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Buying Property in the USA

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  • Buying Property in the USA

    Hi, I'm looking at buying some property in America. The yields look very good. Does anyone have any experience investing in the States?

  • #2
    Buying property in the US is generally quite easy. Actually, I would say it's easier than buying in NZ under recent AML laws and registration requirements. There is 1 issue when buying in the US and that has to do with estate / death taxes. If I recall correctly, it's a whopping 33% tax on the total value and that applies to non-residents. US residents get a $10M estate exemption. Holding the US property under a trust name or corporate would involve accountants and lawyers which adds to the cost of ownership annually. Also you have a weak NZD to the USD currency rate.

    In terms of after tax real estate gains, Auckland has done extremely well over the past 10 or 20 years when compared to abroad. Those that left NZ say about 15 years ago to places like the UK (where at the time the GBP was 3 times stronger than the NZD) had done far worse upon returning back in recent years. I mean if they bought property in London at that time and sold today, they would be far better off owning the house in Auckland (as recently the GBP is less than 2 times to NZD). This is not to say things would be different for the US market. It's just that with no capital gains tax on NZ real estate is a strong incentive to keep NZ investors 'in' and without having to worry about estate death duties on NZ property.

    As a disclaimer, I own property in the US jointly and looking to sell.

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    • #3
      Originally posted by WreckTangle View Post
      Hi, I'm looking at buying some property in America. The yields look very good. Does anyone have any experience investing in the States?
      Take a look at the yields available. Amazing. SBQ or anyone, do you know much about Detroit and investments like this one?

      https://www.detroitpropertyshop.com/...roit-mi-48204/

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      • #4
        I wouldn't touch it and it's most likely dead $. Don't bet on the rental income to maintain the attractive yield. LIke many NZ shares, the dividends or rental incomes don't last forever. The yield may be attractive but replacement value isn't. Be certain the building is a buy is as is deal. Low income tenants never take care of the place so there's probably a lot more to see that isn't disclosed. Asbestos, zoning covenants, but more importantly, if you had to replace the building, could the cost justify the higher rental price, especially in a neighborhood that lacks the paying jobs?

        You really need to do your homework, if buying with considerable sums, it would even pay to fly over and live there for a few months just to get the know of things. Detroit has been never came out of the collapse of the auto industry and most likely will never rebound like the rest of the US.

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        • #5
          Originally posted by nextbigthing View Post

          Take a look at the yields available. Amazing. SBQ or anyone, do you know much about Detroit and investments like this one?

          https://www.detroitpropertyshop.com/...roit-mi-48204/
          Have a read of this. It doesn't look like they're impartial, however it gives some insight as to what's going on.

          https://homevestorsfranchise.com/blo...-look-in-2019/

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          • #6
            https://www.quora.com/Is-it-still-go...etroit-in-2018

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            • #7
              https://www.freep.com/story/money/bu...gium/99823810/

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              • #8
                It's the US. Please Google "landlord shot trying to collect rent" and ask yourself, "are the rents worth the risk" :-)
                Don't drink and buy shares in a downtrend, you bloody idiot!

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                • #9
                  Originally posted by nextbigthing View Post

                  Take a look at the yields available. Amazing. SBQ or anyone, do you know much about Detroit and investments like this one?

                  https://www.detroitpropertyshop.com/...roit-mi-48204/
                  Google street view is your friend. Take a look at that property, it looks derelict and all the empty sections filled with rubbish surrounding it makes this neighbourhood one of the ones likely to be bulldozed in the future.
                  Don't drink and buy shares in a downtrend, you bloody idiot!

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                  • #10
                    Yep. Just like that Belgian guy that got rooked investing in Detroit (in WreckTangle's link). The window dressing makes investors all over the world thinking they're investing into something real good. If the deal was that great, then locals would be jumping on to it.

                    There's no substitution knowing your own territory. Even a better bonus knowing that you can drive by it everyday.

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                    • #11
                      Originally posted by SBQ View Post
                      Yep. Just like that Belgian guy that got rooked investing in Detroit (in WreckTangle's link). The window dressing makes investors all over the world thinking they're investing into something real good. If the deal was that great, then locals would be jumping on to it.

                      There's no substitution knowing your own territory. Even a better bonus knowing that you can drive by it everyday.
                      Yeah, local speculators buy something for $50k (which according to Zillow was what that property was worth a few months ago), do it up, take nice photos, then flip it quick smart to an overseas investor who doesnt know the area or the nature of the tenants. Within a year or two, the property will be derelict again and with overdue rents, due to its scummy tenants and their friends, and the n00b investor is stuck with a property they cant sell or collect rent on.

                      If you look on Zillow you can buy houses in that area for $1200 - the question is "do you want to?"
                      Don't drink and buy shares in a downtrend, you bloody idiot!

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                      HLG

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