Is Now Still a Good Time to Invest?

Don’t Get Wiped Out on Wave Two…

Mid Year, A good time to reassess goals

A sense of Perspective

Why Australians should invest in U.S. property

 

Coronavirus (or COVID-19) has had a devastating impact on Australian society. Small businesses are on their knees, companies have slashed jobs, a battle between renters and landlords looms large and essential grocery items have been in short supply. 

In the fragility, many people have come to a stark realisation that it doesn’t take much to unravel business and lose a job. It now seems a daily occurrence to see thousands of people queuing for hours outside of Centrelink to register for unemployment.

This situation is heartbreaking and dire. And it won’t end anytime soon. 

According to the Grattan Institute, up to 26% of Australian workers could be out of work due to COVID-19 and the crisis will have an enduring impact on jobs and the economy for years to come. 

The Australian Government Labour Market Information Portal indicates there were approximately 13 million Australians employed in February 2020. If unemployment rates reach 26% based on that figure, an extra three million people will be looking for work.   

While it might seem insensitive, this circumstance has highlighted that individual financial security needs to be diversified. The age-old concept of ‘not placing all your eggs in one basket’ now has renewed importance. 

Having multiple revenue streams is the only way to ride-out situations like COVID-19.

That is why I believe you must turn your attention to bricks and mortar, but not in Australia. 

The US property market offers Australian investors a strong opportunity to diversify their revenue streams and build wealth and it can be done without a significant cost-outlay. 

Investing in US property 

As evidenced by the graph below, the US residential housing market was worth more than $27 trillion dollars last year and is expected to grow to over $33 trillion within the next 24 months. 

While these figures may be affected by COVID-19, it highlights that the US residential property market in the next two years alone is worth more than the entire property market in Australia.  

I am not suggesting there’s anything wrong with our property market and if you have the resources to invest, it might be your best option. But most people do not. 

The average cost of a two-bedroom apartment in Melbourne, Sydney and now Brisbane has skyrocketed in recent years and it is not uncommon to see prices hit more than $600,000.

That would mean Australians trying to get into the property market would need a deposit in excess of $100,000 not including stamp duty and other associated costs. Investing in our domestic property market adds-up quickly and it would seem for many owning ‘the Australian dream’ is a reality out of reach. 

However, US property prices are much lower than what we experience here and represent a significant opportunity. For example, a three-bedroom family home can be purchased with tenants from a meagre $50,000 US outright. That’s less than a deposit for Australian property and it’s done without the loan and no interest. 

While many outside of the US might view the country as still rebuilding from the aftermath of the Global Financial Crisis, nothing could be further from the truth. 

One of the hardest hit areas, Detroit, now offers enormous potential for growth, has a high domestic rental market and affordability of accommodation. This is supplemented by increased levels of government investment and flourishing local industries. 

Other аrеаѕ like Florida, uрѕtаtе Nеw York, Ohio, Tennessee and еvеn Texas and Alаѕkа are primed for investment too. 

While this type of approach does not necessarily address an immediate need of finding an Australian home to live in right now, it does present a viable solution to building financial security. 

How to invest in US property 

There are many ways Australians can invest in the US property market but, as with everything, the results achieved depend on how you go about it. 

Three of the most commons ways to invest in US property are:

Buy property and hold rentals – this is considered a long-term investment strategy with minimal risk. An investor will purchase a house or apartment and hold on to it long term and open up the property for rent. This strategy can earn more than a 10% return in NET passive income. 

Fix and flip – I’m sure you’ve seen this on TV and what happens there (minus the smoke and mirror) can happen for investors. Fix and flip means buying a rundown property, renovating, and then on-selling it for a much higher price to make a profit. This gives an investor great returns and strong equity. 

Buy, Renovate, Rent, Refinance and Repeat (BRRRR) – this is a strategy an investor will go through in order of the investment cycle. First buying, then doing up the property, then renting it out, refinancing for a better deal and doing it all again. This allows investors to get a cash flowing investment and refinance out most of their capital and repeat, leaving a strong cash flow even after finance costs of 4-6% ROI. 

Going beyond the mechanism with which to purchase property, investors need to know how they are going to do it. This is where the process can become more complicated. 

Typically, there are two types of people investing in US property. The first one will be gung-ho and want to do everything from start-to-finish by themselves.  

They think that hard work is all it takes and spend day after day researching growth areas and property evaluations and then jump right in. No system. No strategy. No idea. 

This approach can work but it doesn’t give the best return of investment (ROI) and after time in the game this investor gets burnt out and doesn’t achieve the passive income results wanted. 

The other investor takes a more measured approach and plans what they want to achieve, puts the correct strategy in place to achieve it and is prepared to undergo the ‘training’ required to fully understand US investment and the opportunities it presents. 

It’s no secret who gets more out of their investment. 

Minimising US property investment risk 

Nobody should go into US property investment blind. As with Australian property investment, it presents potential risks that need to be mitigated. 

Currency shifts -can be a boon as much as a risk to your investment. The key to avoid running into strife is to have flexibility when converting funds. Owning a bank account, or trust account (called Escrow account in the US) can help allow funds to be kept in the US, until needed, or you are comfortable with the exchange rate. When the AUD is low, this can mean the price of the properties is higher, but of course, also means your rental returns are greater. Alternatively, the reverse allows for cheaper entry rates on purchase but reduces the equivalent AUD of your rental yield.

It is always pertinent to look at the yield as a percentage of the value, rather than actual dollar value, which even during large currency shifts, will remain constant.  Specialised Foreign Exchange companies often have much better rates when exchanging money than banks generally do and can save thousands on transfers if done right.

Insurances – like in Australia, insurances are critical for your investment. Ensuring your investment property is covered for damage, flood, theft, fire, and storm is a minimum, but going further is also an option. Tenant and rental insurance are also available to cover damage caused by tenants, even loss of rent if the tenant leaves, or does not pay.

Property management – is a vital part of your investment strategy. Choosing the wrong one, can cause a significant heartache especially when they are based overseas. It is not uncommon for an investor to spend hours on due diligence of a property, only to hand over the keys to the first property manager they meet. 

You should always seek out the services of more than one property manager and subject all to a rigorous interview process. Chances are you won’t get the option to meet face-to-face but online video programs can be used to conduct interviews. 

Spend as much time developing your property manager, as you do researching your property, and you will certainly massively increase your success rate, and mitigate risks.

COVID-19 has delivered us a new reality and what many thought was secure, is now not. 

Australians are fighters by nature, and we will bounce back but it will take time and won’t be without a few more battle scars along the way. 

But as unemployment lines continue to grow – up to as much as 600,000 – and as more companies go the way of Virgin Airlines, now more than ever is the time to start looking at ways to diversify your revenue streams to financially safeguard your future as much as possible. 

There’s safety in bricks and mortar and ROI opportunities in the US property market. 

This article we wrote first appeared in Your Investment Property

If you want to learn a little more about the market, why not download our e-book “7 Simple Secrets to Investing in U.S. Property” here.

The Aliens are coming… Or are they here?

G’day all

Well, its Friday again, and marks the end of what has been a tragic week for mankind…

I must say, this past couple of weeks, I have been ashamed of humanity, disgusted by the actions of not only the few, but of the many, not only in the U.S. but here in Australia too. 

What happened in the U.S. to George Floyd was a tragedy no doubt.  The fact that there had to be protests before the officers involved where brought to justice was just dumbfounding.

That this is just another event in a string of cases in the U.S and STILL people are not seeing the evil in this, is again, mind blowing… Almost surreal.

And then, I get the protests across the country, but the looting, stealing, vandalism?  Burning down businesses that have been barely surviving during this crisis anyway?  What the…

How does smashing shop windows to steal televisions help George Floyd’s family or any other individual that could suffer the same at the hand of police brutality?

And then, after all that, there is the Joker card – Trump.  Wow.  Just wow…

At a time of national upheaval in America, Trumps answer, rather than try to unite the country, is to threaten to bring in the U.S. Military…  The single force that was put in place and designed to PROTECT the United States from foreign adversity and uphold a constitution that explicitly protects the rights of citizens to peacefully protest.

Even the former Defence Secretary, Jim Mattis has had to finally break his silence and denounce the militarisation of the U.S. response to the unrest by saying “Donald Trump is the first president in my lifetime that does not try to unite the American people – does not even pretend to try.” 

He even drew a comparison to the U.S. war against Nazi Germany saying that the U.S. troops at the time where reminded before the Normandy invasion that “the Nazi slogan for destroying us was Divide and Conquer

Is this really what Trump is thinking?  Divide and conquer the American people?  This just cannot be happening…  I cannot help but think he is an alien put here to begin some form of takeover by turning us against ourselves…

And yet, even here in Melbourne, there is planned a protest for the Black Lives Matter cause, which of course they do… as do ALL lives.  But really, after Australia having done so well to stop the spread of COVID-19 in this country, they are predicting some 30,000 people think it is a safe and sound idea to break all social distancing rules and laws?

In a year where we even had to give up our own ANZAC day marches and services due to the virus; we had to find other ways of show support for the thousands of men and women in this country that fought in wars to give us the freedom we have now – we cannot seem to think it maybe pertinent to also find a safer way right now to show support for the Black Lives Matter cause?

We are facing one of the most significant economic downturns in our lifetime, and just as we look to be possibly able to move past it, around 30,000 Victorians are going to gather on the steps of parliament and walk down Bourke street…

If even a couple of hundred people contract Coronavirus from this, it could set our state and possibly our country back months…

Months that many small, medium and even large businesses in the country do not have.

I am certainly not down playing the cause, I completely understand that support is needed right now, but if even 1 person dies from COVID-19 due to this rally; if even 1 business owner goes bankrupt due to increased lockdown rules and takes his/her own life after this rally… is that acceptable?

In an age where I really believed we were moving into the era of intuition, where more and more of humanity were becoming increasingly aware and conscious of the world around us, we look to set ourselves back decades in just a few short weeks.

Ah, but as the sun streams in my window, and I look across the marina at a beautiful Melbourne winters day, not a cloud in the sky, I am reminded there is always hope for humanity.  Hope is what keeps us moving forward, even in the darkest of hours…

Hope and faith – knowing that this too will pass, and better days are coming.

I am, though, going to keep my eye to the sky for any sign of UFO activity, because that is what must be next this year… right?

You got this!

Happy Investing all and have a great weekend!!

The second wave…

G’day all

Happy Friday everyone, hope you have all had a great week!

And that brings us to the end of May, and what looks like the end of most of the lockdown restrictions in Australia as business and the economy slowly starts to move again over the next month or so…

Its good to see things reopening, or at least plans being made to do so – kind of like that light at the end of the tunnel… at least now we can see it getting closer.

The U.S. is in a similar place, albeit nowhere near as successful at curbing the spread of the virus.  Being such a consumerism society, I feel they have little choice but to start lightening restrictions, regardless of the cases, pretty much a lose / lose situation.  Damned if you do, and damned if you don’t.  I do feel that this is not going to reflect well on President Trump’s chances for re-election, so be prepared to see some fancy footwork from the “Pres” now as he tries to recover and divert attention away from the crisis.  Look out China…

On that note, there are already some interesting economic data coming in from the US and AU showing quick recovery of housing prices, good auction clearance rates and lower than expected unemployment levels.

I would, however, suggest that the statistics and data we are seeing right now, is not indicative of actual…

First and foremost, for unemployment figures to be accurate, it requires all those “not employed” to register as such for benefits.  There are a significant number of people whose employers would be paying Jobkeeper in AU and therefore not need to register as unemployed.  Our figure came in last month around 6.9%, up from mid 5’s before the crisis, but the real number is probably around 15%

Same in the US.  What will really matter is come September / October, when the stimulus starts to wane, how many jobs are gone, and how many businesses close. 

I believe we are likely to see a “second Wave” but not in virus cases, in business and job losses.  I also fear that this 2nd wave will be harsh, the initial wave being artificially supported by stimulus packages.  Once these are gone, those that are on a knifes edge will crumble.  This is where we will see the real impact.

From a housing perspective, for there to be a drop in house prices or market, there needs to be transactions.  The volume of transactions in the US particularly, since March, has completely dropped off a cliff.  What this will do is as things start to reopen now, demand will return for housing quickly, but with no properties being listed for the past few months, it will take some time for supply to catch up.

So, what do you get if demand is outstripping supply, even for a short time? Growth…  But again, I feel this is artificial.  The supply of inventory will return and the demand as time goes on will ebb, leaving a gap.  Again, how big a gap will depend on that ‘real’ unemployment number in the months to come after the stimulus has gone.

This could almost be the property markets version of a ‘bear trap’ – a term used in stock and commodity markets representing a small rise in pricing, enough to get the average investor thinking prices are rising so they buy… and bang! Prices plummet…

I don’t believe it is as pronounced as this in property, but I would be hesitant paying too much for properties right now.  I still would hold firm to my low offers and sit tight, you will start getting deals accepted sooner or later.

Stick to your guns and your investment strategies and watch for that second wave… There will be some great opportunities coming…

You got this!

Happy Investing all and have a great weekend!!

An Amazing time to Grow!

G’day all

Happy Friday everyone! With some beautiful May days here in Melbourne over the past week or so, there has never been a better time to be alive!

And I mean it…

We have certainly had our share of challenges this year already, not trying to play that down, but as I mentioned last week, diamonds are not born out of comfort…they are created from pressure!

This is giving us the opportunity to grow, to develop.  I have seen so much more patience from the impatient, courtesy from the in-courteous, consideration from the inconsiderate that ever before…

We are supporting each other, helping each other, have more time for each other, yet isolated and distancing.  Amazing how life sometimes needs to give us a shove for us to learn…

Even now, more challenges are coming, and China is mad at us…

And i get why, no one likes having people go through their closet…

They are slapping tariffs on our barley exports and wanting a ban on beef exports. And that’s just getting started.

This could simply be because of the call to an inquiry into the COVID pandemic, or something deeper, our push back against Huawei and the 5G roll out…

But in reality, it is simply because Australia had to take sides and we have sided with China’s bully…

The relationship between the US and China inevitably reached a place where it was destined – rivalry. The Chinese and American political models are simply incompatible with each other. As China’s economic and political power grew, it was inevitable that they would start butting heads with America eventually.  And, the Trump administration is certainly not backing down now from the plate…

And now that we have all stopped pretending that we’re not involved and have our head in the sand, it’s time for us to pick sides.

For many years, Australia has tried to have its cake and eat it too.  We have wanted access to China’s markets, while turning a blind eye to the CCP’s authoritarian nature.

But we cannot continue to do that, it’s time to pick a side.

And maybe our pride stings at that – that we can’t stand on our own two feet and choose our own friends.  We are a tiny nation with a tiny military, we don’t get that luxury.  We live on the graces of one empire or another.  

In the past it was England and so it looks like now we’re siding with the American empire.

I’m cool with that. And not because I think the US is any more noble or righteous than China – far from it – but our values simply align with American political values – as flawed as their democracy and capitalism is – more than they do with China’s.

But of course, after having made our intentions clear, now China is testing our resolve.

But that’s cool too.  Again, I think it is a relationship we needed to test…  We have been far too reliant in this country on China and need a reason to stand on our own two feet again (even if leaning on Big Brother America)

We are a commodity exporter and trade is fluid.  Even if China starts buying barley from someone else, we will simply sell ours to whomever that someone else was selling to…

Global demand doesn’t change, all you get is ‘trade substitution’.

And in that sense, even though we have let our economy become crazily dependent on China in recent years, China needs us more than we need them.

So, I’m cool.  We have picked sides, and I think we made the appropriate choice.

More retaliation is coming, but we’ll be fine, and we will learn and grow.  I’m confident in this.  Let’s enjoy this time and sunshine while we have it 🙂

And in the meantime, let’s buy Australian!

You got this!

Happy Investing all and have a great weekend!!

Two investment properties within nine months for Star Dynamic client

Building a property portfolio that generates passive income seems like utopia and only available to the chosen few.   

But with some understanding, guidance, and willingness to pursue new opportunities, it can be done. 

And that is what a recent Star Dynamic client did. 

As a business consultant, Katie Potter understands the importance and value of strong financial practises to future-proof the organisations she works with. 

Having been on the frontline of consulting companies for the last 7 years, seeing some prosper and others fail was a catalyst for Katie to turn her attention towards securing her own personal financial future. 

Investing in our domestic property market has long been heralded as the “Australian dream” but for Katie, it was more of a nightmare. 

“Initially, I thought my best chance to get into the property market was to buy a house. I looked Melbourne-wide, but the prices were too high for what you got in return. I’d always ask for a better deal and see what modifications were needed to these homes.” 

Through trial and error, it became clear that Katie wasn’t searching for her future home but instead an investment opportunity. 

“I realised I was an investor and the property I needed wasn’t for living in but to build wealth and help create the future I wanted for myself.” 

With this knowledge and renewed confidence in finding a property, Katie started looking beyond our shores to invest. 

International investment opportunities   

A simple Google search for “international property investment” results in a plethora of options. There are options to do it yourself, let others do it for you, weekend information seminars, blogs, podcasts and news articles. 

It’s a flooded market and Katie, with her analytical brain, spent hours trawling this information to identify a way forward. 

She discovered an opportunity to buy property in New Zealand and quickly pulled together the resources to do so and purchased her first investment property. But with the benefit of hindsight, Katie admits it was a dangerous move. 

“I did okay out of this experience but being new to the process, it could have been a risk too. I needed to be more informed about what I was doing and the potential ramifications of investing overseas.” 

Many courses ‘sell’ the dream of property investment but fail to educate students about the research and hard work required to do it correctly. 

Fortunately, Katie survived, and this experience only sharpened her resolve to intelligently invest overseas again. 

While researching high-growth areas of the United Kingdom (UK) property market, Katie found a much more appealing option outside of the mother country.  

After realising a three-to-four bedroom home can be purchased outright for less than the cost of a deposit in Australia, Katie was convinced she needed to invest in the United States (US). 

Investing in the $27 trillion dollar US residential housing market

Over time, Katie has built a support network of investors to help each other navigate their property investment journey. When she told them of her decision to focus on the US residential market, a UK investor friend told her to speak with Star Dynamic Property Investments. 

Katie did her due diligence and contacted several US property investors, but only one bothered to get back to her. 

“Lindsay from Star Dynamic had a genuine interest in me and didn’t push his services. Our first phone call was about me sussing him out. I had direct questions for him and he had accurate answers every time. It was reassuring to hear that Lindsay has a team of professionals on the ground in the US who work with him to find properties that return on the investment made,”

“But I told Lindsay I wasn’t ready right then and he was fine with it. In fact, he told me I could speak with him whenever I needed to run ideas past him. He didn’t have an agenda and I appreciated that.”

After about four months and a few further conversations with Lindsay, Katie was ready to ramp-up her US property investment and engaged Star Dynamic to help educate, support and work with her to secure financial freedom. 

This engagement initially started with Star Dynamic’s Fix and Flip Academy and the Investors Inner Circle. 

The Fix and Flip Academy is a ‘do it yourself’ online system that coaches you on how to set up, source, renovate, tenant and if needed sell US property.  

The Investors Inner Circle gives you access to Star Dynamic’s on the ground US-team to help manage your projects, access off-market deals before they hit the market, negotiate strategies to save you thousands and help build strategies that boost returns on property sales. 

For the first few months, Katie committed to learning about the US residential property market as a way to safeguard her future and escape the daily grind of fighting for money. 

Once Katie’s momentum built, nothing was going to stop her. 

“I followed the coaching of Lindsay and his team and within three weeks, I was able to put in an offer for a great property in Michigan for $15,000 USD below the asking price and I was successful.”

Katie was so excited and brimming with confidence that it wasn’t long before she went again. With her first property completed, renovated and ready for tenants, she purchased her second property. 

It’s two great results within nine months. 

How to invest in the US property market 

The US residential property market represents a major opportunity for Australian investors, as Katie’s story highlights. 

Investing in property in Australia is daunting enough and adding in an intentional market with foreign rules and regulations is a whole new ball game.  

But with the right help and guidance, you can be the next success story. The best time to start learning about US property investment is now and the best place is our Fix and Flip Academy. 

The Fix and Flip Academy is an online training program that steps you through the entire process of fixing and flipping property in the US. It’s an eight-part module of everything we’ve learnt from flipping more than 100 properties ourselves (and several more for our clients). 

Applying what you’ve learned after the eight modules will enable you to earn good profits and build your wealth through bricks and mortar. 

To learn how to get started investing in the $27 trillion dollar US residential property market, join our 5-day Facebook challenge. 

Each day you’ll be tasked with completing a 20-30 minute challenge and coached through how to do it. We focus on topics like determining a solid investment strategy, how to identify locations to invest in, how to choose a supportive team to help you, how to analyse a property’s potential and then how to bring it all together in a guide you can use moving forward. 

“For me it’s simple. Without Star Dynamic I wouldn’t have any properties in the US. Lindsay went above and beyond to ensure my property deals went smoothly. I can’t thank him enough for that,” said Katie. 

If you see the opportunity that the US property markets presents, sign up to our 5 Day Facebook Challenge