Table of Contents:
I. INVESTING IN USA PROPERTIES
II. FEES AND TAXES
III. QUALITY AND CHOICE OF PROPERTIES
IV. SALES HISTORY
V. TENANT PLACEMENT AND PROPERTY MANAGEMENT
VI. HOME MAINTENANCE
VII. INVESTMENT POTENTIAL
VIII. BUYING PROCESS
I. INVESTING IN U.S.A PROPERTIES
1. USA Investment Properties, why now?
As is well known, the USA housing market drastically deflated from 2007 to 2010 and is just beginning to recover. Homes are presently available for sale at just 50-75% of their true (not 2006 peak) value, offering a great opportunity for cash investors. Rents have not decreased proportionate to the falling prices, creating the ideal scenario for Landlords seeking healthy cash flow: low purchase price plus high rent equals high cash returns.
2. How do I profit from this investment and what is the expected time period of return?
There are now five (5) ways to profit from these investment properties. The recommended hold time is 3 to 7 years. Resale assistance will be available when the investor is ready to liquidate their investment.
Below Market Prices – All properties are priced with instant equity, from 5 to 10%. As such, investors walk into a property with immediate capital growth.
Low Dollar-Increased Purchasing Power – The U.S. dollar is near the lowest point it has been at in a couple of years! This creates an immediate additional profit margin of 10-15% depending on the strength of your home currency!
Rental Income – All properties cash flow with net returns of 9 to 18%. Net yields are calculated with major expenses factored: Property Taxes, Property Insurance, Property Management Fees, and Home Owner’s Association Fees (Community Fees), if any.
Future Rise in Rental Rates – As the population in Atlanta and our other chosen investment areas continues to grow and mortgage financing remains restrictive to local home buyers, rental demand increases in a market where new homes are not being built (builders cannot compete with current market prices). As long as lending remains tight, rents will increase.
Ability to finance certain property investments – By achieving mortgage finance of up to 70% of your property purchase price for certain properties; mortgages over up to 30 years and from as little as 5.85% interest rates… you are able to utilise bank capital to increase your total property portfolio value and thus your return.
Capital Return – On the contrary, when financing does become readily available for home buyers, property values will spike, thereby creating a spike in property values that will drastically surpass any decrease in the rental market.
3. Why invest in Atlanta?
According to Fortune Magazine (April, 2011), Atlanta is the most affordable market in the U.S. with rents at 153% of the comparable mortgage payment on properties. This creates a unique opportunity for Landlords seeking high cash flows.
With a growing population of 5.5 million, Atlanta is the travel and business hub of the Southeast United States.
The specific area we are dealing with has a 3-month absorption rate, whereas other markets have a 13-month absorption rate, evidencing high demand and high sales activity relative to the supply of homes.
The southeast section of the U.S., if it were a country in and of itself, would be the 4th largest economy in the world. Job stability – Atlanta is ranked fifth in the country with the most Fortune 500 company headquarters, to include Home Depot, Delta Airlines, Coca Cola, CNN, AT&T, and many others. Atlanta is the home to the country’s busiest airport: Hartsfield International Airport.
For the quality of these properties, these yields are the best in the market. As an international investor you are also able to leverage your purchase with a 50% mortgage at 8,25% for 30 years!
4. Why invest in Texas?
Browse to this page for more detail: Texas: focus areas for investment
5. Can a foreign national legally buy real estate in the USA?
Yes. Monarch&Co and our partners specialise in serving foreign investors and are currently closing a large number of USA cash flow properties per month, with investors from Australia, Canada, Brazil, UK, the Middle East, Europe, Asia, Israel and now South Africa.
6. Can there be multiple buyers for each home?
Yes, the best way to do this is to form a multi-member LLC (Limited Liability Company) and purchase the property in the name of the LLC. Our attorneys can provide assistance and cost.
7. Do I pay tax on the cash flow income?
Yes. Investors are required to file a U.S. tax return annually. We have tax professionals that specialize in non-resident tax filings that can assist with this.
8. Will I have clean title to the property(s)?
All properties are delivered with clear title, free of any liens and encumbrances. A title exam is done by the closing attorney and title insurance is ordered as further protection from any future claims to title. The cost of the title exam and title insurance are inside the traditional closing costs described below.
II. FEES AND TAXES Back to Top
1. Are there any other fees incumbent upon the investor to pay besides the actual cost of the property and real estate related fees,?
There are no “extra” fees. Only the standard closing costs on the property which include lawyer’s fee, title search and title insurance, property recording fee and county tax which comes to a total of 1.5% to 2% of the purchase price.
2. Is there a purchase tax?
No. There are not additional taxes beyond the closing fees mentioned above.
3. What are the annual holding fees and costs?
Holding costs include the Property Management fee (6 to 8% of the collected rent); Annual Property Tax (approximately 1.5% of the purchase price); Property Insurance ($500 to $900 per year, depending on the age of the property); and sometimes Community Fees (HOA Fees, ranging from 0 to $1,500 per year). All fees are listed for each property on our price sheets.
Should you obtain a mortgage then this cost would also be included as a monthly/annual cost.
III. QUALITY AND CHOICE OF PROPERTIES Back to Top
1. What is the quality of the homes you are offering for sale?
Our properties are all newly built, within the last several years. The exception to this are our older single family homes, typically built 20 to 40 years ago. All properties are freshly renovated to be in tenant-ready condition. Additionally, all major systems and appliances are covered by a 1-year home warranty, purchased by the seller after closing.
2. How do I know what properties are available?
Per your request, we will send a list of all available properties and pricing. Prices range from $49,900 to $180,000. You can view such from our live property listing on this website.
For Texas properties, the properties are selling too quickly to load on the website. For this reason we request that you please view the example properties, decide if you are interested and if you are we will send through the very latest properties that are available for purchase.
3. Where in Atlanta and Dallas are your properties located?
All of our Atlanta properties (except 2 currently) are within a 15 to 20-minute drive to downtown Atlanta and the International Airport, predominately in neighbourhoods of College Park, Lithonia, Decatur, Riverdale, and Jonesboro.
Our Dallas properties are similarly situated in select good suburbs that feature attractive draw factors.
4. How do you find your properties?
Our acquisition team has relationships with banks and REO listing agents for unparalleled access to ideal rental properties. Strict acquisition guidelines are followed to ensure the purchase of properties that offer high cash returns with minimal risk. Properties in high risk areas are avoided (high crime, inconvenient locations, etc.).
IV. SALES RECORD Back to Top
1. What is your present real estate record with rentals of the type of homes you are offering?
Our current property managers have just under 2,000 properties under management, all within similar geographic areas as our homes. About 180 of these properties are ours and our investors. All of our properties (sold and unsold) are tenanted with the exception of a few that have been recently acquired or are in the renovation process. It typically takes 2 to 6 weeks to place a quality tenant.
V. TENANT PLACEMENT AND PROPERTY MANAGEMENT Back to Top
1. What type of client will be renting the homes?
Working class families with a solid, steady income and good rental history. The typical household income for our tenants ranges from $30k to $50k annually, with monthly rents ranging from $775 to $1,000 monthly (staying at or below 40% of gross household income). 90% of our properties are rented to traditional tenants, whereas 10% are rented to Section 8 tenants (government subsidized rents).
2. Is there an initial rental guarantee and what happens when the client moves out?
In most cases each property comes with a 1-year rental guarantee including free tenant placement. Most of our properties are purchased with existing tenants and a new 12-month lease in place. Upon expiration of the rental guarantee, the property manager will continue managing the property and collecting rents on the investor’s behalf. We are our property manager’s #1 customer and they will continually be motivated to earn our business by doing a good job for our investors.
3. Have you had to evict any of the tenants you leased to?
Our property management team attempts in every situation to seek mediation by which the tennant can pay their rent in full. While evictions are not typical in our properties the state of Georgia and Texas do allow for a swift and immediate adjudication of non paying tenants.
4. How can an investor be kept up-to-date regarding the management of his property?
We always encourage buyers to talk with the property management company. There is a possibility of receiving online statements that can be accessed by the client.
5. When do I receive my rents?
Rents are collected between the 1st and 5th day of each month. Rents (less the management fee) are distributed from the 12th to the 15th of each month. Investors will receive their first rent check within 30 days of closing on their property.
VI. HOME MAINTANENCE Back to Top
1. Is there any type of home warranty?
Yes, there is. Every property comes with a one-year limited home warranty which covers appliances and major systems, including:
2. Can you guarantee that the homes will be well-maintained?
Considering the types of renters we attract, our properties are better maintained than others. The main responsibility for maintenance is in the hands of the property manager and we work with the best managers in the field. No guarantees beyond that. Of course, our property managers (like anyone in US real estate today) are in a competitive market. Everyone is trying to find landlord clients, so these property managers are continually looking to please us so we continue sending them new clients and keep the existing clients working with them.
VII. INVESTMENT POTENTIAL Back to Top
1. How long do you suggest an investor holds on to the property to achieve maximum capital gains?
We suggest holding on to the property for a minimum of 3 to 7 years for maximum appreciation potential.
2. What is the outlook for rental rates in the near future?
Rents are expected to remain constant and/or climb through 2015 as lending restrictions prevent families from buying. New housing (inventory) will remain relatively constant. Population growth and “in-migration” (relocation to the Atlanta market from within the U.S.) continue to be among the strongest in the country, bolstering demand.
VIII. BUYING PROCESS Back to Top
1. Identify desired property and complete the CONTRACT INFORMATION FORM. This form outlines remaining steps in further detail.
2. Sign and return a Purchase Agreement along with a $2,500 deposit (held in escrow until closing) to formally pull the property off the market. Closing will be scheduled two weeks later.
3. Should you wish to raise a 50% mortgage as an international buyer for your Atlanta property purchase then you would now need to apply for the finance through our service providers at this point.
4. Home inspections (if applicable) and Property Insurance will be ordered prior to closing.
5. Closing – Closing documents will be emailed to the Buyer. Transfer of the property will be processed upon receipt of the signed closing documents (no notary required) and remaining purchase funds.
6. Property Management – shortly after closing, your property manager will be in touch for a seamless transition.
7. Property Deed – Your deed will be mailed to you after the county records it in the public records. This typically takes 60 to 90 days.
Should you be purchasing a property in Texas and want the up to 70% mortgage finance that we can offer, you would need to firstly get your LLC in place as well as the finance approval and then you would follow the above points 1 – 7. For more detail on this please contact us.