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7 Questions you should ask Before Buying US Property
The housing crisis has left the united states property market in turmoil with dirt cheap prices on empty all over the country, opening the door to foreign investors. Aussies, who are used to one of the most expensive areas in the world, are popular US market at record numbers. The most typical strategy for Australian investors is purchasing distressed properties through some type of short sale deal in the bank. Many are enjoying returns from 10% to 15%!
Sounds easy, right? Wrong! The fact is that purchasing real estate around the world is actually very complicated.
Fundamental essentials top questions that Lachlan McPherson, Chief Investment Officer at US Invest continues to be asked.
Prior to you making the jump in to the US real estate market get the answers to these important questions.
1. How do you determine if it's a fair price? Comprehending the market: If you are a new comer to the united states property market, you may not realise, its not as easy as it appears on the surface! Must be house is selling at $30k, it may not be considered a bargain. Home values are determined according to the time that it takes the home to market in accordance with its value. A home selling at $30k, because it is in a community with low demand, may actually only be worth 20k.
2. How do you find the correct property? Research: So once you know the marketplace, next is research. This requires access to council information, planning and development, economics information, past trends and affordability matrices. Really, there's a lot research to be done that most do not have use of this type of info, or the some time and experience to conduct a thorough analysis. Here' recommend getting professional help or at best getting access to reliable market information. Just typing addresses right into a internet search engine is not enough.
3. Do you know the tax implications? Understanding Tax: Tax is a big one. No one wants to pay too much tax. But, it is literally impossible for that person with average skills to understand a foreign state's tax codes inside a short period of time. It's essential you will find the right tax advice from a US professional and that can be expensive. A typical accountant in the US charges between $100 to $200 dollars each hour. If you're able to locate an alternative route to get tax advice, such as a property management company, it could help you save some cash.
4. What is HOA? Be cautious about HOA: This means Property owner Association. Often, condos seem like a wonderful investment. HOA fees incorporate the expense of maintaining a house. If it has facilities like a pool or gardens, this can be expensive and eats into the income the thing is at the end of your day from your investment. Many sharp sales people available don't properly show HOA costs in yield calculations.
5. What types of insurance do I need? You will find such a wide range of insurers out there, you really need on the ground help ensure firstly that you're not getting ripped off (with a broker or otherwise), also that your insurance covers what you need. Fire, theft, disaster etc. are just some of the risks that should be covered. Foreign investors often purchase coastal markets such as Florida, which has a big hurricane season. Flooding insurance during these areas is a must!
6. How do you protect myself from the legal standpoint? There are 50 states and 50 different markets and laws to together. The US is an extremely litigious nation and so good legal council is vital for your success as a foreign investor. The easiest method to go about this is establishing an L.L.C, which means "Limited Liability Company." This can be done through an attorney as well as some property management companies
7. How do I get reliable tenants? Unfortunately, there isn't any easy answer to this, except that you need to place yourself in the perfect situation. Rental demand in america is booming across the board but reliability depends on the community your property is in. Areas rich in unemployment and crime rates generally mean bad tenants. Ideally, you need to own a property in a nice community having a family renting. Families tend to remain in the same home for a long period of time.
There are companies that offer research, accounting, legal, and property management services. There's also a lot of companies who claim that they can do so but wind up charging ten different fees! After the day, you need to do your research making educated decisions.
