The top twenty TV shows in America tell us a lot about where America’s at, and why there’s money to be made for clever Aussies… like me.
People often ask me why I’ve been taking such an interest in US property.
“It’s some tax dodge so you can claim trips to Disneyland, right Jon?”
That is one of the reasons. In fact there’s a lot of reasons, but one of the things that sums it up for me is this – the American TV ratings for 2015.
Now, what do you notice about this list?
To me it looks a lot like the Australian league table. Football comes in at number 2. Then there’s NCIS and a whole range of cop shows. Downton Abbey even makes a showing at number 20.
There’s even the familiar “reality” TV shows – Dancing with the Stars and The Voice.
But what’s missing here?
Yep. Reno TV. Where’s The Block? Where’s House Rules? Where’s Renovation Rescue or whatever incarnation we’re up to now?
(My Kitchen Rules is also missing, but that’s a topic for another time…)
Since about 2003 when Renovation Rescue came on to the scene (though you can probably trace the trend back to Backyard Blitz which launched in 2000), renovation-based television shows have been consistent performers on Australian television.
In many years they were the best performing shows of the year (not counting AFL finals etc.)
What does this say about us?
Well, as the well-worn saying goes, Australians love their properties. I’ve always been a bit sceptical about this saying. Who doesn’t love houses? But it does seem that Australians do have a unique relationship to property.
And perhaps more than anywhere in the world, Australians are tuned into the fact that their house is not just a home, but the most important and powerful asset they own.
The Australian public led the media on this one. Reno TV started out with the idea of “how do we make this property awesome?” But it quickly merged into, “How do we make this place awesome, AND increase its value.”
And this idea gave us The Block, where the capital gain is literally the way winner is decided.
All of this is absent in America.
Well, not totally. But property is certainly not the BBQ stopper it is here. And I’d venture to say that the Australian population is the most property savvy in the world.
This gives us an advantage.
And while there are no renovation shows in the top 20 in America, they do exist. But they have a slightly different flavour there.
For example, Income Property finds households with cashflow problems and shows them how they can build a granny flat or something to generate a little extra income.
Fixer Upper finds crapped-out houses and turns them into gems, helping to revitalise struggling neighbourhoods.
Flip or Flop follows a husband and wife team of ‘flippers’ who find distressed properties, buy them at a discount, and renovate for a profit.
“Flipping” has never taken off in Australia, and I think that speaks well of us. I always see flipping as an immature strategy. It’s like you get in there and renovate, the price goes up and you get all excited and sell.
If you’ve got a solid property, why not keep the rental income and use the equity to keep building your portfolio?
That’s the Australian way.
But this is the nature of American reno TV. It’s about flipping houses for profit, or escaping financial hardship.
It is not about ordinary people finding creative ways to improve the capital values of their homes.
And so to me, it just seems that Australia is further down the road with our relationship to property. We know that any growth we manufacture is not just about the “profit”. The real power is in the extra leverage it opens up.
And its this difference the creates the opportunities for Australian investors in America.
When I’m looking at properties in the US, I often feel I’m the only investor in the game. Maybe there’s a couple of owner-occupiers. Maybe – MAYBE – there’s a flipper, but they need different numbers to me anyway.
And so I’m finding I’m picking up deals where I’m thinking, there’s no way a property with these kinds of numbers would last more than a day on the market in Australia.
But sometimes I’m the only one making an offer.
Add to that some super-cheap buy in points, strong rental returns, and markets that are still emerging from the swamp of the GFC – still entering their upswing phase of the cycle – and you have some excellent opportunities.
My feeling is one day America will catch on. Average Americans will realise the wealth-creation power of property, and American TV will be swamped with The Block rip offs.
Til then, I’m going to enjoy the benefits of being ahead of the curve.
What do you think? Are Australians the most savvy property investors in the world?
Rectangle Square says
I disagree with this statement it is far too broad, if you consider that most investors in Australia wont own more than 2 properties and strategies are limited compared to US market.
US investors use many strategies that we would not use in Australia because we do not have the population and it would not work. I won’t mention them here because I don’t need more competition.
I am seeing some amazing opportunities in US at the moment, however its no different to anywhere in the world if you want to be successful it will come down to networking with the right people. Network with the wrong people and lack of homework could see many lose their shirts. Which is exactly what has happened to many investors.
Its a totally different beast in US today, when I was buying in 2011/12 for cash flow with 20%+ returns there were deals everywhere and it was just a matter of buying in the right neighbourhoods, fast forward and these properties have tripled and with the currency play today I yields are much higher.
Today we have a continued frenzy of buyers, multiple offers however a very tight market. The Hedge Funds are buying by the bucket load and rents are starting to increase. I can only see upside with US, labour force has been expanding for 8 years now.
Australia is ready to tank IMO, the writing in on the wall. As a developer I have offloaded most of my stock and continue to play in US market.
Happy investing everyone:)
Jules says
I’d love to pick your brains, Rectangle Square! I’m about to venture alone into the scary world of US property, starting at the very low end. I’ve been wanting to since 2009, but this is the first time I’ve been approved to borrow (how’s that for timing… the economy is about to tank globally due to over-indebtedness, and I finally get the opportunity to carry some debt. Hmmm. But if I can make it work, and pay for itself plus more, then hopefully it’ll be okay). Capital gain is not my expectation, now or for many years to come in any market, so cashflow is my goal.
Paul Needham says
Hi John
Would like to know if you have had any of the following challenges happen to you with your US properties
vacancies in any of your properties or issues with evicting tenants
tenants that don’t pay for a month and are allowed to walk away without paying back rent
Other costs = paying for cleaning/putting on a lockbox/changing locks/advertising/marketing/leasing fee/leasing registration the property
On going expenses = Insurances – general and building
Property taxes = paid twice a year
My experience of owning x3 US properties , bought through a very reputable company , after doing all the due diligence previous is nothing short of criminal
Any contact/advice would be appreciated
Thanks
Paul
Duffyfrog says
We have 6 properties in the US and have had tenants not pay rent for anything up to 6 months, then you finally get them out but you don’t get the back rent. When a property lies vacant for a couple of months you get lumbered with all the utility bills as well not to mention rehab costs for each property. Even with these things happening consistently over the past 5 years we have still managed to turn quite a good cash flow as well as having trips to the US on our US LLC’s income. We have found that while there are risks and dangers if you stick with it, a favourable result will come your way.
tezza says
I disagree that flipping is an immature strategy – it just doesn’t work well over here because of our high buy/sell costs (stamp duty, agents fees, legals, etc) – I don’t know what the situation in the US is but I am guessing these costs are lower. Cant see anything wrong with people buying run down houses, renovating and then selling for a profit and then turning around and doing it again if that gives them a better return than holding for rental but it is just really hard to do here with our costs.
Rob says
Hi Tezza,
You are on the money (pun intended). Each buy/sell cost is about $5k and makes it very worthwhile to do (and then to sell the finished product to overseas investors with a tenant in it!). A big reason that most USA people are not into it is that they cannot get a loan and that property is not considered as good an investment as stocks!
ron goddard says
hi jon..hmm all is well in ‘lotus land’. we still believe in the fairy god mother who sprinkles fairy dust around…while we INVEST in property. now to extend this to usa is rather nice. buuut…its a long from reality, i think. employment figures are fudged to glory, municipal councils are going belly up by the dozen …what else..oh heck doesn’t matter. americans are leaving the country by the million…why? ha ha they think it stinks thats why! oh well its your dough not mine. go for it. there is ‘talk’ of bankruptcy by autumn or even this summer. by whom? the usa government ……………………….and who is the chief conjurer? ms. yellan and who is the villain? why, its your ‘mate’ : trumpie. cheers, ron