US Investment Property Workshop

[SeoulFire]

Greetings,

I posted in the CP Power Ring (as I am associated with the group that is coming) in this regards but as the workshop is rapidly approaching I wanted to get this out to a wider audience.

http://forum.calgarypuck.com/showthread.php?t=118438

In a nutshell, the team I invest and work with will be giving a workshop to current investors and a rundown of the markets in SW Florida. There is limited space so registration is required. This is a free event (when similar usually cost upwards of $500) with no hidden fees. The host of the event is Spencer Raffel.

PM me for specific details.

[albertGQ]

"I don't need to go to any session. I'm in! Where do I send the check? "

Fotze

[SeoulFire]

Well thanks for the bump I guess.

[normtwofinger]

So what's the catch. How many vitamins or emeralds I have to buy? When do I get to be captain of an airship? Sign me up.

[SeoulFire]

No catch - you buy and rent out properties and make money. They are doing a development in Costa Rica as well.

Not understanding the way the market is down there does not make it less real.

[onetwo_threefour]

Aren't non-resident property taxes crazy expensive in Florida? I'm curious (a little) but have heard stuff that would make me worry.

[normtwofinger]

Originally Posted by SeoulFire

No catch - you buy and rent out properties and make money. They are doing a development in Costa Rica as well.

Not understanding the way the market is down there does not make it less real.

I don't follow.

[SeoulFire]

Originally Posted by onetwo_threefour

Aren't non-resident property taxes crazy expensive in Florida? I'm curious (a little) but have heard stuff that would make me worry.

There are ways to structure the holdings to reduce the tax burden and limit personal liability.

I also think that worrying is pretty natural for an endeavor such as this. As with any investment there is some risk but you can take steps to minimize it - which are covered during the workshop.

Other types of risks are quite low in that it is likely very close to the bottom of the market. There is an enormous number of properties are selling between $33 and $75 per sq ft which is well below an approximate replacement cost of $100 per sq ft. The comp value is also very good due to the nature in which the properties are acquired (via direct connections with servicing agents) - about 35% below mls value. Finally, the monthly rents are well over 1% of the total value of the house - a key indicator in that it will generate positive cash flow. These three indicators saying "go" at the same time is quite rare.

[Derek Sutton]

Originally Posted by SeoulFire

There are ways to structure the holdings to reduce the tax burden and limit personal liability.

I think that is a yes.

[SeoulFire]

Originally Posted by onetwo_threefour

Aren't non-resident property taxes crazy expensive in Florida? I'm curious (a little) but have heard stuff that would make me worry.

I answered a different question that was not asked! Sorry.

I will preface this by saying I am not a tax guy - this is just how I understand it.

Non-residents are not eligible for the Homestead Exemption (not just Canadians but all owners not residents of Florida) which brings down the tax bill substantially. Non-residents are not taxed more per se but as they are not eligible for up to a $50k exemption they will end up paying a higher rate.

Once again I am not a tax guy.

[bizaro86]

Originally Posted by Derek Sutton

I think that is a yes.

Yes, it is.

Non residents are ineligible for the 50k homestead exemption. So on a 100k condo a permanent resident pays tax on a 50k assessed value and a snowbird/investor pays tax on a 100k assessed value.

Also, mill rates are higher because many homeowners are paying tax on lower values. (They still raise the same amount of tax in $, but a larger percentage of it comes from non-residents)

Also, there's a 3% assessment increase cap for residents, whereas non-resident assessment increases are capped at either 10% or not at in. (I believe this varies by county). This also increases the percentage of total taxes paid by non-residents, as some long time homeowners are paying taxes on very low old assessments.

This increasing assessment will be even a bigger deal if prices increase in the future (and why would you buy if you didn't think that would happen). That's because homeowners will have their assessments permanently pegged to "great crash of 2008" levels +3per cent, whereas properties owned by investors will have their assessments bounce back.

Anyway, that's a long way of saying, yes, property taxes are higher for non resident investors than they are for homeowners. (That's not to say it couldn't be a good investment, just consider it, so not trying to thread cap here)


Edited to add: Don't feel too bad about a bit of a thread cap, since this is in off-topic (so fair game for discussion, imo) not power ring.

[SeoulFire]

Don't feel bad about it at all - it is an investment decision and the tax rates are operating costs that will affect the bottom line. It might even bring you down to 14% cash flow from 15% not including appreciation

It is still quite relative as they may be more than Arizona or Nevada but are still much lower than here (unless you want gulf access then you pay through the nose for that).

Edit: Even if it was in Power Ring the points you brought up are valid - nobody is trying to hide any of the risks/costs associated with investing abroad. With that said, comments from the resident smart ass that have no validity have no place in either forum (or those trying for godknowswhatreason to emulate him).

[bizaro86]

Originally Posted by SeoulFire

Don't feel bad about it at all - it is an investment decision and the tax rates are operating costs that will affect the bottom line. It might even bring you down to 14% cash flow from 15% not including appreciation

It is still quite relative as they may be more than Arizona or Nevada but are still much lower than here (unless you want gulf access then you pay through the nose for that).

Edit: Even if it was in Power Ring the points you brought up are valid - nobody is trying to hide any of the risks/costs associated with investing abroad. With that said, comments from the resident smart ass that have no validity have no place in either forum (or those trying for godknowswhatreason to emulate him).

That's all definitely fair enough, there aren't any numbers here (for obvious securities law reasons) so I can't determine whether I'd consider it a good investment or not. I'm more of a "Do it yourself" kind of guy, so I doubt it.

[SeoulFire]

Originally Posted by bizaro86

That's all definitely fair enough, there aren't any numbers here (for obvious securities law reasons) so I can't determine whether I'd consider it a good investment or not. I'm more of a "Do it yourself" kind of guy, so I doubt it.

There are a couple of sample pro-formas in the other thread and I can get countless more if needed. 14-15% is fairly standard on a cash purchase and that can go much higher on a cash on cash return with financing. Proformas, of course, are estimates and not promises.

Or if you choose not to invest directly you can be a money lender secured by the property and get 12%.

[afc wimbledon]

if you wanted to invest in some rental property why woulddn't you invest in, say Calgary, where you can keep an eye on it?

[SeoulFire]

Originally Posted by afc wimbledon

if you wanted to invest in some rental property why woulddn't you invest in, say Calgary, where you can keep an eye on it?

Price. Calgary does not fit any of the fairly standard three criteria for a good rental property investment - unless you have a boatload of cash and don't mind a small ROI. The only one you might hit on is comp value if you get a nice foreclosure. However, if this were the case I would probably just flip it anyways. The key one for me is the 1% rule - Calgary does not even come close.

Property management fees are simply a cost of doing business.

[bizaro86]

Originally Posted by SeoulFire

There are a couple of sample pro-formas in the other thread and I can get countless more if needed. 14-15% is fairly standard on a cash purchase and that can go much higher on a cash on cash return with financing. Proformas, of course, are estimates and not promises.

Or if you choose not to invest directly you can be a money lender secured by the property and get 12%.

Oh ok, I haven't looked at the other thread. I assumed you couldn't advertise publicly because you weren't registered to sell securities.

[SeoulFire]

Originally Posted by bizaro86

Oh ok, I haven't looked at the other thread. I assumed you couldn't advertise publicly because you weren't registered to sell securities.

Well I was registered to sell securities as an IA way back when here in Calgary but that is another story! I pretty much won't touch the stock market now...

Also, the proformas are simply best estimates based on readily available information on how the rental will perform. It is not much different than if you were buying a business and took a look at its' operating income/expenses and made the call from there.

[blankall]

My understanding as the reason for the depressed markets in Florida, Arizona, California, and Las Vegas, is that there are large areas that are totally vacant. How can you guarantee any kind of rental income?

[bizaro86]

Originally Posted by SeoulFire

Well I was registered to sell securities as an IA way back when here in Calgary but that is another story! I pretty much won't touch the stock market now...

Also, the proformas are simply best estimates based on readily available information on how the rental will perform. It is not much different than if you were buying a business and took a look at its' operating income/expenses and made the call from there.

Fair enough, I'm sure you have legal advice saying what you're doing is in compliance with securities law. My impression was that public offerings of securities like:

1- Lending to Building Wealth Club
When we find a deal we will close on the property and at closing
there will be a loan placed on the property for the amount invested.
At 12% APR - This will be over a 30 year period and depending on
what the Investor- Lender wants there will be a 3 - 5 - 10 - balloon.
Of course Investors needs to form an LLC for the Lending Company.
Which we will help with.

required a prospectus, and either a public registration or they could be sold by an exempt market dealer.

Edited: For those interested, a prospectus is required for the sale of any security, unless the trade meets one of the requirements under NI 45-106 for exemption. http://www.albertasecurities.com/sec...0PUBLISHED.pdf They are presumably operating under one or more of these exemptions.