According to some reports as much as $650 million may have been spent in the United States over the last 18 months in property. Now the real question should be how much of that $650 Million has been spent well. In my view many people have brought into the United States because of cheap prices. I hear every day of people buying properties for $30,000 to $50,000. The problem is that many of these properties are in slum areas. If you saw some of these locations you would not want to get out of your car let alone buy a property there.
People often buy because of the returns. It not uncommon to have returns of 13-15% however in many cases the figures quoted are gross not net returns. By the time you take away property management, Property Taxes and maintenance the returns can fall well below 10%. So at the end of the day you are paying cash which may be costing you 6.5% or more and getting a return as low as 8% with little chance of solid capital growth. To me this is not a great investment.
If you are going to buy single houses you need to buy a lot of them. To simply buy one is not economical because you have to look at the cost of setting up the LLC in the state you are buying in. Plus you also have to look at lodging a yearly tax return with the IRS and also a state return. Both of these processes are not cheap and if you only have one property then watch your return plummet.
There would appear to many suppliers in the United States, some good some bad; the question is how you tell the difference.
Make sure that the people you are dealing are actually operating in the city you are purchasing in. Sounds like a silly question, however in many cases wholesalers are buying properties they have never even been to. So the question arises how you can tell the quality of the property or area in which you are buying, the answer is you cannot. Then you have to find someone to manage it good luck with that one.
You then have people who buy properties and renovate them. These types of properties are better however what is the real value of the properties is the real question. You need to see examples of sales in the immediate area. In some cases the market located just 3 blocks away can be very different. Before you buy spend the money to go and meet the supplier and get them to prove to you that what they are recommending is worthwhile. Also see how big is their team? If it is a one man operation what happens if they go out of business. Meet the property manager and question them carefully about their experience and what kind of follow up support can you expect? Remember you can be in the best market anywhere if you are dealing with an idiot, crook or a salesman you still have a problem.
Suppliers that are locally based are also interesting. It is important to consider the following questions
Do these suppliers have ownership in the US Business or are they just middlemen?
Have they met the suppliers they are dealing with?
Have they been to the city in which they are recommending that you buying?
Now you may be asking yourself how can someone who has never been to the US not met the supplier offer you good advice. The answer is they cannot. Be very weary of people asking for fees when their real knowledge may be limited.
My problem with single homes is that you cannot leverage, because you are paying cash for properties. Personally I like commercial properties and that can include apartment complexes because we can get at least 60% from a commercial bank. To me these are great purchases and good solid investments because you receive a great net return together with strong potential capital growth and in most cases the occupancy rate is over 95%.
America is a great place to make money, however you can lose money very easily if you are dealing with the wrong person. Do your due diligence very carefully, not only on the market that you are going to deal in but look carefully at the experience of the supplier you are going to deal with and match that with your investment needs.
Investing in the United States can be a great and successful experience by simply taking the trouble to do your due diligence carefully.
People often buy because of the returns. It not uncommon to have returns of 13-15% however in many cases the figures quoted are gross not net returns. By the time you take away property management, Property Taxes and maintenance the returns can fall well below 10%. So at the end of the day you are paying cash which may be costing you 6.5% or more and getting a return as low as 8% with little chance of solid capital growth. To me this is not a great investment.
If you are going to buy single houses you need to buy a lot of them. To simply buy one is not economical because you have to look at the cost of setting up the LLC in the state you are buying in. Plus you also have to look at lodging a yearly tax return with the IRS and also a state return. Both of these processes are not cheap and if you only have one property then watch your return plummet.
There would appear to many suppliers in the United States, some good some bad; the question is how you tell the difference.
Make sure that the people you are dealing are actually operating in the city you are purchasing in. Sounds like a silly question, however in many cases wholesalers are buying properties they have never even been to. So the question arises how you can tell the quality of the property or area in which you are buying, the answer is you cannot. Then you have to find someone to manage it good luck with that one.
You then have people who buy properties and renovate them. These types of properties are better however what is the real value of the properties is the real question. You need to see examples of sales in the immediate area. In some cases the market located just 3 blocks away can be very different. Before you buy spend the money to go and meet the supplier and get them to prove to you that what they are recommending is worthwhile. Also see how big is their team? If it is a one man operation what happens if they go out of business. Meet the property manager and question them carefully about their experience and what kind of follow up support can you expect? Remember you can be in the best market anywhere if you are dealing with an idiot, crook or a salesman you still have a problem.
Suppliers that are locally based are also interesting. It is important to consider the following questions
Do these suppliers have ownership in the US Business or are they just middlemen?
Have they met the suppliers they are dealing with?
Have they been to the city in which they are recommending that you buying?
Now you may be asking yourself how can someone who has never been to the US not met the supplier offer you good advice. The answer is they cannot. Be very weary of people asking for fees when their real knowledge may be limited.
My problem with single homes is that you cannot leverage, because you are paying cash for properties. Personally I like commercial properties and that can include apartment complexes because we can get at least 60% from a commercial bank. To me these are great purchases and good solid investments because you receive a great net return together with strong potential capital growth and in most cases the occupancy rate is over 95%.
America is a great place to make money, however you can lose money very easily if you are dealing with the wrong person. Do your due diligence very carefully, not only on the market that you are going to deal in but look carefully at the experience of the supplier you are going to deal with and match that with your investment needs.
Investing in the United States can be a great and successful experience by simply taking the trouble to do your due diligence carefully.
), I purchased my properties at around $20 per sq ft, it costs approx $90 per sq ft to build in Atlanta. Once building starts to take off in US investors who purchases at a low base will be sitting pretty I believe.
