance on salary-based income, and building assets during this accumulation phase.
6. Debt reduction is on the horizon—looking to consolidate and start winding down debt within the next 7 years.

If anyone has experience investing in the Texas real estate market or any tips on navigating US property investments, feel free to share your thoughts!