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Buying property in USA for Australian citizens
May 2, 2012
to answer this question.
Australian residents can buy and own direct US property, but many investors prefer to own through an LLC (limited liability company) usually set up through a tax haven state like Delaware. There are necessary registrations with US tax dept (IRS) and setting up US bank accounts. I have access to a great accountant in Melbourne who specialises in US tax laws and helping Australian investors structure their practices for best tax efficiency and would be hppy to make a referral if anyone wants to contact me.
We are in the process of buying US Properties for investors and find not paying any stamp duty a positive for all involved. Ownership can be transferred for as little as $200, so switching from company to personal ownership is not a big deal if tax conditions change.
The main factors making the US so attractive are the incredible prices available, particularly for foreclosed properties bought from banks. Part of the sub-prime washout was that the US government is bailing out the banks, subsidising the short selling of foreclosed properties by buying out the mortgages. As a result we are able to buy properties at a fraction of normal price. US citizens are excluded largely by the banks, where credit policy closed down options long ago and it doesn't look like changing again fast, despite Obama's pleas to the contrary.
The low prices are not reflected in rental returns. Rents have remained buoyant, because homes are a necessity of life and when people walk out of a non-recourse mortgage they still have to live somewhere. Net rent returns exceeding 20% are available in a number of cities in good locations, making the cash flow part of the investment incredibly compelling for overseas investors. When someone talks to me about cash flow positive property in Australia they generally mean break-even after depreciation. This is not improving fast with the RBA going at investors throats with rate hikes.
The RBA can be thanked, however for the strength of our currency which is now near record highs against the pound, euro and US dollar. Our leverage into America makes a compelling argument now for securing some cash flow into the future in US dollars. Once recovery takes place in The US and Europe the Aussie will fall, according to most commentators, making the US property deals a lot brighter.
Property prices in America will rise again when Americans can access mortgage lending and when existing home stocks are filled and new construction takes place. Population growth, particularly in the South East is strong enough to deplete reserves of housing stock and reduce vacancy rates within the next 10-18 months. New construction costs are tempered by fixed labour and material costs, ensuring new homes will be valued well above any current prices.
May 4, 2012
As some people have mentioned, but not vocally enough,
******AMERICA IS DIFFERENT TO AUSTRALIA*****
In Australia we pay council rates of around $1000/year
***** In America they dont have council rates, they have things called Summer and Winter taxes. IE: Taxes that are for things like the local school, local fire brigade, local hospital,local ....... etc. You pay for Local everything in your community for things that the State and Federal government normally pay for in Australia.
These Taxes are broken up into 2 seperate pay periods, one happens during the summer, and the other during the Winter. That is why they are normally called Summer Tax, and Winter Tax.
Every YEAR one can expect to pay around $5,000 total for these community taxes no matter if it is a $1 place or is not inhabited or is just sitting on some repossessed bank ledger.
Even if the bank gives the property away for nothing, they stop having to pay around $5000 a year for a property they can do nothing with and lose even more money ... a new sucker is now responsible for that payment.
If you look at some place like Detroit, where the car industry has collapsed, more than half of the jobs have disapeared. Every second house is empty ... people have left the area. In the city around 30% of the office blocks and shops are empty and vandalised. There are many video clips dealing with these areas on the net.
It appears that America is coming into another housing collapse again, so prices should start to drop even further.
Be afraid ... be very afraid ..... if you have gone into the American housing market, or are thinking of going into it in the near future ..... suffer.
May 3, 2012
I suspect many Australians do not have a real grasp of the situation in America.
We all think that eventually house prices will recover over there and we use the logic we have experienced in the Australian situation to base that from.
There has been a fundamental change in America that will probably take a generation or more (maybe 30 years) to correct.
The people that keep the middle/upper sector of the housing market boyant, have been killed off with NO chance of recovering. I am talking about the educated middle upper class older generation.
There are huge number of well educated middle class people that will probably never recover from this financial market and therefor the middle class area of the market will take a long long time to recover ... if it ever does.
Does a person want to invest in a market that has no future in their own lifetime?
We in Australia have no idea how bad it is in the rest of the world .... America, Ireland, UK, Spain, Portugal, etc. The only countries that are doing reasonably are the 3rd world countries and the ex comunist block countries .... but their living standard are way lower than the rest of the world, so they could not drop much.
People here have no idea how fortunate we currently are ...... but I suspect even Australia will take a HUGE dive in the future when the housing bubble in China collapses and our export of resources takes a dive.
May 4, 2012
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