2. The housing crisis has left the US property market in
turmoil with dirt cheap prices on foreclosed homes all
over the country, opening the door to foreign
investors. Aussies, who are used to one of the most
expensive real estate markets in the world, are
flocking to the US market at record numbers. The
most common strategy for Australian investors is
purchasing distressed properties through some kind of
short sale deal from the bank. Many are enjoying
returns from 10% to 15%!
3. Sounds easy, right? Wrong! The truth is that
investing in real estate across the globe is
actually very complicated.
These are the top questions that Lachlan
McPherson, Chief Investment Officer at US
Invest has been asked.
Before you make the jump into the US real estate
market get the answers to these important
questions.
4. 1. How do I know if it's a fair price?
Understanding the market: If you are new to
the US property market, you may not realise,
its not as easy as it seems on the surface! Just
because a house is selling at $30k, it may not
be a bargain. Home prices are determined
according to the time it takes the property to
sell relative to its value. A house selling at
$30k, because it is in a community with low
demand, may actually only be worth 20k.
5. 2. How do I find the right property? Research:
So once you understand the market, next is
research. This requires access to council
information, planning and development,
economics information, past trends and
affordability matrices. Really, there is so
much research to be done that most don't
have access to this sort of info, or the time
and experience to conduct a thorough
analysis. Here I recommend getting
professional help or at least getting access to
reliable market information. Just typing
addresses into a search engine is not enough.
6. 3. What are the tax implications? Understanding
Tax: Tax is a big one. No one wants to pay
too much tax. But, it is literally impossible
for the average person to learn a foreign
state's tax codes in a short period of time. It's
essential you have the right tax advice from a
US professional and that can be expensive. An
average accountant in the US charges
anywhere from $100 to $200 dollars per hour.
If you can find an alternative way to get tax
advice, such as a property management
company, it might save you some money.
7. 4. What is HOA? Be Careful of HOA: This stands
for Home Owner Association. Often, condos
look like a wonderful investment. HOA fees
incorporate the costs of maintaining a
property. If it has facilities such as a pool or
gardens, this can be expensive and eats into
the income you see at the end of the day
from your investment. Many sharp sales
people out there don't properly show HOA
costs in yield calculations.
8. 5. What types of insurance do I need? There are
such a broad range of insurers out there, you
really need on the ground assistance to ensure
firstly that you're not getting ripped off (by a
broker or otherwise), also that your insurance
covers what you need. Fire, theft, disaster
etc. are just some of the risks that need to be
covered. Foreign investors tend to invest in
coastal markets such as Florida, which has a
big hurricane season. Flooding insurance in
these areas is a must!
9. 6. How do I protect myself from a legal
standpoint? There are 50 states and 50 different
markets and laws to with them. The US is a very
litigious nation and so good legal council is
crucial to your success as a foreign investor.
The best way to go about this is setting up an
L.L.C, which stands for "Limited Liability
Company." You can do this through an attorney
and even some property management
companies
10. 7. How do I get reliable tenants?
Unfortunately, there is no easy answer to
this question, except that you have to put
yourself in the best possible situation.
Rental demand in the US is booming across
the board but reliability depends on the
community your property is in. Areas with
high unemployment and crime rates
generally mean bad tenants. Ideally, you
want to own a property in a nice
community with a family renting. Families
tend to stay in the same home for a long
period of time.
11. Thanks for reading! My resources:
http://www.landcentury.com/
http://ezinearticles.com/?7-Questions-to-Ask-Before-Buying-US-
Real-Estate&id=7110525
