Join our investing community

Purchasing Property in the USA

Discussion in 'General Investing Discussion' started by menestys, 24th Nov, 2009.

  1. menestys

    menestys New Member

    Joined:
    24th Nov, 2009
    Posts:
    4
    Location:
    Collie WA
    Hi,
    We are in the process of purchasing an investment property in the USA using our SMSF. It is quite a daunting prospect as we have only ever invested in Australia though it's an exciting challenge:) My question is whether anyone else has been through this and what has their experience been like? Look forward to hearing from you.
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,623
    Location:
    Sydney, Australia
    Can you tell us why you are buying in the USA?

    Do you also own property in Australia?
     
  3. menestys

    menestys New Member

    Joined:
    24th Nov, 2009
    Posts:
    4
    Location:
    Collie WA
    Hi Sim,
    Yes, we have property here in Australia. We are finding it quite challenging now to obtain finance for investment properties here. The banks are not making it that easy for investors like myself with a proven track record to gain finance. This is hopefully going to change in the next few years - it will have to, otherwise we will have a crisis on our hands. Anyway, we use the buy and hold stragety, and this will work effectively in the states. I can purchase a 4 X 2 for $60 000 with a monthly rental income of $800. Most of our properties here in Oz are negatively geared so having a pos geared investment will help with cashflow. As I said, we buy and hold so we are looking at the long term growth.
    Warm regards,
    Louisa.
     
  4. jason626

    jason626 Member

    Joined:
    16th Jan, 2009
    Posts:
    21
    Location:
    moe(melbourne),vic
    i have thought about investing in property in the USA also, but because i have no experience there and are unfamilair with there legislation it has turned me of a little, but there are many many bargin price property's with exellent returns that not considering buying there would be silly, and now with the aus dollar at very high levels represents an ideal time. ps can you give a helpful link that has house prices in USA that i can reference.
     
  5. menestys

    menestys New Member

    Joined:
    24th Nov, 2009
    Posts:
    4
    Location:
    Collie WA
    There are two Aust companies that cater for investors wanting to enter the US market. Talpac - USA Foreclosure Residential Investment Properties - and House Buyers USA - House Buyers USA - Welcome to House Buyers USA They both are very similar only that Talpac sources their properties solely from Detroit and House Buyers source from Kansas and Missouri. House Buyers have current listings on their web site. If you require further information then send either one an email and they will get straight back to you. At the moment you need to have the cash to purchase a home outright though hopefully there will be financing options in the future.
    Cheers,
    Lou.
     
  6. trishdavies

    trishdavies New Member

    Joined:
    30th Nov, 2009
    Posts:
    4
    Location:
    Newcastle NSW
    Hi,

    I purchased a +Cashflow property last year for USD$32,000 and the rent is $625 per month. It has out performed any other asset that I hold in regards to the ROI in cash flow. I am an Accountant here in Australia and I am purchasing another 3 now and 7 in the coming months... hope that helps!
     
  7. trishdavies

    trishdavies New Member

    Joined:
    30th Nov, 2009
    Posts:
    4
    Location:
    Newcastle NSW
    Hi,
    It is an ideal time to purchase property in the US with the strength of the USD$ right now. You must know who and where you are buying US real estate. You must trust who you are buying from and know exactly what you are purchasing. I purchased a +Cashflow property last year for USD$32,000 and the rent is $625 per month. It has out performed any other asset that I hold in regards to the ROI in cash flow. I am an Accountant here in Australia and I am purchasing another 3 now and 7 in the coming months. I have field partners on the ground in the States I am purchasing... hope that helps!
     
  8. TrishJ

    TrishJ New Member

    Joined:
    30th Nov, 2009
    Posts:
    1
    Location:
    Brisbane
    Hi Trishdavies,

    I am researching purchasing properties for Section 8 tenancy in the USA. Did you use one of the companies mentioned earlier by Louisa (I've checked out both of those) or one over there? I am tossing up who to go through or whether to find one in the USA.
    I would appreciate any tips you may have.
    Cheers,
    Trishj.
     
  9. Chris C

    Chris C Well-Known Member

    Joined:
    2nd Apr, 2008
    Posts:
    1,327
    Location:
    Brisbane, QLD
    How difficult is it to find a tennant at the moment?
     
  10. trishdavies

    trishdavies New Member

    Joined:
    30th Nov, 2009
    Posts:
    4
    Location:
    Newcastle NSW
    Hi ChrisC,

    Not difficult if you have the property manager and field partners in the US doing the right thing for you. One of the houses I am buying at the moment had 2 other families wanting to move in... TrishDavies
     
  11. trishdavies

    trishdavies New Member

    Joined:
    30th Nov, 2009
    Posts:
    4
    Location:
    Newcastle NSW
    Hi TrishJ,
    No, I didn't use any of those companies... I am doing this myself with the assistance of field partners in the States that I want to buy in. I have been travelling to the US for 4 years every quarter, involving myself with real estate investors and entrepreneurs and seeing the real estate first hand. I have many contacts that I trust implicitly. You must trust who you are dealing with, especially if you cannot get over there to see the properties.... hope that helps... TrishDavies
     
  12. menestys

    menestys New Member

    Joined:
    24th Nov, 2009
    Posts:
    4
    Location:
    Collie WA
    Hi Trish Davies,
    Thank you for your imput, gives me confidence in what I'm trying to achieve. The biggest hurdle for us is working out the ATO laws and what we can and can't do with our SMSF. We have been told by our accountant that we are not able to purchase the property through a Limited Liablity Company, our SMSF must have direct ownership. This would be a concern with regards to asset protection, so I'm investigating other options. A positively geared property would be the ideal investment for a SMSF, so I'm not going to give up!
    Thank you again and regards,
    Louisa.
     
  13. adi

    adi New Member

    Joined:
    30th Oct, 2010
    Posts:
    2
    Location:
    Mackay
  14. adi

    adi New Member

    Joined:
    30th Oct, 2010
    Posts:
    2
    Location:
    Mackay
    Hi Lou

    I managed to get in touch with House Buyers USA but it appears that the company Talpac that you refer to has disappeared off the web? Do you know if they have changed their name?

    Regards
    Adi
    Adrian
     
  15. HarryMac

    HarryMac New Member

    Joined:
    4th Nov, 2010
    Posts:
    2
    Location:
    Perth
    Hi Trish, Louisa etc,

    I am also considering buying some high yield residential investments in USA (possibly Atlanta) ie on basis of high Aud$, US prices down >35%, high yields & low mortgage rates.

    Just wondering if you guys know what the average acquisition & sales costs are for US residential property in % terms plus the approx % outgoings on residential investments ie management, maintenance, taxes etc. Many thanks.

    I am planning to visit US in early 2011 & am happy to share my experience as I work through this.

    Cheers,

    Harry


     
  16. HarryMac

    HarryMac New Member

    Joined:
    4th Nov, 2010
    Posts:
    2
    Location:
    Perth
    Looking forward to some feedback.

    Thanks in advance,

    Harry

     
  17. jeddi

    jeddi Member

    Joined:
    31st Aug, 2005
    Posts:
    12
    Location:
    Newcastle
    We seriously considered buying a property in the US with our SMSF.

    We went to a seminar a couple of weeks ago where Dymphna Boholt was talking about everything to do with it.

    Its nothing like investing in Australia and it seems like you can't go there with the same mindset that use to you buy here, its vastly different.

    Dymphna mentioned quite a few significant differences which I am glad I heard about first before we bought.

    Its like lots of things, you just need to do your homework. The property management can be a problem and so can knowing the right places to buy.

    You can buy a house for $1 but you probably don't want that house!

    Anyway, its involved and its overseas so its even more imperitive that you get help and the right advice before you jump in.

    That's what I have decided to do.

    Good luck with it.

    cheers
    Dianne
    Easy Home Ownership Solutions - Hi and Welcome to Our Website. | Own*-*Preloved Homes.com.au
    vendorfinanceproperty.com
     
  18. Mike M

    Mike M New Member

    Joined:
    4th Mar, 2011
    Posts:
    1
    Location:
    Melbourne, Vic
    Hi,

    We have know exactly where we want to buy in the USA through our SMSF - has anybody done this successfully? We need to borrow around $450k at an LVR of 65% - does anyone know of a lender who will do this?

    thanks, Mike.
     
  19. handyandy

    handyandy Well-Known Member

    Joined:
    6th Jun, 2006
    Posts:
    312
    Location:
    Sydney Nsw
    AS per a previous poster - there are problems with SIS re buying property using a LLC.

    The super fund needs to own 100% of the shares in a C-corp which then owns the US property.

    There are no imputation credit system in the USA. A company pays tax on profit and dividends are paid out of the after tax profit the amounts received through dividends is then taxable again to US residents.

    As a consequence owning property in a c-corp will mean that any profits are taxable in the US without any tax credit back to Aust. Up to $50k the tax rate is 15%. Above that the scale progresses upwards.

    Then on any funds remitted back to Aust there is a 15% witholding tax. This is credited as tax paid in Aust but is not paid out if you have excess tax paid.

    Possibly it can still work by mixing the imputation credits received from Aust share investments and substituting the foreign tax credit but not sure if this is allowed.

    Regardless you will have lost 15% of the income profit before it even leave the US shores.

    Cheers
     
  20. accook2001

    accook2001 New Member

    Joined:
    1st Oct, 2011
    Posts:
    1
    Location:
    melbourne, victoria
    US Property

    Hi

    I'm looking into buying property in the USA and the returns do seem to be too good to be true. Why aren't locals all involved in it if the yields are so great?

    Does anyone know of people who have been burnt in this?

    Thanks a lot.. Chris