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Presentation. Purchasing US Property. Disclaimer. To date, we have purchased two properties (sfr’s) in the USA.

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  1. Presentation Purchasing US Property

  2. Disclaimer • To date, we have purchased two properties (sfr’s) in the USA. • We undertook extensive research prior to purchasing and are happy to share our sources with you however you do need to do your own due diligence especially verification from a variety of reliable and reputable sources. • We do not accept any responsibility or liability for the information contained in this presentation. • The research conducted was for our own investment purposes.

  3. Presentation Outline • Why the US • Due Diligence • Preliminary Research • Why Texas • GPD Texas Property Tour • Tips & Traps.

  4. Why the US? • In 2008, local banks would not lend to us as our DSR (Debt Servicing Ratio) was not satisfactory enough, • ie. asset rich, income poor • ??? Needed more cash flow • Attended the 2008 Brisbane Property Investment Expo to find out about “positive cash flow property” • Purchased several Margaret Lomas books on the subject. • Also noticed one of the stands promoting “buying positive cash flow property in the US” • Prices looked too good to be true!!

  5. 12300 Brookglade Cir., Houston • $74,000 USD 3 Bed, 2.1 bath

  6. Houston Property Searches • Newspaper - Houston Chronicle • www.chron.com • Real Estate Agent Listings • www.har.com (Houston) • www.realtor.com • Property comparisons (values, location – cul de sac, easy access to main roads) • www.realquest.com

  7. Preliminary Research • Books – US related: Mortgage-Free For Life: Secrets Banks & Lenders Don’t Want You to Know! Richard Weathington & Beth M. Ley (BL Publications, USA) 2007 • Getting the terminology right before doing internet search • Internet – which US states • Check out: www.fhfa.gov (federal housing) • Look for state HPI (housing price index) summary

  8. Australia LOC/Interest Only 25-30 years Everything All locations Solicitors Company + family trust Rates USA P & I 15 years Above $200K Local area Title Co’s LLC (foreign nationals) Municipal taxes Investing Differences • Finance • Length • Brokers • Banks • Legals • Asset Structure • Taxes

  9. US Housing Price Index • Source: www.fhfa.gov

  10. Clear • Red • Source: www.cyberhomes.com

  11. Why Texas? • Employment • Oil • Medical research • Military • NASA • 2 of top 10 cities in US (Dallas & Houston) • 2nd largest state in US (population & land size) • Northern migration • Stable house prices

  12. Our Focus • Property Type: • sfr’s (single family residences) • Strategy: • Start off small, get foot in door • 1 positive cash flow property • Establish strategic relationships • Banks • Property managers • Title Companies • Agents, developers, builders

  13. Asset Protection • US LLC • Foreign Nationals can set up LLC’s. • IRS taxes at local rates • Some US banks won’t lend to LLC’s for property • Able to set up LLC online • US bank accounts • Does require some local assistance • LLC is the applicant name • EIN is the ITIN.

  14. US LLC Formation - SmallBiz

  15. Property Broker • Finding a potential property easy part • Getting: • finance (reasonable interest rate & terms) • conveyancer (title company) • property manager (reputable) • thought could be much more difficult • Searched for an Australian based broker specialising in US property who could offer this: • Global Property Deals • Westan Johnson & Frank Stace.

  16. Global Property Deals • Preliminary discussions satisfactory • US market knowledge • Open to questions • Conduct regular investor tours to the US • Long term relationship development. • www.globalpropertydeals.com

  17. Dallas • Tour start point • Meet fellow tour members/investors • Overview of tour

  18. Sherman • Presentations • Economic Development • Title Transfers • Property Management • Local Investments.

  19. Austin • Night Stop-over • General Overview

  20. San Antonio • Presentations: • Foreclosures • Tax & Accounting Practices • Investment Structures • Investment Opportunities • City Tour.

  21. Houston • Presentations: • Foreclosures • Investment Opportunities • GPD Projects Tour • US Bank Account Set-up.

  22. GPD Property For Sale • 120 Country View Circuit, Pottsboro • List Price: $114,000 USD

  23. Due Diligence • Online property appraisals • www.realquest.com • www.eppraisal.com (*) • www.realestate.com • www.realestate.aol.com (*) • www.coldwellbanker.com • County tax office • www.viewshermanhomes.com

  24. Sherman Property Manager • Website: www.nor-texhomes.com

  25. Property Management - Sherman • 5-K Property Management • Full Service • Leasing Agent • Rental Manager • Fees • New Tenants: 45% of 1st month’s rent • Management Fee: 9.5% of monthly rental

  26. Property Taxes • Property taxes will vary from locality to locality however they comprise a series of separate taxes: • City tax, • County tax, • School tax, • College tax, • Energy Service tax and • Hospital tax. • Usually this equates to about 3% of property’s rateable value. • Some areas also have Municipal (MUD) or Association taxes as well.

  27. Tax Assessments

  28. Entity Codes • GRA (Grayson County) • JRC (Grayson College) • CSH (Sherman City) • SSH (Sherman School)

  29. Weighing Up The Deal!! • What’s involved in weighing up the Deal? • Down payment (deposit) 20% (foreign nationals) • LLC setup $800 USD • Title Insurance $500 USD • Attorney/Title Office Fees $850 USD • Court Filing Fees $64 USD • Taxes 3% of property value • Property Management 9.5% of gross rent • Insurance 1.3% of property value • Brokers Fee (GPD) $2,500 USD • Rental Income $700 USD per month.

  30. 1313 East Lamar St, Sherman • So how would it stack up? (first 12 months) • $56,500 Sale Price (Final) • + $2,500 GPD Fee • + $1,350 Legals • + $1,306 Taxes (County) • + $702 Insurance (Hazard) • + $798 Property Management • ----------------------------------------------- • $63,156 Total

  31. 1313 East Lamar St, Sherman • $8,400 USD Rent ($700 USD per month) • Gross return • This equates to: 13.3% ($8,400/$63,156 x 100%) • Net return • $4,872 Loan repayment ($406 per month) • $3,528 Net return • This equates to: 5.59% ($3,528/$63,156 x 100%)

  32. Higher Returns - Foreclosures • Website: www.myusaproperty.com.au

  33. US Interest Rates • Bank Finance (May 2009) • 30% (foreign nationals) • 6.75% fixed for 3 years adjusting to wsjp + 1% each 3 year period thereafter with an interest rate floor of 6.75% • Vendor Finance (April 2009) • 20% (foreign nationals) • 7% (wsjp + 3%) fixed for a 15 year term.

  34. US Bank Home Loans • New Homes • Arrange with local banks in area only • Direct approach (internet search) • P&I (usual finance structure) • Line of Credit (HELOC) - home occupiers only • Existing Homes • Alternate Finance • Vendor finance quite popular.

  35. US Bank Home Loans

  36. Funds Transfers • Transferring funds (ie. deposits) • Use OzForex • www.ozforex.com.au • Division of Macquarie Bank • Appear to offer the best exchange rates and lowest fees.

  37. GPD USA Investors Tour • 2010 - (Sun Sept 19 - Sat Sept 25) • 5 Cities - Texas - 6 nights • Dallas, Sherman, Austin, San Antonio, Houston

  38. Further Information • Go to: • http://www.paragon-marketing.org • To download: • Presentation powerpoint slides • Texas Economic Outlook • Sherman Overview • US LLC information.

  39. Thank You Any Questions!

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