You have probably heard that US Property is at an all time low, so what makes this a great time for Australians to invest in American property?
As with any investment opportunity the market conditions need to be right, to allow investors to get maximum potential for gain, with minimum risk. It will not always be a good idea for Aussies investors to buy US Property as there is a lot of information to consider. However, for the 7 reasons below our experts are confident the timing is right at the moment and that it will only stay this way for a relatively short time.
- Our Powerful Aussie Dollar – in recent times our AUD has achieved record exchange rates against the USD, which means that we can buy more for less at the moment. As the American economy improves this will adjust and we will not have the currency advantages we have now.
- US Properties are on Sale - the American economy has been struggling for many reasons, including the impact of the non-recourse loans previously on offer, the 2008 banking crisis and increasing unemployment rates. These have all contributed to a massive drop in home prices and the decrease is so high that Aussies can actually purchase already discounted houses in the US, in good areas at 50-70% off their market value, which is amazingly less than the price of stamp duty on an average home here.
- Over 100 US Banks went Bankrupt - As part of the GFC many US banks went bankrupt. The remaining banks are now very scared to lend to US home buyers and they are burdened with debt so fewer loans are possible.
- US Buyers are Holding Off - With banks unable or unwilling to loan money, it is too hard for most Americans to get loans at the moment. Also, potential home owners that could get loans are concerned about job security and the overall state of the economy and they are choosing to rent until things stabilise.
- Poor Credit Ratings - Another factor holding back American buyers is poor credit ratings. FICO is the most common credit assessment model in the US and as a result of the high number of people who've lost jobs, defaulted on bills or walked away from their mortgages, millions of people in the US now have a low FICO credit score.
- Lenders want International Investors – the weakness of the US economy has opened the doors for International Investors. According to the recently released 2011 Profile of International Home Buying Activity from the National Association of Realtors, the value of international residential purchases in the US surged $16 billion from $66 billion to $82 billion in the year ending March 2011.
- Positive Cash flow Properties – Despite the drop in property prices, rents have largely remained stable, creating historically high gross rental yields in good areas, which means it's possible for Australians to affordably purchase high yield positive cash flow properties.