Thanks a lot for your reply and quite a honest one.. I am straight shooter so have tremendous respect for people who are as well.
Yes the AUD.USD rate is the biggest factor..as presently that would mean going long USD and short AUD.. however if the borrowing rates drop in US and US $ index declines that generally strengthens AUD and that would cause losses. However if the rates are steady around 0.8 then even if AUD drops I gain on forex moves. Know few people who bought 8-10 properties in 2009 all on cash from here and made big just before AUD started dropping.
They bought into the fear and exchange rates favoured them as well so made money going in and while coming out.
My view is set for a 5 yr block after which I tend to reallign with whats happening and what I want to do.
I dont touch my pension aka Superannuation fund at all is its 75% invested in index funds and the rest is between cash and large cap equities. There is not much tax advantage to buy property in that vehicle especially at an accumulation stage.
We bought aggressively when there was value available in Perth market however with drastic increases in median prices limited demand there is not much value to be found. And are seeking next growth markets and opportunities which are sustainable in the long run so need to be neutral cashflow or maybe slightly negative.. however capital growth needs to justify risk measure, borrowing costs and currency volatility so its very important.
I hear what you have to say about the DSCR loans.. and I am reading more about it. Only way I will lock myself into 1 is if the exit fees are not prohibitive and % basis points is within acceptable ask price from the present lending rates, can surely go in for a higher deposit to tilt the balance towards positive cashflow i.e 25%-35%.
I am aware of his chatgpt use. But he did make some points.
Would you have anything to contribute in the thread. Happy to learn from investors in US real estate game
Through the search function and by researching the forum a bit, you'll probably answer your own questions.
Austin is an oversupplied market-- can see that via research-- and the entry point is on how you want to decide it. Houston is interesting too, I personally invest in Houston and live in Austin. I am about to invest in Austin, too.
You're going to have to research the criteria of how you want to invest and what fits that mold. You're right that prices peaked in 2022 then have retreated--that's because of rates. They haven't retreated enough to create an intrinsic asset and that's because supply has been an issue.
You want to invest out of country, and I am assuming blindly? Best bet is to come here and see how things are.
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:
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!
Have you considered doing new construction in an STR area? I'm an investor (just before covid, I had built a portfolio of 83 houses here in Illionis) but also have starting building to sell and building to rent in Tennessee - specifically Sevierville/Gatlinburg area. Its one of the top 3 most visited areas in the country actually and has a very robust STR market.
As a licensed builder, I am building to hold and building to sell. And we have a little bit of bandwidth to build for other people now but right now kind of limiting that to investor friends or family. I came up with a number that makes sense for us as a builder and them as an investor where we presell the build to them and they get the construction loan or use cash and we both agree not to use a realtor (that saves us 30k that we can pass on to the buyer).
We're trying our first one for a former coworker and new investor. He's doing a 1 bed, 1bath 1,000 sq ft cabin that appraises out for 525k and that we agreed to build for 400k all in (including lot, utilities, appliances) provided they get the construction loan or pay cash (they can refi out later) so we don't have any interest expense either.
The numbers are ok for us but not obviously not as good if we were to just get the loan and use a realtor to sell when its done. But they're good enough given its a presale and we have the bandwidth just sitting there. The former coworker can then refi after completion and get most of their money back out so he can do something close to a BRRR on these deals which was even more fun for him.
When he refi's to say 375k, he'll be out of pocket a total of 25k on the deal. And it should cash flow about 3k to 7k a year including PM fees built in (he's out of state too). Although that cash flow number might not be there until year 2 as usually that first year of a new STR tends to be lower rent. So that first year may be a 2 to 3k loss or break even unless he gets lucky.
I'm just thinking if we can do something like this as a builder to where we can make our numbers work and the investor can basically BRRR his way to growth and cash flow, there has to be more builders out there that can do the same thing.
Now if you were to find a deal like this with another builder and put down 25% or 100k and your loan would be 300k, your 100k would get you 225k equity in the property and it would probably cash flow between 10k to 15k a year by year 2 with the smaller loan payment. Or you could refi and only be into the property for 25k and have 150k in equity with a lighter cash flow.
Again, I'm not saying it would be easy to find builders and areas that can do the same numbers, but I think its worth looking at. The other benefit to new construction is that you shouldn't have any major expenses for several years. AND with STRs you have no risk of evictions (which can get to be real expensive depending on the area) and most damages that guests do are covered by insurance (either through the rental platform it was booked through or sometimes the property management firm has added insurance too).
As someone that build a large long term rental portfolio here in Illinois (I still have 40+ houses here) and somebody now building a portfolio in tennessee, I would definitely recommend looking at new construction in some of these str areas. You'd be surprised what builders might actually be willing to do if they have a presale and don't have to use a realtor to sell it or get their own financing.
I am aware of his chatgpt use. But he did make some points.
Would you have anything to contribute in the thread. Happy to learn from investors in US real estate game
At higher deposits i.e >25-30%, finding right property should then get slightly easier as then lesser yield would turn the asset positive though ones cash on cash returns would reduce.
Basically by doing this I am going LONG USD and SHORT AUD, rewards should offset that otherwise it might end up costing in case USD goes down drastically.. which generally happens if the lending rates reduce by fed.
I am just starting out in the US markets and would like some exposure to begin with as I believe there is some value in the market.
Having a budget in mind is important however with timing especially at higher borrowing costs the lower end of the market or the "affordable housing" runs the most and runs hard.. has that also happened in Austin ? Or yet to happen?
Would love to know your thaughts on this..
Hi Mohit! It sounds like you have a solid foundation with your real estate investments in Australia, and your strategy of buying in the right market cycle, renovating, and refinancing is a proven approach. Expanding into the US residential market can be a rewarding opportunity, especially with your focus on cash flow and capital appreciation.
Given your interest in properties that yield positive cash flow while also offering capital appreciation potential, I'd like to introduce you to a financing option specifically designed for foreign investors like yourself: Debt Service Coverage Ratio (DSCR) loans. This approach can help you secure funding more easily without the need for traditional income documentation. Here's how you can navigate this transition while considering DSCR financing:
Your strategy of balancing cash flow with capital appreciation while aiming for financial independence is sound. If I were forced to pick, I would suggest focusing on Austin due to its tech-driven growth and lifestyle appeal. However, Houston’s diverse economy and affordability also present compelling opportunities.
Feel free to reach out if you have more specific questions or if you need insights about particular neighborhoods in Texas! Good luck with your investments!
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:
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!
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:
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!