Presentation

Purchasing US Property

Disclaimer

To date, we have purchased two properties (sfr’s) in the USA.

We undertook extensive research prior to purchasing and are happy to share our sources with you however you do need to do your own due diligence especially verification from a variety of reliable and reputable sources.

We do not accept any responsibility or liability for the information contained in this presentation.

The research conducted was for our own investment purposes.

Presentation Outline

Why the US Due Diligence Preliminary Research Why Texas GPD Texas Property

Tour Tips & Traps.

Why the US?

In 2008, local banks would not lend to us as our DSR (Debt Servicing Ratio) was not satisfactory enough,

ie. asset rich, income poor ??? Needed more cash flow Attended the 2008 Brisbane Property Investment

Expo to find out about “positive cash flow property” Purchased several Margaret Lomas books on the

subject. Also noticed one of the stands promoting “buying

positive cash flow property in the US” Prices looked too good to be true!!

12300 Brookglade Cir., Houston

$74,000 USD 3 Bed, 2.1 bath

Houston Property Searches

Newspaper - Houston Chronicle www.chron.com Real Estate Agent Listings www.har.com (Houston) www.realtor.com Property comparisons (values, location –

cul de sac, easy access to main roads) www.realquest.com

Preliminary Research

Books – US related: Mortgage-Free For Life: Secrets Banks & Lenders Don’t Want You to Know! Richard Weathington & Beth M. Ley (BL Publications, USA) 2007

Getting the terminology right before doing internet search

Internet – which US states Check out: www.fhfa.gov (federal housing) Look for state HPI (housing price index) summary

Investing Differences Australia LOC/Interest Only 25-30 years Everything All locations Solicitors Company + family

trust Rates

USA P & I 15 years Above $200K Local area Title Co’s LLC (foreign

nationals) Municipal taxes

Finance Length Brokers Banks Legals Asset

Structure Taxes

US Housing Price Index

Source: www.fhfa.gov

Source: www.cyberhomes.com

Clear

Red

Why Texas?

Employment Oil Medical research Military NASA

2 of top 10 cities in US (Dallas & Houston) 2nd largest state in US (population & land size) Northern migration Stable house prices

Our Focus

Property Type: sfr’s (single family residences)

Strategy: Start off small, get foot in door 1 positive cash flow property

Establish strategic relationships Banks Property managers Title Companies Agents, developers, builders

Asset Protection

US LLC Foreign Nationals can set up LLC’s. IRS taxes at local rates Some US banks won’t lend to LLC’s for property Able to set up LLC online

US bank accounts Does require some local assistance LLC is the applicant name EIN is the ITIN.

US LLC Formation - SmallBiz

Property Broker

Finding a potential property easy part Getting:

finance (reasonable interest rate & terms) conveyancer (title company) property manager (reputable)

thought could be much more difficult Searched for an Australian based broker

specialising in US property who could offer this:

Global Property Deals Westan Johnson & Frank Stace.

Global Property Deals

Preliminary discussions satisfactory US market knowledge Open to questions Conduct regular investor tours to the

US Long term relationship development. www.globalpropertydeals.com

Dallas

Tour start point Meet fellow tour members/investors Overview of tour

Sherman

Presentations Economic Development Title Transfers Property Management Local Investments.

Austin

Night Stop-over General Overview

San Antonio

Presentations: Foreclosures Tax & Accounting Practices Investment Structures Investment Opportunities

City Tour.

Houston

Presentations: Foreclosures Investment Opportunities

GPD Projects Tour US Bank Account Set-up.

GPD Property For Sale

120 Country View Circuit, Pottsboro

List Price: $114,000 USD

Due Diligence Online property appraisals www.realquest.com www.eppraisal.com (*) www.realestate.com www.realestate.aol.com (*) www.coldwellbanker.com County tax office www.viewshermanhomes.com

Sherman Property Manager

Website: www.nor-texhomes.com

Property Management - Sherman

5-K Property Management Full Service

Leasing Agent Rental Manager

Fees New Tenants: 45% of 1st month’s rent Management Fee: 9.5% of monthly

rental

Property Taxes

Property taxes will vary from locality to locality however they comprise a series of separate taxes:

City tax, County tax, School tax, College tax, Energy Service tax and Hospital tax.

Usually this equates to about 3% of property’s rateable value.

Some areas also have Municipal (MUD) or Association taxes as well.

Tax Assessments

Entity Codes

GRA (Grayson County) JRC (Grayson College) CSH (Sherman City) SSH (Sherman School)

Weighing Up The Deal!!

What’s involved in weighing up the Deal? Down payment (deposit) 20% (foreign nationals) LLC setup $800 USD Title Insurance $500 USD Attorney/Title Office Fees $850 USD Court Filing Fees $64 USD Taxes 3% of property value Property Management 9.5% of gross rent Insurance 1.3% of property value Brokers Fee (GPD) $2,500 USD Rental Income $700 USD per month.

1313 East Lamar St, Sherman

So how would it stack up? (first 12 months) $56,500 Sale Price (Final) + $2,500 GPD Fee + $1,350 Legals + $1,306 Taxes (County) + $702 Insurance (Hazard) + $798 Property Management ----------------------------------------------- $63,156 Total

1313 East Lamar St, Sherman

$8,400 USD Rent ($700 USD per month)

Gross return This equates to: 13.3% ($8,400/$63,156 x 100%)

Net return $4,872 Loan repayment ($406 per month) $3,528 Net return

This equates to: 5.59% ($3,528/$63,156 x 100%)

Higher Returns - Foreclosures

Website: www.myusaproperty.com.au

US Interest Rates

Bank Finance (May 2009) 30% (foreign nationals) 6.75% fixed for 3 years adjusting to wsjp

+ 1% each 3 year period thereafter with an interest rate floor of 6.75%

Vendor Finance (April 2009) 20% (foreign nationals) 7% (wsjp + 3%) fixed for a 15 year term.

US Bank Home Loans

New Homes Arrange with local banks in area only Direct approach (internet search) P&I (usual finance structure) Line of Credit (HELOC) - home occupiers

only Existing Homes Alternate Finance

Vendor finance quite popular.

US Bank Home Loans

Funds Transfers

Transferring funds (ie. deposits) Use OzForex www.ozforex.com.au Division of Macquarie Bank Appear to offer the best

exchange rates and lowest fees.

GPD USA Investors Tour

2010 - (Sun Sept 19 - Sat Sept 25) 5 Cities - Texas - 6 nights Dallas, Sherman, Austin, San Antonio,

Houston

Further Information

Go to: http://www.paragon-marketing.org To download:

Presentation powerpoint slides Texas Economic Outlook Sherman Overview US LLC information.

Thank You

Any Questions!