What are Lease Options?

Following on from last week’s piece on Land Contracts, another strategy sophisticated investors use to sell properties are Lease Options.

Lease Options – The basics…

This is where you lease or tenant the property to a prospective buyer and give them an option to purchase the property by a certain date at a certain price. This can take several forms, but essentially you agree on a price and a date by which the prospect must take up the option to purchase.

If you wish, you can take additional rental payments, to cover a deposit, if the prospect is confident, they wish to purchase the property, but other times, the prospect just wants the option to purchase.

Advantages of Lease Options is that you can often tenant the property for a higher amount, sometimes over market value, giving the tenant the chance to put together a deposit so they can get financing to purchase.

Further, you can often get an excellent price, as you are giving the prospect the opportunity to purchase a property that they would not have had otherwise.

Full market value for the property and even more – 110% – 120% is not unusual in these cases and 12-24 months to purchase can be popular as well.

Disadvantages are that there is no guarantee the prospect WILL purchase the property; it is just an ‘option’.

Now if you are getting additional rent as a deposit then chances are they would be pretty serious, but you would also need to be sure that your contracts etc was extremely clear what happens with the additional ‘deposit’ monies if in fact the option to purchase is not exercised.

There is no right or wrong here, just so long as all parties are fully aware of the stipulations, whether the deposit funds are returned, or kept.

Further, it helps to get your property solicitor (I would not do a lease option, nor land contract, without a solicitor) do some due diligence and checks on the prospect.

There have been cases where the prospective buyer was never in a position to purchase or even pay the rents correctly, so you will need to screen these applicants extremely carefully…

Certainly an option when looking to sell properties, particularly good in flat markets and can be quite profitable strategies when done correctly

Need to transfer funds to the US?

One of the certain aspects of Global Investing is going to be the need for Foreign Exchange to transfer funds to other currencies and countries. It is absolutely something you need to consider and ensure to allow for costs and charges when doing so.

The banks are generally the most expensive options and I certainly would not recommend this.

We’ve partnered up with award-winning Australian based currency brokers SendFX to enable our Star Dynamic family to make significant savings against the banks, and I have found the process to be one of the most streamlined I have used from all FX companies:

  • Exchange rates up to 8x cheaper than the banks
  • No transaction fees or charges
  • Personal account manager
  • Forward contracts to secure USD rates
  • Free consulting on USD transactions
  • 5 Star Reviews on Trust Pilot
  • ASIC & AUSTRAC regulated

If you need to send funds, here is a link to get a quote, compare and see what you think. Another massive advantage is the ability to lock in rates when they are high, have a chat with them today, can save you thousands on your next transaction!

Linz’s Friday Musings – December 6th 2019

G’day all

Happy Friday!  Here we go…decent into the Christmas madness!  Christmas parties, catch ups with friends & family… don’t get me wrong, I do love this time of year!

Haven’t had a peek of summer yet here in Victoria, but still hopefully he will show his face soon 🙂

The US on the other hand is descending into Winter and, particularly in the northern states, it’s starting to get mighty cold.  Just coming off their Thanksgiving break, and with Christmas looming, the US also have the added stress of coming into their end of financial year.

I was chatting to our legal team in the US yesterday, they handle all the LLC creation etc, and she was saying that it is just the craziest time of the year.  Once Thanksgiving hits, everyone suddenly realises all the things they need to get done by the end of the financial year, for tax purposes and the pressure hits!

I guess it is hard enough here, with only Christmas to worry about, kinda thankful we have our financial year end, in June!  Whew!

Having said that, I was lucky enough to be in the States last year at this time, and over Thanksgiving was a magical time to be in the US – come to think of it, I wonder who won the Annual Thanksgiving NFL match this year, Chicago Bears or the Detroit Lions? Must remember to google it…

Thanksgiving is a fabulous holiday (not so keen on the whole ‘Black Friday’ theme though) and as the snow starts to fall with Christmas decorations going it, can be quite beautiful.  Check out the very quick video I took last year on the Saturday after Thanksgiving – ill link it below.

Anyway, enough from me…I’ll let you all get back to the Christmas party, ours is next week!

Have a great weekend all and Happy Investing…!!

Cheers,

Lindsay

Linz’s Friday Musings – November 29th 2019

G’day all

So, here we go…last couple of days of Spring before we launch ourselves into our Aussie Summer!  Wow!  What an awesome time of year.  I love this time of year! 

December is crazy, Christmas lead in – did I tell you I used to work in hospitality? Man, that’s the definition of crazy. Shout out to all those in hospitality over this period, and for the rest of us, let’s be patient J

Once we hit Christmas though, I find the period between Christmas and New Year, such a relaxing time… Boxing day test on the telly, BBQ’s, summer weather, beach, a lot of us on holidays (seriously not trying to have a dig at the hospitality workers here!), family time…I feel its magical.

But, although we are also now, on the lead up to Christmas, let’s not take our foot off the pedal here.  We still have a good 3-4 weeks of time we can achieve so much!

At this time of year, we can often start drifting into Christmas mode – parties, catch ups etc.  Time can also go so quickly (relatively speaking) as we are always just so ‘busy’ that the Christmas lead up takes over everything

What I invite you to do, for the next 3-4 weeks up to Christmas, is to walk slower…

Now I know that might sound crazy, but hang with me a moment.  I recently did a retreat in Sydney and we did an exercise where we literally walked around the property for almost 30 minutes at different speeds.  We would almost power walk, seeing how that felt, what we noticed.  We did this a various speeds over the thirty minutes and what I noticed when walking much slower, is that I was really able to notice so much more, take in the surroundings, see more, recognise more, enjoy more.  It really works…

During this hectic period, in our lead up to Christmas, try walking slower.  Take in your surroundings, enjoy the Christmas spirit as you walk around the city maybe.  Watch as people scurry to their next meeting, or party, not seeing or noticing their surrounds.  Take all this in, and you will find that you will also feel calmer, less stressed –  the hospitality crew will LOVE you! 

Reminds me of my favourite poem my dad gave me, by Rudyard Kipling – “If you can keep you head when all around you are losing theirs and blaming you…”  This is really a key.  Remaining calm is the sea of uncertainty, a rock against the storm.

Try it…let me know as Christmas looms how it felt for you?  I promise if you do this you will enjoy this period so much more J

Have a great weekend all and Happy Investing…!!

Cheers,

Lindsay

Why having a team when investing is important?

I have a lot of people ask me when looking to get into the US market, what is the first thing you need to do to get started? My answer is always the same…

Build your team on the ground!

This is, I believe, the most critical and important step to do and do well. If you are looking to purchase an investment in your neighbourhood, or a nearby suburb, or even a nearby town, you are able to visit the property, do the walkthroughs and inspections, query the agents, etc yourself. Not such an issue here, you can do your own due diligence and trust yourself.

But if you lived in Sydney and wanted to buy a property in Brisbane, you would need to ensure you get a good agent over there who you can rely on to give you the right information, ask the right questions for you, I would even recommend finding a good buyer’s agent in that area to work for you, wouldn’t you agree?

Same with the US. There are a few people who are important you find good ones and people you can rely on.  Without this, it can be almost “pot luck” to make sure you have a good deal.  You can only do so much due diligence from afar, without walking the property, knowing the neighbourhood, checking comparable values in the region, etc, you are gambling at best…

Even here in Australia, you are going to need an accountant you can trust, foreign exchange company to enable you to convert funds to USD (don’t use the big banks, they will gouge you with fees!) possibly even a solicitor or notary (like a Justice of the Peace for US documents to witness signatures etc)

In the US it’s even more important… You will need Realtors, Wholesalers possibly, home inspection companies, Title company, general contractors, insurance agents, property managers (oh my, an important one!) US tax agents to lodge tax returns for you; the list goes on…

A lot of this you will need later throughout the process and won’t need some of these suppliers until you have purchased a property, but it’s good to understand the process of finding them when the time comes.

It’s also a good idea to set up a US phone number.  Now this doesn’t have to be getting a plan or SIM with a US phone provider, but there are some companies that offer this on VOIP methods, Skype is one of the best.  It can make it easier for the US team to contact you as often, they can be put off with calling overseas numbers.

Without building this team, this support network, you are really gambling on your investments.  You might come across a good deal, good property, but its also likely there will be issues you were not able to see from halfway across the world.

Investing globally is not any harder than locally, just takes a different approach to get it right.  You need to be able to find and trust others instead of always relying on yourself.  I always look at investing as a business, the treat is as such and it will treat you well.  Become that leader, that manager of people and your business and investments will thrive…

Linz’s Friday Musings – November 15th 2019

G’day all

Happy Friday again!  Not sure if it is just me, but are these weeks going faster now that we are getting closer to Christmas?  Einstein did always say time was relative!

Speaking of relative, I was reading an article this week on the state of the AU market.  Some amazing stats regarding the number of properties listed being at a record low (well, at least since they started recording these figures some 25 odd years ago).

But with the property market in Australia so hot right now, why would there be so little inventory around?  Very tough to be a real estate agent in the cities right now, I would suspect.

Well, the article goes on to suggest that it could be the government, or policies causing this, but I have to agree with one of my property mentors, Dymphna Boholt, who is suggesting that it is more down to the fact that property IS such a great investment, that people are just not selling…

We all purchase properties to grow wealth, and generate income, and while these properties are doing this, why incur stamp duties, commissions, etc by selling?  With lending rates so low, and looking at going lower (did you see the unemployment figures for AU this week?) people can access the equity in the property through refinancing and line of credit rather than selling

What this means is a record low amount of inventory on the market, which will in turn drive the prices up again…it’s a self-fulfilling prophecy!  Supply vs Demand, and demand is high, but supply is at record lows…

So therefore, not only is it hard to be a real estate agent in Oz right now, it is hard for us investors!

This is where US property can also help to fill a void.  High cashflow, low entry costs (compared to AU properties anyway), very stable, very sound investments, when done right.  Plenty of inventory here! 

Maybe it’s a perfect time to start looking across Pacific to pick up some gems, while here in Australia, investors are fighting over available properties…

Reach out if you want help to get started…

Oh! Don’t forget if you are in Sydney, or two upcoming events below!

Have a great weekend all and Happy Investing…!!

Cheers,

Lindsay

The Renting Revolution – Why more Americans are turning to Renting…

In the U.S., the attitude towards renting versus homeownership has been changing for years now. With this year’s tax reform shifting and reducing some of the benefits of owning a home, we’re seeing more and more change in the narrative around purchasing a home versus renting debate. And everything points to good news for real estate investors.

Historically, owning a home was a crucial part of the American dream as it is here in Australia. As a mark of success, you hadn’t “made it” until you owned a home. Even recently, homeownership was still a goal, and the only reason the real estate market was lagging was due to financial woes in other areas that caused first-time homebuyers to put off their home purchases.

Renting, by and large, has been seen as an inferior option, often touted as simply throwing one’s money away year after year, versus actually investing in a long-term asset.

But we’re seeing the conversation change.

Freedom and Flexibility of Renting

Traditional wisdom tells us not to buy a home unless we plan to live somewhere for five years or more. Renters are understanding more and more about the commitment of buying a home and how it can affect their lifestyle. Today, people are less inclined to commit to careers for 20 or 30 years, are more likely to work from home, and value mobility and flexibility. People now are more mobile than ever and actively choose to rent because it fits their lifestyle.

When we look at modern millennials (who are now in their 20’s and mid-30’s) we see people who are highly connected, community-minded, and…not all that interested in buying a home, even if they were able to save for the down payment.

Realising How Costly Home Ownership Really Is…

Over the past several months, Forbes has published several articles on the shifting opinions on renting and homeownership in the US. In one such article, it points out just how costly homeownership really is in a variety of ways. Typically, most Americans have only considered the mortgage payment and compared it to their rent payment when comparing what it costs to be a homeowner versus being a renter. We make the same mistakes here in Australia too.

But the article points out this is not an apples-to-apples comparison.

Homeowners have to worry about many one-time costs like closing fees, Realtor fees, mortgage origination fees, and lawyers’ fees, on top of costs like buying new furniture, moving, and purchasing equipment associated with homeownership, like lawnmowers.

Then there are the ongoing costs: property taxes, mortgage interest payments, utilities, insurance, possible homeowner’s association fees (like our body corporate fees, and more.

While many are quick to argue that a rent payment is flushing money down the toilet, the costs associated with buying, owning, and selling a personal residence are high for most Americans today.

When you take into account the increasingly transient lifestyle of modern families and the uncertainty on the return on investment in owning a home, choosing to buy over renting for its own sake just doesn’t make sense to an increasing percentage of the population. There are far better investments to make than a personal home.

A Renter’s Explosion

The rise of the renter is not just in debate or in public sentiment. It’s very tangible. In the United States between 2006 and 2016, the number of people renting versus owning increased by 5% nationwide. In 22 of the 100 largest cities in the US, “rentership” (if that’s a word?) beat homeownership. See below the top 22 cities in the US where renting has overtaking homeownership! This data is a few years old now, but in fact, it has only got stronger in rental terms…I will source the recent data and post it next week!

Linz’s Friday Musings – November 8th 2019

G’day all

What a strange week it’s been!  Hard to get into a solid rhythm here in Melbourne with a public holiday for a horse race in the middle…

I always find it strange how as a nation, we have no issue with spending thousands (notice I didn’t suggest ‘investing’) betting on horse races, Tattslotto results, pokies etc, but when someone at the local footy game, suggests they have just put a deposit down or purchased an investment property, we are all – “are you sure that’s a good idea? What if the market crashes?”

I feel our affinity with gambling and a ‘flutter’ on the horses could be a potential drawback or hindrance for us as Aussies, giving us a poor mindset around money. And believe me, our mindset around money, will make or break out bank balances, for sure and certain

It is what we ‘think’ about money that sets a tone in our subconscious that will then determine our wealth level.

If we feel money is bad, or only bad people have money, we will find ways to sabotage our success to make sure we only every have enough to ‘get by’.

If we feel money is a tool, a vehicle whereby we can grow business, employ people & create jobs, purchase things to stimulate the economy, then we will find opportunities to grow our wealth and succeed in our goals (which don’t have to be money focused by the way!)

It’s crazy how this works, but believe me, it does…

Don’t get me wrong, I lost my $10 on the cup like the best of us (think Constantinople is still running) … but we need to understand our mindset around the ‘flutter’.  If you’re at a cup BBQ, or at the races and want to put a few bucks down to have fun, and enjoy the day, then that’s great, knock yourself out!  It can be a lot of fun.

But just stop and think for a sec…what is my mindset around this?  Am I actually desperately ‘wanting’ that horse to come first?  Does it matter to me next week if it does or doesn’t?  Am I actually upset or disappointed, or more so, ashamed or guilty that I placed the bet in the first place and lost?

If these are the emotions your feeling, if you are genuinely upset or ashamed that you placed the bet and SPENT the money; or alternatively genuinely NEEDING the horse to win to help alleviate some finance issues next week, then I would recommend chatting to someone about this…

Mindset around money can often be one of the biggest hurdles investors need to overcome to start becoming successful at investing. 

What’s yours like?

Have a great weekend all and Happy Investing…!!

Cheers,

Lindsay

4 Steps to a Successful Start in US Real Estate Investing

So you took the plunge. You’re officially a real estate investor! First of all, congratulations. You’ve begun your journey towards financial security — and freedom — for life. If you’re like most new investors, you likely feel nervous along with excited. After all, you made a massive financial commitment. What if it doesn’t work out? What if you do something wrong? You don’t want to ruin your investment! Further, it’s even scarier as its halfway across the world!

If you want to lay the successful groundwork for your investing future, here are a few things every investor must do (besides have Star Dynamic help them on their journey!).

  1. Cultivate your relationships.

Nothing is more valuable to an investor than their relationships with their service providers.  Whether than be realtors, property managers, contractors, title companies or anyone, its these relationships that will allow you to get the most out of your suppliers and your investments

  • Read, read, and read some more.

Never underestimate the value in continuing your education. In real estate investment, the learning curve can be steep. While this is mitigated through knowledgeable and experienced support, it doesn’t absolve you from learning everything you can about your new venture. 

From understanding different investment strategies to becoming acquainted with your investment markets, reading up is hugely beneficial.  Never stop learning, studying strategies, options.  Make sure you have a plan B for your investment should something not go according to plan.

  • Think about the next steps.

One of the biggest mistakes we see inexperienced investors make is failing to plan ahead. If you know you want to invest, that’s great — but it’s not enough to sustain a long-term vision for financial freedom. As the owner and investor, you take control of the trajectory of your investing future. 

What does that look like, exactly? For many, it means setting goals when and where you want to expand your portfolio. It means thinking about both short-term and long-term steps and how to achieve them. This is where you are the most proactive and involved — in shaping the growth and direction of your investment portfolio. 

  • Practice engagement.

Passive investors, above all other kinds of investors, can struggle with engagement. It takes intention and determination to engage with your portfolio and the people who make it all happen. During your first year, be particularly proactive in your engagement of others. Make connections with other investors, both those with more experience and those in your same boat.  Join groups to discuss investing, particularly in the areas you are in; Facebook groups, attend workshops on investing, particularly US strategies; ask questions; be involved.  (check out our Inner Circle coming soon!)

Engagement doesn’t just mean you initiate conversations and relationships with others. It also means you value reports and information surrounding your investments and their markets. Be an engaged investor.

If you follow these principles in your first year of investing and beyond, you are bound for success as a global investor.

For more information on this, and our US Property Investors Inner Circle, contact us now.

Linz’s Friday Musings – November 1st 2019

G’day all

Pinch and a punch for the first of the month!  Or something like that 🙂

Seems like ages since I put out a newsletter, November already here in Oz, and Halloween in the States! Wow!

Been quite a whirlwind month for us here at Star Dynamic.  Launch of our new online portal, launch of the Fix & Flip Academy course, and also our brand new Investors Inner Circle.  Been amazing the response we have been getting from everyone!  If you haven’t had a chance to get a look at with the Inner Circle can offer or the course, reach out to our team and we can let you know all about it…

With everything that’s been going on, can be very easy to get that feeling of overwhelm. 

Ever had that to-do list so large that you don’t know where to start?

Laid in bed trying to rest (coz damn, you need it…) but you head keeps running all the things you have to do, all the “overdue” tasks you haven’t done…? 

Yeah?

Can be easy to fall into this pattern.  But we must remember that the feeling of overwhelm comes from a scarcity mindset…

“There is not enough time to do everything!”  Said this to yourself once or twice yeah? 

See, even though this is the story we tell ourselves, truth is there is always time, we all have the same 24 hours.  As Einstein said, “time is relative”.  5 seconds with your hand on a hot plate, can feel like an hour! While spending an hour with a loved one, can feel like seconds.  If we can change our mindset to an abundance mindset…there is always time.  There is always more out there, more clients, more opportunities, more love… we just have to go get it.

There are 4 stages of life:

  1. Life AS me
  2. Life happens TO me
  3. Life happens BY me
  4. Life happens THROUGH me

We are born at stage one, for the first 5-7 years of our life we just are…just soaking up everything we can, working out what this wonder called life is. 

Then as we get older we move into stage 2.  This is where we can start to feel that overwhelm, that scarcity mindset.  I don’t have enough time!  There’s not enough money.  There are not enough opportunities for me.  We start blaming everything else for what is happening to us, without realising that we are actually in the driver’s seat of this thing called LIFE.

A few then can move through into stage 3, whereby they realise that we are in control of our own destiny.  The things that happen are consequences of the decisions we make and therefore we can shape this beautiful gift of life, rather than have it shape us.  We can now begin to control what happens, and certainly how we react and deal with it.  Stage 3 is where we understand, rather than fight against life, leverage it to achieve.  Abundance mindset… I have time, I have opportunities, I just need to go get them!

Finally, occasionally you might come across a person who just seems to have an aura to them.  A light, or deep sense of belonging that we can consciously feel.  Ever been at a party and suddenly someone walks in that you unconsciously stop and notice?  Talked to someone that you just get this feeling of peace and love from, like they radiate power.  This is stage 4…very rarely do we find those that manage to obtain this.

I met two such individuals last week, but I will tell you about that another time…

Have a great weekend all and Happy Investing…!!

Cheers,

Lindsay