All Forum Posts by: Thierry Van Roy

Hi all,

This topic is not about me but I am asking for a friend who is in a bit of a special situation. I have not been active in US real estate for the past 8 years so my knowledge is rusty and the market back then was still teeming with owner financing, REO properties and wholesalers offering cash financing.

I am hoping to figure out what her possibilities are. Any advice would be greatly appreciated.

She

* has been living in the UK for 16 years and now returned to her family home while getting everything sorted.

* On paper, she is a single mother with no job (she is starting over so in the process of applying, buying a car, already got pre-approved for a credit card with Chase if that means anything etc.)

* no bad credit, but also no credit history (never had a credit card, no loans either).

* However, here is the catch: her partner (they are not registered) works in London Private Equity and makes good money to support her (something like over 6,000 USD net per month). 

* Some of her siblings have good credit and would be interested in putting their name on a property/financing/lease, as the husband provides guaranteed cash flow anyway, but they are not familiar with the whole process

* One sister who works as a property manager and has access to MLS, but she hasn't been on that job for long enough to understand REOs, owner financing etc.

She is currently looking to rent a two bed at 1,300 USD per month with a 12 month lease in these Michigan areas:

*Dearborn

*Dearborn Heights

*Sterling Heights

*Garden City

She said Detroit only if close to the above (so not ghetto).

But at that price I feel she ought to find a property to buy instead.

The problem is of course it would take a few months for her to get settled and get a credit score that would reflect her current situation, so until then these months ought to be bridged with some creative financing.

Am I wrong?

I would be happy to tell her she should just rent for 12 months (according to her sister that is the minimum in Michigan), build her credit score and look again a year from now. But only if that is realistically the smart way forward.

So no to Zillow then?

I never heard of Tranio because I'm not a Russian 'investor' looking for some overpriced prestige property. Let's take Paris for example. The big Haussmann 2 bedroom may look cool but offers a net yield of less than 1%. Brokers add listings to these sites so they can try to get 15,000EUR/m² whereas you should never go higher than 12,000 EUR/m² (and that's in the top neighbourhoods like the 1st or 8th Arrondissement at that). 

If you want investment property in Paris, I can tell you from experience it requires you to get intimately acquainted with every single arrondissement and street and then you have to look for half a year to maybe get lucky, lest you be stuck with a 2m high ceiling on the 8th floor of a building with no elevator in a street that is parallel to a good avenue but nevertheless in a bad neighbourhood.

There are less than 2.000 properties in Paris advertised. That's how many get added to the market listings every week if you look on PAP, SeLoger and MeilleursAgents.

So no, Tranio is not where you want to look if you're not swimming in cash. It may be good if you're an international second home buyer, but not an investor who does his due diligence.

Care to tell me where I can find those European listings on Zillow? Never heard of Tranio until now, but their partners are very limited and after browsing I would have to conclude not at all aimed at investors. 

What I mean is you can't find any website that covers all of Europe, period. All sites focus on specific countries, hence fragmented.

Never heard of those in European markets. Most brokers in Europe speak English, so I would recommend you to just look on national real estate websites instead. There's no one European site, really, it's all fragmented.

One word: VastgoedBelang. 

I do hope you speak Dutch if you want to get to know the Dutch market. There is opportunity for international professionals as well, but then you're competing at a very high level in commercial and 'social' (any lease below 700EUR/month) real estate development. You will have to get a college or university diploma to make the shortlist, what with the industry still being in a slump.

There are some good college books as well, though they don't really give you much on the Dutch market.

Dag Maarten,

Seriously? The Dutch private investors market is not exactly forum-material in my opinion. We have VastgoedBelang and that's about how dynamic you can get in this market.

But what the heck, will check it out.

Wow, this discussion has gotten a second life? Ok. Might I come to my defense between your laughter by separating older grandfathered properties and construction from the past 30 years? Also, when talking VRBO properties, do you mean vacation shacks or high rises? 

My claim is fact and supported by simply comparing building codes. Wooden frames? Not allowed. Aluminum gutters? Nope. Asphalt shingles? Fire hazard, not allowed. Non-concrete basement? Forget it.

Standard rule of thumb for new construction we use in my markets: 1,200 EUR per square meter. That's 360 EUR or 480 USD per square foot. Average construction cost in the US: 94.5 USD. That's 5 times less.

Google if you don't want to believe me. The only other factors I can think of is higher lot prices and labor cost.

Also, I do believe this discussion is a very informative, so perhaps we should try not bringing it down by laughing with personal Eurotrip experiences. Want to throw in some French toilet sanitation jokes for good measure?

***

@Dunstan Midlane  , are those investment mortgages you are talking about?

@Erik Noordam , as always, very succinctly put. I wonder about two things though: where should those non-regulated properties come from and is the private investor being crowded out once again?

Hi Craig! I see we're in the same markets! If you plan on finding stuff in Maastricht, you'll have a hard time though, or you'll at least have to look outside of the city central regions.

South Africa sounds interesting, though. I wouldn't know how it works there though.

Hi Dunstan,

The Netherlands will be difficult for what you're trying to accomplish. I don't know what kind of business plan you have, will be happy to review it for you, but there are a myriad of regulations in this country. It's a long story, but the crux is that without cash for down payment, you'll have a hard time. 

Perhaps, and don't take my word for it, you could market to someone willing to do seller financing lest they go into foreclosure. But watch out for all the rules and regulations you might come across if you take that route.

Hallo, Dunstan!

Are you studying at the Amsterdam School of Real Estate or in Eindhoven?

This place isn't exactly rife with the big developers we're used to in The Netherlands, but I find it very useful. 

Could you elaborate on your ambitions?