Buying property in the states

[rirawin]

Looking to co-own a property in the states, but I'm quite unsure where to begin. I must admit the whole thing is on a whim because I would like to take advantage of the current situation at the moment in the states and what with the pound being strong (not as strong as it was a few months ago) against the dollar. Primary purpose of buying it would be to let.

I'm quite hazy about the whole thing and haven't properly done a "google search" on it, as it was just an idea. However, I would like thoughts and opinions, in particular on where to buy or "hot spots" in the states, west coast? east coast? up and coming areas etc. Additional to this, what would be the legal issues surrounding the fact that I'd be coming in as a foreign investor/buyer, obviously I'd have to purchase a property with an American citizen - which wouldn't be a problem. How would the mortgage scale be judged etc?

[dismalfuture]

I'm no Donald Trump, but I have been buying little boxes in my old college town and renting them/prepping them for rent as student housing, I have 3. Small college town, population 100,000, gets rated well for good living, same category as Portland, Bloomington, Indiana, etc, cost of living to amenities in good proportion. After school was done I'd still go up, visit my friends, go out to drink and eat, get my BMW serviced because the dealer was nicer in that town, etc. Good little town.

I got a fixed rate, two I got since I got back from overseas were really cheap because the markets have collapsed. Think in the lower half of 5 digits a piece. Town is set up on a grid with 1 large and 2 small universities on the East quad, downtown on the southern and nothern quad, and then a 'ghetto' made of old turn of the century shacks in the original district, District #1. Most white people and professionals move 5 miles out of or across town to stay away from this disctrict, but it's jst as safe as any other place, it just means having black neighbors (ooh scary, Todd). Nothing over $100,000 there and you'd know why, they're 2-3BR/1BA with single car garages (at best). My recent two aren't for rent yet, I've been working on them myself getting them up to nick, I've laid down mixed oak/hardwood floors I got at closeout for $1.65 (dirt cheap) a square foot. That and drywall, new paint mainly, I may look at roofing before I'm through. I do all the work myself, so it's just materials that I try to buy when they're cheap, and my time (which I have too much of obviously)

I plan to rent to college kids, 1 bedroom at 4-500 per, 2BR's in one and 3 BR's in my newest houses. I got the houses for steals so they'll pay themselves off in around 6 years, I would normally figure on 10 in a healthy market, some cities might be like 12-15 or forever, depending. I think Since I own them, the fluctuations of market are irrelevant because the schools are only growing and rentals usually get reserved 6 months in advance, and the locations are in the heart of downtown. The only possibility in the future that I see is that ghetto becomes gentrified, new student housing, because of its location, and rates will double. One of the few walkable neighborhoods to campus, so it has that potential.

These are not all blue chip properties, but it was like $20K out of my pocket, $500/month in mortgage payments for the two, and the deals were hard to pass up. If you have cash right now, it's a good time to buy on the cheap. I had no intention of stringing along properties, but money isn't making money in the bank right now. Add a little more petty cash for my council/federal levies and some insurance.

I like college towns across America, because they're generally safe, occupied 9 months a year (but you rent for 12) and people are generally ok. There's been the trend in the past 10 years of these massive crackerbox apts going up, 3-4 story quadplexes with like 30 in a complex. Those rent at a small premium over downtown places, and they're really cheaply built and are crap. Kids rent them for a year becuse they have rooms for 4 friends and are new, and then they figure out they hate them, because you have CWG parties every wwaking hour, the police, and kids usually have to drive to campus from them, like something inane like 3 miles, so it means using gas and a 1 hr lecture means 3 hrs expended. Driving is serious business to American kids and a lot of places aren't bikable. Therefore all these mega-crackerbox complexes, they lose their sheen after 2-3 years and have to lower rents and add incentives. I think that I have solid no-bullshit properties, walkable to campus and the shops, for people who know and don't mind what they're getting into by living in the ghetto. Also kind of helps to appeal to people as being 'independent' rather than being some crazy corporate super who'll let your property go neglected for the whole 12 months. Rents are according to the ups and downs, it's a good deal in my book.

I think that is about as small as you'd want to go as far as town vs suburb/cities, but I think the returns are higher in the small-medium size places. Bigger places, maybe like Portland would be ok, but that is mainly done. I'd just look at what towns have schools that have been on the upward trend for the past 10 years, endowments and enrollments have shifted a lot recently.

Get your rate locked in low, get it through your American partner, and don't go into something like this with a woman if you are heterosexual. (0)

[englandmj7]

No offense dude, but this is insultingly vague.

What can you afford to spend? $300K, $30K, $3 million ?

Also, you absolutely don't need to co-own the property with a US citizen if you want to buy in the US.

If you're looking for a deal and buy a fixer upper, you are going to have to hire out a contractor to do all of the necessary work to bring it up to par, and since you are out of the country, not only will you have to hire a property management company to deal with everything from evictions to replacing your tenant's lightbulbs, but you also have to worry about repainting/recarpeting/refinishing/maintenance for the unit when needed (which can be once a year if you have high turnover and/or a shitty tenant). This is always feasible when you can spread out these costs over the margins you are making on several units if you own a complex, etc, but if you only have one or two units it can hurt you. That's why your budget is obviously key.

It isn't a complete buyer's market here and not everyone is going to turn a profit on buying during the housing slump; far from it. In fact, you could very easily end up losing alot of money. In a plethora of areas in the US, even with housing prices down, you couldn't get a renter to pay a fee high enough to even cover your mortgage if you were to buy and try to rent out.

If there was a formula as easy as, say: Have $75K, buy in Pittsburgh, rent it out = turn profit in 10 years, we'd all be filthy rich right now. Unfortunately, it's a bit more complicated; there's an unbelievable amount of factors to consider.

Now, if you're just a rich Russian who wants a nice condo to live in in NYC / a vacation home in New Mexico, or a Japanese businessman who can afford half of the commercial property in Denver, it's a different story. Yes, foreigners are investing here, but it's not guaranteed profit. You'd want to REALLY know what you're doing.

It's also good to note that in addition to the taxes you'll pay on the property/profits here, you're also going to have to pay them on any income you bring into the UK as well. To try and minimize this, you'd have to set up a corporation here, etc.

Lastly, remember that your rent money is going to come back to you in USD, which you will have to convert to GBP. So in the long run, if the pound continues to strengthen against the dollar, the money you make in the US is going to equate to even less in GBPs i.e. it doesn't matter that the GBP is valued so highly right now, unless you are planning on buying and permanently moving here, etc. 99% of the Brits buying in the US right now are simply buying small vacation homes/apartments for personal use in places like Florida, etc

Honestly, you're probably better off looking at a developing college town in the UK.

[hotboyx2]

Very well said and thanks for the information.

I had some thoughts on investments now that the dolar is at its lowest, but as you said that are so many factors to be considered.

[horriblyjollyjinx]

buy funds instead

[djrajio]

No offense dude, but this is insultingly vague.

What can you afford to spend? $300K, $30K, $3 million ?

Also, you absolutely don't need to co-own the property with a US citizen if you want to buy in the US.

If you're looking for a deal and buy a fixer upper, you are going to have to hire out a contractor to do all of the necessary work to bring it up to par, and since you are out of the country, not only will you have to hire a property management company to deal with everything from evictions to replacing your tenant's lightbulbs, but you also have to worry about repainting/recarpeting/refinishing/maintenance for the unit when needed (which can be once a year if you have high turnover and/or a shitty tenant). This is always feasible when you can spread out these costs over the margins you are making on several units if you own a complex, etc, but if you only have one or two units it can hurt you. That's why your budget is obviously key.

It isn't a complete buyer's market here and not everyone is going to turn a profit on buying during the housing slump; far from it. In fact, you could very easily end up losing alot of money. In a plethora of areas in the US, even with housing prices down, you couldn't get a renter to pay a fee high enough to even cover your mortgage if you were to buy and try to rent out.

If there was a formula as easy as, say: Have $75K, buy in Pittsburgh, rent it out = turn profit in 10 years, we'd all be filthy rich right now. Unfortunately, it's a bit more complicated; there's an unbelievable amount of factors to consider.

Now, if you're just a rich Russian who wants a nice condo to live in in NYC / a vacation home in New Mexico, or a Japanese businessman who can afford half of the commercial property in Denver, it's a different story. Yes, foreigners are investing here, but it's not guaranteed profit. You'd want to REALLY know what you're doing.

It's also good to note that in addition to the taxes you'll pay on the property/profits here, you're also going to have to pay them on any income you bring into the UK as well. To try and minimize this, you'd have to set up a corporation here, etc.

Lastly, remember that your rent money is going to come back to you in USD, which you will have to convert to GBP. So in the long run, if the pound continues to strengthen against the dollar, the money you make in the US is going to equate to even less in GBPs i.e. it doesn't matter that the GBP is valued so highly right now, unless you are planning on buying and permanently moving here, etc. 99% of the Brits buying in the US right now are simply buying small vacation homes/apartments for personal use in places like Florida, etc

Honestly, you're probably better off looking at a developing college town in the UK.

If I ever come back to the states sooner than later, lets go into real estate together.

[Egpt]

just buy oil and cereal futures. renting stuff is a pain in the ass with a gigantic amount of redtape involved, specially if the house is not even in your country.

[furien]

have you considered shares/mutual funds/futures or high interest bank accounts. Shares would something I would only really get into if I knew anything about the companies you are buying and if you knew a lot about the industry they work in. If your not a risk taker just stick it in a high interest bank account eg. ING .. or something. Also the share market is currently on a downturn... or aleast it is here in Australia so be wary and just do you research. Also when considering property... there are alot of costs that people dont think about eg.repairs, insurance, council fees,landlord fees.