在澳大利亚 I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo
I know this has been hashed over many a time, but If you saw the Today tonight segue tonight that showed how "easy" it was to buy a house in Detroit for as little as a dollar....
In the words of my 7 yr old neice "Pluheeeease"
I can see get rich quicker-s flocking to the internet...... its a shame that they show such segments without the balance of showing a declining market, horrible economy, worsening job situation, rampant poverty, gang violence and P!$$ poor property management.
but thats just my 2c
I also noticed that although they said that he pays taxes and rates
never did they mentioned that rates could be $10k to $20k and more
per year. Also there may be a few years of backdated rates to be paid.
just emphasizing how cheap the properties are only.
I can see some seminars soon to be advertized.
luvvit said: ↑
I know this has been hashed over many a time, but If you saw the Today tonight segue tonight that showed how "easy" it was to buy a house in Detroit for as little as a dollar....Click to expand...If you were to buy a house, actually even a block of land in the worst suburb in any Australian capital city, you would being paying in the tens of thousands for it.
The fact that a house would sell for $1, only shows that the whole area surrounding these homes are a wasteland.
There was a recent thread on SS with you tube links on Detroit. Why would you own there voluntarily?
mmmmm buzz, yep I agree
My point, besides rambling, is that the story was, in my view, misleading.
Im sure there are couples/friends/families sitting over their meat and 3 veg tonight and talking about how cheap it is to own property in the states.
Where is the balanced journalism in the piece? sure props can be only a few hundred dollars, but what about the problems / costs associated with holding a property in the states?
What was the point of the segment in the first place? to lure aussies to invest in the states is my first thought. My second is a bit more cynical and that some "guru" will start spruiking US props here and sucking punters into buying.
When I see such blatant one sided journalism it makes me mad, and in my view Today Tonight and A Current Affair should re brand themselves as lifestyle programs, not Current Affairs shows. Their journalistic integrity should be taken with a pinch of salt.
And too much salt is a bad thing...........
Wouldn't be surprised to see a book circulating in the not too distant future titles from 0 to 500,000 properties in 2 years.
luvvit said: ↑
My point, besides rambling, is that the story was, in my view, misleading.TT outlining an investment strategy on property??? *sound of alarm bells ringing*
Im sure there are couples/friends/families sitting over their meat and 3 veg tonight and talking about how cheap it is to own property in the states.
Where is the balanced journalism in the piece? sure props can be only a few hundred dollars, but what about the problems / costs associated with holding a property in the states?Click to expand...
'Balanced journalism' from TT & ACA? You're a funny guy luvvit, thanks for the laugh!!
ger said: ↑
I also noticed that although they said that he pays taxes and ratesWhat's your source for the rates on this kind of property being $10-20K?
never did they mentioned that rates could be $10k to $20k and more
per year.Click to expand...
Edit: I still think investing in Detroit is incredibly high-risk and not something I'd consider, but I seriously doubt property taxes would be anything like $10K, let alone $20K.
yes, I saw the same thing, it was theage article, $10k-$20k in taxds purchase price being $1-$5k
Well, Rick Otton has bought houses in the USA and has nothing really good to say about it UNLESS YOU LIVE THERE. !!
Here is an excellent article written by Rick Otton from his newsletter posted recently, It outlines his views on purchasing US property.
I hope there wont be a problem with reproducing it here:
Rick's article begins here:
"Should we Invest in the United States? Australian Worries for USA investing
For many years people have been calling me and asking me should we, or shouldn’t we buy property in the United States? Well I’ve been buying property in the United States now for a little over 20 years.
I started buying real estate in the United States in the late 80’s. I got involved in the savings and loan debacle. That’s where the banking system failed in the southern states of the United States and there were virtually no banks around and we had to transact property buying and selling without a banking system.
Now it seems about every 20 years the Americans have another banking crisis and when I was buying properties, prices dropped quite significantly and in some cases up to 95 cents on the dollar. We were buying properties 5 cents on the dollar. I remember buying home units for as cheap as $600 and houses for a couple of thousand dollars each.
Now the Americans are going through another banking crisis right now and many Australians are asking themselves is this a good time to get in and take advantage of the US market? I’m going to explain it to you a number of different ways, leave it alone unless you’re going to live in the United States!
I remember in the late 80’s I spent a lot of time with Australians trying to save what they had left of their precious capital that they’d invested in the US. Again, I find myself doing it 20 years later. I’m helping Australians get out of the United States and still retain some of their precious capital recognizing the fact that they’ve lost a lot of money.
Why does this happen? Why do Australians invest in the United States and don’t do as well as they should do? Especially when we read about 15% returns, 20% returns, 25% returns. I would like to examine that for you in just a moment. But I would like to go back to some fundamental differences between the way the Australians do business and the way Americans do business much of it outlined in a book called “American and Australian cultural differences” written in the 1970’s.
Donald Trump wrote a book called The Art of the Deal and in there he made it quite plain, there is no such thing as a win-win in business. It’s ‘I win and you lose’. You see, Australian culture is one where people come first and money comes second. The American cultural society is different. Big business comes first, the dollar comes first, the people come second and this is very important. This does not mean America or Americans are bad just our cultural differences. So a business transaction is designed where it’s all about the money first and who cares about what happens to the people. Whereas, in Australia we have a very different type of culture mentality and all the governing laws lean that way.
Australian culture is all about the people first and the money second and this is reflected in our legal system a system shared with both legal law and equitable law. Equitable law is fair play law, which means if a judge sees a contract he does not like, he will over turn the contract because under equitable law can if he feels it was fair. Well in the American playing field that is not the way it works. What is on the piece of paper is the deal.
So the exciting part about playing in the US market is that you and I can sit down at a table and work out a contract and I can actually trade a piece of real estate in the United States for $7. I’ve got a one page Warranty Deed or General Warranty Deed and we both sign it. That property is sold or bought right there for $7 because $7 is what it cost me to record it at the local court house and make the purchase or sale public. Well whatever deal we put together whether it’s some sort of creative lease option or installment contract that is the deal. So if you get yourself into some bad terms, you don’t have a government body that comes in and looks after you. That is the deal and the dollar comes first.
So let’s have a look at this. When you’ve got a country where in real estate its ‘I win and you lose’, look out! …they apply a whole different set of rules.
I would like to recite some interesting stories about what happened over the years and hopefully by the end of this article, some people will get it into their heads that maybe the US is not the place to invest unless, of course, you live there, in which case the present meltdown can be highly profitable.
Now let’s look at US property management. We look at the way property is managed in Australia and we assume this is how it is done in the United States. In Australia, when you buy and sell a piece of real estate it’s managed by the real estate agent. This is not the case in the US. The people who sell you the property for the most part have nothing to do with the management of that property. It’s difficult to find one which shares the same moral code as those in Australia and the ones that I have are so hideously expensive in overhead you’ll go financially broke trying to make a profit.
I’ll give you an example. American management companies for some reason can never get your money to you in Australia or they have a very poor mail service as they seem to lose many cheques. As far as they’re concerned your cheque sinks because Australia might as well be Atlantis. It is all about taking money out of your pocket and not allowing you to make a profit.
If I use a good management company, a light bulb costs 25 cents but to get it installed will cost you $88 because a good management company will only use licensed people. Why? Everybody in the US is worried about getting sued. So therefore, if you have a property manager in the US they’re not going to use anybody on your property who is not licensed, whether it’s a plumbing license, electrical license or whatever because these management companies don’t want to get sued. They’ll only use licensed people that’s okay but licensed people are expensive.
The average American light bulb lasts about 15 months and very cheap to buy but boy, how many times have I been charged $88 to have a light bulb put in a house all because I was an absent landlord. And if you think an American will change their own light bulbs I’m sorry you are sadly mistaken.
You see in Australia we do stuff with our hands, Americans on the other hand have been used to being gifted to for so long they do nothing. I find that when I rent my properties in the US, if the carpet is more then 2 years old the property becomes un-rentable. If the property has been painted less then a year ago it becomes un-rentable. You see in Australia I can rent out just about anything and I can rent out a place with 10 year old carpet, 20 year old carpet, 30 year old carpet and it hasn’t been painted for 5 years. Not in the United States. If that property is not squeaky clean with new carpet and new paint, it will stay empty and you will not rent it. Why? Because vacancy is much higher in the US then it is in Australia. Now you can rent your property to people commonly known as “trailer trash” but then again may I suggest this is not a good idea
So how does this all come back to management? Okay here is the deal. We know that nothing is going to rent in the US unless it’s in excellent condition and virtually in new condition. This costs money. When I had apartment buildings in Dallas, Texas and they used to be vacant…I had a building that was very close to SMU campus and the students moved out at midnight. I had a crew go in and repaint, recarpet and had new people coming in at 10 a.m. the next morning, so I had a 10 hour window to send crews in. Ladies and gentlemen, if I didn’t recarpet and repaint I could not let that property and Americans are more mobile than Australians they move more often. So please recognize this is an expense you have. With high vacancy rates Americans can pick and choose where they live as they live with more choice through higher vacancy than Australian cities
You’ve also got management companies whose job it is to make sure they take money out of your pocket. Constantly I have seen this the way people would be charged for hot water systems, be charged for heating systems, air conditioning systems, which never ever appear in your property.
Now let’s talk about air conditioning, Just about all properties in the US have air conditioning and air conditioning is hideously expensive. It’s great if the tenant cleans the filters but US tenants they don’t ever clean the filters, which means your air conditioning systems burn out. To which it’s $300 to $400 to get your air conditioning coils cleaned and the new compressors put in. This will drive you nuts. You’ve also got a situation where American houses come with an ice maker. Every time you replace an ice maker its $130 for the ice maker, the service call is about $150, so that’s about $300 and the average ice maker will last you about 24 months.
When you have people in air conditioned properties, especially if you have 2 or 3 tenants and they constantly turn that temperature gauge up and down what it will do is fry your air conditioning unit. You constantly change the adjustments on an air conditioning system because you’ve got tenants and tenants don’t respect your equipment, they will fry your circuitry and you’ll be spending a fortune in air conditioning systems and heating systems. This is standard stuff in the US and it is not standard stuff in Australia.
Management is normally 10% of gross income. Every time they send anybody to the property they’re going to have to be a serviced tradesmen who are expensive as they normally do kickbacks. Most American management companies receive kickbacks from trade’s people, so they will quite happily constantly send trades people out to the property. By the way, the landlord does not come first in the eye of the US property management company, the tenant does. Whatever the tenant wants the tenant gets, therefore they will constantly burn up your cash flow and burn up your profits by sending people out to do the stupid things to properties so they won’t get sued, things which you would never get done in Australia.
In Australia what we serve up for people to live in is absolute bottom of the range. You can’t serve up this kind of property to an American.
Americans don’t pay rent. The percentage of Americans that pay rent is much lower then in Australia and I think for $19.95 I could buy a book called 500 Ways to Rip Off Your Landlord and Never Pay Rent. You are in the area of big business, I make money and you make none. A lot of Americans do not pay their rent. This is just the way the business is. Please recognize it for what it is, Americans do not pay rent.
Many Australians ran into US properties with cash aiming to refinance later and get their cash returned by creating a debt instrument. The properties were cheap because you can not get finance you will always have your cash locked up so you can’t get financed and you have to put all your cash in there and then later on you have to get the cash out. We’ll talk about that in a minute.
If management’s left you any money and I can’t stress this more, I’ve watched people eaten alive, you’ll be charged for all sorts of jobs that were never done, houses that were never painted. By the way, the American roof only lasts about 12 years, so if you bought a house that didn’t have a new roof put on it, your American roof will last for about 12 years. If you ever wondered why the suburbs blow over in a storm, American houses do not have any steel or cement in them, very important. American housing is made of wood and the bricks on the outside are very thin. They’re only slate style brick and an inch wide. It’s not like Australian household brick 3 or 4 inches wide that holds up the house. No, the bricks on American houses don’t hold up the house. The wood behind the brick face holds up the house. The brick is just a fascia plate. So what happens is there is not much integrity in the house; therefore when these big cyclones come through it wipes out entire suburbs of American housing. There are no bricks and no cement.
American bathrooms do not have any water or sink hole for the water to go down. Now the little kids when they splash over the bath the water sits on the floor and American bathroom floors are made of plywood, about 5 ply would be the standard. I used to replace bathroom floors every 4 years. The average bathroom floor is cheap it only cost me $300 to $400 to replace it if your there to do it yourself. Now you didn’t know you’re going to be replacing your bathroom floor about every 4 years. There is no drainage hole in it and therefore the water sits on the floor which quite often is carpeted because Americans carpet the bathroom floors and it rots, so get ready to replace your bathroom floor every few years.
Something else you much realize is that American sewer pipes are 2 inches and not 4 inches. Australian sewer pipes are 4 inches and American sewer pipes are 2 inches. You’ll constantly be fixing blocked toilets. It is just the standard system of fixing the blocked toilet which is about $90 every time the “Rotor Router” guy comes out and fixes blocked toilets.
You’ll either rent to blacks, whites or Hispanics. Most people don’t realize this but a lot of Australians have lost a lot of money by buying cheap properties but not understanding that the neighborhoods where they’re buying these properties were Hispanic. Well that’s fine and Hispanics are great. They will pay their rent before they feed their kids. But there is an expression called ‘they’re hard on the machinery’, they’re really hard on a property. For instance, they use lard in cooking. Lard is fat and they pour it straight down your sink. Mexican people cook with lard and pour it down the sink, which means about every 3 to 4 months you’ll get a call because all your plumbing is totally blocked and you’ll be sending in the Rotor Router or actually your managing agent will do this for you, spending some more of your money trying to unplug all your pipes.
There was one gentleman I knew who lived in the Sydney suburb of Roseville and he bought 52 units. He bought them cheap. He didn’t understand that it was 52 units of Hispanic residents. The man ended up being financially crippled by the operating expenses of Hispanics. Hispanics, for instance, on a Friday or Saturday night like to sit in the back of their pick up trucks and shoot their guns, which is fine. But because they like to drink and in many of the States there is no drunk driving laws, I quite often would have to dig a pick up truck out of my swimming pool full of drunk Hispanics who would drive the pick up through my fence into the swimming pool. They all don’t speak English and this is expensive getting tow trucks at 3 in the morning.
Unfortunately, when we go to buy property in America we go to buy property in America based on what we know in Australia which is a different set of standards. Well you can’t do that. This is a totally different market. They think differently, they do things differently. So let’s recognize that we know that carpets don’t last very long, paint doesn’t last very long although it is cheap to paint, everything is sprayed on with a spray gun. No one uses a brush because everything gets painted every 2 years.
I’m presently assisting a lady who has a property in New York. The agent put the property on the market, for $1.3 million and to this day I don’t think that property is worth any more then $900,000 in the present USA market conditions. The agent has produced a back pocket buyer who has been buying the property, not buying the property, doing building reports that were suddenly not done that didn’t exist, which suddenly do exist. Having tenants in the house and then didn’t have tenants and now finding that this house was supposedly empty but they’ve actually had tenants in there for 9 months. But the agent has been collecting the money and putting it in their back pockets saying I’m sorry we can’t get any tenants. You’ll find you actually do have tenants in your properties but your management people will tell you there isn’t and they’ll just siphon the money off and you’ll keep paying the cost.
The idea here is to bleed you until eventually you sell the property back and then the management company has a back seat buyer who will take you out of it for pennies on the dollar. This I have seen happen over and over.
Next, what happens if your lawns don’t get mowed, because your management company doesn’t organize your lawns to get mowed. Well the city is going to come in and they’re going to mow those lawns for you because they have city codes and city ordinances.What that means is if your house doesn’t look clean and tidy, the city comes in and makes your house clean and tidy and you’re going to get a bill for $400 for the city to mow your lawn to make your place clean and tidy.
In many parts of America you’re not allowed to park your car on the street. Therefore you’ll be charged any towing costs. There is now a lien you have to the city. You don’t find out about it because the city probably sends this to your American mailbox or to your American property manager, which is standard. That American property manager doesn’t pay it, goes out of business or just destroys it. You don’t pay it and now the city sells your property out from under you. The city wants its money for its $400 lien and will take you to foreclosure and sell you out.
These are those city tax lien sales you hear about on late night television. It’s where the city is owed money on properties. They’ll just sell you up and the next minute you’re going to find they’d either sold you up or they’ve condemned your property.
The city will condemn because your property has a problem like a burst pipe flooding issue. We had this in Dallas, Texas and I’m in a hot State, which means you have to run those taps. In the wintertime if I don’t get all my piping blown out, which is called winterizing, I risk my pipes bursting during the winter months. If they burst during the winter months, I’ve got major flood damage. So I either winterize it and it will cost me money or I’ve got to make sure my taps are dripping and I’ve got to also make sure my house is above 68 degrees. That will cost me money on an air conditioning and heating system going 24 hours a day, 7 days a week.
But quite often you get it wrong. Your pipes burst, you’re not there to fix it, you’re not there to sort it out. What happens is the city will come by and condemn your property. They’ll condemn it and put a big tape across the front of it and then the homeless people move in and destroy what’s left of it, the city not liking the homeless people who may sue the city if they injure themselves in a city condemned property will bring in a piece of equipment and remove your house. They’ll leave you with what is called a PAD and I saw this happen in the United States a lot in the early 90’s and you’ll have nothing there but a cement pad, which is great because it will be very clean and smooth for you to rebuild as your house that was there is no longer .
These are the sort of things we don’t do in Australia and a lot of Australians get lost and confused by this. I’ve seen lots of people who will be selling properties for $19,000 but what they don’t understand is these have got black tenants who in some cases do guns and drugs and they don’t pay rent. So what I would probably want to do if I was an American and I wanted to sell you some properties in Australia is I’ll put some phantom tenants in the properties an create a whole bunch of leases that show how much they’re supposedly paying and for 2 or 3 months I’ll make sure the money goes through the books to get myself the Aussie sucker.
The Aussie comes in and now your tenants don’t pay rent . Well these guys all carry guns and so unless you want to start learning how to shoot a .44 hand gun and collect rent you’ve got to start getting these guys out who are doing drugs. USA properties can be bought for $8,000, because nobody goes there. These are gang areas, these are drug houses, these are houses of prostitution. We’re not used to this. We’ve got a number of gun carrying States in the United States. People are strung out on drugs and people get shot and it’s usually in the cheap properties that Aussies start buying. Well this is where all the social problems are.
Its not that Aussies are going in and buying the rich properties, the rich properties have a whole different set of problems. They go in and buy the cheap stuff but they don’t understand that the Americans won’t touch it and there are so many reasons why.
Remember you can’t get your cash out because most US mortgage companies won’t lend money of less then $50,000 in value. So even if the buyer comes in, you’ve got a property that you’re trying to sell for $45,000 or $40,000, an American cannot get a loan to buy the property because of the minimum loan size, it used to be about $35,000 but I believe they’ve now upped it to about $50,000. The minimum loan size is $50,000. Well therefore people can’t buy it and the Hispanics and the black people and all these demographics of people who live in this neighborhood, they don’t have the 50 grand. So they can’t borrow it because those loans don’t exist. So you can only cash out.
Now the only person who is going to cash out is not the black person because they’ve got no money. It’s not going to be the Hispanic person who has no money, it’s the investor. Well the investor is not going to cash out for $45,000; he’s going to take you out at $20,000. And he’s going to walk in and he’s going to string you out because he’s the only one that has the cash and you’re going to find that you’re going to get about $20,000.
When they talk about these gross yields in America, they say this property is gross yielding 26%. This is before an amount of money is taken out for repairs and maintenance, very important. These are gross figures before the amount is taken out for repairs, maintenance and vacancy. My properties, this is when I’m living there, 17.4% of every dollar was spent in up keep. It’s very cheap to get parts for US houses and if you’re in the US doing it yourself that’s great, you can get in and out of properties because you’re there, but overseas it’s a killer. It’s the labor cost of getting someone to do this job whilst you’re not around.
Also people fail to take into consideration the airfares of flying there and flying back, the long distance phone calls, the fact that you have to get up at 5:00 in the morning in Australia to speak to somebody who is in their office. Usually you’re not going to get to speak to them anyway, everybody does voice mail. You’ll never get to speak to anybody live and it will drive you nuts. You’ll find that your cheques will never arrive. You’ll find that American banks will not wire to Australian banks unless you’ve filled in all sorts of legal documents.
You’ve got a whole stack of extra paperwork from the new Patriots Act that Bush brought in, you’ve got a whole bunch of paperwork nightmares you’ve got to go through simply to get your money out of the US back to Australia.
I do not know any Australian who has ever, made a profit buying and holding property in the US. I’ve never seen it to this day, yet I know I’m constantly called by people who buy properties in the US looking for the big profit. It’s going to be a long day’s time before you see it.
Let me tell you a story, I bought a property from the US government and it was 22 home units. I owned this for 2 years; it took me 2 years to wangle with the government to buy it. The cash flow on this property should have been $11,000 after all expenses. But for 2 years I hung on and I never saw a check over about $1,500. It just goes, disappears, evaporates. It’s just the system.
You’ve got to understand their structures, LLCs, companies, s corps, all this stuff, you start doing all these corporations and tax treaties and all this stuff with the US government the average Australian accountant can’t do your taxes any more. You’ve got to go to Coopers and Lybrand, you’ve got to go to the biggest companies in Australia that do the taxation so they understand LLCs, they understand S Corps, C Corps, all this stuff you’ve set up in the US. These guys charge you $300 an hour starters. You’ll find that your tax bill will go from $1,000 a year to $15,000 a year just to get an Australian tax return done and a US tax return done. It will absolutely kill you. It’s called the on cost of doing business.
On the other hand, if you are living in the United States, it is exceptionally profitable and you will make a lot of money buying and trading properties in the US because Americans leave equity behind. They do not see real estate as an investment vehicle; they see it as a consumer item. They treat real estate as a consumer item and when they’re finished with it they leave it and walk on. They’ll quite often leave lots and lots of equity in a house. And if you’re there you can be overseeing what is going on. The Americans will realize you haven’t gone to live in Atlantis and therefore you can turn up the next day with a double barrel shotgun asking for your money and you can make profits. But that is if you are there.
Oh I have made a lot of money in the United States when I was there buying, selling, trading real estate cause I am there and take advantage of opportunities, which we can take advantage of when we’re there. But also understanding the US and how it works when it comes to real estate trading.
The reason why I’m putting this together today is recognizing two things, we speak the same language as the Americans but they have a totally different philosophy about business. It’s they win and I lose. Most Australians will never go through a property transaction in the US without any legal battles. Everybody sues everybody in the United States and it’s not about winning, it’s about bleeding the other guy dry. That’s simply it, you sue someone and work on the basis that you can bleed him for longer then he can bleed you and he’ll eventually capitulate and give you what you want. This is the harsh reality. I’ve just seen many, many, many Australians go into that US market and a lot of them are coming back having lost all sorts of money, assets, and not received anywhere near the returns. And your cheques, somehow will always get lost in the mail.
In summary there is a lot of money to be made right here in your own backyard without incurring airline tickets, setting up US corporations, learning a whole country’s way of doing business which is so different from the way it is done here in Australia. Recognizing that it’s not easy for you to borrow money in the United States, it sounds sexy and yes I guess it’s great to say I’m off to see my Florida house. I suggest the same sort of opportunities are here in Australia.
Remember when shown US figures for yield returns, ask for the net yields, the net return figures. And take into consideration vacancy and repairs and maintenance and now we’ll see what properties in the US really do return to the investor.
Just before I go recently I came across an e-book, where the author shares her experiences when buying property in the USA.
If you would like read about this you can find it on www.seekingfortuneinnewyorkstate.com.
According to the Michigan Treasury site, the property taxes on an average home (value $77K) in Detroit (Wayne County) would be $3,220. It's still high, but it's nowhere near the "10-20K" bandied about.
The $10K-20K+ rates/taxes usually account for back taxes and penalty interest (ie the property owner hasn't paid them for a couple of years). This was a figure quoted in one of the articles regarding the Aussie bloke who cashed in his super and bought houses in Detroit.
The $3K sounds correct for an annual figure.
ozperp said: ↑
According to the Michigan Treasury site, the property taxes on an average home (value $77K) in Detroit (Wayne County) would be $3,220. It's still high, but it's nowhere near the "10-20K" bandied about.Click to expand...Trace, as BudyBee mentioned - I think they're referring to back taxes that will have to be paid by anone that purchases the property. Which is why people are desperate to unload the properties, even for free. Same with the BrisConnection shares.
ger said: ↑
never did they mentioned that rates could be $10k to $20k and more per year.Click to expand...Buddybee said: ↑
The $10K-20K+ rates/taxes usually account for back taxes and penalty interest (ie the property owner hasn't paid them for a couple of years).Click to expand...steveadl said: ↑
Trace, as BudyBee mentioned - I think they're referring to back taxes that will have to be paid by anone that purchases the property.Click to expand...Absolutely, but that's not a recurring cost, which is what ger is suggesting.
Probably a reason those houses are so cheap.
Wonder what it could be.....
Savanna100 said: ↑
Here is an excellent article written by Rick Otton from his newsletter posted recentlyClick to expand...It's interesting, but unfortunately it's factually incorrect in some parts, and misleading and exaggerated in many others.
It seems to me that the same skepticism that is rightly applied to claims of profitable investments, should also be applied to scare stories. Particularly when the horror stories are told with the goal of selling an e-book on how to avoid these traps. Do your own research and find out the facts for yourself. I was going to list the several errors/exaggerations that I found, but I accidentally lost my lengthy draft post (d'oh!), and I've decided it would be more valuable for others to exercise their own critical thinking faculties anyway. And hey, I'm not trying to persuade anybody of anything, except the value of independent thought/research!
I've heard Rick speak, and found him very entertaining. I also happen to agree with him that investing in the USA is absolutely not for the faint-hearted or naive. But there are enough real risks to US investing without introducing made-up or exaggerated factors.
for those who are interested
tubs said: ↑
Probably a reason those houses are so cheap.the bank sells them for a dollar to get them off their non-recourse loan books - each property held costs them 3-4k pa in taxes alone.
Wonder what it could be.....Click to expand...
imagine all those people that have handed back keys andnow the bank has to pay the rates and taxes....no wonder they're up sh it creek.
I had a look and there are taxes at Federal, State and county level but they all seem to be based on value. So I can see how back taxes could be high as they would be based on boom prices but I don't see how the ongoing taxes could be so high. The Michigan treasury site also said something about the value being half the purchase price (maybe thats American logic). If you want to look for Detroit, the state is Michigan and the county is Wayne.
ozperp said: ↑
Absolutely, but that's not a recurring cost, which is what ger is suggesting.Click to expand...as mentioned above the anual rate for a house worth $77k is 3k rates
there are only a few houses for sale under $100k
most I have seen are over 200k
so the rates of $10k and over are very real per year
also lets not forget $3k US is nearly double AUS
ger said: ↑
as mentioned above the anual rate for a house worth $77k is 3k ratesOn the site I looked at there were 14,000 listing for houses in Detroit, out of those 3,100 were below 20k, that's about 20% and of those 1000 of them were below 5k. That's a lot more than a few, other states are a lot different but most of the news stories about $1 houses relate to Detroit.
there are only a few houses for sale under $100k
most I have seen are over 200k
so the rates of $10k and over are very real per yearClick to expand...