With such huge opportunities available in the USA property market right now where should you, as a foreign investor, invest? Having just come back from the US you can't imagine what it's like seeing so many properties for the equivalent of a deposit here in Australia.
It's like being a kid in a lolly shop. Properties of anywhere from $10, 000 up are extremely easy to find. But just because they're so cheap doesn't mean these US properties are a good deal. Taxes, property management and maintenance costs, not to mention vacancies if you buy in the wrong area, can all add up quickly and direct your hard-earned investment dollars into a money pit. Detroit is a classic example.
When thinking of cheap USA real estate, many people think of Detroit due to all the media around the ridiculously low US property prices in that area. You could even buy a house on eBay for under $1000! However, it has also been one area that has had to bulldoze the many abandoned houses due to the mass exodus of its large workforce.
It's cheaper for the local government to bulldoze these properties than to maintain them whilst being empty and foreclosed. If there are no jobs, there are no people, as people will go where the work is. The car manufacturing industry based in Detroit suffered hugely due to the GFC and as a result the entire city experienced a decline in population. If you were to invest in Detroit, even for a $10,000 house, it is likely you would lose money due to the extremely high vacancy rates in the area and the continual decline in property values.
When carrying out due diligence for a foreign market such as the USA real estate market, you need to follow the fundamental rules of property investing. Stable population and employment, hospitals, universities, diversified industries and solid infrastructure such as roads and all necessary amenities.
There are areas in the US that have all of these along with reduced real estate prices. Ideally when investing in the US property market you want to capture both positive cash flow and capital growth when that occurs.
Seeking out independent advice along with doing independent research will pay dividends when investing in a foreign market including the USA real estate market.
