Buying in Atlanta
- Thread starter MTR
- Start date
MTR, Oscar, mind telling me why you hold only 3 per LLC, or for that matter say 5 per LLC?
I have One LLC and plan to hold all my properties under this LLC. I currently have 5 properties in this LLC and two more are on their way, I mean they are 'under contract'...
My understanding is that it's really just to limit your liability (get it?
). If you have 7 properties through the one LLC, and something happens that prompts a lawsuit to be brought against it, which is successful (lets say the roof of one of the properties collapses and seriously injures a tenant), then the tenant could theoretically receive damages up to the value of all 7 properties (the total value of the LLC).
If you instead had the properties spread across 2 LLC's (one with 4 and one with 3) and the one with 4 had a claim brought against it, the tenant could only obtain compensation up to the value of the 4 properties held within THAT LLC, rather than all 7.
Really up to you how much risk you want to take relative to minimising expenses, though (in establishing and maintaining additional LLC's).
This is a good question, as Rezix mentioned asset protection, however I actually believe it is overkill and if I continue to purchase I will place more than 3 properties under 1 LLC which will also reduce costs.
As I have loans against each property - a lein, this in effect is another form of protecting my assets.
Cheers, MTR
I tend to agree that it does seem like an overkill, particularly when there are initially 100% loans against each property.
The problem is that when the values increase the capital value of the LLC will increase but the loans will only reflect the original purchase/reno price.
Even now if the market prices are to be believed we are up about $20k per property. So with 3 properties per LLC thats a $60k target. With 5 properties per LLC a $100k target and so on.
The question is at what level of value do the ambulance chasing lawyers get interested.
Cheers
Thanks MTR, Rezix, understand the asset protection aspect.
My acquisitions are Cash purchases currently. In about a years time I am planning to Finance the holdings through a Business Loan (it could be from my bank - Chase bank or III party equity) and expand further into the Real estate business. I believe by holding in one LLC there is better possibility of valuations at the Entity level given that you show a strong P&L and tax statement.
Again that comes to whether you want to show less P&L and pay less Tax, by paying yourself a Interest at say (10-12%). Or to show P&L as is and get a better valuation for the company, and inturn be able to borrow and fund future acquisitions.
Each to his/her own I guess, depends on what they want to achieve...
It is very difficult to source loans in US, though there are hard money lenders who will charge 12%.
Also companies/wholesalers that are selling properties with access to their product/ loans. Once you do the homework you will realise that the properties they are selling are outrageously marked up.
Set up fees on loan products I have looked at have always been expensive, usual period of the loan perhaps 3-5 years, makes it a very risky proposition, also insurance fees required with these loans will hurt.
Complicated paperwork, additional accounting fees. In short if you do not have cash then don't bother as it will end in tears I am sure of this.
Cheers, MTR
Also companies/wholesalers that are selling properties with access to their product/ loans. Once you do the homework you will realise that the properties they are selling are outrageously marked up.
Set up fees on loan products I have looked at have always been expensive, usual period of the loan perhaps 3-5 years, makes it a very risky proposition, also insurance fees required with these loans will hurt.
Complicated paperwork, additional accounting fees. In short if you do not have cash then don't bother as it will end in tears I am sure of this.
Cheers, MTR
http://www.propertyinvesting.com/forums/overseas-deals/4345700
For those who have an interest in US, thought I would provide you with Steve's comments, just remember though Steve is buying the bottom feeder stuff -- higher risk
MTR
For those who have an interest in US, thought I would provide you with Steve's comments, just remember though Steve is buying the bottom feeder stuff -- higher risk
MTR
Atlanta Prices are Rising Rapidly
http://online.wsj.com/article/SB100...WORDS=Atlanta+real+estate#articleTabs=article
This article pretty much sums up why prices are rising and it is very difficult to find any stock and yields of 20% gross are gone.
The Au$ is high but the big boys are now in the game.
Cheers MTR
http://online.wsj.com/article/SB100...WORDS=Atlanta+real+estate#articleTabs=article
This article pretty much sums up why prices are rising and it is very difficult to find any stock and yields of 20% gross are gone.
The Au$ is high but the big boys are now in the game.
Cheers MTR
HI BT
Good question, I have no idea perhaps Karina may be able to answer this question as she is sourcing properties in Atlanta.
What is also pushing prices up is that US investors are very happy to settle for 8% net yields, obviously the foreign investor wants a greater return, ie risk etc. US investors are prepared to pay more for these properties. Seems like they are now jumping in. The Atlanta market was one of the worst foreclosure markets.
With regards to selling I expect newer homes will be easier to sell, it costs around $80-90 per sq ft to build a home in Atlanta today, who knows in 5 years with inflation etc, this does not include land.
I have purchased anywhere from $18-28 per sq ft. Once they start building again then anyone buying at a low base will certainly make money and if the $Au goes back to traditional levels that it will be all the sweeter.
Cheers MTR
Good question, I have no idea perhaps Karina may be able to answer this question as she is sourcing properties in Atlanta.
What is also pushing prices up is that US investors are very happy to settle for 8% net yields, obviously the foreign investor wants a greater return, ie risk etc. US investors are prepared to pay more for these properties. Seems like they are now jumping in. The Atlanta market was one of the worst foreclosure markets.
With regards to selling I expect newer homes will be easier to sell, it costs around $80-90 per sq ft to build a home in Atlanta today, who knows in 5 years with inflation etc, this does not include land.
I have purchased anywhere from $18-28 per sq ft. Once they start building again then anyone buying at a low base will certainly make money and if the $Au goes back to traditional levels that it will be all the sweeter.
Cheers MTR
I am just at lax on my way back from looking at properties in atlanta. There are still good deals available but prices have increased around $20k from the bottom of the market.
Key differences:
Lovely tree lined suburbs much greener than australian cities
Almost always no fenced yards. My guess is that because the hoa mows the lawn they want to get a clear run at it
Newer builds in the less expensive suburbs are vinyl clad but i have been advised that this is durable and acceptable in this market
I saw a great 5 bed 3 bath 330 sqm house for sale at $75k. Only needs a $3k reno. Would have been $1m anywhere in sydney. You really are getting value for money there.
Also went to texas on my trip and wasn't so impressed. Typically houses were 3 times the prices in atlanta.
Key differences:
Lovely tree lined suburbs much greener than australian cities
Almost always no fenced yards. My guess is that because the hoa mows the lawn they want to get a clear run at it
Newer builds in the less expensive suburbs are vinyl clad but i have been advised that this is durable and acceptable in this market
I saw a great 5 bed 3 bath 330 sqm house for sale at $75k. Only needs a $3k reno. Would have been $1m anywhere in sydney. You really are getting value for money there.
Also went to texas on my trip and wasn't so impressed. Typically houses were 3 times the prices in atlanta.
MTR,
Under $20sqft is pretty much gone in this market. I am still finding some deals around the $30sqft mark.
We just picked up this one at $58,750 (around $30 sqft).
https://www.youtube.com/watch?v=Vff9qrDNVWQ&list=UUtQZwox-2O4ZBo5XwrUGL3g&index=1&feature=plcp
Missed out on every deal we offered on this week. Competition is fierce right now.
Just to get some perspective
Most of the Atlanta Properties on the net look very Gothic, or is it just me?
Fences/Boundaries look very different also
Any other visual differences noticed MTR & Oscar?
Hi RW
Its like chalk and cheese. The houses may look very pretty but foreclosures properties that I have purchased are not as well built as our Aussie properties, full brick and in WA double brick.
For me US property is purely for cashflow, growth is a bonus and it is happening alot quicker than I expected.
Cheers MTR
Hi mattnz
I believe Texas housing market did not fall back as some of the other markets ie Atlanta, LV, Arizona.
I personally think that there are greater opportunities in the areas that got hammered - potentially more growth and cashflow.
I found this newsletter very interesting, also gives information on what the big funds are doing
http://clicks.aweber.com/y/ct/?l=BMlZR&m=3kekEikZSwjUcBS&b=g.Lkook97AGDCaLhaXrmDg
MTR
Cheers, MTR
I saw an interview with Robert Shiller, who's probably the leading US housing commentator / economist. a few weeks back. I think that it was one of these:
http://video.foxbusiness.com/v/1810749077001/yales-shiller-the-fiscal-cliff-could-hurt-confidence/
http://www.npr.org/2012/09/10/160886672/the-housing-market-have-we-finally-hit-bottom
He reckoned that Atlanta would be a good buy over the long term. I can't recall his arguments, but I think it was that low prices for property and decent infrastructure would make it a decent place for businesses to invest. This in turn will boost the economy and house values.
http://video.foxbusiness.com/v/1810749077001/yales-shiller-the-fiscal-cliff-could-hurt-confidence/
http://www.npr.org/2012/09/10/160886672/the-housing-market-have-we-finally-hit-bottom
He reckoned that Atlanta would be a good buy over the long term. I can't recall his arguments, but I think it was that low prices for property and decent infrastructure would make it a decent place for businesses to invest. This in turn will boost the economy and house values.
