The United States

I am heading off to the United States on Wednesday. I will working with a group to help them establish a property investment and management division.
The services will be aimed at Americans, however it will enable me to help other Australians to invest there by at least establishing services on the ground that will assist them. So many Australians who are buying in America seem to do so by buying blindly without doing any research.

I will try and post my experiences while I am over their.

Have a great trip Nigel and tell us your thoughts.

I agree that many Australians have bought US real estate using the same criteria as they do for buying local property and it doesn't work that way.

I know a few who have really regretted their decisions.

Pass on some tips while you are over there, but before you go, could you please explain why you thing we should consider buying in the USA?

Buying in the United States

Hi Michael

Thank you for your question and congradulations on your new book.

I am a researcher at heart. Some colleges of mine had started to look into investing in the United States. They had also carried out extensive research and had travelled there on a number of occasions. After a number of meetings with them I first travelled to Texas last year.

My view is that when you purchase stand alone houses in the United States there are a number of problems. Firstly you will only be able to borrow around 70% which means that you need to fund either 30% through cash or a line of credit. Secondly even in Texas where state taxes are low property taxes are quite high. As an example if you buy a property for around $100,000 the property taxes may be as high as $3000-$4000 per year. Nearly 50% of that figure is for a school levy which is how they much much of their public schools.

The good news is that by forming a small group you can acquire apartment buildings. We are only buying buildings that are established and offer good returns. Because these are deemed to be good quality commercial investment the banks will lend up to 80% of the purchase price. We structure these deals so that whether we use cash or a line of credit the returns are great and we each have an ownership in the complex.
The other thing is forclosures. In the States if a house is sold by the State then you may get a 20-40% discount on the normal retail value. However you really need to kow what you are doing. Doing the research here is the key. You also need someone on the ground.

The company that is bringing me over, will establish a property management and an investment division. We will promote Texas property in the United States, aimed at states like California. Here stand alone house work well, because the Americans are already in the US Tax system. However I am confident that there will be many opportunities for Australians in invest there safely.

I am not suprised that there are people who regret buying there. Unfortunatley there are people who have been promoting places like Buffalo who seem to be happy taking money fropm people without telling them about the potential risks.This areas are cheap, you can buy properties for $40,000 but you will need to pay cash because most people will not lend on these deals. Property management can be a nightmare. Anyone wanting further details on finance in the United States should contact Alistair Perry on 0407787313

In conclusion yes there are problems but overall parts of the United States are a little like investing in New Zealand 3 years ago, there are great opportunities but you must either travel there and throughly research the market or get involved with ethical people who are also prepared to invest their own money over there.

*Bump*

Thread # 1.

I posted some statistics in the Economics forum, from the New York Times, which indicates the US market may have reached something of a tipping point.

The New York Times reported this week that the overall US median house price declined 1.7% in the 12 months to August, the first such decline in 11 years.

Stock of property for sale also continued to rise. Sales volume decreased 4.1% from June to July and 0.5% from July to August. The backlog of sales, at an estimated 7.5 months, is now the largest since April 1993.

In the Northeast and Midwest, sales rose while prices fell. On the West Coast, sellers were more stubborn. Prices actually rose 0.3%, but sales fell 22.3%.

Interesting statistics! Full story at http://www.nytimes.com/2006/09/26/re...te/26econ.html (username required).

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- Dave99