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7 Questions to Ask Before Buying US Property
The housing crisis leaves the united states property market in turmoil with very inexpensive prices on foreclosed homes from coast to coast, opening the doorway to foreign investors. Aussies, who are accustomed to one of the most expensive real estate markets in the world, are flocking to the US market at record numbers. The most typical technique for Australian investors is purchasing distressed properties through some kind of short sale deal from the bank. Most are enjoying returns from 10% to 15%!
Sounds easy, right? Wrong! The fact is that purchasing property across the globe is really very complicated.
These are the top questions that Lachlan McPherson, Chief Investment Officer at US Invest has been 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 know if it's a reasonable cost? Understanding the market: If you are new to the united states property market, you may not realise, it is not as easy as it seems on the surface! Just because a home is selling at $30k, it might not be considered a bargain. Home prices are determined according to the time that it takes the home to sell relative to its value. A home selling at $30k, because it is in a community with low demand, might actually simply be worth 20k.
2. How do I find the correct property? Research: So once you know the market, next is research. This requires use of 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 even the time and experience to conduct an intensive analysis. Here' recommend getting specialist or at least 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 huge one. Nobody wants to pay too much tax. But, it's literally impossible for that average person to learn a foreign state's tax codes inside a short time. It is important you will find the right tax advice from the US professional and that can be expensive. A typical accountant in america charges between $100 to $200 dollars each hour. If you're able to find an alternative way to obtain tax advice, such as a property management company, it could save you some money.
4. What's HOA? Be Careful of HOA: This means Home Owner Association. Often, condos seem like an excellent investment. HOA fees incorporate the expense of maintaining a house. Whether it has facilities like a pool or gardens, this can be expensive and eats in to the income the thing is after the day from your investment. Many sharp sales agents available don't properly show HOA costs in yield calculations.
5. What kinds of insurance will i need? You will find such a wide range of insurers available, you actually need on the ground assistance to ensure firstly that you aren't getting scammed (by a broker or otherwise), additionally that your insurance covers what you need. Fire, theft, disaster etc. are just some of the potential risks that should be covered. Foreign investors often invest in coastal markets for example Florida, with a big hurricane season. Flooding insurance in these areas is essential!
6. How do I protect myself from the legal standpoint? There are 50 states and 50 different markets and laws to with them. The united states is an extremely litigious nation and thus 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 and even some property management companies
7. How do I get reliable tenants? Unfortunately, there is no easy answer to this, except that you need to place yourself in the best possible situation. Rental demand in america is booming across the board but reliability depends on the city your property is within. Areas rich in unemployment and crime rates generally mean bad tenants. Ideally, you need to own a property inside a nice community having a family renting. Families tend to remain in exactly the same home for a long time of your time.
There are firms that offer research, accounting, legal, and property management services. There's also a lot of companies who claim that they can do so but find yourself charging ten different fees! At the end of your day, you need to do your quest making educated decisions.
