Invest in US

You need to commit to the process
Buying 1 cf+ over there will not be enough to change your life. Accumulation will change your life.
Yield > 20% is very common if you know what kind of property you are looking for
Australian tax resident can claim tax credit for tax paid in the other country under double tax agreement, but with broad tax country like US, we can quarantine the income in US and only pay us tax rate.
You can have several LLC under 50k income, and always pay 15% tax only.
Capital gain can be quarantined in US. You can pay only 15% CGT in US, or roll it over into the next purchase.
NZ is not a broad tax country.
Dymphla focused on multi-family properties over there
Properties Dymphla bought, cheapest 23k, mostly 35-40k without the need for reno
Only 1 property she had vacancy that she bought for life style.
Condo conversion = strata title
Single family home yield was 15% a few yrs ago, now with the price coming down, they can be 20-30% yield
People over there have corporate mentality, particularly in manufacturing industry.
Normal foreclosure rate was 4% GCC, (0.4% in Au), now 8% there, and .6% in au
No FIRB equivalent regulation for foreigners over there
Each state is different.
Over there institutions can clean your credit in 6 months if you know how to do it. Here it’s 3 years from bankruptcy + another 7 years before the record is cleared.

Structure
It’s crazy to buy anything under your name over there.
S corp not available to foreigners. C corp is similar to company here, but it’s a stronger entity, unless. To go after director, you have to prove fraud.
LLC can be like a company or act as a pass through company to pass the profit to its members, or you can pass the profit to the member being a Australian entity such as a piggy bank trust.
Trust law differs from state to state, and it’s more difficult. LLC is just as good for Australian.
Some state you pay both federal and state tax on your rental income. Some state has no state tax at all.
If you buy properties in a few different states, you can start with LLC, as you accumulate more, it’s worth set up a c-corp in state w/o state tax.
Navada and wyoming don’t have state tax.
You can set up LLC here, difficulty is setting up bank account for LLC.
Three is a process to set up bank account and structures.
When you have your personal bank account, it’s easier to have LLC bank account set up （can I do it offshore then?）. Then you have your EIN (entity identification no) for your LLC.
Once they get you identified, it’s easy to add another one.

Finance:
Hard money: a private lender who lends at very high rate. E.g. 16% for 6 months with balloon payment in the end. 1 day late, they take the property.
In the last 3 months, hard money dries up. You couldn’t get bank finance unless you are prime premium American, but the bank has eased. Private money prefers to lend 50-70% LVR to a foreigner, at around 6.5-8.5% （2% normal finance over there）.
A little bit of bank finance is coming back.
A lot of brokers will not touch a deal <$120k, so you group a number of properties together for financing, but it’s a slow process.
You are better taking the line of credit here and pay cash over there.
Quick plan D: taking over someone else’s mortgage

Team required:

Sec1031 for CGT roll over
It’s tough to have property managed over there. They are starting to have property management in some areas. That’s one of the biggest obstacle is to find good managing agent you can trust.

Renovation = rehab; You’ll be astounded how little it costs. One tradie will have a team of people working under him that’s lowly paid. Au price is sometimes 3-4 times higher.
Going to home Depot site (Bunnings equivalent), you can set up a Depo account once you have a credit rating. You can cost a whole project on their website. Dymphla had a whole kitchen done <$800 which would cost $8000.

Insurance
It’s similar to Australia. $300-$800.

Research
Without going there talking to people, you are going there blind.
When you target varing areas. You are never going to invest in ever state, if you are looking for uplifting area, you look for where the price really dropped. If you are buying for cashflow, it’s a completely different type of property.

Tax deeds and tax leans?
Council has the right to sell property if someone doesn’t pay their rate (property tax they call it there). Tax leans can be bid online over the internet. Selecting state is important. Some state has claw back period of 4 years. There is a guaranteed return on the tax lean.

Say $8000 tax lean, you get 18% yield + penalty and your $8000 at the end of 2 years. If they don’t pay, then you get the property at the end of 2 years. You might bid $10000 say and still get good return, but if you end up with the property, you can’t reno or do anything until the claw back period is over.
Missisipy is 4 years.
Don’t buy property with existing deed or leen which becomes your liability when you buy the property.

Status of market
The market has continue to fall through this year. We have just starting to see the market turn in some sector.
Financing market has just started to turn.
There will be a 2nd tier fall out in the commercial industry. It won’t affect the yield of the high cash flow residential property Dymphla is talking about. People still have to live somewhere. The vacancy rate in a lot of these places are very very low. The only thing it will do is the growth might be slow.

Caution about buying commercial at this time, maybe end of 2010.
The seminar

Feb 6-7
Novotel Sydney brighton beach, Brighton Le Sands 2216
Preforeclosure, foreclosure and post foreclosure propertyis
PT: not having to pay tax ever




To Dos:
1. Ring citi bank to apply for credit card.
2. set up an LLC
3. secure good management agent
4. to buy, check the property doesn’t need reno, doesn’t carry a deed or leen,
5. follow Dymphla’s system to get a credit rating in their system