USA - A unique investment opportunity
The current investment opportunity is the result of an unprecedented collapse in real estate values compounded by an almost complete freeze on locally available mortgages. This has depressed the real estate market, but because people still need homes in which to live, the rental market is actually booming. Investment properties that are bought today for cash can easily generate double digit yields from local residential lettings.
Because mortgage finance is still virtually unobtainable, renting remains the only option for many Americans; this is despite the fact that interest rates have never been lower and the cost of owning is technically far less than the cost of renting.
Investors from around the world are consequently flocking to the US, lured by the prospect of high rental yields and the expectation of a lucrative exit come the time that the credit freeze eventually thaws and US mortgage lending normalises.
So, if you are interested in American real estate as an investment, now is the time to act whilst we still have this unique scenario of rock bottom property prices matched to a strong rental market.
Summary of locations:
Whilst no part of the US has escaped the collapse of the property market, there are different stories in different cities and States.
FLORIDA - The sunshine State was a big victim in the early days of the crash because of over supply of housing stock in Miami and Orlando. Other regions of the State experienced the general malaise of the market as prices sunk to an all time low in 2011. Florida is bouncing back though and Summer 2011 saw the first increases in month on month sales for more than four years.
Synopsis - Our offering in Tampa is robust and stable brought about by a management company highly experienced in their field and with an existing mature portfolio. Confidence is high that there will be continued high rental demand in Florida generally and Tampa in particular. Orlando is ever popular and the condo units in Orlando are managed by one of the biggest management companies in Florida.
MICHIGAN - The north eastern industrial regions have suffered with both the economic downtown and the impact on local jobs and the knock on effect on the local housing market, compounded with the overall collapse in real estate. Michigans most famous city - Detroit - has seen the biggest collapse of all. Value in Detroit today is undeniable with large properties being available for just a few thousand dollars in great residential areas. Renovation will always be necessary in Detroit but the end result will be a desirable and easily rentable property that should yield well for many, many years to come. Short to mid term growth potential and disposability is a subjective argument and our opinion would be to take no less than a ten year view.
Synopsis - Detroit has been hard hit by the economic downturn and the result is that value for money is the overwhelming factor and $ / ft2 lower than almost anywhere else. Despite good news from the city, the investment remains a long term yield proposition and confidence is low for any sort of price rebound for at least ten years.
Renting Options:
There are two routes to the rental market and the location of your chosen property will probably determine which route you take. In either case, you will be needing to appoint a local managing Agent and they will be able to help you with this.
OPEN MARKET RENTALS
In all towns, cities and States there is a natural rental market and demand for housing. An open market rental is simply a rental Client sourced normally by your managing Agent who will normally sign a one year lease agreement secured by a deposit. Your managing Agent would normally allow sight of this document in case you have any specific requirements.
SOCIAL HOUSING ( Section 8 / HUD )
There is a popular scheme with landlords who own property in urban zones on the edges of larger cities. The Section 8 programme is a Federal (National) arrangement whereby a certain proportion (or all) of the rent is paid by the US Governments Department for Housing and Urban Development (HUD). Long distance landlords seem to like this scheme as the rent is coming directly from the HUD and not via the Tenant.
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Buying property for investment in the USA
- We always recommend a Site visit unless you are planning an auction purchase. Our locations have Agents on the ground and you can visit real houses, talk to the managing Agents as well get a feel for neighbourhoods and Districts. We are happy to provide advice if you want to buy site unseen but our recomendation is that you visit.
- We are aware that other Agencies and Organisations are in this same marketplace and we encourage comparison. Our advice would be not to pay any advance fees and avoid being convinced for the need to buy site unseen.
- Our Partners, Associates and Managing Agents on the ground in both Detroit and Florida have impeccable standards of service and an unimpeachable record. We welcome scrutiny from serious buyers.
Buying investment property in the USA is relatively inexpensive and can be quick and easy. We can assist you with advice about purchasing entities (Personal or LLC), money transfers and the opening of US bank accounts. Remember that owning a property in the USA means that you will have to file a US tax return every year and we can also point you in the right direction of someone who can assist you with this.
In short, we enccourage you to talk to us. We will encourage you to visit the USA and we will encourage you to question your own motives for buying as well as ensuring that you are clear about the mid and long term synopsis and what your realistic expectations could and should be.
We look forward to hearing from you.
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