Thinking of buying US property? Read this.

This timely warning applies to Kiwi investors too. – Olly

AMERICAN WARNING
A deadly trap for Aussie investors.
by Neil Jenman

Here’s a confident prediction: Hundreds (probably thousands) of Australian investors are going to lose millions of dollars in the American property market.

Right now, it seems to be all the rage, the latest fad. Buy real estate in the United States. It’s easy. Prices for American homes are so low and our dollar is so high that an investment in ‘the home of the brave and the land of the free’ seems like a really good idea.

Unfortunately, it’s not a good idea. For the average mum-and-dad Australian investor, buying real estate in America is a very bad idea. Never mind what the Aussie spruikers tell you, never mind how good it sounds, it really is too good to be true.

These days, a number of Australian spruikers have set up companies and are selling real estate in America to Aussies. Some of the men ‘behind’ these companies are the same villains who were once ripping off investors with over-priced property deals in Australia. As any police officer will tell you, once a crook, always a crook.

Yes, I know it sounds wonderful. The numbers are enticing. You’ll be told that you can buy a house for as little as $50,000 and rent it out for about $200 a week. That’s a twenty per cent return. It seems like a no-brainer. In reality, it’s an investment for people who don’t have the brains to spot a scam. And while I don’t mean to be rude, I do mean to protect you from getting stung.

If you really want to check out the American real estate market, do it properly. Buy a ticket to the United States and check out the market for yourself. Under no circumstances should you buy property on the advice of an Australian company alone. Do the real research. …

Read the full article at Jenman.com.au.

Posted in News & Articles | 3 Replies

3 thoughts on “Thinking of buying US property? Read this.

  1. Hello,

    I agree with your advice – do not buy American property sight unseen, or at the prompting of an Australian company.

    Additionally, there are terrible areas that are not worth it to invest at any price.

    However, that said, I know Australians who literally have bought properties in decent neighbourhoods in Las Vegas for $50,000 and are making upwards of 15% net yield. They did their homework, learned the city, visited the areas, and made educated decisions regarding where to buy, and as a result are receiving great returns. It is possible, but it’s not easy money.

    With regard to flippers, this is true that this is happening. However, it is easy to spot on websites that give historical prices, such as redfin.com or zillow.com.

    One part of this equation that is not mentioned above is the lack of credit in America. While it is true in theory that the family who has to pay $250/year in interest would be well advised to buy, Americans without a down payment and good credit are unable to get financing to purchase houses in many cases.

    As soon as credit eases up, normal locals will be able to start buying. Some predict that this will push prices up to sensible levels, which would be good for the Aussie investor if they bought earlier. This could also lead to a lack of demand for renters which could have a poor effect on investors, if property stays so affordable.

    So it may not be all doom and gloom, but it’s not all easy as some Australian companies would have you believe. You wouldn’t buy a house in Australia sight unseen, in a neighborhood and city you’re not familiar with. Don’t do the same in a different country.

  2. Aussies want to be Americans. We think of ourselves as being Americans. Living in America and becoming a “real” American is the ultimate goal and achievement for any Australian. Owning property in America is the next best thing to actually living in America and being an American. Good luck talking us out of investing in American property.

  3. Pingback: How To Go Broke by Buying in the USA « Olly Newland

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