Property Investing in the US: Beware of Uncle Sam!

investing-in-us-propertyKaz:

Isn’t the topic of US property and investing in US property a popular one at the moment in Australia?  I, certainly have noticed over the past year or so, many seminars, speakers and articles related to investing in the US, with it’s cheap properties and the promise of great cashflow. I’m not sure about you, but I am definitely interested.  I haven’t actually taken any steps – mostly because my money is currently tied up in other property projects, but I know that when I have some money available, this topic is absolutely something that interests me.

But let’s face it, investing in another country, particularly one you have no sense of familiarity with can be a little daunting.  If you don’t know what you are doing and haven’t found a suitable guide or mentor to assist and haven’t done your homework then it can be downright foolish!

Lucky for us, we have found a property expert here in Australia who deals with US property and helping Australian investors, Trish Davies and we managed to get her on the Everyday Property Investing podcast to share some of her knowledge with us.

Check out the interview with Trish Davies on US Property Investing here

I know that after speaking with Trish, I certainly would be a lot more comfortable and a lot more likely to invest in the US, particularly with someone like Trish to help me! But – investing in the US may not be for everyone, in fact, Den wrote the article below just days before I spoke to Trish – I’d be really interested to see what his thoughts are now, after listening to the interview!

Den:

Purchasing real estate in America – buyer beware. I regularly read that there are some great buys and a lot of money to be made in American property. The values of many American properties have dropped a lot in the last four years and it means that the yields can be quite good on rental properties in America.

There is a bit of a buzz thing happening at the moment and quite a few people are buying into it. I am often asked why I haven’t invested in the US yet. I’ve read articles about people who are fully confident that it’s the way to go; property is cheaper, yields are better… I’ve heard all this before.

I guess it’s human nature to want to make a lot of money quickly – that’s why certain investing magazines sell so well. Couple this with the emerging “come to our seminar and we will teach you how to invest in the US” market, and you’ve got the potential for someone, somewhere to make some money. It strikes me that quite a few people are buying into the US, and frankly I think they’re being sucked in to a market that’s not great.

My main point is this – if the American property market is so good, why are Americans not investing in it? Not every American is strapped for cash and has lost everything in the global financial crisis, so if the market is really that good, surely there would be enough investment in the US to buoy the US market somewhat. So where does this leave you?

I’m going to sound like a broken record here, but it’s really important to look carefully at any property you buy. Don’t believe hype, always do your own figures and remember that when you are investing overseas, not only do you have the uncertainty of the market, there is also the uncertainty of dealing with foreign banks and exchange rates. Furthermore, you’ll need to factor in complexities in foreign law.Finally you’ll need to make sure you have a great property manager (and I’ve heard some horror stories about property managers in the US).

So if you’re someone who is looking for a high-risk, high-return investment then maybe it’s worth casting your gaze across the Pacific. Otherwise, do what I do – look locally, do your own sums and and due diligence, don’t take unnecessary risks and minimise the chance of an epic failure.

And good luck with your investing.

Summary:

There are a couple of points to make here:

  • Different investors have different opinions and clearly, not all forms of investing will suit all people.
  • You need to understand yourself and your risk profile.
  • You need to do your homework if you do want to try investing in the US.
  • Having a mentor or guide who can assist you in new investing territory can really maximize your chances of success and importantly, minimize your chances of failure!
  • You are the person who is in control of your financial future – you need to be responsible for educating yourself and determining the investing strategies that you are going to pursue.

And if you decide that you want to learn more about investing in the US – do check out Trish Davies, she’s someone who has put in the time and effort to get to know the market, the process and the risk mitigation strategies over many years.

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  1. SocialSave says:

    Property or home Buying and selling in the Us: Be careful of Uncle Sam!…

    Is making an investment in U . s . property a fantastic idea or a tragedy in the making? Let’s find out!….

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