Investment Property Bargains in the USA?

With the US dollar looking like it will soon compete with the Mugabe Zim dollar for the "Most number of zeros on my currency award", What are the realities, dangers and prospects of buying into US Real Estate?

It isn't as easy as it used to be for foreigners to get a US mortgage any more, and only a few companies will provide quotes for anywhere outside Florida, one particularly efficient company for this is Fidentia. They cover most of the states although they do need specifics and don't offer an online quote engine due to the extensive variables.

Buying property itself? Well this is another mine field altogether. In the USA they have various collaboration tools and schemes. REALTOR.com is the arguably the largest, it is a tool enabling agents to share all their listings all over the place, the draw back to this though is that it can be very out of date, and whilst there is a lot of legislation on the USA for being an agent or realtor, it still would appear that anyone can sell a house if they want to. REALTOR.com has some 3 million listings country wide, what they don't tell you is that these listings are supplied by over 1 million agents. What that means to you and I is a lot of people that don't update the system!

There are a few other techno systems for site owners, one being IDX and a few others under construction at the moment, the key thing is though is that as much as every agent can say they have access to millions of listings for sale, there is a good chance only 3 are actually theirs, which may well be out of date!

There is though a new breed of agent outside the USA selling property there now. Admittedly only for investors, but nonetheless, they are supplying a well researched source of US properties that do actually make investment sense.

Colossal Property Investments

When you first enter their site, it all seems just a little too good to be true. A 3 bed detached house in New York for 12k Euro? Freehold? With rental income? And a Profit? sounds like madness! After roaming through the site though it is clear to see these guys are doing their homework and leaving no stone unturned, calculating every last little thing down to the nickle

American Dream Investments

Admittedly the site could do with a tidy up, but here we see a similar set up, with properties also in New York at fantastic prices (Starting from around £20k) The site quotes gross rental yield in this case, so would suggest calculating all the net figures to ensure their is a profit in place, but all in all, both companies whilst niche in their fields seem to have found the point in the market place where even the smallest of investors can make money relatively easily in a struggling market.

There are some developers out there also that have decided to walk away from developing at the moment if they can and diverting their efforts into buying up the last 25% or so of other developments at a discount, repackaging and moving on. It makes use of their cash, ensures a discount in the first place, and keeps the money working for them whilst making a profit in the process.

There are those of course still pushing out deals direct from developer, beware! Ask yourself, will the developer be able to finish the project? Do they have the money to get through? It might be next to Sea World but I don't see Shamu the Killer Whale helping out developers or Mickey Mouse paying any mortgages.

With the exchange rate the way it is, there are some serious bargains to be found in the US, just look very carefully. The exchange rate is likely to get worse before it gets better, so either keep your cash gained in the US, or at least in USD.

An old adage that so often rings true, "The first profit is always the best, regardless of the size."

Still Selling, or Sold Out?

With the credit crunch and fears of recession, fact or otherwise continually being written about in the press, one has to ask "Is there any money to be made in selling property anymore?"

Well, on the golf course, in the pub and according to the industry, yes there is, but on closer inspection of the market place, no-one seems to be buying except the heavily cash rich. So which is it?

Granted it can be argued that there are some bargains out there, but how much of a bargain are they really? We see agents purporting to advertise property and land for "less than 10K" only to find upon closer inspection that that is just the deposit, and the seem to have conveniently forgotten about the other several hundred thousand that's involved at some point!

Just nipping into Google and entering "cheap investment property", and what do we find? The second site in is claiming to promote "Free Property" in London! Now I am sure if it was all that simple, we would all be lazing around in Utopia without a care in the world, putting our £3k down and then getting £3k cashback, how simple is that?

On not very much closer inspection however with an "example property(This one is £5000 down, prices from £199,950)" we find that whilst the deposit is "paid", along with the Stamp Duty, Legal fees and a bunch of cash back on a different property than the banner ad on the front, the "average rental is apparently £725 per month.

So OK, sounds great! where can I get one? in fact I'll take 2! But hold on a moment, what about the mortgage?, So, off I pootle again to Google, and this time type in "UK Mortgage Quote" and take a top 3 site from there and very carefully enter in the numbers. Property cost (not "value")
and take into account the 10% down already in the deal.

After calculating very carefully using the days interest rate, and working on 25 years, interest only is £990 per month, and interest plus capital is £1241.12 per month!

Given this, the property that is apparently £3000, that I also cannot live in, because I need to rent it out, has just bought me £516.12 per month worth of debt, so all in, over 25 years and hoping that the interest rates don't go any higher, this "£5000" property has actually cost me £154,836 even if I rent it out for 25 years!!!!!

There is no claim or statement about commissions being included, or the percentage or charge involved, and as much as this is property for sale, is it really any wonder at all that no-one is buying with figures like that?

What I would like to know, and this is just one example I came across, but how much money is there in this business, and how do I get some of the action if there is that much?

Anyone wanting to buy £150k of debt for £5k, please do let me know.....

COMING SOON! Bargains in the USA?