Well seeing you asked.
For the year July 2012 - June 2013
7 properties rented out for the full year. 2 properties rented out for 1/2 a year 1 property just rented for 4 months. Total 11 properties
We had 1 property empty as we furnished it and lived in it for about 4 months.
Average cost per property including reno $74k. Average rent $1200 per month. So gross return around 20%
Total invested $814k
Years gross income $119k (so rent on 8 properties)
Expenses approx $53k
Accounting fees $2-3k
Income before interest $63k
Total invested $814k
Return 7.7% net before interest
These figures are not 100% accurate as there are some expenses for properties that weren't rented. But the figures do not change substantially.
Dramas
1 Property trashed by tenant - cost to fix $5k Empty for extended period due to slow tenant placement.
1 Property needed new A/C - cost $2.5k would have been north of $3k if I had left it for the PM to attend to.
1 Property broken into because PM took so long to place tenant. Cost $3.5k to fix after having just spent $14k on reno.
This financial year.
The next financial year should be better as all 11 properties will be rented.
As such the expected gross income will be about $158k. I would expect the expenses to stay about the same. But for this exercise say they will be about $60k Thus, this financial years net return should be about 11-12%.
This figures can easily take a dive as a tenant placement fee is 1 months rent and tenant like to start their occupancy at the beginning of the month so very easy to loose 1-2 months rent plus the placement fee.
Capital Gain
Who knows. They have moved up in value but not enough to make it all worthwhile. Selling fees are 6% which is a big chunk. Then add legals etc it will all eat into the sales profit. The average prices for the properties are currently around $120k - retail. I am hanging out for an average of about the $160k mark.
This would then deliver a 100% gain after selling expenses. In the meantime I can collect the rent and hope there are no major dramas and related large expenses.
I know that one of the houses needs the roof replaced. What do you expect when you use tar paper with sand on top as roofing sheets.
Also, this is our oldest house built in 1988, but these shingles only last 25 years.
http://www.homedepot.com/p/GAF-25-Y...3-Tab-Shingles-0201180/100040028#.UjbW7H_p-YM
We had this roof repaired in the last reno but that just replaced about 20 sheets. I would estimate that the cost of reroofing will be in the vicinity of $12-15k.
Advise
If you were still seriously thinking about investing in the US then these are the points I will make.
Buy as new as possible. The newer the better as these houses aren't made to last.
Buy as cheap as possible in the best area possible. Remember you make your money when you buy not when you sell.
You really need to visit the area you intend to buy in and educate yourself as the sellers will tell you that the area they have available property is the best (but it's only the best for them
) You might be Ok but them again maybe not.
Would I be buying now?
No. The dollar and the market has moved against the buyer. The spuikers are starting to market some OK properties but at a much higher entry point and the rent is certainly not going up. At best the rental market is stagnant or actually decreasing due to competition.
Wages are not increasing so very hard to see any real increases in income and am even doubting reaching my ultimate selling prices. If the is some real inflation and wages actually increase then thing will move my way. If not I will just keep collecting the rent. Coupled with a falling AUD this will work for me.
Cheers
