I am a US Citizen living in Europe interested in investing in real estate in the U.S. I have looked at single family houses and after doing the math, see that they give a return of 5-7%, or about $200 net a month for houses in the $130,000 range. One flight of mine to investigate the property more or less wipes out the annual profit, and I want cash flow more than I want to speculate on appreciation.
Then I began looking at 4 unit rentals that are bank possessed and selling at the same price as above, but with a much greater ROI in terms of cash flow. (they are priced at 33% -40% the 2007 prices). I have good friends who manage properties in the area and they are talking about annual cash flow returns of 20% on cash invested before taxes, or several thousands of $ a year.
Putting aside which type of asset has more potential appreciation, is it generally true that such commerical properties, if properly managed, generate more cash?
What are some of the pitfalls and issues to pay attention to?
Thanks, Tal
You will get more cash flow and a higher ROI out of a multifamily house in most cases. The best bet for you to become educated with the US real estate market is for you to actually post deals that you are interested in and let us do the numbers for you the way we buy property here. You then will get recommendations from us on what is a good buy and what isn’t. This will help you learn to spot a good deal and prevent you from making a bad financial decision.
Most investors here are interested in the house cash flowing at $100 USD a month per door after all expenses and loan payments. That way you are being paid a little for your investment and the house is being paid off by your tenants.
Look for foreclosed homes and talk directly with a REO realtor in the area that you want to buy. If you have friends here that can look at the property for you and tell you how much in repairs is needed you will be best off. There is a high failure rate of out of State or out of country investors and your way to minimize this is to first come here to make sure you are making a financially sound decision, then have your property managed by a professional property management company. If your friends have been doing this for a while they will be a great help.
Lay out your deals and all of the details. Cost to buy, verified amount it will rent for, etc. We can help you on how much you should offer.