Linz’ Musings – Jun 7th, 2019

G’day all 

Happy Friday and welcome to winter! Brrr… now while we don’t generally get snow as bad as the picture above in the more populated areas of Australia, those of us in the southern states at least, are feeling quite a blast of chill coming down! 

I posted a question on our Facebook page this week, asking what people’s favourite thing about Winter was…one of the funniest comments from the SD Facebook family was “the end...”  LOL 

But you know, this can be an interesting thought.  We can often find ourselves in less than ideal conditions in life or even investing.   

Now, stay with me here…  

It might be winter, it might be a deal that hasn’t seemed to work out the way it should, it might be a work related position you are now in… Often we gripe and moan about how bad things are…”Oh you will never believe what happened to me the other day…”  But does all this complaining really help?  Maybe makes you feel a little better to share the misery around some, but you will then also find less and less people join you around the water cooler (or heater)  

Truth is, complaining about a situation or action does little to help.  What can be useful, is to try and think of something good in this situation…anything at all, no matter how small.   

From a winter perspective, my wife says she loves the winter wardrobe!   

If you can somehow find something small that is good about a bad situation and then focus on that, you will often find it will firstly, help your frame of mind (more friends around the heater with you!) and secondly, can aid your subconscious mind to find a solution or way out of the problem. 

In investing terms, even if a deal is going sour, what is the best thing still about that deal?  Is it the location of the property? The layout? Close to a particular school or park… Whatever it is, if you can focus on that positive, often you will slowly see a thread form that can help weave you out of the sour deal and give you a better outcome! 

Have a great weekend all and Happy Investing…oh… and rug up!! 

Cheers,

Lindsay

5 Types of Property Deals to look for RIGHT now!

What types of property deals are ripe for property Investors right now?

The market is always changing. What worked 5 years ago may not work as well today. Here are 5 niches to explore, test out and find bigger profits in now

Small Multifamily & Mixed Use Properties

Overall yields on single family home rentals have been getting squeezed over the last year or so. To get the same spreads as recent years, many property investors are having to look at multifamily properties or apartments. Mixed use is still a hot item too but need a little more experience in the industry to manage

Vacation Rentals

It’s true that the Airbnb Effect has dramatically driven up asset prices in many areas over the past few years. Yet, if you look, you can still find sweet spots where property prices are low and the potential yields from short term rentals can be massive. Can be a little more difficult for us as overseas investors to ensure we have the right areas though, but definitely worth thinking about as a strategy for the larger, 4-5 bedroom homes.

Empty Nesters

The US is in an interesting moment, coming off of a down period, but with a strong new economy. That means there could be fewer good property deals or foreclosures. Yet, there are all types of reasons for sellers to be motivated. Age can be a big one. With age, homes can end up being too big to manage, or just don’t fit health and mobility needs of seniors. This can be a big reason to be able to pick up off market properties and create more win-wins.

Construction REOs

Construction REOs have been a secret pocket of the distressed property industry. The average homeowner or new investor may not want to take on a home or apartment building that wasn’t 100% completed. That means these deals can have less competition and more bargaining room. You may find houses that just need a little love on interior design and applying for the Certificate of Occupancy. For those interested in more active incomes, these can be a good way to get in and fix up for under market value giving a good rental return or flip for a profit return.

Foreclosures

There are still foreclosures and foreclosure auctions. Check the data and you can find fresh spikes in this activity in different parts of the country. Be flexible and willing to go where the deals are at and you can still find great profits.

f your unsure of how to find these types of deals, or don’t know where to start, fear not … We do!

This is really the backbone of what we do. We source, screen and perform due diligence on hundreds of property deals in the US to narrow down to the ones that work and have teams on the ground to do the legwork for us…

Leverage off our team in place, book a call with us today to discuss how!

Linz’ Musings – May 24th, 2019

G’day all

Happy Friday! So, its done…it appears that ‘ScoMo’ has pulled off the “Steven Bradbury” of politics…winning the unwinnable election. Question I guess for the much more politically savvy than me, is that did the Libs win or did Labor lose it…?

I kinda feel is more the latter than the former, but the markets certainly were happy with the result – the USD/AUD jumped up over the weekend (short term rise though); ASX, and particularly banking stocks took a nice short term rise as well. The Labor loss will certainly allay the fears of many investors, particularly in Real Estate, with Labor’s proposed changes to Franking Credits, Negative Gearing, and Capital Gains tax now confined to the Recycle Bin of history.

With APRA also finally seeing the light and allowing the banks a touch more leeway when lending (they have released the tough constraint of rating serviceability at equivalent rates of 7% when its clear our interest rates will not be back near level for a LONG time) and the Fed Reserve chalking up two rate cuts this year (one is pretty certain to be next month) this should see an easing in the financial markets and make lending more accessible for everyone. Throw in the Liberal Gov’ts “First Home Buyers Grant” which is not really a grant, more like a bonus, and I think we are in for a nice period of growth again in property in the months to come. It will take some time to see this in pricing (up to 6 months possibly) but soon could be a good time to start looking to set up offset loans against property here, and get some high cashflow from the States!

If you need help with the strategies of where to start, or how to set this up, sing out, we would love to help.

Have a great weekend all and Happy Investing…!!

Cheers,

Lindsay

Linz’ Musings – May 17th, 2019

G’day all

Happy Friday! In this election version of our newsletter our country will be headed to the polls this weekend to vote for who we believe should be leading us forward for the next few years…or considerably less, if recent history is any indication…

With that in mind, and irrespective of your view or political alignment, I believe everyone would agree that Australia lost a legend of Australian politics this week in Bob Hawke. Labor’s longest serving prime minister, the Hawke’s government did a lot for the economy of this country and helped put us in a great global position. From creation of Medicare, to deregulation of the financial sector and floating the Australian Dollar, much of this was pivotal in shaping economic Australia. One of Australia’s greatest Prime Minister – RIP Mr R J Hawke.

On the other side of this particular political coin, we have struggled in the past 8-10 years to have any consistency or leadership in the role. This election does seem to have a larger impact on the property market in Australia than elections of the past. It will be interesting to see how Labor’s concept of scrapping Negative Gearing (one of the most overused, and overrated strategy in our market in my view) will effect the market; with Morrison’s implementation of a new First Home Buyers (FHB) Grant, where essentially if the first home buyer can save 5% of the deposit, the government (read taxpayers) will fork out the remaining 15% of the deposit so the FHB can avoid mortgage insurance… interesting…

I do feel that with the FHB Grant probably imminent, irrespective of which party wins, and an interest rates cut imminent in June as well (the banks are already starting to pass this on, thats how certain it is…) that we may start to see the bottom of the property clock, particularly in Melbourne and Sydney and prices start to pick back up again, but lets watch and see

Anyway, I would wish the pollies all the best in the election and say “may the best candidate win” but I am not certain the “best candidate” is even running…but that’s another blog for another day…

Have a great weekend all and Happy Investing…oh and voting!!

Cheers,

Lindsay

An increasing number of Australians, including Millennials, are investing abroad with the United States as the most popular destination.

The United States is the most appealing location for overseas investment, but an expert warns to do your research before entering overseas markets
A COMPETITIVE property market is stripping many of their chance at buying a house, but some creative Aussies have found a way.
FACED with an extremely competitive property market, many Australians have given up on the dream of buying a house.

But some creative property seekers have found a surprising way to become homeowners by looking a little further when it comes to getting into property.

An increasing number of Australians, including Millennials, are investing abroad with the United States as the most popular destination.

There is no denying that the Australian property market is tough to crack. Despite Australian house prices falling 0.2 per cent in June on a national basis, overall prices are still 32.4 per cent higher compared to five years ago.

Figures from the recent Atlas Wealth Management Expat Insights Report — which surveyed 1774 Australian expats in 65 countries — revealed a 29 per cent increase in Australian residents purchasing properties abroad.

Brett Evans, managing director of Atlas Wealth Management — a company that offers financial advice to Australian expats — said this is because Aussies have been priced out of the Australian market and they are trying to get a foot into any property market.

“More recently the demographic of the Australian resident buying an overseas property has changed to a younger investor who either can’t afford a property in Australia and/or feels that they have missed the property boom in Australia and is looking for the next opportunity overseas,” Mr Evans said.

“We believe the increase in the younger demographic is occurring due to the high minimum price point in purchasing Australian property as opposed to the relatively low entry price point overseas.”

The report revealed the group investing the most is 38- 48-year-olds who accounted for 35 per cent of overseas property investment by Australians, followed by investment from Self Managed Super Funds at 20 per cent (down 28 per cent), 58- 68-year-olds at 16 per cent.

It was the younger demographics 28-38 year olds and 18-28 year olds that had the biggest increase, respectively up from six per cent to 10 per cent and from two per cent to four per cent.

According to the survey, the most attractive destination for Aussies is the United States at 48 per cent, followed by Asia (18 per cent), the United Kingdom (17 per cent) and the United Arab Emirates (10 per cent) — with the main appeal being lower entry prices, higher income yields, more diversity and choice of property.

The median house price in Sydney is just shy of $AU900,000, compared to the US where it is roughly $AU250,000.

“In countries like the US there are tax incentives to purchase the property that you live in and this can often be the deciding factor,” Mr Evans said.

The graph shows the median house price of major Australian cities compared to other countries. Source: Atlas Wealth Management Expat Insights Survey August.
The graph shows the median house price of major Australian cities compared to other countries. Source: Atlas Wealth Management Expat Insights Survey August.Source:Supplied

As for the UK, Mr Evans said Aussie investors have been enticed for two reasons.

“The fall in the pound after the Brexit vote and the second has been falling property prices in the UK due to the economic uncertainty that Brexit may bring to the UK.”

Mr Evans warned that even though the above factors can make an international property purchase appealing, changes in either the exchange rate and/or local tax legislation can have the opposite affect.

“These considerations should be at the forefront of any decision-making process when considering investing internationally,” he said.

“For most countries you don’t have to be a resident or citizen to purchase a property but the rules do vary quite wildly, so it’s always best to do your homework.

“You also want to find out whether the country has a Double Taxation Agreement (DTA) to avoid the potential scenario of double taxation on your rental income if you were to rent the property out.”

Respondents cited tax changes as a deterrent from buying property in Australia with 41 per cent saying that wouldn’t buy in Australia because of it. Source: Atlas Wealth Management Expat Insights Survey August.
Respondents cited tax changes as a deterrent from buying property in Australia with 41 per cent saying that wouldn’t buy in Australia because of it. Source: Atlas Wealth Management Expat Insights Survey August.Source:Supplied

When it comes to Aussie expats living abroad, the survey figures showed that 41 per cent who were considering buy property in Australia, have been deterred by recent tax changes.

“In May 2012 the Australian federal government removed the 50 per cent CGT discount on Australian investment properties that are held by nonresidents (including Australian citizens) resulting in them paying 100 per cent capital gains tax on the increase in the value of the property while they live overseas,” Mr Evans said.

Mr Evans said the biggest challenges faced when purchasing a property overseas (apart from finding the right property) is not only finding a suitable property manager to protect your interests, but also understanding and monitoring the market.

“The internet is a great asset, but nothing beats on the ground intelligence when it comes to what the market is doing,” he said.

Of the 58 per cent of Atlas clients who own property overseas, 70 per cent is in their Principle Place of Residence, 25 per cent is for investment purposes and five per cent is retirement planning.

There has been an increase in Aussies purchasing properties abroad.
There has been an increase in Aussies purchasing properties abroad.Source:AAP

WHY INVESTORS AREN’T CONSIDERING AUSTRALIA

Australia is no longer an attractive market for international property investors, whether they are an Australian expat or a foreign citizen, according to Mr Evans.

Last year’s state and federal government reforms enforced steeper charges on foreign purchases, less favourable tax treatment and a cap on new development sales were introduced — resulting in the recent boom foreign buyers to be over.

The state and federal proposed tax legislation — Main Residence Exemption (MRE) for both foreign citizens and Australian citizens moving overseas — is yet to be enacted.

“What this proposal means is that if you were an Australian citizen and purchased a house and lived in it for 15 years (as an example) as a Principal Place of Residence (PPoR) and were to move overseas — if you were to sell that property while living overseas (whether that be in your first week of living overseas or five years in) then you would potentially pay capital gains tax not from the time you moved overseas, but from the date of initial purchase,” Mr Evans said.

“This has resulted in a lot of Australian expats selling their Australian properties before moving overseas.”

Most Australian states have started taxing both Australian expats and foreign citizens who own properties back in Australia.

This proposed legislative changes to the Main Residence Exemption Rule (MRE) was passed in Canberra by the lower house in February and is currently before the senate to vote on when they resit in August.

“The most extreme has been Queensland which does not distinguish between a foreign or an Australian citizen,” Mr Evans said.

“They levy a Absentee tax which is an annual charge of 1.5 per cent of the property value greater than AUD$350,000.

“These state tax taxes are in force now. As an example, if you own property in Queensland then your residency status will be noted as at the 30th of June and the Absentee tax levy will be sent to you.”

Building Your Team

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 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 Perth, 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 buyers agent in that area to work for you!

Same with the US. There are a few people who are important you find good ones and people you can rely on.

1) First and foremost would be a Realtor you can trust. They will be your “boots on the ground”. They will find the houses for you, do the inspections, negotiate on your behalf etc. Finding this person can be difficult; you may know someone already in the States who is a Realtor; have friends or family there that may be able to refer a Realtor they have used; check out and call references that the Agents have (yes often the good agents will have references you can check) etc.

Once you find this person, they may then be able to recommend a good title company once you have found a property, and will likely be able to refer a good home inspection company to do Home Inspection Reports etc for you.

2) Secondly, to do a flip, you will need to find a reliable General Contractor, and this person will be again, critical to your success in the project. Will need to make sure they do good standard of work, and they will often be able to supply to you a folio of previous jobs they have done so you can see. Possibly can even get a referral here too, someone you know might know a good contractor etc

3) Thirdly but certainly not lastly, would be a property Manager if you intend to rent the property. Again the Property Manager (PM) can make or break your investment if they do not manage the tenants well, don’t collect rents, deal with maintenance issues etc. Referrals here and references can be crucial.

On the other hand if you don’t have a solid way to find good contacts in the US for your investing, fear not… We do!

This is really the backbone of what we do. We have sourced, screened and used hundreds of property professionals in the US to narrow down to the ones we have that we trust…

Leverage off our team in place, book a call with us today to discuss how!

Linz’ Musings – April 12th, 2019

G’day all

Happy Friday! As Easter draws near, the US have started their Baseball Season and football and Hockey is shelved for another season. Here, we are well into our football, AFL or NRL, pick your poison and go <Insert Your Team Here>!

Its great to see the passion a great many have for their sporting teams. Watching the games, the sports news and discussion shows, listening to talk back radio, its a big thing! Then the week at work, all the discussions around how the weekend went well (or didn’t go well depending on the results!). In my family tipping competition, i have gone from last years champion (reigning premier yeah!?) to having trouble tipping a hat at the moment.

What we need to do is also ensure we use the same passion on the other areas of our lives. Imagine how different our society would be if we also were out for a few drinks on the Friday night and chatting to our friends about how well our career/business/relationship/life was going; friends listening intently and giving hints and tips on how to get better… But alas, it seems we are rather more intent on judging and making sure we don’t “get ahead of ourselves”. We even feel or justify to ourselves that by keeping our friends or family “grounded” we are doing the a favour…hmm….

So we stick to sports as an outlet, rather than have the passion across all areas of our lives. We often get so caught up in one area, we start neglecting the others. It may not be sport it might be business, or career, or even health. Now, any of these areas certainly deserve our focus, our passion, but not to the detriment of the others?

What if…Monday you made a goal to spend at least 15-20 mins focusing on each of the 6 areas of your life every day – Family/Relationships, Social, Health, Finance, Career/Business, Intellect. Imagine then, in a months time we are at the pub having a couple of Friday frothies and talking about how each area is going? Would it be better? Would you find you have more passion across the board? Would be an interesting experiment to test out…

Have a great weekend all and Happy Investing!!

Cheers,

Lindsay

Asset Protection Strategies

One of the first steps we do for clients, and I would certainly recommend for anyone investing in Real Estate anywhere, is to discuss with your legal team or accountant about asset protection. Real Estate, albeit one of the more stable and less-risky investments, still comes with its fair share of risk, and as an educated investor, we need to ensure to mitigate as much of these risk as we can.

One way we can do that is to ensure to protect our assets as much as possible, and structures or entities are one way we can do this.

By broad definition – an “asset” is anything useful, desirable or having exchange value. Taking an equally broad view of the definition of “asset protection” then, would be – “steps taking to help protect the asset”.

Two of the more common methods or structures used to protect assets are Limited Liability Companies (LLC’s) or Corporations. Both have their pros and cons, particularly in the area of taxation and I would ensure to talk to your accountant or US Tax agent re these.

A corporation is a legal entity that exists within the contemplation of law, which is separate from its owners, or also known as shareholders. A US corporation is similar to an Australia Pty Ltd Company in this respect. A Corporation can be a good asset protection vehicle in that it shields the shareholders’ personal assets from that of the business or corporations’ assets. This corporate shield can also be referred to as the “Corporate Veil” and is in place provided a number of formalities are followed.

Limited Liability Companies or LLC’s as you will often hear them referred to are another popular method of entities used in investing particularly, within the US. These are non-corporate business entities which by design are substitution for the corporate entity. LLC’s are bound by a number of state based acts and statutes which generally set forth a number of rules that directs LLC operation and governance unless the members (or owners) of the LLC agree otherwise. Since they emerged in the 1990’s they have become one of the most popular form of business entities within the US

We have a great legal team based in the US who handles all of our work and would be happy to refer their details if you need, or if you would like to discuss getting started in US Investing, book a call with us TODAY!

Linz’ Musings – April 5th, 2019

G’day all

Happy Friday! April is upon us, and its almost time in the Southern states to put our clocks back to normal. I will admit I am a fan of daylight savings to a point, the extra daytime in the evening is fantastic during summer periods, but I do think it goes on a bit too long. Getting up at 6:30am to head to the gym is certainly not early compared to a lot of people, to be still dark in March is crazy really, and even this week, still almost dark when I finished at 7:15! Wow. Anyway, as they say, change your clocks, change your smoke alarm batteries!

I was reminded this week by our wonderful neighbourhood Facebook, of a seminar I attended two years ago in Sydney and was able to see Arnold Schwarzenegger speak and meet him. Probably a highlight for me as he as been one of my heroes, with what he has been able to achieve. To have reached the pinnacle of success in not 1, but 4 completely different industries – Bodybuilding, Real Estate, Acting, Politics is incredible. I guess it does just show that whatever you put your mind to, no matter how different, you can achieve.

During the seminar he spoke about his 5 Rules for Success and elaborated on each. Funnily enough, a week or so ago, Facebook also showed me a video of the same speech he had done elsewhere (this is not a recording of the Sydney seminar i went to but another). I posted this on our Facebook site but here it is again below if you didn’t catch it, just click on the photo. This is a cut down version, only around 7 mins, so I definitely recommend you watch it when you can. In brief, his 5 rules are:

1. Find Your Vision

2. Think Big

3. Ignore the Naysayers

4. Work Like Hell – he uses slightly different terminology 🙂

5. Give back

Go ahead and watch this and he goes into each one briefly. I love the quote right at the end, and am going to put this on my wall:

“If not us, who? If not now, when?”

Wow!

Have a great weekend all and Happy Investing!!

Cheers,

Lindsay

Why the US market for Rentals?

I do get asked a lot about why is the mid-west US market so good for rentals? The answer I believe comes down to two main reasons:

1) First and foremost, affordability! The actual cost of the property is cheaper. As the land value in the mid-west US is very inexpensive and abundant (unlike our land costs on the eastern seaboard of Australia – wow!) the property prices are much more affordable. This enables us to get into the market for much less capital and helps with the return

2) Secondly, the actual rental returns are not tied to the cost to purchase the properties. Rental prices (just like any other commodity) is tied to supply vs demand. If you have a region with massive amounts of vacant properties for rent, you will find the rental rates go down – will be very cheap. If on the other hand, there are not many rental properties available, then rents will be high, rising and more expensive

The mid-west US has some fantastic employment opportunities for job seekers, some fantastic schools and universities for studies and the affordability to live there is very attractive. Many Americans are still scarred by the GFC crash and find purchasing homes harder and the job market harder so they are happier renting than owning. The dream to own your own home with the white picket fence is almost gone now, very few millennial’s are striving for this. Also, even more high income earners are finding it better to rent where they live, and purchase investment properties where they can get the best return!

Click on the graph below to go to a recent article by Maven Money in the US analysing renting vs Owner Occupied properties for higher income families – the results are astounding!

 

If you want to find out more about how to access great deals in this area (or another others) book a call with us TODAY! at the bottom of this page.

If you want to find out more about how to access great rental deals and get excellent passive cashflow, book a call with us TODAY! Below.