Reed Goossens US property

How to get big investment returns with US property

Reed Goossens went from studying engineering in Queensland to running an investment portfolio of 1000 properties across the US. His incredible career path, which he shared with Bushy Martin on the the Get Invested podcast, had an equally incredible beginning; a Spanish love story and a job on a Russian billionaire’s yacht.

After finishing university and working as an engineer in Queensland, Reed got itchy feet, and moved to London in 2008 where he worked as a structural engineer on the Olympic stadium.

“I had a fantastic year living in London,” Reed said.

“And then … everything went to hell over there. I moved to the south of France (and) spent a good 12 months working for Russian billionaires on their super yachts. Backpacking around, I went to the running of the bulls and then subsequently went to San Sebastian for a couple of days to recover afterwards, and stumbled across this gal and her friends. She turned into my girlfriend, now my wife.”

Reed took his new American girlfriend back to Australia, but they soon realised that a life spent in a cubical as a small cog in a large organisation wasn’t for them.

“I really felt like I was a star athlete, sitting on the sideline, just watching my life go by. And I said, I’ve got to make a change.”

Reed quit his highly paid engineering job and he and Erica packed their bags and moved to New York City. Reed started going to real estate networking events and within six months had purchased his first triplex in upstate New York, for $38,000.

After another six months he bought a second unit, which soon grew to five. Reed carried out low-cost cosmetic renovations on the properties to add value, then rented the units out.

After flipping two more properties in Philadelphia, Reed thought he was doing pretty well, until he caught up with an old Canadian friend he’d studied with in Queensland, who’d just closed on a 70-unit property in Canada.

“And he went and explained about (investing with) other people’s money … essentially, he was able to pull some friends and family money together … The banks in North America look at commercial property differently to how they look at it in Australia. And so they underwrite the property more, and he was able to muster up the down payment. I just thought that was bloody brilliant.

“It really sort of lit the fire under my belly, because what he was doing was the same thing as what I was doing on the smaller stuff. He was going into every single unit, putting in five or six thousand bucks, and a lick of new paint, some new appliances, new flooring. And then charging $100, $150 more (in rent per month).”

Reed knew this is what he wanted to do, but didn’t quite KnowHow to get there. So he went out and got himself a mentor who had the experience he lacked.

“I was able to ride on his coattails and use his experience to raise a small amount of money from my friends and family to get involved in his deals early on.

Now, Reed and his business partner control about $70 million worth of syndicated multi-family real estate in the United States. Reed raises capital from investors, purchases a large multi-family property, which is a garden-style apartment complex with multi-story buildings and shared spaces, and fills those apartments with tenants. He offers his investors strong returns, and a plan to improve the property and sell it in five to seven years, doubling the investors’ money. According to Reed, the sweet spot in the US is in tier two markets – cities in states like Texas and Florida, where there are plenty of employers and plenty of demand for housing, but property is more affordable to invest in.

Reed explains that under his model, his company raises money from investors on the basis that they receive a preferred return, usually six or seven per cent, which is an agreed percentage of return on their investment. Reed’s company doesn’t receive anything until the property is delivering that preferred return, then after that threshold is reached, Reed and his business partner receive 30 per cent of everything above that preferred return, which is a huge incentive for him to perform on behalf of the investors in the syndicate.

Bushy points out in the interview that someone in Australia who has about $100,000 and has funds sitting in cash and shares might be getting three to four per cent returns, or in property they might be getting five per cent, whereas Reed’s model offers seven per cent, and the doubling of the capital investment in around six years – much better than what’s on offer in Australia.

“When I first moved to the United States, I realised this is just a different type of level of investing compared to what we’re used to in Australia,” says Reed. “And what I tell a lot of American investors is that you’re bloody lucky that you’ve got this in your backyard, and if you are sitting on the fence, don’t, because I’ve come from places like Australia.”

The size of Reed’s business brings ongoing benefits for his investors.

“We now have close to 1000 units in our portfolio, instead of going directly to the equivalent of Bunnings in Australia, you know, the Home Depot here in America, we’re going direct to China and getting all our flooring and lighting fixtures and plumbing fixtures, which means that we can do our unit turns for a lot cheaper than the average person.

“Through that scale we’ve now created other systems and businesses within the business. It’s a stable investment opportunity because we can control more of the pieces of the supply chain.”

In addition to financial and career success, Reed finds what he does extremely rewarding.

“I love collaborating … providing education and value to other people because it really, at the end of the day, helps others to take the blinders off and see that there’s other things out there in the world. And as the world continues to change, we, as entrepreneurs and investors, and people who are wanting to have more freedom in their life, you need to change with it. So you need to also be humble enough to continue learning. I’m never one to say that I’ve achieved it, I’ve done it, and put up my heels and off I go. If I stop learning, I stop growing. So for me, it’s about learning from the best and collaborating as much as I possibly can, that’s really what it boils down to.

“You’re here to make the most out of your life and if you’re not happy with what you’re doing, you’re the only person who can change it. No one’s going to walk into your living room and give you your dreams or your goals. So get off your ass and make the most of it, because we only live once!”

Listen to the full interview here

Want to learn more about Reed’s investment opportunities? Want to Know How to build your ideal lifestyle through property? We can help. Talk to the team at KnowHow, now.

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