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How to invest in US properties - taxes and finance

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Sarah | 21 Jul 2013, 02:22 PM Agree 0
Having secured my first mortgage, I'm now pondering the idea of overseas property investment. My motivation is not for a get rich quick, high return rental, more to secure somewhere for myself to live in the future. My professional field offers good prospects in Houston, Texas, and I'm considering buying a property to initially rent before making the move there myself. So, the dangers of being sucked into buying $10 houses in Detroit aside, what taxes, fees and finance considerations are involved in overseas property investment?
  • Jason Simpson | 23 Jul 2013, 12:48 PM Agree 0
    Sarah, finance is becoming more and more accessible out of Texas, but i would suggest buying with cash for your first home. Establish a bank account and have your rental monies go in there every month. This will assist you in establishing credit with a bank when applying for a loan later on as required.
    If you intend to live in this home yourself just check you have the right visa to do so and obviously buy somewhere you want to live. Texas is a strong market and has a great economy supporting the state and your choice for buying there is a great start.
    As far as a loan for your first home, don't do it from Australia, get over there look at some homes yourself through a local Realtor and meet with a few local banks too.


    All the best
    Jason Simpson
    Cash Flow Gold
  • wiseinvest | 12 Jun 2015, 06:14 PM Agree 0
    Hi Sarah,

    Good idea on what you want to do with your property investing. As Jason mentioned, it's a good idea to actually go there if you can and visit the place... if you can't you can always find out your research online. The beauty with US properties is you can actually see a lot of the information for FREE unlike here in Australia where you have to subscribe for hefty fees just to get the information.

    Things like:
    - how much the property last sold for... when it was sold and who owns it
    - whether that specific place/street is a safe place to invest/live in or there had been crimes involved in the area. If there were crimes involved you can find out what they are, when it happened and what other crimes happened recently (if any).
    - you can find out who the seller is and negotiate with them directly
    - you can also buy directly from the banks for a fraction of what you would pay through a broker either here or in US

    Buying a US property from Australia is difficult to do - although it can be done. I am living proof of it having purchased several US properties from Australia, but it's taken me a long time to work it out and I have also been to US a few times.

    As for financing, banks would like to see you have some skin in the game - establish your relationship and go from there.

    One more thing, if investing - make sure to buy it through your company and not personally as litigation is rampant in US. If they see that you have some monies/equity in your property - they may find a way to sue you. I've heard of too many litigation cases where the owner got sued because of negligence (i.e. tripping on the driveway). Learn how you can best structure yourself and the best places to do it.

    Anyway, best of luck to you in your future property investing.
  • | 12 Jun 2015, 08:38 PM Agree 0
    Hi Sarah,

    Good idea on what you plan to do with your property investing. As Jason mentioned, it's a good idea to actually go there if you can and visit the place... if you can't you can always find out your research online. The beauty with US properties is you can actually see a lot of the information for FREE unlike here in Australia where you have to subscribe for hefty fees just to get the information.

    Things like:
    - how much the property last sold for... when it was sold and who owns it
    - whether that specific place/street is a safe place to invest/live in or there had been crimes involved in the area. If there were crimes involved you can find out what they are, when it happened and what other crimes happened recently (if any).
    - you can find out who the seller is and negotiate with them directly
    - you can actually buy directly from the banks for a fraction of what you would pay through retail.

    Buying a US property from Australia is difficult to do - although it can be done. I am living proof of it having purchased several US properties from Australia, but it's taken me a long time to work it out and I have also been to US a few times.

    As for financing, banks would like to see you have some skin in the game - establish your relationship with them and go from there.

    One more thing, if you are really considering investing - make sure to buy it through your company and not personally as litigation is rampant in US. If you're not structure properly, people can see that you have some monies/equity in your property - they may find a way to sue you. I've heard of too many litigation cases where the owner gets sued because of negligence (i.e. tripping on the driveway) - because they wanted to get a piece of their equity. Learn how you can best structure yourself and the best places to do it.

    Anyway, best of luck to you in your future property investing.

    regards,
    Armand
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