5 contractor must-haves to make the best of your property investment

The way your property looks and feels will make or break your sale–and those factors rest on your property investment team’s contractor. It’s important to hire a contractor you know will get the job done professionally and effectively.

Hiring a contractor to oversee your property renovation gives you direct access to an expert who can manage all the moving parts for efficient project completion including project coordination, consistent quality control and timely and accurate communications.

Without a contractor, you run the risk of shelling out more money than necessary in case of damages. Your property may not look as seamlessly finished, and handling the tradespeople may not be worth the time, effort and money if everything is disjointed and communication is poor. To make the best of your major property renovation and upgrade, you need a contractor.

You can’t just get any old contractor, however, you need to find a good contractor who works with your needs, responds quickly and is in sync with your communication style.

While it will take a little extra time to go over resumes and conduct background checks, you will have security around your renovation work knowing everything will be done on time to the highest possible quality. As well as reducing your stress, hiring a professional will maximise your chance of a great return on investment.

As an Australian investing in residential real estate in the U.S., it’s possible to see amazing profits, especially when you overcome the challenges of time zones and distance. The way to ensure this is through hiring a skilled property management team on the ground, starting with a contractor you trust to coordinate your project. Getting that right means you can rest easy and let the extra income roll in.

Why hiring a good contractor is important

Finding a good contractor is essential to keeping your property improvements consistent, on time and in line with the vision in your head. Your contractor will help keep your project on track by overseeing essential tasks such as:

  • Hiring qualified subcontractors
  • Coordinating with suppliers for materials
  • Addressing and relaying build status
  • Overseeing build quality and timeliness
  • Managing construction workers

As the most hands-on member of your team, they’ll have a direct impact on your property renovation timeframes, consistency and quality. The right contractor will also bring engaging energy to the project site which can change the pace and worker motivation for the better –from simple refurbishments right through to property overhauls.

The benefits of hiring a good contractor far outweigh the costs and will assist you by:

  • Saving time and money overall
  • Providing access to their trusted subcontractor network
  • Giving support and feedback to workers on site
  • Reducing and simplifying your workload

Five things a great contractor needs to demonstrate

The right contractor will oversee your project to ensure you have the best quality renovation possible and show that they have the ability to seamlessly handle every subcontractor and tradesperson working on your property. Here are five things that your contractor needs to demonstrate to be the most valuable part of your team.

 

1.  A proper licence

The most important thing you need to secure is a copy of your contractor’s licence. A photocopy or photograph of the licence is enough to cross-check with online databases that store professional contractor information and ensure it’s legitimate.

Licence conditions vary from state to state so you will need to do your research on what is required for the state your property is located.

 

2.  Insurance and property damage coverage

A professional contractor will have general liability insurance to protect against any kind of loss and mitigate risks.

As well as your property damage, there also needs to be protection against damage to worker property or personal injury to workers as well, especially in the U.S. where hospital costs run into the hundreds of thousands.

As well as protecting your investment and ensuring the wellbeing of workers, a contractor who has taken the time to secure general liability insurance is demonstrating their professionalism and how seriously they take their job.

 

3.  Past experience, customers and social proof

Your research into who you hire will need to go deeper than just the testimonials they provide as part of their resume or website. No one is going to post a bad review of themselves. To get the social proof you can trust you need to cast a wider net. Google is a great example of a research resource as your candidates can’t manipulate the greater web.

Look for past client reviews, follow up on case studies to get more information and dig as deep as you can to see what they are really like to work with. If there is a negative review, give them the benefit of the doubt and ask them about it. Not only will this show you both sides of the story, it will also give you an idea of how they handle situations.

 

4.  A legitimate network of subcontractors

An experienced, reliable general contractor should already have subcontractors in mind or people they’ve worked with in the past.

 

This will give you legitimate shortcuts in finding and hiring a team that not only performs to the contractor’s standards but already knows how to work well together. This will reduce the likelihood of walkouts and reduce team standup times making your flip timeframe shorter.

 

Who your contractor selects will also show how well they know their job and the specifications involved for your type of renovation work.

5.  Keeps accurate job files and bookwork

While trade work is hands-on and active, it also comes with paperwork, lots of it. There are subcontractor contracts, plans, permits, order forms, blueprints and easements that all need to be carefully filed and referred to multiple times throughout the project.

 

A contractor needs to be practised in keeping everything in writing and accessible. This is important when working with someone regardless of your location–but even more important when working interstate or internationally.

 

The contractor should be able to provide you with a high-level overview of their systems and communication methods which should predominantly be digital (as I doubt you want multiple calls throughout the night to answer one simple question). This will also give you an indication of how they run their business at large and their professional abilities in being organised and reliable during a hectic and complex building project.

 

At the end of the day, hiring someone interestate vs. overseas isn’t that different. You want to ensure you are hiring a trustworthy and professional contractor to oversee any property investment renovations.

The main takeaway from this is to ensure that you don’t solely rely on an interview. It’s important to carry out the required background checks to make sure they have the qualifications and work history to back up their resume.

Not only will these extra measures reduce the time and effort required for worksite check-ins, you also help create a better team on the ground who are responsive, quality-checked and working to schedule.

If you are interested in flipping a U.S. property for profit, take a look at our Fix and Flip Academy. This online, self-paced course gives you all the information you need to get started.

For any further advice on buying residential investment property in the U.S or building your ground crew, give the Star Dynamic team a call.

5 red flags to watch out for when dealing with a real estate agent

Wouldn’t it be great if we knew in advance that a deal was dodgy? In hindsight it might be all too clear that you were walking into trouble, but if you are new to a situation, or pumped with emotion about something exciting – like a property purchase! – you might be walking blindly into a ready-made disaster.

In just about every situation there are early warning signs and red flags to look out for, especially when it comes to property buying. The issue is, it takes time and experience to learn what these red flags are, a learning curve that can be expensive and stressful.

Like anything, a knowledgeable and experienced team at your side, you can easily navigate your way through a worthwhile and high-quality residential property investment.

Real estate agents are an integral part of your property team. Hiring the right one requires research and effort in order to get the best of the best by your side. We’re not just in terms of skill, but also in terms of service and how well they communicate with you.

 

It’s important that when you do spot red flags you take them seriously. It’s the only way to weed out unreliable offers and make sure you find a trustworthy real estate agent that will look after your hard-earned Aussie dollars.

Our years of experience helping Australians enter the U.S. property market allows you to build a reliable U.S. property investment team and secure the best properties available across the U.S., all for far less than buying property in Australia.

Why investors may feel uneasy about real estate in the U.S.

Foreign investment ventures always have that extra level of uncertainty around them. Even though residential real estate in the U.S. is a lucrative opportunity, many investors hesitate because of the extra gap the distance and time zones make.

For those who step outside their comfort zone and take the U.S. plunge, the rewards are fantastic and most of the common myths around U.S. investments are quickly realised to be just that: myths.

Here are some common investor fears that most Australian investors find to be unfounded when purchasing U.S. residential properties:

 

  • Real estate is too risky – All investments come with certain risks, which is why you need to do your due diligence before committing to any investment – no matter where it is in the world. When it comes to real estate, it’s a well-trodden road with easy to follow steps. As long as you take the time to build a solid professional team on the ground to oversee your investment, it’s very possible to see fantastic returns.
  • Real estate agents are shady – The unfortunate truth is that there are shady people in every business–not just real estate. You need to exercise caution whenever you’re going into a new business venture, whatever it may be. Doing your research and chatting with a number of real estate agents before you commit will help you create a shortlist of high-quality and trustworthy professionals to assist you.
  • Real estate is a trap because you’re in for the long haul – There is an investment option for every investor. You might prefer the idea of a long-term investment, but equally possible are fast returns with property flips and fixes as well as a variety of lenders to match your needs too.

 

Your concerns for safety and certainty with your investment are valid, and it’s smart to tread carefully in new situations, to a degree. Remember that everyone starts somewhere. Residential real estate investment in the U.S. can feel new and foreign to you now, but if you’re open to it, broaden your perspective and think “abroader,” you will soon find your footing and trust your ground team to invest again, and again.

 

5 red flags that indicate a dodgy real estate agent

Inviting a real estate professional to join your property team requires preparation and time to get right. Once you find a real estate agent you can trust you can feel confident and continue to rely on their services for future investments as you build your international portfolio. Starting your initial real estate agent search you’ll need to be diligent and watch out for these five red flags.

1.  They are difficult to contact

Not being able to reach your real estate agent can be frustrating, and it’s not just about common courtesy, it can damage your investment opportunities if it takes significantly longer to iron out details, especially as there’s a time difference to consider. It could even mean that you miss out on your dream property, simply because they didn’t bother to read your offer.

If your real estate agent is difficult to talk to or communicate with, it’s probably an indication of how they are going to respond in the future as well. Don’t wave it off thinking it’s not going to keep happening, no matter how impressed you are with their resume–listen to your gut and find someone new.

Consider the cost on you personally as well. Waiting for responses can be anxiety-inducing, especially if they make you call within their office hours, leaving you sitting at your computer or on hold at 2.00 am.

Red flags with consistently slow response times can indicate that the agent:

  • Doesn’t specialise in your purchasing field
  • Has no commitment to the market
  • Doesn’t work in their position full-time

Take this as a sign that they are not in a position to fully address your purchase and not that they are simply busy right now. Expect this to be an ongoing and significant issue that needs to be avoided.

 

2.  They seem unmotivated

When someone is clearly not passionate about their job, it can be hard to trust them with your investment. In these cases, you are more like a dollar sign to them than a customer they can deliver quality customer service to.

If you can see they are being half-hearted about their answers and assistance early on, you can expect them not to put their energy and effort into finding or securing the property you really want down the track.

A passionate real estate agent is one that will secure your property investment to the best of their ability.

 

3.  There’s a lack of transparency

Working with someone who doesn’t tell you everything becomes suspicious. If they seem to be holding back on providing information about their processes, work history or credentials, this is a big red flag of what’s to come.

It’s fair for you to question what else they’re hiding, as well as their legitimacy. There should never be gaps in information, especially when it comes to a property you are looking to buy. If they are not upfront and honest, they’re not going to offer the reassurance you need for your property purchase.

 

4.  They seem overly pushy

No one likes a bully, so if you see signs of your real estate agent being overly pushy, take a step back. Remember that they are not just interacting with you, they are also interacting with the property vendors and your future homebuyers. That pushy attitude will push everyone away and hurt your buying power.

You can also expect them to put pressure on you to “buy now” without assisting you with options or negotiations.

While being aggressive in real estate used to be a solid tactic, it’s now outdated and out of favour, so don’t stand for it, especially if it crosses the line to bullying.

Someone patient and charismatic will be equally charming with everyone they meet, helping to grease wheels, make deals and sign a contract that has everyone smiling.

 

5.  They are unprofessional

In every transaction, you have to remain professional–especially when dealing with something as delicate and important as residential real estate investment.

There are a few ways where lack of professionalism shows:

  • Passing the blame
  • Giving excuses
  • Failing to keep promises
  • Getting upset, defensive or emotional over small details
  • Poor communication and response times

It’s important to factor that real estate licensing is easy to come by in the U.S. A lot of people have it to access special reports and databases and don’t have any contacts or the ability to assist you with a property purchase. You need to be vigilant about who you hire even if they technically have the paperwork.

Any suspicious activity, i.e. they are working out of their home basement not a shopfront, needs to be considered as a serious red flag and an indication they might flake on you at any moment..

Being vigilant about who gets a spot on your team includes knowing who you should avoid at all costs. A little bit of research and time spent here ensures you have the best possible group of people representing you in terms of reaching your property and financial goals through your U.S. property investment.

Don’t settle for less than a real estate agent who is professional, prompt, passionate and transparent with their business processes, costs and communications.

Our online, self-paced course, Fix and Flip Academy goes into greater depth on this topic, giving you all the information you need to start investing safely and confidently in the U.S.

To learn more about investment opportunities and costs or working with a property team in the U.S. give Star Dynamic a call.

What to look for and must-haves in a U.S. residential real estate agent

You may be raring to go when it comes to investing in U.S. residential real estate, but just as you need to be discerning about which property you want to invest in, you also need to be selective about choosing a real estate agent you can trust.

 

The reality is not every real estate agent is going to be the one for you. You need to have criteria in place to determine your non-negotiables when selecting who you want to work with. Beyond just avoiding incompatibility, you need to make sure that your real estate agent is someone trustworthy, can actively pursue the properties you want and has your best interests in mind.

 

A legitimate, reliable real estate agent is a necessity if you want to make foreign real estate investment a lucrative way to earn passive income.

What does it mean to be a “legitimate” real estate agent?

 

The first thing you need to do when looking for a real estate agent for your investment property is a legitimate license. Real estate agents are defined as licensed professionals who connect buyers and sellers with each other for property sales transactions. You need to double-check the validity of their licenses first before getting into business with them.

 

If you deal with an unlicensed real estate agent, you run the risk of precarious deals without any kind of protection. And, even if the rates seem low for unlicensed real estate agents, you might end up paying more in the long run because they aren’t meeting your standards and you have to spend more trying to make up for their less-than-stellar service.

 

One crucial thing you need to remember is that every U.S property goes through the Multiple Listing Service (MLS), a reservoir of every on-market property that only legitimate real estate agents can access. Those who don’t have valid licenses can’t look at this database, so it’s best to only deal with agents who can legally review property listings.

 

But having access to the MLS database is not foolproof. Some people get their licenses just to access the MLS database but still don’t operate legitimately. Just because they have the papers doesn’t mean they have the means or intentions to help you.

 

Finding a real estate agent you can trust is crucial to your investment success, which is why you need to find someone professional with integrity and as invested in your real estate goals as you are.

8 things you need to look for in a real estate agent

Here are eight ways to identify a good real estate agent that puts you first, not themselves.

1.  A license

Like we’ve mentioned, a license is the first thing you need to see to make sure a real estate agent has one. If a real estate agent tries to market themselves as legitimate but refuses to show their license, run for the (Hollywood) hills!

 

Secure a photo (or photocopy) of their license and double-check its validity. Luckily, some states allow you to verify licenses and real estate agent identities online, so make sure you do your research on that depending on where you are.

2.  Past experience, customers and social proof

 

Double-check your prospective real estate agent’s social proof and testimonials beyond their own profiles or website as those could be manufactured.

 

It’s not uncommon for some companies to make up imaginary buyers to pressure others into buying in as well.

 

Pro tip: Search engines are a great resource to use to find out about agents, as online reviews on credible websites like Google can’t be manufactured or manipulated.

3.  Active listening and problem-solving skills

 

Listening actively is different from just waiting your turn to respond and weigh in–and that’s an important quality in a real estate agent. Instead of just staying quiet to let you air out your concerns, they should be taking them in, being thoughtful and trying to address them as actively as possible.

 

Real estate agents have to think logically and tackle your issues, problems or concerns about a property analytically. Real estate is no walk in the park, so they need to be able to find solutions for you, especially if they’re on the more experienced side.

4.  Familiarity with the area you want to invest in

 

The best real estate agent for you must be familiar with the local area, prices of similar properties around that area and what’s nearby that contributes to the price of your property (like parks, shopping centers and schools etc.).

A real estate agent that’s knowledgeable about the area is more trustworthy because you know they either did their research or are already intimately familiar with what’s around, making it easier to take their word on prices and standard of living in the area.

5.  Understanding of real estate law

 

Intimate understanding of real estate law, taxes and property investment should be a requirement so that they can point out any legal issues that may come with properties you’re attracted to. Having this understanding helps them better weed out which properties are worth your time and effort.

 

A good real estate agent knows how to operate within the boundaries of the law, especially in the U.S, which may not always be the same as Australian and New Zealand laws.

6.  Negotiation skills

 

A big part of real estate is negotiation. Your agent should be able to talk to other buyers and property owners and be charismatic enough to negotiate a price that works for both parties and is fair to you.

 

Being able to negotiate shows that they’re aware of appropriate pricing and that they’re willing to deal with a property owner on your behalf.

7.  Integrity

 

A real estate agent should operate with integrity–as all professionals should–but real estate agents deal with something as crucial as property investments that contribute to diversifying your portfolio and providing you with passive income.

 

You’re spending a lot of money, time and energy on your property ventures, so a real estate agent should have your best interests at heart. All their actions and decisions should be executed in good faith.

8.  Connection

 

Having a genuine connection with an agent is important. While it’s a business relationship, you should still trust your gut and need to know that you should feel completely at ease with how you interact with them. If you feel they do want what’s best for you and you don’t have any anxiety around your relationship, it may be a sign they’re the real estate agent for you.

 

Jump on a call with them to feel them out with questions on how they operate, what motivates them and what they’re like.

Finding a good agent is important because real estate agents are an irreplaceable part of your team. Property is a great long-term investment, and anything worth doing in the long run is worth doing right with the best possible team you can put together.

 

We go in-depth on this topic in our Fix and Flip Academy which is an online, self-paced course that will give you all the information you need to start investing in the U.S.

 

If you want to learn more about what you need to look for in a real estate agent, give us a call.

 

Renovating Multi-Family Properties

Is buying and renovating the average home a little boring? Consider diversifying your investment portfolio (and simultaneously earn a sizable profit) through buying and renovating a multi-family property. 

 

When we say ‘multi-family home,’ we’re talking about apartment blocks, duplexes and triplexes. Because of their scale, multi-family properties are significantly more work compared to a single-family home with significantly more revenue potential. All the extra time and care can translate to stronger cash flows through multiple streams of income. Let’s face it, having three paying tenants on one property means incredible, predictable, passive income without having to lift a finger for years to come.  

 

Compared to Australia’s infamously heavy stamp duties, real estate in the U.S. comes with little to no stamp duty. This makes property investments in the U.S. more attractive to foreigners and more promising when it comes to a solid return on investment. 

 

Multi-family properties are a lot of work but there are some great bargains on the market ready to be snatched up. If you are prepared to do the renovation work to take a three-star residence to a five-star one, it can result in significant returns while balancing your investments over more diverse assets to decrease your risk of capital loss as an investor. If this is something you need a bit of help with, then Star Dynamic can support you. Just reach out to us via email to chat about your options.

What is a multi-family property? 


A multi-family property is one large building, divided into multiple individual homes, often with a private front entrance and full amenities. It’s not uncommon for each residence to be identical in layout, or to have mirroring layouts. Be careful with what you look for because anything beyond four is categorised as a commercial property, which operates differently in terms of city zoning and financing.

 

Multi-family properties are a popular choice for renters because they’re more affordable than single-family properties. As a bonus, they’re usually closer to commercial areas and transportation hubs, making the market highly competitive. Properties in bustling areas mean higher rental yield and investment capital growth and multi-family choices are especially profitable. 

 

There are several types of multi-family properties to choose from:

 

  • Unit or apartment blocks
  • Duplexes (two individual family zones)
  • Triplexes (three individual family zones)
  • Quad or fourplex (four individual family zones)
  • Apartments

 

Not all multi-family properties require renovation, you can also buy and lease as is, however, finding a property that is a little run down significantly reduces your buying costs. Doing the renovation work to bring the property up-to-date costs less than you think and you can simply hire a team in the U.S. to take care of it for you. For example, Star Dynamic has a contractor team in the U.S. that carry out all of our renovations which we provide exclusive access to for our clients. That way you get a much higher rental income and have a desirable and valuable property that will attract (and keep) high-quality tenants. 

 

There are multiple strategies you can implement to get the most from your investment performance. Here are the three strategies I’ve seen to be especially effective during my time working with U.S.A real estate investments:

  • Buy and hold – Purchasing a fully renovated property that has at least an 80% occupancy rate will yield consistent profit. Buying and holding is a long-term investment strategy that requires less maintenance because the property is ready to go and already leased. It may cost a pretty penny, but it’s a great way to earn quickly without any downtime on fixes.
  • Buy, fix and hold – Properties that need some work come cheaper but require more time and effort to fix, especially to bring them to a high standard and really make them shine. That work will pay off with reliable repairs that will last for years, competitive tenants and higher rental yields, allowing you to quickly recoup your costs.
  • Fix and flip – If handling tenants and owning property doesn’t interest you, you can fix and flip. In this case, you find a solid property that’s a little older and undervalued, buy it and organize to have it refitted. Once the renovations are completed you put the property back on the market for a much higher price. You see returns within a few months and can access short-term loans with better lending flexibility.

Single-family vs. multi-family properties

 

Owning multi-family investment properties and single-family homes differ in more ways than just in terms of scale. They have their differences in price, management styles and even exit strategies. Both have their pluses, but the benefits of multi-family properties are hard to ignore. 

 

Single-family properties are typically cheaper to buy and also to maintain. They also have higher appreciation with time due to strong market demand with both investors and home buyers keen to buy. 

 

If you’re looking for bigger cash flow, then multi-family properties are your best bet. A single-family property will only produce one month’s rent, whereas a multiple-family block will be earning double, triple or even quadruple that amount. One vacancy in your multi-family property is also not as pressing since your other tenants will provide income to cover any losses until the vacancy is filled.

 

While we always recommend property managers for international real estate, hiring a property manager and a team for more complex investments like multifamily properties becomes essential. It’s a business venture so you need to treat it like a business in order to grow your profits and see increased results. The best way to do this is through hiring a capable and trustworthy team who can help with your business strategies, on-ground communications and keep all the pieces (labour, maintenance, tenant screenings) aligned and running smoothly. This was essential for Star Dynamic to grow throughout the U.S. and also be able to provide holistic support to our clients looking to do the same. We also found that building a trustworthy team was a make or break situation so a great amount of time has been put into building that in the U.S.

 

The small added cost means peace of mind and fast response times when it comes to managing the property and tenants. 

Why are multi-family properties a profitable option? 

 

There are plenty of reasons to invest in a multi-family property. There are not as many out there compared to single-family dwellings so snappy investors tend to snatch them up quickly, and for good reason. 

 

Leases on multi-family properties are easy to fill due to an increased demand for workforce housing in the U.S. Single-family properties are too expensive for those who make up the bulk of the workforce to rent, especially if they are single, or single parents. Apartments and units in a duplex or triplex are much more affordable and fit their needs well. 

 

Millennials are a big part of the workforce now with many looking for affordable housing while they save to buy their own home. The transient nature of workforce housing, like apartments, is appealing because many are not looking to settle down, they are exploring career opportunities and different lifestyle choices.

 

As an added bonus the commercial environment and great infrastructure usually surrounding typical multi-family properties help increase demand and attract high-quality tenants. This means you can charge higher rents and look to capitalise on short term lease agreements with frequent rent increases.

 

When it comes to investors who have purchased residential multi-family properties in the U.S. through us, they have seen a 20-22% return on investment annually, which is a huge payout compared to the price of their initial purchase

 

Multi-family properties require a little more attention, management and maintenance given their scale, but as long as you stick to a strategy that works for you and get the help of professionals and communicate what you want effectively, you’ll see a strong return. 

 

While we highly recommend a multi-family investment in the U.S., we don’t expect you to be able to handle it yourself. Unlike flipping homes in Australia where you can roll up your sleeves and get your hands dirty, the distance of an international investment makes it better to employ a professional team that knows the residential codes and can complete your masterpiece for you. You also need to look into a trusted property management team that can handle enquiries, screen tenants and communicate over the time zones.

 

If you are interested in learning more about investing in multi-family properties in the U.S., we have an exclusive training guide. This guide gives you the details on buying strategies and property types to help you make a solid purchasing decision. 

 

Download our free guide now. 

What you need to know about working with lenders

If you are looking to invest in the residential property market in the U.S., you might be overwhelmed by your financing options. There are a lot of options available when it comes to investing in real estate, even without cash, but one straightforward and low-risk option is working with private equity lenders.

 

Let’s quickly break this down for you. 

Private: Meaning that it isn’t under a bank or large investment firm. 

Equity: The money.

Lenders: They let you use their money in return for a small cut/fee. 

 

Often you might hear these referred to as ‘mortgage lenders’ in Australia. 

Borrowing from private equity lenders is usually less rigid than having to take out a loan from banks, or similar institutions, because you’re borrowing from someone who has their own funds and, therefore, more relaxed terms. 

Private equity lending in the U.S. is pretty rampant, so you have plenty of choices when it comes to different lenders. You will need to do your due diligence and make sure you cover all options before choosing a trusted lender. 

So if the thought of working with an often rigid bank loan is putting you off, then why not consider a private equity lender. 

They are a great way for Aussies and Kiwis to unlock funding to invest in U.S. property. Investing in residential real estate in the U.S. is a great way to make profit as compared to Australian markets because there’s so many to choose from and the stamp duties and other taxes are either non-existent or incredibly low. 

What is a private equity lender?

Private equity lenders are also known as hard money lenders or mortgage lenders in Australia. They are usually private investors or companies that won’t hold you to the same repayment terms as banks or other lending institutions. They also exist out of public markets and exchanges. 

Traditional mortgaging can feel restricting, especially with rigid policies in place. Hard money lenders have more lenient criteria, despite some loan terms being shorter making it the quickest way to secure your funds. Perfect for if you’re in a hurry to invest. In just a matter of days (not weeks or months), you can get your money and seal the deal on your investment. 

If you are an Australian investing in the U.S. property market, getting a traditional loan can be complex. Hard money lenders often cater to foreign investors because they know how difficult it can be to understand a loaning institution’s policies from another country. Dealing with a bank can be frustrating in any country, especially one abroad. 

Private equity lenders are especially well placed for Australian investors looking to flip houses and resell quickly, due to their short-term nature. If you aim to renovate a property, sell it then move on to the next purchase, this option is definitely for you. 

As a foreign investor you can use the funds you’ve secured from a private lender in these ways:

  • Borrowing funds to purchase a property with a deposit or downpayment
  • Borrowing funds to renovate a property after having purchased it 
  • Refinancing capital back out of a flowing investment property 

4 points to note when working with a private equity lender


We’ve already touched on a few of the benefits above, but now it’s time to see exactly how beneficial private equity lenders in the U.S. can be for your property investment. Here are some points you want to note:

1. Loan to Value Ratios (LVRs) are lower for foreign investors

 

While interest rates are generally higher for foreigners, (they’re often up around 7-8% or even more depending on the loan and deal criteria), loan to value ratios are generally lower.  This can mean that you may need a higher deposit, but with more affordable markets. The good news is that deposits could be as low as $30,000 – $40,000 USD.


A loan to value ratio is calculated as a percentage and is used by lenders to assess the risk of accepting a loan application. The lower the loan to value ratio, the less the risk for the lender when it comes to handing over the capital. 

 

As a foreign investor, loan to value ratios can range around 65-70% of valuation compared to 80% or even as high as 90% for local residents with low FICO (Fair Isaac Corporation) scores. A FICO score calculates your credit and gives a clear picture of how likely you are to repay a loan. This affects how much you can borrow from a lender. 

2. “He who has the gold, makes the rules” 

 

Because the money belongs to the lender, they can make their own rules including lending criteria and decisions about who they lend to. They can be more flexible in terms of repayments, making it easier for you if your investment needs don’t fit a lending institution’s stringent payment schemes.

 

The lack of regulations may work in your favour but they can be a potential risk as well. It is still your responsibility to find a trustworthy lender. Do your research, conduct background checks and ensure that you find past client reviews and even get in touch with them personally so you have someone to vouch for them. Finding social proof around the lender will help immensely as someone else can attest to their professionalism and how they work. More experienced lenders might be a better option because they already have insight into the investment process. 

3. It makes investing in the U.S. quicker

 

Because you can secure funding quickly, your turnaround time will also be much faster compared to traditional mortgaging options. Faster renovations means securing profit much sooner, allowing you to work on more homes and rinse and repeat. 

 

Return on investment comes in more rapidly compared to high bank loans that can take a long time to be approved. Private lenders tend to have quick liquidity provided that you are someone they trust and you agree with their criteria. 

 

Depending on your arrangement, you can forgo monthly repayments and just pay in bulk when the property sale goes through. This way you can move much faster with more capital, giving you more time to focus on your residential property investment and getting renovations completed. 

4. They work with you and want you to succeed

 

Having a vested interest in your investment means that your investors will want you to succeed and they’ll want to help you out. Your success means they gain as well, so your growth is directly proportional to theirs. 

Private equity lenders may like to involve themselves in your decisions or offer their expertise. Some private lenders work with ‘fix and flip’ loans frequently so have an idea about contractors and work processes in the local area. A lender who fits with your schedule and whose personality complements yours, can make a big difference to your portfolio and help a smooth transaction for strong returns. 

Investing in residential real estate in the U.S. without cash can feel daunting, but it’s definitely not impossible. Hard money lenders are a great option for foreign investors loan to value ratios, flexible criteria and proven returns. Taking the time to research a trustworthy lender will pay off with fast money access meaning you can buy and renovate your U.S. property investment that much faster and sell it again for profit.

 

At Star Dynamic, we work exclusively with a private equity lender that specialises in foreign investment into the U.S. property market. 

 

We hosted a live webinar with them on last Thursday, March 3rd 2022. Click here to watch our replay

Why real estate is a good long-term investment

If you have some extra money in the bank you’re probably feeling like it’s wasted, the bank’s low interest rates mean you are getting nothing for saving it, so how do you put those dollars to work? 

If you’ve reached a point where you’re financially ready for a long-term investment, how about an overseas investment option? Long-term investments are a good way to earn passive income to boost what you earn regularly and make life a little more comfortable, either now or in retirement. 

Where to invest is not a small decision, especially when there are several options in front of you:

  • Real estate – Buying residential or commercial property (or various types of property shares) for lease and resale.
  • Stocks – This is when you have partial ownership or equity in a company and can see your money grow as the company profits. 
  • Bonds – These are loans that a company lends to investors. A company is indebted to you and there is no equity or shares involved. 
  • Cash equivalents – This is the total value of on-hand cash and current assets. While cash equivalents are good for long-term investments, they’re not ideal for retirement plans because the return on investment (ROI) is pretty low. 

While all these options are viable sources of passive income, the most popular investment is residential real estate. Unlike many items on the list real estate investments come with minimal risk, great tax benefits, and consistent appreciation. Real estate is the long-term investment Aussies and Kiwis are jumping on, sending prices soaring, so it’s refreshing to know there is a ready and widely available property market waiting in the U.S.A.

There are a number of benefits to investing in the U.S.A. The perks for residential real estate there are very different to the investment setup you might be familiar with in Australia or New Zealand. 

For example:

  • There are little to no stamp duties 
  • Mortgage rates tend to be more long-term, giving you more time 
  • It’s more flexible in general 
  • Housing prices are significantly cheaper

Because the U.S.A has a denser market there are more residential properties up for grabs and more people actively looking to purchase and rent quality homes, making both flipping properties and leasing them easy sources of passive income. 

Prices are currently climbing with U.S.A residential real estate doing well, but it’s comforting to know that even if the spike slows down you’ll still have a stable source of passive income since even in slow periods your investment continues on a gentle climb. 

What makes an investment “long-term”?

Long-term investments are ones that are held for more than one year. To see a good return, the usual stance is: the longer the better with people holding on to their investments for decades, even lifetimes. It’s an investment strategy that’s best suited to those who don’t need fast access to their funds and are prepared to wait it out, (perhaps a decade or two) until their investment fully matures. 

This is different from short-term investments where investors expect their ROI immediately or within a few months. You can choose this option if you need to meet financial goals ASAP or need fast money to fund other projects. In most cases, these investments are high risk/high gain, while long term investments are usually more predictable rather than risky.

A smart investor understands that long-term investments aren’t going to pay off instantly. A slow rise in value is part of the long-term investment process. 

 

5 advantages to long-term U.S.A real estate investment

 

If you are already looking at options for residential real estate properties in Australia it’s well worthwhile considering the U.S.A market tool, the benefits will surprise you. While foreign residential real estate investment can seem daunting, these five advantages may help you “think abroader”:

1. Capital appreciation

Property gains genuine value with time in the U.S.A — whilst it can be generally mild compared to Australia and New Zealand, their market is currently appreciating rapidly as more people in the U.S.A are looking for housing and will pay the prices the market sets because of increased demand.

While some people are worried that the U.S.A market may crash, as it did previously during the infamous housing bubble of 2007, better measures have been put in place to control lending so that the property market continues to climb with genuine financial backing.

Investors are benefiting from the wealth effect of the U.S.A market and will continue to as long as demand for housing increases.  

 

2. Tax Benefits

A long-term investment in a U.S residential property comes with special tax benefits. Tax deductions apply on mortgage interest, insurance, property tax and cash flow from the properties themselves. 

Repairs, maintenance and even travel expenses can be eligible for tax deductions. While these are attractive, make sure you get a tax professional so you can ensure that you get the best possible deal. 

 

3. Passive income

One of the biggest benefits of U.S. Property.  Leasing out your property provides passive income all year round, so long as you keep the investment going and look after it. A big bonus with passive income is that it will keep ticking through without much effort or input from you. In terms of capital gains, the property will appreciate on its own, offering you a better ROI the longer you keep it, in addition to the lease payments every month.

 

4. Great returns (with minimised risk)

Real estate is considered one of the safest investments worldwide. Because it’s so stable and the population will continue to grow in the U.S.A, people will always be looking for housing, keeping those money wheels turning. 

Compared to other long-term investments like stocks and bonds, real estate offers certainty. Property rarely sees the sharp peaks and sudden troughs of the stock market, typically showing a slow and steady climb year-round. As well as traversing the ups and downs of stocks you also need specific skills in order to really get the most out of your investment. 

Real estate investment doesn’t require any special skills and it’s suitable for entry-level investors.

 

5. You’re the boss

A residential property investment is something you’re in full control of. Instead of relying on a company for shares and having them take control of what comes next, you’re the one in charge—you’re the boss. Unlike stocks, once you invest in property, you don’t have to worry about a volatile market that may cause your net worth to dilute overnight. You make your own decisions and take action when you see fit. If you feel a renovation needs to be made, you call the shots. If you want maintenance looked at, you’re at the helm.

Ultimately, it’s your decision and your team on the ground will carry it out for you. 

Real estate is an ideal long-term investment because of its steady pace and predictable appreciation with time. While it’s not for those who want instant gratification, it’s a solid way to grow your wealth slowly with the added benefit of passive income from tenants while you wait. 

 

If you want to learn how to start making money from residential real estate in the U.S, give us a call.

How to find good contractors

As you build your team for your property investment in the U.S.A., each member will have different specialisations and corresponding tasks in ensuring that your property is managed properly. In a team where everyone has a role to play, it’s important to hire someone who can be the glue in the group and ensure that everything is running smoothly.

 

A general contractor in the U.S.A works as the manager of a project, whether the property is a new build or is in need of construction or renovation. They are responsible for the overall coordination of the build and will ensure that the project comes together under their supervision.

 

A general contractor is generally a qualified tradesperson so they will have the most hands-on knowledge and experience about the project and how the property is coming together. They play a critical role in seeing the build through because they oversee the quality of work by all the hired subcontractors while providing all the services and equipment that your property needs.

 

Taking the time to find a good contractor is important because you need someone that you can work well with and has the qualifications and experience to see the project through.

What is a general contractor?

 

Contractors are usually hired contractually per project within a specific time frame. They are skilled tradespeople who are knowledgeable about different aspects of construction including:

 

  • Masonry
  • Carpentry
  • Framing
  • Plumbing

 

This allows a general contractor to understand all the construction work in the project and communicate effectively with different hired labourers in the crew. While they possess excellent construction skills, contractors are hired for their managerial skills. They will often recruit specialised labourers called subcontractors and oversee their work to ensure the success of the project.

 

A general contractor is responsible for the safety and wellbeing of everyone they hire. So if a subcontractor accidentally snaps a floorboard or shatters a window, for example, it still ultimately rests on the general contractor because they are his people. 

 

Like registered builders in Australia and New Zealand, general contractors are also responsible for the following:

 

  • Acquiring building permits (if needed)
  • Site maintenance
  • Subcontractor maintenance
  • Property security
  • Disposal and recycling of construction waste
  • Cash flow for any subcontractors or other specialists they may have hired
  • Accurate recordkeeping

 

Unlike trade specific contractors, general contractors will be able to oversee everyone and have an existing pool of subcontractors ready. If you have a project manager for the property, trade specific contractors (i.e. separate carpenters, plumbers, and electricians who don’t all work together or under the same contractor) might be the answer.

 

However, a group of trade specific contractors who don’t have an established relationship may not work well with each other or with the project manager, making it harder for you since you can’t be on the ground. A general contractor can save you this headache because they already have a set of qualified people they can work with. 

 

You may come across non-licensed candidates in your search for a good contractor so keep in mind that general contractors are required to have a license. Non-licensed contractors may be working to get their licenses (others, however, don’t ever plan to), but it’s safer to hire someone who is licensed so you can have the peace of mind that the job will be done. 

 

Hiring non-licensed contractors runs the risk of an unfinished build or a complete one done poorly. Whereas a licensed contractor, who needs to maintain their quality of work to avoid getting their license revoked, will be invested in completing the build to the best of their abilities.

 

Contractors have a huge responsibility on their hands—they’re your eyes and ears on the ground while the build is ongoing—so having one you trust in your investment team and one who gels with you well can make all the difference. 

How to find a good contractor

 

Finding a good contractor takes a lot of discernment and a good process of elimination in order to find someone who will work best with you.

 

There are two popular methods:

 

  1. Searching – This doesn’t mean you should stick to the first Google search result you see. By using search engines, online testimonials, and even company pages, you can learn which contractors are well-recommended, have a good work portfolio, and have past customers who can vouch for their ability. Sites like Bigger Pockets or Angie’s List are good places to start.
  2. Advertising – By posting an ad online, you can have contractors come to you instead of you looking for them. This might help you better sift through candidates as they will have an idea about the project already from your ad.

 

It can be overwhelming to wade through different options, so here are some tips that can help you narrow down your search:

 

  1. Rely on companies more than individuals – It’s much easier to transfer payments to companies rather than individuals and it can give you peace of mind knowing that it’s a more professional transaction. 
  2. Ensure there is insurance in place – There needs to be safety measures for your property and for your contractor and subcontractors in case of accidents during the build.
  3. Find people who are permit-savvy and accept payments in installments – Installments ensure that contractors will have the funds they need to purchase the necessary materials and equipment for the build while giving you time to save up for the next payment. 
  4. Contractors who take comprehensive photos and videos are usually reliable – Good documentation is important so that you know how things are progressing over time. You can see how the property develops and can make changes if needed before the construction is completed. 
  5. Referrals are important – The members on your investment team may already know some good contractors that you can all work well with. Your team are the experts in the field, so they may have contacts you can use. 

Hiring a contractor

 

Putting together a good team is part of making your investment property a business, which helps you maximise profit and success. Running an investment property like a business helps you make the best of it as it keeps you on top of everything, which includes being discerning when it comes to who you’re bringing into the team. 

 

Following these steps can make your hiring process more efficient and help you find a contractor who works best for your investment:

 

  1. Research – Find candidates (whether through ads, searching, or referrals) who fit your style. Remember that it’s important that they work well with you. There may be good contractors, but not all of them will be good for you. They may have different work hours, communication style or even work standards from you. Find someone you think will be easy to work with.
  2. Go through resumes – Be meticulous when you look through a candidate’s credentials. Check if they have referrals you can call and verify the information with. This will ensure that you’ve got the very best on your team. 
  3. Conduct interviews – Face-to-face interviews are the best, but as a foreign investor, you won’t always have that option. If you can at least interview them through Zoom, Skype, or any kind of video conferencing system, that will suffice. Avoid tests or emails as communication is more than just words being said. 
  4. Welcome them to the team – By welcoming your contractor, you open up communication and camaraderie in the team, which can help everyone work better together. 

 

Good contractors will ensure that construction for your property is on track and that your property is in tip-top condition. They are an essential addition to your team and will help you make the best of your investment because of their construction skills and managerial skills, ensuring that you have someone you can trust on the ground. 

 

If you want to know more about finding good contractors, we have an exclusive training kit on this topic!  Click here to get yourself a free copy.

How to find a property manager you can trust

As an Australian  or New Zealander, investing in property in the U.S. has so many benefits. But having to coordinate with renters when you’re not even in the same time zone can feel impossible. What if they have urgent concerns? Coordinating a solution for them might take days with time zone delays, or might mean you need to be on call 24/7. 

 

This is just one scenario that could easily be solved if you have a property manager you trust on the ground. A property manager will handle your property for you and take care of rentals on your behalf. Having someone on the ground in the States will make it easier for you and relieve you of the burden of having to oversee the property from a completely different continent. 

 

A trustworthy property manager will also keep you updated on the status of your property and be able to step in if there are rental prospects. On the flip side, if you employ someone who isn’t loyal or dedicated to the job, you run the risk of not knowing what’s going on with your property and being on the back foot when it comes to repairs, maintenance, and troubleshooting issues, potentially affecting your return on investment (ROI).

 

To know how trustworthy a property manager is you’ll need to go through a thorough screening process, reviewing references and past work in order to find someone who’s not only outstanding in their field, but also someone reliable. 

What does a property manager do?

 

When you’re unable to manage the property yourself (i.e. it’s far from your location, you work full time, or you live overseas), you’ll need to hire a property manager. They’ll oversee the daily operations and, if vacant, will hold onto the keys until a renter is ready to inspect. At this point they will screen potential tenants for you and help you decide which tenant will be a good fit and take care of the property as if it was their own.

 

Landlords who are available and in close proximity to the property can still find great benefit in hiring a property manager because it takes a lot of emotion out for the investor. A property manager is a trained professional who can handle communications calmly and knows how to find solutions to property problems because they’ve done it before. 

 

Even the best tenants may have complaints or need to bring something to your attention from time to time. It can be a great thing because it means you get to know about improvements that can be made. A property manager can look after these situations with faster turnarounds because they are close by, and can talk to the right agents to get the job completed, because they know the property and the industry so well.

 

Finding a good property manager means you can feel reassured by the fact that they have your best interest in mind and will apply their experience with overseeing your residential real estate investment. 

 

Property managers also supervise any maintenance or changes you need to make to the property. In case the property needs repairs or upgrades, they’ll be your eyes and ears on the ground to coordinate with workers and make sure everything is finished to the highest quality. While technology makes it possible for you to see what’s going on via calls, it’s better to have someone physically present in order to make quick decisions on your behalf.

 

Rent collection (AKA your passive income), also falls into the property manager’s hands. They will make sure that rent comes in promptly every month. They’ll communicate with you right away in case there are problems with rent and help you decide the best way to resolve any issues.

Why a good property manager is necessary when investing in residential real estate 

 

Property managers take care of everything property-related for you, which is necessary when you can’t jump on a plane and fly over to oversee a burst pipe. 

 

With a property manager on your team, you’ll have someone to oversee your property, provide feedback, and help with decision making using local knowledge and resources. They have your best interest at heart and will follow through with your vision despite how far away you are. 

 

Having that proximity to the property makes it easier on both of you. In case anything unexpected happens, they can be there in a heartbeat. If a tenant needs something, your property manager is ready to deal with them personally and without having to call you in the middle of the night.

 

Enforcing policies for the tenant is crucial too because it keeps the property well-maintained. Property managers are important in this aspect because they can keep a close eye on tenants and get back to you if any policies are in violation or there is any behaviour you need to take further action on. On the flip side, they also take care of any requirements the tenants have, to ensure you are in compliance with policies as the landlord as well.

 

Due diligence on your property manager’s history is essential to avoid difficulties, or even financial troubles. While we pride ourselves on exceptional hiring and overseeing of property managers, from time to time a bad apple does pop up.

 

We’ve had instances in the past where bad property managers didn’t do their job. In one case, there was just no communication, we had to constantly chase them for monthly statements and rental payments. In that case, the tenant even vacated the property and no one was informed. 

 

On another occasion, a property manager consistently charged for repairs and call-outs to a number of properties when the properties were all fully renovated prior to tenants moving in. We couldn’t necessarily prove these were illegitimate expenses, but we chose to change managers anyway.

 

Finding a good property manager is important to avoid these situations and bring about the best possible environment for everyone involved with the property. They handle the most important aspects of the property so having an experienced and trustworthy manager will ease the pressure off yourself and increase the likelihood of success. 

How to find a good property manager

 

Potentially, the most difficult part of this process is not finding a property manager (there are hundreds available) but finding the right property manager for you. There are hundreds of people who may fit the description on paper but they won’t always be compatible with you or your preferred management style. You may not like how they screen tenants or how they oversee operations, so being selective is important at this stage.

 

Here are some steps you can take to find a good property manager

 

  • Find reputable property managers in the area 
  • Visit their other properties
  • Ask friends and family for referrals
  • Research online
  • Interview more than just one person for the job

 

Remember that we can help you with this process as we already have a wide network of property managers, real estate agents, and maintenance professionals we can tap into who have proven track records of work done with us previously.

 

Once you’ve shortlisted some people for the position, you need to know more about them and their management style, such as:

 

  • Their experience with handling residential properties
  • Their screening process for tenants
  • How they will go about contacting you (and how frequently)

 

Finding a property manager you can trust who can represent you at a local level and tend to your U.S. residential property is essential for maintaining your investment and your peace of mind. It can feel daunting to have to leave your property to someone else and hand them the keys but, if you find a reputable person for the job, you can rest easy knowing that it will be taken care of for you.

 

To get more in depth information on finding a good Property manager, we have a training guide on exactly this topic!  Click here to download a free copy.

How to find a real estate agent you can trust

You’ve fully renovated your newly purchased investment property in the U.S and you’re gunning to sell for an outstanding profit or bring in some quality tenants – but the onslaught of marketing and fielding questions from interested parties is becoming a struggle.

 

Not only is the distance a problem, but the significant time zone differences between Australia and the U.S can affect the urgency of your communications and document signing. A potential buyer can only stay interested for so long before being lured by a more enticing property, leaving you at a disadvantage as an Aussie/NZ vendor. 

 

This is why you need to hire a real estate agent in the U.S.A to help take your residential investment property to the next level. 

 

Having a trustworthy real estate agent that potential buyers and tenants can contact and meet up with in person gives a property instant credibility as well as open communications for smoother transactions. A trustworthy real estate agent will also look after your marketing and advertising campaigns, putting in the work to engage interested parties and get the word out for you. 

 

If you hire an agent you don’t trust or one that has a poor reputation, you risk the selling process for your property, leading to bad sales and a poor return on investment. 

 

Investing in the U.S.A is more than just wiring the money over and waiting for profit, it’s about building a business around the investment and hiring the right people to get the job done, no matter how far away you are. 

What does a real estate agent do in the U.S.A?

 

A real estate agent is someone who is licensed to buy and sell properties, negotiate on your behalf, and list the property for you. Since they’re experts in their field they know where to publicise your property, how to market it, and determine its value for the best possible sale result.

 

A real estate agent is the face that the buyer sees and interacts with and they will be the person who will see your sale through from beginning to end.

 

Home showings are a big part of the selling process. A good real estate agent will make sure that everything is in tip-top condition and give interested parties an informative walk through as they view your property. They’ll be able to frame the most attractive features of the home to gain attention from more buyers and get some competitive offers started.

 

Even though some people use the terms interchangeably, real estate agents differ from brokers or realtors. Brokers have acquired extra licensing through supplemental training that allows them to hire real estate agents. While they have many of the same duties as real estate agents they can operate independently, with added credibility. 

 

A realtor is a licensed member of the National Association of Realtors (NAR). A realtor can have any profession under the real estate umbrella, like being a salesperson, property manager, or even a real estate agent or broker, too. 

Why a real estate agent is necessary when investing in and selling residential real estate in the U.S.A 

 

When you’ve successfully refitted the property to your standards, it’s time to think about selling it. You’ve upped its value significantly with the work you’ve carried out but the difficulty is determining its price, as you may not be familiar with the area or prices of similar properties.

 

A real estate agent knows these things as it’s part of their skillset. Their hands-on knowledge, along with additional research allows them to accurately value a property and price it so that you can maximise your profit. Because they’re expert negotiators and salespeople, they can boost your property listing to make them stand out from those around it. 

 

They’re also in the best situation for home showings and to answer questions that potential buyers have. It’s just more convenient as they can make the quick drive over to the property and keep you in the loop.

 

Selling your property will be much easier with the help of a trustworthy real estate agent who has your best interest in mind. 

 

Once the sale is made, your real estate agent can then help you find a quality new property to invest in, prolonging your business relationship and increasing your cash flow. Because of their experience, market knowledge and property access, they can become a de-facto advisor you can rely on for your next residential property investment. 

How to find a good real estate agent in the U.S.A

 

While it may be tempting to hire any real estate agent listed online and get started quickly, you need to remember that the profit you earn from this property weighs heavily on how well your real estate agent performs. 

 

It’s worth putting extra effort into finding the right person for the job. They need to have proven credentials, experience, and skills to help maximise your return on investment.

 

Start by asking friends, family, or other associates for any real estate agents in the U.S that they recommend. Someone in the industry (or even already in your business team or network) may already have connections and can recommend a real estate agent they think has the skills to help you. 

 

Look for someone who has proven long term experience in the same local area as your property purchase or sale. The more they know about that particular neighbourhood and the history of the property, the better. They’ll have a clear reading of local property value, market trends and desired property features to make comparisons and price approximations for you, as well as be able to emphasise community benefits to those looking to buy. 

 

Once you’ve found a suitable agent or shortlisted a few people, do your research. It may be an extra step, but it’s crucial to help you single out the best choice. Find out what properties they’ve worked on, who they’ve worked with and how they operate. This will paint a better picture of how compatible they are for your investment needs. They may be a brilliant agent, but if they can’t work or communicate with you, you won’t find any value in their services. 

 

When you are satisfied with your research results you then need to hold an interview. Ask questions like:

 

  • How much experience do you have?
  • How familiar are you with the local market?
  • How many properties have you dealt with? 
  • What do you think an investor can do to improve the home and raise its price?

 

Following this process will help you to secure a trusted agent that has your interest in mind and will put their best into your property sale.

 

A good real estate agent can be difficult to find but it’s not impossible. The U.S.A is full of experienced agents who are keen to work with you. All you have to do is whittle down to the ones you’re most eager and most comfortable to work with. Save yourself the headache and stress and make sure it comes down to an agent you can trust.

If you are looking for an experienced and trustworthy real estate agent in the United States, we’ve got plenty in our network ready to help, download our training kit for free here.

How to invest in real estate (even without cash)

Investing in residential property can come at a steep price. Having reserves of cash might be easy for millionaires but for most of us, it’s difficult to save for real estate and meet your daily expenses at the same time. This can also be true of foreign investment opportunities. As well as ready cash, there is the physical distance and red tape to navigate. People are “fear-frozen” about the idea of investing in property abroad because they believe there are too many challenges involved.

 

Many people who look to invest in U.S. property are ultimately too afraid to take the risk because they believe they don’t have the finances to do it and because it’s halfway across the world. 

 

But the reality is that there are different methods to invest without cash, even in the U.S.A. Overcoming that fear-frozen state will open your eyes to the various means you can try. Lending, joint ventures, and making land contracts with the owner of the property are just some of the methods that you can consider to avoid having to empty your bank account. 

 

Savvy investors utilise these opportunities and often rarely ever use their own cash to invest. 

Why the U.S.A residential property market?

 

The U.S.A residential property market is white-hot right now, causing foreign investors to flock to these untapped properties. Record low interest rates, increased activity, and the reassurance that the market is unlikely to crash any time soon (unlike the 2006 housing bubble) is luring more people to learn how to invest and create another stream of income.

 

Your chances of landing a great residential property at a low price is higher than ever. Properties in Australia and New Zealand can sell at ridiculously high prices, but the U.S is a different story. A down payment in Australia can be the entire property’s price (or even more) in the U.S.A with a staggering range of properties to choose from across all states.

 

Banks and lenders have learned from the mistakes of the past and have rigid practices in place to ensure the malpractices that crippled the economy in the past will never occur again, giving investors peace of mind.

 

Since the Covid-19 pandemic hit, people have become more active in seeking out homes in less populated areas to escape COVID hotspots. Working remotely also had people purchasing homes in quieter locations in order to better focus. This caused a spike in the market that investors abroad are now taking advantage of. 

 

The exchange rate between Australian and New Zealand dollars with the American dollar has recently improved, potentially making your investment even more powerful.

5 ways to get funding in the U.S.A market 

There’s no need to empty your pockets in order to make financial investments in the U.S.A. market. You can get savvy about using other people’s money. If you’re looking for ways to invest in real estate, these five methods are all feasible and often used by more seasoned investors.

1. Option to buy

 

Option to buy is a funding strategy that allows you to have the right to purchase the residential property without technically owning it. It means that if you find a property you want to invest in, you can buy an ‘option to buy’ contract that allows you to be the only person the property is sold to. That gives you breathing space to do some hard research on the property’s current and future value as well as get funds together for payment within that buying period. 

 

Because you have a legal contract you can even sell the house to another party for a higher price if you like. It’s a no-obligation, risk-free strategy that gives you full control over a property without putting down a lot of money.

 

While this sounds like an investor’s dream come true, it comes with a deadline, you won’t have exclusive rights to purchase the residential property forever. There will be an agreed time period for the buyer to make the required payments.

 

Typically an agreement period will range from 30 to 90 days, however, there are instances where it has taken months or even years for the seller to gather enough resources to buy the property. It all comes down to the terms of the individual agreement.

2. Private equity

 

Private equity (also known as hard money lending) is financed through private lenders outside of traditional lending institutions like banks. Private equity is the quickest way to get funding and secure ownership over a residential property, which makes it a favourable choice.

 

Keep in mind that loan terms are short compared to banks and traditional lenders. While most standard loans last five to 10 years, hard money lending can be completed in timeframes as short as six to 15 months. 

 

There are also private equity mortgages that can be an exception to the shorter timeframe. It spans anywhere from five years to 30 years, depending on the agreement. Private equity just generally has higher rates than conventional funding. 

 

Private equity is more lenient and loose with its terms as you’re not dealing with the rigid guidelines of banks or big lending institutions. In a matter of days you can receive the money for your investment, carry out renovations and make quick fixes to flip the residential property for a higher price. House flippers are a fan of this type of lending as it’s fast and easy. 

3. Joint ventures

 

Entering into a partnership with another investor (be it family, friends, or a willing third party) can be a great way to make a big investment and keep your personal finances stable. Even if your funds are low, your partner in this venture will contribute, making it easier to land the property.

 

The danger of this funding strategy is that not everyone involved in the joint venture will be on the same page. For this strategy to work, all parties need to be clear on what direction you want to be taking. Steer clear of joint ventures with strangers and discuss the outcomes well ahead of time. As always when money is split, there can often be arguments about who gets what. It’s essential you have good communication and completely trust everyone invested with you.

Joint ventures require every party to be satisfied with the agreement and how they’re working together to avoid a falling out. Make sure you cover yourself with the right documents so everything can be traced back to written agreements. 

 

Pooling resources is a great way to keep from overspending and secure the residential property you jointly want. At the end of the day, everyone is responsible for the property and the profit they receive from it. 

4. Borrowing against current properties

 

While not all of them do, some lenders may be open to lend against overseas properties. Usually, you need to borrow the funds in the country/ies where the property is, then use those funds to purchase the property in the country of choice. 

 

For example, if you have a property in Australia, you can get a line of credit loan and take those funds to buy a U.S. property. This is the common approach when it comes to using your current properties already.

 

But if you have the chance to loan against property/ies, you use your home or a secondary property as collateral. Instead of using money or credit, you use the difference between the total value of your property/ies and the loanable amount. 

 

This funding strategy can be a little more personal because a seller might look into your credit score and financial history in order to determine whether or not you’re a good candidate for their property, however, it’s a great way to invest without having to dole out cash.

 

Interest rates worldwide are generally lower, so borrowing against current property/ies can be a great way to rekindle an investor’s interest in their investments and see what equity they’ve built up. 

 

Of course, this method has its own drawbacks. If you borrow the money against your current properties and fail to make repayment schedules, your property/ies can potentially be put at risk. 

5. Land contract

 

Land contracts require you to make an agreement with the property owner where you pay an agreed-upon percentage upfront and then pay the remaining balance with an interest component.

 

The period of time this takes can be negotiated depending on how much time you need to do renovations and re-sell the property. When you sell it, you can pay the owner the rest of what you owe. 

 

This strategy can be a complex one. In a seller’s market, a seller has the flexibility to choose the most favourable buyer for their property. Buyers who can make payments in full might be the preferred choice. In spite of this, it’s still a viable option.

 

Investing in real estate doesn’t have to drain your pockets and leave you high and dry. There are plenty of options you can choose from that will have you spending just a bit of cash or even none at all. By being diligent, careful, and mindful of your repayment ability, timeframes and agreements with others, you can invest in real estate in the U.S.A and get a premium choice of properties at an affordable price to start bringing in additional income. 

 

If you want more information on how to invest in the U.S. market and what options are available, check out this video Masterclass I recorded recently.