I am a 31 year old guy from Sweden and I have never been in the Real Estate business before, but since the american finance disaster that happened through the past years, I tought to myself; hey! this might be a ones-in a-lifetime opportunity. The USD has dropped 25% against the swedish currency since 2009 and in addition to that the real estate market has in some areas dropped around 50% since 2008 (correct me if Im wrong).
Therefore am I asking you, dear Reiclub-member-fellows. I have around 3 million dollars initially to invest. What would you do as an foreign newbie?
My focus is right now on Florida- Miami or Carlifornia.
I would really appreciate every tiny tip that you can provide me.
You’re not wrong at all, Picasso. For foreigners with cash, the US real estate market is presently an opportunity we may never see the likes of again. The dollar has sunk and will continue to do so. Where I am in Florida, property values have, indeed, dropped 50%. In some instances, even bigger discounts can be had. And if you’re waving cash around, there’s no knowing how far a seller will drop their price. In today’s credit market here in the US, even if a buyer does show interest in a property, the seller needs to be concerned as to whether or not they can qualify for a mortgage. Not at all a given these days. Cash is king, picasso, and you are sitting on the throne right now. :beer
I’m in Miami, so if you have any questions I can help you with, don’t hesitate to send me a PM.
Good luck!
Picasso, I have a 3BR/3BA, 1600 sq ft townhouse outside of Houston I could sell you for that amount… No deal?
What is your goal for this investment? Do you want to get in and get out? Or do you want to hold for awhile? I am not sure about the markets in those areas, but I would assume $3M could get you a pretty decent Multi-Family building that you can cashflow for a few years and when the market picks up you can cash out the equity. I think there is a perfect storm in our economy right now that gives landlording the advantage.
Or if you wait long enough you may be able to buy the US for your $3M the way things are going…
Our plan is to start purchase within 6 month and then continue buying every 3 month. Our intention is to hold for at least 10 years but probably even longer. We are right now taking condos under consideration.
What´s your opinion regarding condos as an investment( cash flow- wise versus a multi family- bulding or multiple single houses)? Pros and cons?
We are also planning to hire a property management team since we dont have any intention in moving. Is 10 % of the gross rental reliable?
Have you any idea whether the U.S. banks agrees to lend to foreigners if you put 50 % down? And if so, at what interest rate?
Picasso, if you’re looking to buy and hold, then your long term approach is necessary. I don’t see any appreciation on the horizon for the areas you’re interested in. Condos, in particular, have taken a serious nosedive in value here in south Florida. During the boom years they were being built faster than cockroaches run when you turn on the lights. Of course, we all know what followed. But that means there are exceptional values to be had, especially if you’re buying with cash. Compared to single family housing in this area they are a better value as rentals. The cost is less as is the maintenance. The likeihood of a single family house cash flowing in these parts is remote unless you are buying in bad areas, war zones and the like. Not recommended.
As for the banks, they are running scared and not readily making loans. With prices still declining they are being rightly conservative. However, 50% down ought to soothe their nerves somewhat :cool Another approach might be to buy for cash, get a great discount, and then go to the bank to refi and pull some of your money out.
Picasso, you may want to take a look at Washington DC metro. Gov’t is the only thing growing these days in the USA and this has caused the DC area’s economy to remain quite strong being the nation’s capital, while most of the nation is still many years away from growing at all. But get this: SMOKING DEALS ARE STILL LITERALLY EVERYWHERE!
I’ll say this much…houses the close-in areas (DC proper, Arlington/Alexandria VA) are moving like hotcakes due to their favorable location and as a result there aren’t very many deals there…however in the suburbs, particularly Prince Georges County MD and Prince William County VA it’s like shooting fish in a barrel. These areas are still lagging and foreclosure sales in those jurisdictions still dominate the market. This is creating a tremendous opportunity to buy houses at less than half of their 2005/6 values, many of which actually don’t need much work if you can believe that.
Here’s another way to look at it. Prices in many DC suburbs is now similar to that of similar homes in places like Baltimore or Virginia Beach, however one look at the demographic profiles and there’s literally no comparison that DC values should be MUCH higher (as they have been historically). Point blank, DC is on CLEARANCE but the sale ends very soon!
I cannot recommend specific areas to invest in, but you might want to consider the following:
How much income/cash-flow do I want to receive from my $3,000,000 investment?
How much tax will I need to pay as a foreign investor on this income?
Do I need to pay tax in the US and my home country?
Which areas have jobs growth, population growth and seem undervalued?
I would agree that the US has had a large downturn in values across the country, but that does not mean you could just buy any cheap property and assume it will be worth double in 10 years time.
Make sure you research the fundamentals such as investing near public transport and infrastructure, achieving a reasonable rental yield and the population is increasing at a reasonable rate.
These fundamentals are what can give you snapshot of the future for the area.
In some cases, the investment opportunity can become even more lucrative in tax lien sales and tax lien certificates. Few advantages are fixed-interest rate returns as well as have the chance to purchase property much less than the original price.
That is a lot of money to invest in something you are not sure about. If you are serious about US Market, you need to get educated about its market…not from CNN. There are many real estate research center that publish free stat. Texas A&M has one for Texas market (residential, land, farm and ranch), ICSC for shopping centers etc.
Then, you should attend a real estate seminar here or at least listen to training CDs so you know terminology and how things work here. Get a good team like lawyer, broker who can represent your interest.
I am a commercial real estate investor so I would recommend investing in Bank-Owned commercial asset. You can make money in any type of real estate and anywhere in US when you BUY it right.
I would not rush myself in investing your money if I were you.
Find a place where you will consider staying for long because that’s the place where you can invest your money then do a lot of research. Would you like staying in a condo or get a small to medium house? Are you going to stay in that place/country for long? Should you make investments… how are you going to manage them? These are just some considerations you might want to think about.
