Steve and Sue Sterry used the profits they made from selling their one UK buy to let investment to start their US property investment portfolio and now own 11 properties in the US.
So far, they have bought three houses for cash in Detroit and have taken out a loan to buy eight duplexes (16 units in total) in Rochester, New York. We asked the Sterry’s about their experience.
How did you get into investing in the US buy to let market?
We kept getting mailshots about US high net yield buy to let investments and started doing some research and realised we could make our money work harder for us in the US than in the UK.
We were sceptical at first
At first, we were quite sceptical; and were unsure about some of the companies selling US properties. I guess the initial fear is that if something looks too good to be true, it probably is, so we were incredibly cautious. It is a big deal buying property thousands of miles from home.
Darren Brown of PCG Invest was the only person that would meet us in face-to-face, all the other companies were phone and internet only, and that immediately put up red flags. We really liked how refreshingly honest he was about how it all worked, he did not try to hide the risks, because of course there is a risk with anything.
After meeting Darren we went out of way to do the due diligence on both PCG Invest, the areas we were interested in investing in and the actual properties we were interested in buying.
We first bought three houses for cash – the purchases went through incredibly quickly
We bought three houses for cash in one go, in Detroit. The whole process went extremely smoothly and the purchases went through incredibly quickly, we owned them in four weeks. This is unheard of in the UK.
Of course, when you buy in America you have not had the advantage of looking around them unless you fly out there but you can go on Google Earth and check the houses are actually there and PCG Invest provide evidence that properties exist too and can even arrange video walk throughs. Also, PCG went through the whole buying process and they helped us with all the legal preparation. We would never have known what we had to do or how to do it all without the team at PCG Invest.
We bought eight more properties (16 units) with a finance package and are now earning 34% net yield
In early summer 2015 we decided to invest in more property, Darren told us about the Rochester finance package deal that would enable us to invest in eight duplex properties with an investment of only $144,000.00, 16 units in total, which worked out to be 30% in a deal worth $480,000.00.
Taking out a loan in the US was a real eye-opener; going through all the process of setting up the LLCs, which included opening a bank account as a foreigner and dealing with all the complicated paperwork. Darren and his excellent team guided us through every step of the way. Again, we would not have had a clue what to do without them. Setting up a bank account as an alien is a complex process, and altogether we had over 300 pages of documents to go through before we could complete on the purchases. It took time but it went smoothly.
A partnership with the finance company – security and reassurance
The great thing about taking out a finance package is that you have a lot of security because in effect you are in partnership with a finance company. Firstly, the company does its own due diligence on the properties and they will not lend money on properties that are being sold at above market value.
Then the buildings were surveyed by an independent company to ensure they were in good condition, the finance company also made sure they found out what the properties were worth and what they were on the market for in comparison to the rest of the street. They also found out what other properties are getting in rent on the street so we could compare prices. It was comforting that they were so thorough.
Safe hands on both sides of the Atlantic
Our advice to anyone is to only work with people you can really trust. There were times when we thought we would just walk away, there was too much involved and if it was not for the back-up we got from PCG Invest we would not have done it. The company we deal with in the US is very responsive as well, so we feel like we are in safe hands on both sides of the Atlantic.
A high net yield, low maintenance investment
Now everything is in place there really is not much to do, just a few hours a week in administration or transferring money and at the end of the day you have a bricks and mortar investment that is not only bringing you a tremendous returns from the rental income but also good capital growth. If the money was in the building society here it would be making 0.3%, if we were lucky, and a UK buy to let would bring in maximum 3%, compared to 34% on the Rochester properties and a high teens return on the Detroit ones.