Property investors look to the US

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With Australia's property market booming, home buyers are looking to the United States, where you can pick up a cheap investment.

Our property market is booming with record prices and clearance rates but that makes it a seller's market.

Once, the solution was to look further out or a few suburbs away but the solution now is another country.

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Fourteen months ago Queensland couple Shaun and Jody Brady bought a house in Missouri, near Kansas City, in America's mid-west.

We met them just after they sealed the deal on their first American house.

Shaun and Jody have been landlords before and 12 months on say the financial returns on local properties were never as good as this.

"We get $800 a month in Australian for a $25,000 investment," Shaun said.

At this rate the couple will have the house paid off within two-and-a-half years.

"It has been really easy to get involved, to get it happening and to be making money without doing much," Jody said.

John Jones is Marketing Manager for HousebuyersUSA, an Australian-owned business that renovates and sells houses in the US.

"In America it's very different situation, with the properties that we're looking at," he said.

"They are foreclosed properties that have been fully renovated and they are tenanted.

"Those properties do return very good percentages on the actual cost of the property."

The combination of a strong Aussie dollar and the collapse of the US economy, according to John Jones, presents Australian Investors with a golden opportunity.

"I guess the fortunate side of things is that with such a great number of foreclosures in America, which is a sad thing to say for the people involved, but from a personal point of view of buying property it's a very good opportunity."

Last year 358,000 US home owners defaulted on their mortgages, compared to 22,000 here.

It is these homes the American banks are now selling to recover what they can and because the banks are still struggling, mortgages are not really an option.

How it works
The average price of a foreclosed house is around $30,000. One-off fees include $2,950 to HousebuyersUSA for arranging the purchase, $1000 to set up your American company which will own the property and a further $500 title insurance.

Ongoing fees include $60 a month in property management fees, $350 in rates and around $600 in house insurance.

After costs are deducted, and provided you have tenants paying the rent, the expected return is around 15 per cent.

Professor Reed is an expert in real estate investment and he urges caution when buying any investment but especially when buying overseas.

"I would be asking the question 'why are these houses so cheap? Why hasn't somebody bought them and what are all the total costs involved?"

"I would certainly not just rely on the one source being the internet or advice from the marketer," he added.

"I'd go and find out second-hand advice, I'd do some research and ask other investors looking at investing in that medium, I would speak to some of the local governments and the schools and just get some feelings for what they feel about it."

Related link

For further information visit the website at www.housebuyersusa.com.