Foreigners picking-up US real estate

[Rock]

Foreigners may be offsetting weak domestic demand for US real estate in some areas - capitalizing on a weak US$ and depressed market values.

http://finance.yahoo.com/news/Foreign-b ... et=&ccode=

Momopi or others with some US real estate experience: Do you believe Phoenix and/or Vegas currently offer the best opportunities to maximize net rental yields without high risk (eg Detroit)? Yield is very hard to come by these days in financial markets. Your thoughts on these and other value for money US property markets?

[globetrotter]

Vancouver, BC, Canada is in the middle of a huge property bubble and it's mostly caused by Chinese Mainlanders bidding up average homes to insane levels.

They value the 'face' of owning property in Rich Canada.

That they would move to the USA is no surprise.

I remember 15 years ago when even liberals were offended by the notion of foreigners buying up America.

Now...

[Rock]

Vancouver, BC, Canada is in the middle of a huge property bubble and it's mostly caused by Chinese Mainlanders bidding up average homes to insane levels.

They value the 'face' of owning property in Rich Canada.

That they would move to the USA is no surprise.

I remember 15 years ago when even liberals were offended by the notion of foreigners buying up America.

Now...

I also have no issue with foreigners buying-up America. But, it could help create a bottoming-out to prices earlier than I would have otherwise expected. I hoping there's still decent value for money property which can provide a good and stable long term casg return. Depressed markets are probably the best hunting grounds for such deals. Rent levels don't move up and down nearly as much as market values.

[ladislav]

They will still have to be subject to state and federal regulations and pay taxes into America. And the money will go into the US citizens' pockets. When there is another crash, they will lose huge just like the Japanese did in HI. And they cannot take the land with them.

They also have to be careful not to repeat the Korean mistake of buying land in the bad part of America and owning stores in poor and violent areas. When they get robbed and shot at a few times, they will rethink their American dream. Canada does not allow guns, America does.

[Repatriate]

They will still have to be subject to state and federal regulations and pay taxes into America. And the money will go into the US citizens' pockets. When there is another crash, they will lose huge just like the Japanese did in HI. And they cannot take the land with them.

They also have to be careful not to repeat the Korean mistake of buying land in the bad part of America and owning stores in poor and violent areas. When they get robbed and shot at a few times, they will rethink their American dream. Canada does not allow guns, America does.

The difference is the Japanese foolishly invested in inflated commercial real estate which were hard sold to them by slick real estate agents and businessmen. They were flush with cash during the 80's and didn't do their due diligence.

Whereas these foreigners are mostly buying residential property which is currently at budget prices due to the housing crash. It's a much better investment move. Most asians (esp. Chinese) only buy property in known asian neighborhoods in CA or Vancouver so they know the area is secure and in demand.

[globetrotter]

The Chinese are buying rental houses and RRE in North America.

Only the taxes will stay in the USA, the rental income, a much larger sum of money, will go to Chinese owner.

No country, anywhere, likes the citizens of another nation buying up a large percentage of its land, housing or economy. Especially a nationalistic nation like the USA. Such behavior is, and has always been, a direct threat to national sovereignty.

It also makes the USA poorer, because US Citizens don't own the assets, someone else does.

There is nothing positive about this...for Americans.

The Chinese on the other hand make out like bandits, gain face, gain US denominated assets and cashflow, and other benefits.

The USA is going to be like Chile or Israel or Ukraine or Russia, very soon. A middle income developed nation, $22k PPP annual GDP, most citizens will be worth less than $15k.

[momopi]

Momopi or others with some US real estate experience: Do you believe Phoenix and/or Vegas currently offer the best opportunities to maximize net rental yields without high risk (eg Detroit)? Yield is very hard to come by these days in financial markets. Your thoughts on these and other value for money US property markets?

I have no experience with Phoenix and Detriot RE market, so you'd have to ask elsewhere. I'm just a small fish in a big pond right now. Many people are bullish on Vegas RE market right now:
http://www.irvinehousingblog.com/blog/c ... al-estate/

I've personally went to LV several times over the past year to look at the properties there, but did not make a purchase. But my friends did buy 4 or 5 rental properties there, usually 2/2 condos built within the last 10 years. The closer you get to downtown LV, the older the condos, and the further you go out, the newer (look to the north).

Unlike Orange County, LV's residents were, um, far less inclined to play nice when they couldn't get a loan mod. So many of the condos I saw had its doors and drywall smashed in. Very typical to see former owners take a hammer to every door in the house. Turnkey properties are avail but will cost you $10k more. Cash is king. If you're interested I have an agent and property manager contact there.

In California, many good deals can be found along the I-15 in Southern CA, and places like Rancho Cordova & nearby cities in North CA. Stay away from areas close to SF and don't buy in Sacramento. Cash is king and sellers are looking for all cash offers. The best time to buy in Southern CA was early summer 2009. By fall 2009 all the local vultures had descended on the RE market with their multi-million dollar bank accounts. There were cashflow positive RE in central OC in summer 2009, but it was all gone by winter. I meet a lady who complained to me that she only had $3 million cash and couldn't compete against some guy with $50 million bank account bidding in Riverside and buying everything. >_>

In 2010 many of the local big fish cash investors had their fill, inventory spiked briefly in summer and many small fish and flippers fought over the properties. Foreign investors from Canada and Europe are now in the Riverside County market -- I just lost a bid to some guy from Sweden or Switzerland. He made all cash offer and beat my 30% downpayment + loan offer. ;p I'm putting another 5 bids in this week. Lending is very strict now and each bid must have its own deposit check (cannot share same check with multiple bids). The inventory level is low right now and many are short sales, which takes a long time to go through the process.

There are so many people doing loan mods, refi's, and purchases right now, underwriters are completely slammed. Purchases have prioerity and refi gets bumped to bottom of the stack. I had one refi with BofA that took almost 3 months, and that bank branch's manager was my accountant's wife. @_@;; You're better off going with a loan broker.

There are many Chinese Canadians from Vancouver area coming down here to look at RE. I'm taking my friend's parents for a drive along the I-15 when they arrive in few weeks. These guys are loaded and he bought a new BMW for his son with cash, because he didn't want his son to drive an "inferior" US/Japanese car. Mainland Chinese in China are facing tougher restrictions on property investment, so more of them might come to the US.

Yes there are many foreign buyers, but they're still small fish compared to the big guys with billion-dollar bankrolls who buy foreclosed properties from banks in lumps of 100's. They hire analysts to evaluate properties in each lot and make recommendations on buy or no buy. The Japanese don't know how to buy straw hats in winter, and the Chinese are great bargain hunters but tend to cash out too early. Those willing to be a slum lord can find many opportunities in SF/Oakland. My uncle owns 30-40+ units there and he collects rent in cash every month -- learn to speak Spanish first. Beware of squatters, they have web sites set up to inform each other of vacant properties. I have a friend who owns 60+ units in central OC and he bribes squatters to leave. If that fails he has biker gang friends to call in for a chat with the squatter.

[Rock]

I have no experience...

Thanks a lot Momopi. Vegas sounds attractive. Pls. do PM or post your broker contact. Not sure about SoCal though. Aren't yields lower there?

I'm just seeking high rental yields in regular neighborhoods. I don't wanna be any kind of slum lord. A low crime neighborhood with decent rental demand and very low prices would be great. Of course its also important to have reliable management companies available to help with securing and managing renters for reasonable price.

Basically, my goal is to generate a stable net cash yield of around 7-8% or better with no leverage (100% cash).

[globetrotter]

Vegas sounds attractive?

You guys are nuts. Think about this for a minute. Your tenants are going to be people like this:

"Unlike Orange County, LV's residents were, um, far less inclined to play nice when they couldn't get a loan mod. So many of the condos I saw had its doors and drywall smashed in. Very typical to see former owners take a hammer to every door in the house. Turnkey properties are avail but will cost you $10k more. Cash is king. If you're interested I have an agent and property manager contact there."

Why would you want to rent your asset to a thug? And it's very clear that Vegas is FULL of liars, thugs, thieves, con artists, grifters and dirt balls. Your quote above proves what they are like.

I will never buy property in the USA, ever again. The current LPS/Notary/DOCX fraud has made due diligence so troublesome that it isn't worth it. There is a real possibility that most titles in the USA may not be clear - ever.

[Rock]

Vegas sounds attractive?

You guys are nuts. Think about this for a minute. Your tenants are going to be people like this:

"Unlike Orange County, LV's residents were, um, far less inclined to play nice when they couldn't get a loan mod. So many of the condos I saw had its doors and drywall smashed in. Very typical to see former owners take a hammer to every door in the house. Turnkey properties are avail but will cost you $10k more. Cash is king. If you're interested I have an agent and property manager contact there."

Why would you want to rent your asset to a thug? And it's very clear that Vegas is FULL of liars, thugs, thieves, con artists, grifters and dirt balls. Your quote above proves what they are like.

I will never buy property in the USA, ever again. The current LPS/Notary/DOCX fraud has made due diligence so troublesome that it isn't worth it. There is a real possibility that most titles in the USA may not be clear - ever.

Not all of Vegas is a slum. And I've seen plenty of trashed properties in Fort Meyers on foreclosure visits. They still have value. It boils down to mathematical calculations.

I already stated that I have not interest in being a slumlord. If I did, I might go to Detroit and pick-up $1,000 properties. One condo my family has was purchased several years ago in Mobile, AL. It net yields 7% based on the purchase price at the time (it has actually appreciated in market value by about 30% in spite of crisis). It is also easy to rent-out and manage with a local firm doing the legwork. And there are tax benefits to boot. Sure as hell beats the yield on a Treasury long bond or investment grade corporate debt.

You have an extremely bleak view of the US in general. Understandable to a point. But if you ever decide to leave your Chinese village and travel around the country a bit to invest or do business, your chances of being scammed are much higher there than in the US. I know quite a few smart people or families in Taiwan who over the years have lost anywhere from 100s of thousands to millions of US$ investing or trying to do business in China. And they all had Chinese language and business skills.

The lone laowai with money to invest would look like a sitting-duck to the unscrupulous types who abound in China just as much if not more than in the US.

[globetrotter]

"Not all of Vegas is a slum."

I did not say that. I said that Vegas is populated by liars, thugs, thieves, con artists, grifters and dirt balls. Many of them make good money, wear suits and drive expensive cars. I get that vibe as soon as I get into Southern Nevada - Mesquite for example. It radiates off of the convenience store clerks. It radiates of of the RRE agents - everyone had that vibe in 2006-9 when I was there.

It's why I cannot stand the place - it's clearly a sunny place for shady people. Just driving through the place gives me the creeps.

People in middle class areas have torn up their foreclosures - this is not restricted to slums or the lower class.

"One condo my family has was purchased several years ago in Mobile, AL."

You and I both know that the values of Socal are different than that of AL. Invest in California? Never. I cannot even trust a counterparty has clear title and now there is no way to know. I won't even rent there because I assume the landlord is gaming their servicer and not paying their mortgage, yet they feel entitled to charge me $600 a month.

f**k them.


"The lone laowai with money to invest would look like a sitting-duck to the unscrupulous types who abound in China just as much if not more than in the US."

Sadly, the Chinese are LESS ruthless than the sharks of LA-NV-AZ. I can easily see through their Asian ploys and thwart them before they even begin. I learned in Socal, baby. The land of hustlers.

Total amount scammed from me in one year living in China:

-0- Yuan.

...and it hasn't been for them trying, either.

I also knew, before I ever set foot in Asia, to never invest, do business or buy real estate here. I am able to learn from the mistakes of others.

It is amazing how powerful the word 'no' is.

You guys go ahead and buy real estate and deal with the bullshit and stress. I am content to park my cash and let it sit there, because my peace of mind and low stress levels have a very high monetary value to me. I would rather lose money on the spread than deal with the crap. It shortens my life and I won't do it.

[momopi]

Thanks a lot Momopi. Vegas sounds attractive. Pls. do PM or post your broker contact. Not sure about SoCal though. Aren't yields lower there?

http://lasvegasrealestateupdate.blogspot.com/

Tell him Dat's friend sent you. He also has a property manager in same office. Go north from Vegas on I-15 N, then take 95 W, then 95 N. You'll see a lot of recent/new developments along the 95 FWY. If you're going to buy condos, buy something <10 years old, or preferably <5 years old that are turnkey. I don't recommend fixer-uppers unless if you plan to do the work yourself.

If you're interested in So Cal, contact me when you visit and I'll show you some places.

I'm making bids with 25%-30% down payment + loan right now, because the rates are just way too good to pass up:
http://online.wsj.com/article/SB1000142 ... 79198.html

The 30-year fixed-rate mortgage averaged 4.27% for the week ended Thursday, down from the prior week's 4.32% and 4.87% a year ago. Freddie has been tracking such rates since 1971.

The 15-year fixed mortgage averaged 3.72%, down from 3.75% the previous week and 4.33% in the like 2009 period. The latest week's figure was the lowest since Freddie started tracking such loans in 1991.

[Rock]

"Not all of Vegas is a slum."

I did not say that. I said that Vegas is populated by liars, thugs, thieves, con artists, grifters and dirt balls. Many of them make good money, wear suits and drive expensive cars. I get that vibe as soon as I get into Southern Nevada - Mesquite for example. It radiates off of the convenience store clerks. It radiates of of the RRE agents - everyone had that vibe in 2006-9 when I was there.

It's why I cannot stand the place - it's clearly a sunny place for shady people. Just driving through the place gives me the creeps.

People in middle class areas have torn up their foreclosures - this is not restricted to slums or the lower class.

"One condo my family has was purchased several years ago in Mobile, AL."

You and I both know that the values of Socal are different than that of AL. Invest in California? Never. I cannot even trust a counterparty has clear title and now there is no way to know. I won't even rent there because I assume the landlord is gaming their servicer and not paying their mortgage, yet they feel entitled to charge me $600 a month.

f**k them.


"The lone laowai with money to invest would look like a sitting-duck to the unscrupulous types who abound in China just as much if not more than in the US."

Sadly, the Chinese are LESS ruthless than the sharks of LA-NV-AZ. I can easily see through their Asian ploys and thwart them before they even begin. I learned in Socal, baby. The land of hustlers.

Total amount scammed from me in one year living in China:

-0- Yuan.

...and it hasn't been for them trying, either.

I also knew, before I ever set foot in Asia, to never invest, do business or buy real estate here. I am able to learn from the mistakes of others.

It is amazing how powerful the word 'no' is.

You guys go ahead and buy real estate and deal with the bullshit and stress. I am content to park my cash and let it sit there, because my peace of mind and low stress levels have a very high monetary value to me. I would rather lose money on the spread than deal with the crap. It shortens my life and I won't do it.

1. I agree its not likely you will get seriously scammed as long as you don't invest or buy big ticket items there. If you don't have money with you, there's nothing to scam.

2. I already mentioned in my second posting on this thread, I was not so interested in SoCal due to lower yields.

3. If you keep most of your money parked in liquid US$ assets while living in China, I hope you realize that you are holding a rapidly wasting asset. US monetary policy since Bush 2 for the most part has been extremely dovish. I believe the dominant powers that be want to reduce national debt burden by throwing the dollar under the bus. Its probably the most tenable choice politically for the dumbed down American public. If you factor in overseas inflation rates and exchange rates, the US buck's purchasing power has probably already declined 50-80% over the last 10 years in places like Brazil, Thailand, Singapore, much of Europe, Japan, and yes, China too. China is getting close to all-out trade war with US and Europe because it won't allow its local currency to appreciate more rapidly. If the US and Europe had their way, your Yuan would quickly shoot-up in value, another big hit to your US$ portfolio. But, given your doomsday outlook on the States, perhaps you already diversified out of the buck long ago?

[Rock]

Thanks a lot Momopi. Vegas sounds attractive. Pls. do PM or post your broker contact. Not sure about SoCal though. Aren't yields lower there?

http://lasvegasrealestateupdate.blogspot.com/

Tell him Dat's friend sent you. He also has a property manager in same office. Go north from Vegas on I-15 N, then take 95 W, then 95 N. You'll see a lot of recent/new developments along the 95 FWY. If you're going to buy condos, buy something <10 years old, or preferably <5 years old that are turnkey. I don't recommend fixer-uppers unless if you plan to do the work yourself.

If you're interested in So Cal, contact me when you visit and I'll show you some places.

I'm making bids with 25%-30% down payment + loan right now, because the rates are just way too good to pass up:
http://online.wsj.com/article/SB1000142 ... 79198.html

The 30-year fixed-rate mortgage averaged 4.27% for the week ended Thursday, down from the prior week's 4.32% and 4.87% a year ago. Freddie has been tracking such rates since 1971.

The 15-year fixed mortgage averaged 3.72%, down from 3.75% the previous week and 4.33% in the like 2009 period. The latest week's figure was the lowest since Freddie started tracking such loans in 1991.

Thanks. I like the newer stuff too. Last year, I saw lots of beautiful new condos in SW Florida selling at 1/3 peak or below. Problem there is high condo fees and weak rental demand. Its a seasonal tourist economy.

I'll contact your broker from Asia to see what sort of opportunities he's got in his book. I've always used cash in States so have no credit. My credit cards are all Taiwanese. I'll need a year to get a US credit rating. I agree with you that rates are extremely compelling. My dad says they're lower than ever before in his life. But for now, the only way I can borrow in States is indirectly in my parents name.

[momopi]

I'll contact your broker from Asia to see what sort of opportunities he's got in his book. I've always used cash in States so have no credit. My credit cards are all Taiwanese. I'll need a year to get a US credit rating. I agree with you that rates are extremely compelling. My dad says they're lower than ever before in his life. But for now, the only way I can borrow in States is indirectly in my parents name.

I had to end my "unemployment vacation" and get a job back in March to qualify for loans. Lenders are very strict right now and you have to have 6+ month employment record before they'd give you a loan. The rates are way too low to pass up right now.

Over the past 3 years, the average number of properties with foreclosure notice is roughly 3 million, but only 1/3rd are actually repossessed by the bank. There are over 128 million housing units in the US (2007), of which ~110 million are occupied and the rest (17-18 million) are vacant. The total number of homes actually foreclosed on (repossessed) in this recession will probably be fewer than all the vacant homes in the country.

Overall, only 2.2%-2.3% of all homes in the US is subject to foreclosure. Some cities are hit harder and others less. In Riverside, about 8% of the homes were subject to foreclosure in 2008. In the second quarter of 2010 alone, 1 in every 39 homes in Riverside County received a foreclosure filing.