Am I able to legally purchase property in the US even though I am not a US citizen?
Yes. There is no limit to the number of houses you can buy or the value of the portfolio you wish to grow.
What if I am not Australian – Can you still help me?
As long as you don’t mention any sporting losses your national team dealt us, we will be happy to assist you in making a purchase. Brits, Kiwis, Canadians, Indians, Chinese; all nationalities welcome!
Why would I want to invest the US property market?
Simply put, this is a perfect economic storm of property investment opportunity. It is an unprecedented opportunity for bold and conservative investors alike to reap huge rewards, and we make it easy for you! Click this link to visit our “Why USA?” page to find out more.
How can I purchase a US investment property?
That’s what we’re here for! This topic is too large to be covered in this FAQ. We recommend starting with our Investor Resources section. Click the “Getting started” link. As you will see there, we detail a list of a number of steps which we will guide you through before, during, and after purchasing your property. All American Properties members are expertly guided through this process step-by-step, click here to find out more about the benefits of membership.
How much does a US investment property cost?
The investment properties that we recommend typically fall within the $30,000USD to $500,000USD range. However, high-net-worth individuals and institutional buyers are encouraged to speak with us if interested in the larger deals we have access to. Institutional buyers – click here to find out more!
Why are US properties so much cheaper compared to Australian property?
American properties have always been relatively cheap compared to Australian properties. The average price for a home in the US in 1998 was just under $100,000USD. At the height of the recent real estate bubble in early 2007, this average price was $193,900USD. When this bubble “popped” and the global financial crisis set in, the average dropped to just below $150,000USD. As of January 2013 average prices have climbed back up to $158,100USD.
Where in the USA should I invest?
We can offer you fantastic investment properties in every US state. However, the combination of certain economic and regional specific factors create much more attractive investment conditions in a few particular states-New Jersey, Texas, Georgia, Tennessee, to name a few. Click here to review our market research data on our preferred investment locations.
What kind of returns can I expect?
Positive cash flow after all expenses (cash-on-cash return) can be as high as 20% although typically closer to 10%. Appreciation potential is very high in many US states. In the period of May 2012 to May 2013 the US market appreciated at an average of 10.9%. The highest appreciation rate for any major state was Arizona at 23%.
Can I finance my investment property purchase?
The short answer in most cases is, yes! Through our partner network we can obtain for you GENUINE USA BANK FINANCING with the same interest rates and terms as those offered to resident American citizens – currently 5% and 10-30 years. The only catch is that the downpayment will be in the range of 30-50% for foreign investors with no credit history or background in the USA. We can also offer low-doc and no-doc loans via private lenders and other institutions. These loans typically require a 50% down payment, interest rates can vary from 5-12%+, and terms can be 2-15 years. Despite these less-than-perfect terms, this type of financing can still be viable and beneficial for many investment strategies.Click here for more info on our Financing/Mortgages page.
Another option is to take an equity line of credit against your property in Australia and use this money to purchase in the US. We can assist you with this click here for more information.
But – Cash is always King. By paying in cash you can nearly always negotiate the lowest prices for your property, close in the shortest time, and reduce ongoing risk.
How long does it take to purchase a US investment property?
Typically it takes between 10-60 days from the date that you sign the purchase contract. The exact time frame depends on a number of factors individual to each deal – cash transactions are completed quicker than debt financed transactions, some states process the paperwork fast or slower than others, among other factors we can help you navigate.
Can I purchase property through my Self Managed Super Fund (SMSF)?
Yes, although there are strict guidelines to be followed, you most certainly can. Any time you consider investing with your superfund you should seek independent advice from a qualified professional. That being said, it can be a fantastic option to diversify your holdings and hugely increase your returns. Follow this link to our services page to learn more about this option.
What are the costs involved?
Upfront costs include the purchase price, closing costs and costs for optional services. Ongoing costs include property insurance, property management, accounting fees, etc. We discuss this topic at length in our Investor Resources section; please click here to find out more.
What about stamp duty?
Stamp duty does not exist in the USA. Great, right?
Can I visit the US to inspect my property before purchase?
Yes. You are able to inspect all properties before making an offer, or you can make an offer contingent on an inspection within 7-10 days. As an alternative to travelling to the US we can also refer you to a professional independent property inspector who can provide you a detailed report on the property. See this link in our services section for more information on this.
How do I transfer money between Australia and the US?
In this day and age of modern banking this type of transfer could be completed via internet banking or a simple phone call to your bank’s toll free line. We recommend comparing your bank’s rates with OzForex – they specialize in international currency transfers at extremely competitive rates. Click this link for more info on this topic.
How can I sell my US investment property?
If you would like our assistance then we are happy to help. We can offer your property to new and existing American Properties members or we may offer to purchase it directly. Alternatively we can refer you to a number of great real estate agents based in the US.
If you are looking to sell your current property in order to purchase another US property, you can take advantage of an amazing tool called a 1031 exchange. A 1031 Exchange is a benefit in the US tax code that allows you to sell your property and pay no capital gain tax as long as you buy another property within 180 days. Our trusted accountants can advise you fully on this.
How do I know my property is free and clean of any tax liens or other encumbrance?
Our consultants can help provide you with title reports. Title insurance costs only $200-300 USD and is designed to protect you against any kind of tax lien or encumbrance. We strongly recommend it for any purchase.
Will I be managing my own properties? Collecting rents, organizing repairs, finding tenants?
We cannot emphasize strongly enough that you should utilize the services of a property manager. A property manager will handle the day-to-day management of your investment while you focus on growing your portfolio. They will collect rents and deposit them in your bank account, organize repairs, find new tenants whenever required, and provide a wealth of local knowledge. We discuss property management at length in our services section here.
How long should I hold my properties for?
This is ultimately a personal decision. However, we recommend a buy and hold model with a minimum 3-year holding period. The owners of American Properties purchase properties with the intention of holding them for at least 10 years. To understand more about a buy and hold investment strategy and other investment strategies please click here to visit our Investor Resources section where you will see the section on this topic.
Why should I invest with American Properties?
We appreciate that you have a number of options when it comes to investing in the USA and it goes without saying that most of these options are with good and honest companies that have nothing but the best intentions. But are these companies based on the ground in the USA, living and breathing this market? Or do they outsource their due diligence to third parties based in the USA? Do they have the appropriate skills, knowledge, experience and relationships to ensure you the greatest possibility of success?
By choosing American properties you are choosing an Australian owned company based in the USA – right amongst the property investment action. We offer the highest level of service, the lowest fees and access to the best investment properties in America. We are the best in the industry at what we do because it is our mission to ensure that your investments succeed.
If you are serious about investing in the USA, choose an industry leader who’s got what it takes to ensure your success.Choose American Properties.
How does American Properties make their money?
We charge $1995 for our Membership package. Our comprehensive Membership package sets our clients up with everything they need to safely and effectively invest in the US property market. Unlike our competitors who charge a service fee to you, the buyer, for purchasing an investment property; we charge the sellers a small fee for bringing them qualified foreign buyers. Our business model relies on high volume, not high margins. Referrals and repeat business drive our growth, not squeezing as much profit as possible out of a small number of deals.
Why use your service at all, why not do it myself?
There is nothing wrong with this approach if you are willing to put in the all time and effort to thoroughly understand the US property market and the investment process in that market. Our Investor Resources section is designed to be a gift that gives you the foundation you need to begin this journey yourself. Many of our clients prefer to leverage our skills, knowledge, experience and relationships via our $1995 Membership package in order to save time, reduce risk, and improve their overall results. It is a matter of personal preference, but we feel strongly that a membership with American properties is the best investment you can make in the US property market.
Does becoming a member mean that I am obligated to buy a property through American Properties?
No, not at all, there is no obligation whatsoever. Our membership package sets you up to purchase any property in the USA from any provider. As one of the benefits of your membership, your American Properties consultant will ascertain your investment goals and present you properties tailored to your specific situation. The majority of our clients choose to pursue our recommendations and are highly satisfied with the results. However, some customers see great success sourcing their own properties. It’s not our prerogative to restrict your options, or obligate you. Be wary of providers who do!
The below information is not intended to be a replacement for advice from a professional lawyer or accountant. Please seek independent advice from a qualified professional. This information is intended only as a guide.
Do foreign investors pay tax in the USA?
Yes. You will pay tax in the US on any income earned in the US, and you will pay tax in Australia on your global income. However, there is a double taxation treaty in place between the US and Australia. Essentially this means that the taxes on your income from your US Property will be subtracted from the amount you owe to the Australian government – this means you don’t pay the same income tax twice.
Do Australians pay capital gains tax when selling a US investment property?
Yes, both in the US and Australia. But once again, the double taxation treaty eliminates actually paying twice (or paying any more than the greater of the tax rates between the two countries).
Can I claim visits to the US as a tax deduction?
Yes, but within reason of course. Some of our investors factor this into their investment strategy. Like travelling to New York? A property in nearby Trenton could allow you to offset some or all of any visit as a tax deduction. The specifics of this would need to be discussed with a tax professional.
Can you depreciate a US property for US or Australian tax purposes?
Yes, the US tax code allows for the depreciation of investment properties. The depreciation allowance effectively decreases your US taxable income that in turn decreases your taxable global income reported on your Australian tax return-a result of which is lower tax expense.
What property expense deductions are allowed in the US income tax code?
Lots-normal operating expenses such as, property taxes, management fees, maintenance, etc. are all deductible expenses. Our trusted team of accountants can advise in more detail when you are ready.
What is an LLC, ITIN and EIN?
An LLC (Limited Liability Corporation) is the ideal US business entity for holding real estate real estate. LLC’s have many legal and tax benefits such as pass-through taxation, which we describe more on in our service section here.
An EIN (Employer Identification Number) is similar to an Australian ABN. You will need an EIN to open a bank account for your LLC, to purchase a property, and pay taxes. We’ll help you with your EIN-click here for more details.
ITIN (Individual Tax Identification Number) is similar to an Australian TFN (Tax File Number). It is your unique identifier to the American government for taxation purposes. US residents however use a SSN (Social Security Number) for this purpose.