Buying property in the US has become an increasingly attractive proposition for Australian investors looking for cash flow.
So what are the real pros and cons of buying property in the US?
In this article we take a look beyond the hype and see if buying property in the US really stacks up.
The Cons of Buying Property in the US
- It’s a Long Way Away
America is a loooong way away. For those of you who like to be hands on with your investment properties America is not for you.
- It’s Really Big
The US property market is big. It’s really, really big! It may be the 4th largest on the planet in terms of land mass. But when you look at inhabitable/ inhabited area it is perhaps one of the top 2.
Most Australians are familiar with major American cities like New York, Washington D.C., Orlando, and San Francisco, but the reality is there are a lot more in between. These cities have continued to draw major investment from global pension and sovereign funds. Leading analysts are also beginning to see sophisticated global investors move into America’s secondary markets looking for high yields and high growth.
- The Process is Different
Investing in any new location require’s new process. Of course the first time you purchased a property in Australia it was a new process too.
As with virtually all types of investment, and income there can be taxes associated with increased gains. There may be potential taxes on net rental income from US income properties, as well as capital gains on the resale of assets. Whether Australian investors are liable for taxes, and how much those taxes are will depend how transactions are structured, how funds are put into investments, how title is held, which tax breaks are taken and how well accounting is performed.
The Pros of Buying Property in the US
- Australians Are Underestimated
Aussies are underestimated as buyers and investors in America. Americans are focused on Chinese, Canadian, and UK buys and investors. Australian investors aren’t even on their radar. Even a Google search from within America for “Australian property investors in America,” yields pages of .au sites, and perhaps the odd story from BBC World.
Well-traveled US property professionals may be aware that Australian incomes, wealth, and property values are some of the highest in the world, although most Americans aren’t familiar with much more than the Aussie stereo type. Chinese and Russian buyers in the US are anticipated to have plenty of excess cash and to pay asking price or more for properties. Being underestimated; Australians can have an advantage in negotiations and purchasing properties.
- It’s Priced Right
America is still on sale. There are many cheap properties in comparison to property prices in other popular international destinations. Legendary real estate investor, and multi-billionaire Warren Buffett best describes the current opportunity as “quality merchandise, significantly marked down.” What Australian investors should be looking at to make an accurate evaluation is value, security of capital, future outlook of property prices, and rents comparative to purchase price.
- It’s the Right time
It’s the right time for buying property in the US. Bank data compiler DistressedPro reveals that there are still billions of dollars in distressed mortgage loans and foreclosure properties working their way through the legal pipeline in America.
There are many places to invest in the United States. Together these locations provide opportunity for diversification.
As with any financial move there are pros and cons of buying properties in the US.
The question you need to ask yourself is if the pros outweigh the cons after if the US market will play any part in your long term financial goals?
Matt’s passion for property investing and his intimate knowledge of the US property market has resulted in him building a business where he assists others to build equity, income, and wealth through US real estate. For more information on Invest USA get in touch with Matt here.
The information contained in this article is for general information purposes only and should not be regarded as a substitute for professional legal, financial or real estate advice. The information is provided by Pumped On Property and while we endeavour to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained in this article for any purpose. Because every persons needs and financial situations are different, the information in this article are intended as a guide only. Any reliance you place on such information is therefore strictly at your own risk.
In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits arising out of, or in connection with, the use of this article or which may be suffered by any recipient through relying on anything contained in or omitted from this article.
Through this article you are able to link to other websites which are not under the control of Pumped On Property. We have no control over the nature, content and availability of those sites. The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.