The Pitfalls And Pros of Property Investment In The US

Buying property in the US has recently become a popular trend within Australia. With the increase in interest in this venture, more and more Australians have realised that it is a great way to significantly grow their wealth. America has an oversupply of properties which is why Americans are not buying it and Australians are […]

Buying property in the US has recently become a popular trend within Australia. With the increase in interest in this venture, more and more Australians have realised that it is a great way to significantly grow their wealth. America has an oversupply of properties which is why Americans are not buying it and Australians are taking advantage of this endeavour. Buying a property to rent out is a popular form of long term investment. Even though property investment can be complex at times, houses and units are much easier to understand than many other types of investments such as investing in stocks. Investing in property is also often seen as less risky than other forms of investment, but it does have its potential pitfalls. There are also many common mistakes that investors continually make. Property investors generally focus on the features and requirements needed to become successful and many often forget to consider the aspects and strategies that should be avoided.

Investing in property anywhere have the same kinds of disadvantages which includes the cost, interest rates, vacancy, inflexibility, loss of value and high entry and exit costs. For starters, rental income may not cover your mortgage payments or other expenses so you may have to find other source of money to cover the costs. A rise in interest rates will mean higher repayments and lower disposable incomes. If your property is vacant, there may be times when you have to cover the costs yourself if you do not have a tenant, this can become an issue if your property is vacant for a long period of time. Investing in property means you could also experience a loss of value if the value of your property goes down and you could end up owning more than the property is worth (also known as negative equity). There can also be high entry and exit costs such as stamp duty, legal fees and real estate agent’s fees which make buying and selling property very expensive. One of the biggest barriers of investing property in the US is that at some stage, you must make a trip to the US. This is because to legally own property in the US, you must have an American bank account which must be set up in person. If you have the funds and are prepared to make a trip to the US, make the most of it and why not make a holiday out of it? Travelling to Hawaii to set up your American bank account involves cheaper travel costs but if you are planning to fly all the way to the mainland, try and visit the suburbs you are considering purchasing property.

Two common pitfalls of property investment that investors should generally avoid are taking advice from the wrong people and following the herd. Selling agents and property agents that usually work in their best interest do not work in your interest as a property investor. You may think that because you are paying them for their services, they will have your needs as their best interest. Be cautious who you decide to seek advice from. Selling agents work for the seller and developers are mainly interested in selling their stock and making profits. Developers are not usually motivated to sell you a great investment property that will experience strong capital growth. Property spruikers generally make their money by receiving commissions from developers or selling agents and some property spruikers just want to make a quick sale and provide ill-informed advice or sell you sub-standard investment properties. It is important to make sure when seeking guidance and advice are from reputable and trusted companies who strive to go above and beyond for their clients. There is nothing worse than getting misleading information and getting scammed. Another pitfall to avoid is to stray away from following the herd. When the property market is booming, many property investors will rush and make irrational decisions fearing that they will miss out on capital growth. On the other hand, when the property market slows, many investors will defer their investment decisions until the next cycle. It is important to remain focused on your goals of building your wealth and not to simply purchase your next property when the market is hot. Similarly, you should not shy away from a cool market. There can be many benefits of buying property during a slow market period which includes increased housing stock, less competition, more value for your money and more power in contract negotiations.

Since property investment in the US is on the rise, Australians have been warned over the pitfalls. Thousands of Australians have been attracted to buy property in the largely stagnant US property market, encouraged by promoters guaranteeing a greater return on investment than has been available in the Australian market. There are some property investment companies that promise bargains that are too good to be true. It is important to be on the lookout for dodgy promoters that try and sell you overpriced property. Conducting ample research before choosing an agent can help prevent getting scammed by sketchy promoters and agents that are only out for their own interests. If you are unsure about a company, research will help in your decision making process and if you are still unsure, it is best to avoid.

However, don’t be discouraged with this venture. With the number of pitfalls raised in investing property in the US, there are many benefits that come along with it. Some of the advantages to property investment are increase in income, less volatility, capital growth, and tax deductions. These benefits could be the reason why you have become interested or have begun investing in property in the US. The US is a very appealing market and there are low entry points that even allow young investors with limited income and limited initial deposit to thrive in the market. In order to buy US property, you must get a mortgage from a US bank. Compared to Australia, mortgages in the US are typically one to three percentage points below AU ones which reduces the interest and repayments you will have to make. This is great because you will end up paying less than if you were to invest in property in Australia. One of the biggest advantages of investing property in the US is that most purchases give instant positive cash flow. Even if the US market is slow and takes years to recover, the rental returns you will receive are still very decent when your property is tenanted. Onto another benefit, the prices of property in some markets in the US have significantly decreased that there is nowhere to go but up. This means that the houses cannot get any cheaper because at the rate they are at now, it covers the cost of the bricks, roofs, and fittings. Therefore, this means that there is very little chance that the value of the property can get worse. You will also benefit from capital growth, where if your property increases in value and you decide to sell it, you will receive capital gain. This can result in a huge profit for you if you sell your property at the right time. Investing in property has its own advantage of investing in a physical asset that you can see and touch rather than investing in something that is intangible such as stocks (also known as equity or shares).

Ensuring you receive the right advice and guidance for investing property in the US, you will really need a specialist agent to help find the best property for you. If you want to put your trust into an investment property company that is reliable, distinguished and trusted, Tandem Uehling is your number one choice. We have been providing mortgages and financing for over 10 years and place every one of our clients’ needs as a top priority. Our team of highly experienced and knowledgeable staff is able to provide you with the education and guidance you need to start buying in property in the US. We are committed to delivering the finest customer service in order to ensure your next venue is a positive and beneficial experience. We help you avoid the pitfalls and help provide you with the strategies you need to successfully invest. Tandem Uehling is a proudly Australian owned and operated company and we put your needs and requirements as our top priority. Whether you are looking into property in Atlanta, Birmingham, Charlotte, Chicago, Cleveland, Dallas, Houston, Kansas City, North Dakota, Memphis or Pennsylvania, we can help you find what you are looking for. Whether you are a first home buyer or a seasoned investor, Tandem Uehling is able to provide you with the right property loan to meet your needs. You will benefit from our great interest rates and unlimited advice. We can navigate through the necessary components to get what you require. Start investing property in the US in confidence and contact Tandem Uehling today!