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US Property - Worth Playing Your Trump Card?

US Property - Worth Playing Your Trump Card?

3rd October, 2017

First things first … ask yourself what’s so appealing about the US market? Generally, it’s the low price points, starting at approximately $25,000, which is attractive to Australian investors. With pricing like this you think you can’t lose. Well, I will tell you can and people do.

Property Transactions and Rental Management is very different in America to Australia.  You want to have a good grasp of: exchange rates, taxation, investment structure type (Trust, company or personal names), USA property law, and US economic cycles/trends.

I personally don’t invest in markets that I haven’t had ‘on the ground’ experience or built strong relationships with someone who has ‘on the ground’ experience. Ground presence is crucial, particularly when it comes to international markets. Understanding market volatility makes all the difference. This understanding only comes through experience in seeing how quickly a market does recover when thrown a curve ball, i.e. Country Elections, Terrorism, Severe Weather, Financial Crisis, etc.

Personally I would be keeping my money in Australia. Even if the projected return isn’t as high. The risk outweighs the projected return for me.

If it’s a lower price point investment you are after, I continue to meet many savvy companies/investors that are building wealth for themselves and clients (including me) through managed fund structures – which involve investing smaller portions into private commercial funds, private lending, and potential for other property funds that I am currently assessing.

If you still are still drawn to the US property market, then I would recommend researching the people you are looking to work with in those markets by asking:

  • What is the size of their portfolio both in Australia & USA? Acquire as much understanding as you can around their knowledge and experience.
  • How long have they been transacting properties in the USA? Has it been over several property cycles?
  • What is unemployment rate in these cities/towns?
  • What is the outlook regarding another financial crisis and what infrastructure will manage a strong standing in difficult times?
  • How often are the experts, so the people who are guiding you, visiting the US?
  • Who are the ‘On-The-Ground’ representatives in the US?

Also be mindful of the cultural differences around what’s truth and what’s embellishment. I would also suggest visiting areas recommended to you before dropping any cash. This will be a worthy investment of time and minimal cost for an experience that will enable you to broaden your aspect and total feeling before continuing down a particular path.

If you would like to talk US Property, or anything and everything property, let’s connect.

Or check out my First Time Property Investing Program.

by Luke Moroney

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