Investing in the States!

Well, I've taken the plunge!

Having invested in UK property, with my first buy to let just completed and being done up to boost the rental and re-mortgage value, I have turned my mind to the exciting opportunities abroad.

I was present when Ayshe Kadir gave a group of 20 moneygym members a talk on Investing in Property in the United States. It was mind-blowing.  In fact, as we all agreed afterwards, a "no-brainer".

Investing in America offers several advantages at present.

While property prices have gone down in the UK, those in America are ahead of us due to the sub-prime foreclosures. Although they may not be completely at the bottom of the cycle (who knows?) they are likely to be nearer to it than in the UK.

Ayshe kindly explained all about the events leading up to the current credit crunch in the US.  Basically house buyers were offered a very low (unrealistic) introductory mortgage rate, to be hiked up to market rates after 2-3 years, but were assessed for mortgage repayments at the lower rate. Consequently many of them are now unable to keep up repayments. Thi does sound familiar, doesn't it?

This is leading to multiple houses being repossessed ("foreclosure" in the States). In fact, it is estimated that 1 in 20 US homes are being repossessed.

Opportunities abound in the US for buying property at record low prices.

There are three particularly good ways to make money out of property in the US at present. These are:

Tax Liens
Tax Deeds
Pre-Foreclosure

Tax-liens occur if a householder is "delinquent" - in arrears with his/ her property tax (council tax, if you like). If they do not pay the due amount by the 1st May, the court places a lien (legal charge) against the property, disabling your ability to refinance or sell it. At the time of going to court there is a penalty attached, which varies according to the state concerned.  The tax lien certificates are sold to investors. The lien holder (investor) then takes the interest on the tax and the investment, giving a ROI of 8-80% depending on which state you are in.  The redemption period (the time span for the property owner to pay the tax) can be up to 3 years, so it is not a quick turn around investment. Most property owners pay up at some time in that 3 years.

If you have some money to invest in the medium term, this is a reliable focus as it it guaranteed by the state.

In some states Tax deeds exist rather than tax liens. In these, the county will sell the house if the property owner does not keep up with taxes. The quirk here is - the property is sold for the value of the tax owed, not that of the property - here you can buy houses worth $200,000 for $10,000.

Pre-foreclosure purchases occur "on the court-room steps" or in the weeks leading up to a court hearing. Property owners would far rather get a good price for their houses than  they will get in court. It is possible to help people out here by buying during this time.

The way to make money in property, whether at home or abroad, is to buy "below market value". This may mean buying poor-looking houses & doing them up, or finding "motivated sellers". With pre-foreclosure deals we have access to 90 motivated sellers per day in one state alone!

Of course, there is far more to investing in the states than this, and in all cases due diligence is needed.

So I've signed up with Ayshe, and we wait to see what evolves - at the moment it is forms to fill in, companies to create, & notaries to meet up with...

Enjoy life - I am !

Alison

Financial Freedom for Doctors can help you to work out how soon you can be financially free, enabling you to work part time, take better holidays or plan for an earlier retirement. Find financial freedom through property investment, the stock market and the internet.

Comments

[buy houses]

Make sure you select an agent who is experienced in selling REO’s so that you get good advice on what to expect and guidance . Not all agents have done this kind of business, and it is definitely different from a typical sale. They generally get profit through their commission from the bank, so you don’t pay for it yet you benefit.

[Bradley Tomkins]

I'd echo those views.
I'd also recommend www.propertyinvestmenteducation.com if you want to learn how to avoid getting caught out.
They have an abundance of FREE educational material.