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.

Customer story: “Significant returns—without having to lift a finger”

A lot of people who want to get into investing tend to hesitate when faced with the opportunity to do so abroad, but investing in the U.S.A as an Australian is definitely a great option, even if it can seem daunting. Investment in itself can already feel like a game of chance, even more so when you can’t see the property in person.

 

Plenty of Australians don’t consider investing in the U.S.A property market because it’s so foreign and they think that a property that far away will cost them more time, money, and energy. But what they don’t know is that plenty of foreign investors find the U.S.A property market immensely rewarding (especially right now) and a great place to get significant returns. While the investment process will be different, our team at Star Dynamic can make investment easy and fruitful for anyone willing to try.

 

Pharmacist David Tran seized the opportunity to invest in U.S.A residential property through the recommendation of a friend who already experienced the benefits and ease of using Star Dynamic for their own investment. David had revenue to invest and had already tried his hand at investing locally so he thought to look beyond Australian borders and wanted to try something new. 

 

“If you want different returns, you’ve got to look somewhere different,” said David. “It’s low risk, with potentially even greater reward. So it is daunting because it is in the U.S.A and you’re not just going to fly over there… But at the end of the day, it’s all about the numbers to me.”

 

Many Australians, like David, have taken the chance and found success in the U.S.A residential real estate market. Today we’re sharing David’s story of how he leveraged international property investment to build the future he wants for himself and his family. 

Investing in the ‘great Australian dream’ first

 

When it comes to residential property investment, most people look to their local community or neighbouring areas first, and it makes sense to have that extra control, to be close by and hands-on with the purchase and have the ability to check-in and keep an eye on things. 

 

David felt the same initially and took on a number of different Australian-based investments to get different returns from local real estate, buying and flipping properties, but he came to realise that the local market was small and it was becoming harder to secure property investments. 

 

“It’s all about finding the deals. If you invest locally, your market is going to be very small, especially where I’m from where our population is a lot smaller,” David explained. 

 

He came to the conclusion that there were better opportunities elsewhere. It wasn’t as if the numbers were dismal, but he acknowledged that, in comparison to what he could be getting, his effort, money, and time could be rewarded when invested elsewhere. 

 

“The numbers worked but they weren’t that great compared (to the U.S.A). It’s effort and reward at the end of the day,” said David.

 

This led him to investigate how he could potentially flip properties and have higher passive income. “When COVID-19 hit and everything was locked down, I started googling and talked to my mates a bit more to figure it out. I’m at that stage where I’m in my late 30s, I figured that I’ve got to start doing something a bit different.”

Why David thought “abroad” for his next property investment 

 

At 38 years old and with two young kids, David wanted to put himself into different scenarios that brought about greater returns, luckily he was “okay with being uncomfortable” in terms of investing. After hearing about Star Dynamic and our CEO Lindsay, he decided to take the leap and gave us a call. 

 

“I looked at the U.S.A market before randomly but not seriously. But if I was going to do it seriously, I wanted to engage with somebody who knew what they’re doing. So when I had a quick phone call with Lindsay, the feeling I got was he was a quite honest person to deal with so that gave me the confidence to try it out,” said David. 

 

The U.S.A market, being much bigger, had more potential in David’s eyes. Because the U.S.A market has little to no stamp duty, longer-term mortgage rates, and fewer market restrictions, it easily became a priority choice even amidst good local property options. 

 

The potential returns were just greater compared to local numbers, especially when you can buy a house in the U.S.A for the same price as a deposit on an Australian property, making it low risk because the money down is so little compared to Australian investments. 

 

While you can profit from both (as David has), the U.S.A has brought about higher cash flow for many investors because of the stronger rental yields. That’s not to say that it’s perfect and easy, you still have to do your due diligence and research the area and its properties and then make the required renovations, but it’s definitely worth the effort you put in, especially since it’s a foreign market.

 

And the numbers can’t be argued, there really are more properties in the U.S.A compared to Australia. David knew that if he were to invest and flip again, he would look to the U.S.A.

 

“I probably wouldn’t look too much into residential real estate in Australia again, to be honest. Just because there are only so many properties here that you can invest in whereas in the U.S.A there’s just so many properties and opportunities.”

A done for you service to suit a time-poor investor 

 

This still doesn’t eliminate the fact that a foreign market may bring foreign practices or paperwork, some that you might not have the expertise or time to learn about and execute. 

 

But, just as we’ve helped our customers in the past, we helped David with our “done for you” service where we take care of everything from start to finish, making it the perfect add-on for anyone who’s got a lot on their plate but still wants to reap the benefits of a good investment. 

 

“I decided to sign up to the Done For You service where the Star Dynamic team manages it all for you. It took me a couple of months to get the property. Lindsay finds the deal, presents it to you, you look at the numbers and see if you’re fine with it, and then you go with it,” said David. “It’s a bit nerve-wracking in the sense that you’re literally just handing over money, you don’t know if it’ll work or if you’ll ever see this money again, but it came down to that honesty, that trust, and how genuine I found him so I thought that I’d give it a go.”

 

As a business owner and father, David didn’t have the time to check in with a team in the U.S.A or look through properties on his own, so he left it in our hands to take care of his investment and put the money into a good property.

 

“I’ve got two young kids, I’m quite time-poor, so for me it was that I had a bit of spare cash and I wanted to see what sort of a return I could get out of that,” said David.

 

Like with all investments, we approached David’s using the STARR method (strategy, team, acquisition, renovation, realisation). By implementing a good plan and hiring a team on the ground in the U.S.A, we acquire the property, renovate it to our client’s liking, and then our client is rewarded with their hard-earned profit after they sell or rent out the property. 

 

After buying a home in Detroit we found for $50,000 and flipping it (renovations added up to be just under $20,000), David sold it for $119,000. 

 

“The process is actually quite easy, considering. It’s a lot of paperwork but when you look at your potential returns and what you’ve actually got to do, I mean, where else are you going to get those returns in that short timeframe? It may not always be the case, but the potential returns, without having to lift too much of a finger, are pretty good,” said David. 

 

David speaks highly of working with Lindsay and found him to be a very honest and genuine person. David said that he was “easy to get a hold of” whether it was through emails or phone calls and that Lindsay eased any and all of his worries about investing abroad, so much so that if money comes through again, he said he would “definitely give it another go”.

 

Investing abroad isn’t as scary as many think it is. David’s property investment success can be replicated by anyone looking at investing in U.S.A residential property, so long as they have the help and support from a reliable and skilled team who know what they are doing in a foreign market. For people like David, and all our other clients at Star Dynamic Property Investment, investing in the U.S.A was low risk and resulted in significant returns. 

 

If you want to find a bigger market with bigger returns and have someone else do the hard work, give us a call

Linz’s Musings – Finding your true centre

Spring is certainly upon us, and with the days here starting to really warm up, more sunshine and footy finals upon us, it gives us that small ray of hope in a relatively grim view from lockdowns on the East coast.

And while I am certainly not going to sit here and tell you whether you should or shouldn’t be getting a J A B, I am going to suggest to make sure you listen to your heart…

I mean REALLY listen…

There is so much noise, so much conflict and fear being thrust on us at the moment (media, news, environment etc) that it can be almost impossible to actual hear yourself think through all this.

Fear, anxiety and stress all comes from a place of weakness.  When you are not aligning with your core values, anxiety and stress are the indicators your body gives you, the ‘signs’ if you will that something is off.

I spent all last week with my coaches struggling with this exact issue.  With so much going on, it is so easy for us to be knocked off course and end up wandering around the wilderness, not on our true path at all.

So my wish for you, is stop… take stock of where you have found yourself and get centred again.

Whether it may be mediation, reflection, prayer, exercise, reading… whatever form it takes for you to clear your mind of the rubbish and be back in a place that you can really listen to your heart.

Your core beliefs.

Suddenly you will start to hear them again, and once you are back on that path, there is a peace, a calmness…

Even though the storm is raging outside, it is like you are now in the eye of the storm.  It is here you will truly hear what you need to do, what you are being called to do.  Then do that, whichever choice it is, that is your ‘right’ one.

Its not my right choice, or your partner’s right choice, or even your children’s or parent’s ‘right’ choice… but yours.

As Rudyard Kipling wrote in his poem IF –

“If you can keep you head when all around you are losing theirs, and blaming it on you…”

This is the true meaning of power, of strength.

But first, we must really listen to our core beliefs, it all starts at our centre.

7 best U.S. states and cities to invest in

With 50 states to choose from, it can be overwhelming to decide where to invest in the U.S.A. Narrowing down your property search can also be challenging (in a good way) since there are so many promising residential properties in each state and city. 

Having numerous options across the country has only encouraged more investors to look into residential properties in the United States to boost their income and create financial stability.  

According to the Bureau of Economic Analysis (BEA), the cumulative level of investment in the U.S.A. from abroad increased from $158.6 billion to $5.96 trillion at the end of 2019, proving that there’s a strong return on investment in U.S.A. for foreign investors and that the market is only going to get hotter in the foreseeable future.

Why investing in the U.S.A. is a good idea

It’s understandable to feel apprehensive about investing in residential properties in the United States given that it’s half a world away from Australia. But this is easily remedied by hiring a dedicated, trustworthy team in the U.S.A. who can take care of your property so you don’t have to worry about the distance. 

The investment is definitely worth it once you consider how much cheaper residential property in the U.S.A. can be. To compare, a down payment of $100,000 for a property in Australia is already an entire real estate investment in some states of the U.S.A. 

Plus, the U.S. housing market is booming, with prices appreciating and the residential property trends pointing upwards. The uncertainties brought about by the COVID-19 pandemic has caused people to worry that this white-hot market will have a similar pattern to the housing bubble (and subsequent crash) in 2006, when lenders were more lax about background checks when approving loans for homebuyers and investors.

But the residential property market is unlikely to crash anytime soon, with stricter lending policies in place and hardset compliance enforced. Just keep in mind that it’s unrealistic for the market to maintain its upward trajectory forever, so it’s best to strike now while it’s hot.

7 states in the U.S.A. to consider investing in

Deciding where to invest in the U.S.A. requires careful consideration so that you get the most out of your investment. Fortunately, we’ve narrowed down the seven most ideal states and cities to investing in residential properties in terms of prices, taxes, and location. 

1. Michigan

 

Michigan is one of the best states in the Midwest to invest in because of its affordability. It’s one of the top ten states with the lowest cost of living and cheapest prices to purchase a house. It’s also a profitable location to invest in a residential property as the majority of people prefer to rent out a house than buy one themselves.

Recorded as the most populous city in Michigan, Detroit has been experiencing a skyrocketing demand for family rentals because the median price for a single family home is still below $100,000. This ensures that the rental market in the city leads to profit and positive cash flow for property owners.

The affordability of housing in Detroit allows you to purchase a great residential property for a low price in exchange for high returns and great market appreciation, especially if you rent it out. 

We’ve seen this city’s potential firsthand as we’ve helped our clients find low-cost properties in the best Detroit neighbourhoods so that they can get significant return on investment. 

Detroit had fallen back since the decline of the auto industry and the Great Recession in 2009, but the Motor City is definitely making a comeback now with new infrastructure, new electric vehicle plants opening, and even a large Amazon distribution centre! 

Further, Ann Arbor, Grand Rapids, and even Lansing, with it’s ‘medical mile’ of medical equipment manufacturing market booming, are all excellent cities to look to invest in.

2. Texas

 

Investing in Texas real estate is a “no-brainer”, given that almost two million people in the country moved there since 2010 because of the affordable housing and the work opportunities it had to offer.

Because it has so many options, Texas has varying levels of growth in terms of the housing market. Dallas, Houston, San Antonio and Austin are all considered high-growth markets because of economic growth and demand for housing.

Dallas offers plenty of choices for residential properties, making the housing market accessible for investors and potential renters alike. It also has a diverse economy, allowing people from different income levels to thrive in the city. San Antonio and Austin are also booming, offering similar growth and possibly even lower costs than Dallas or Houston.

It has the lowest rate of home ownership in the country as it’s more cost-effective to rent than to buy. The rising demand for rental properties is another enticing reason for investors to consider San Antonio or Austin as their city of choice.

3. Nevada

 

Nevada gained its moniker as the “Silver State” because of its silver rush days during the 1800s and, even now, mining is a crucial component to its economy. The state is the world’s fourth largest producer of gold and over 2,000 businesses are connected to mining in one way or another, which results in more work opportunities in mining companies and more people looking for housing.

As Nevada’s world-famous city, Las Vegas is still one of the premier real estate investment locations in the U.S.A. Aside from its booming tourism and entertainment industry, the city is also home to a thriving industrial sector including technology and finance. 

Locals and tourists alike reside and visit Las Vegas for a host of reasons: Work opportunities, housing market, incredible attractions, business conventions and trade shows. The pandemic hasn’t slowed this down one bit. Because it’s an international destination, Las Vegas has implemented safety measures against COVID-19.

People go to Las Vegas year-round, which is a good sign for investors who want to enter the renter’s market since people are consistently looking to rent in the city for short-term or long-term stays. 

4. Georgia

 

According to a recent report by the  U.S. News and World Report, Georgia ranks as one of the best states to live and work in and it received high ratings for its infrastructure, fiscal stability, and steadily growing economy. U.S. News also ranked Georgia as the 18th most affordable state for housing in the country, contributing to the upward trend of the local real estate market.

In fact, Atlanta is one of the fastest growing cities in the country, ranking fourth with the most residents in 2019. It’s also home to headquarters of Fortune 500 companies like Coca-Cola, The Home Depot, and UPS. The cost of living in Georgia’s capital is less than half as in cities like Manhattan, proving now is the best time to invest in Atlanta. 

There’s also a growth of capital as homes in Atlanta have increased in value by 5% while maintaining low interest rates for investors.

5. Florida

 

Florida is a renowned tourist destination with year-round sunshine, diverse and dynamic economy, and a thriving global business sector.  It’s unsurprising that people continue to flock to the Sunshine State and its population is expected to grow beyond 22 million by 2022 giving a serious housing shortage. 

Orlando is a great city to invest in Florida as its economy is booming because of its international tourism attractions like Walt Disney World, Universal Studios, and countless others. Investors can choose to target either long-term residential or holiday markets with their properties as both offer great returns. The market is also diverse because every neighbourhood has something to offer to everyone, whether you’re a single, family or first-time investor.

The city is also on its way to recovering from the COVID-19 pandemic with safety precautions in place while vaccines continue to be easily accessible to residents, making it a smart city to invest in.

Further, if the Orlando market is a touch pricey for your budget, Tampa and Fort Myers, on the West Coast, are seeing an amazing influx of people, great booms in values, and certainly more affordable.

 6. Idaho

 

Idaho has a growing job market and it’s become the state with the largest employment gain in the country, making it an attractive location for both potential residents and investors. A large percentage of people moving to Idaho are young entrepreneurs and technology-focused employees, which has resulted in an increase of business startups and a tech-centred economy.

Boise in particular has experienced an increase in population of 2.9% from 2017 to 2018, with the majority of newcomers prefering to rent rather than buy. This makes it a great opportunity for investors to snap up a bargain.

Boise may seem unassuming but it’s been recognised as the best place to buy a home in 2019. It offers diverse neighbourhoods for different kinds of people including the trendy Boise Bench area for millennials, the community-oriented North End for young professionals, and the prestigious Harrison Boulevard for well-to-do residents.

7. Illinois

 

Illinois is a geographically diverse state that’s home to agricultural regions, urban and industrial cities, and even natural resources like coal and lumber. More than 30 of the Fortune 500 companies call this state home including Boeing, Walgreens, McDonald’s, and Kraft Foods. It also has a diverse economy fueled by different industries like finance, livestock, manufacturing, agriculture, medicine, and biofuels.

This economic stability makes Illinois an attractive location to invest in. Although you’ll find different real estate options across the state, many of the best residential properties are found in Chicago.

Demand for housing in suburban and city neighbourhoods in Chicago are steadily rising, pushing home prices to rise exponentially in 2021. The Windy City is also known as the business and financial center of the Midwest, and its growing economy and overall affordability contribute to the great quality of life that residents experience. 

 

It’s also home to a great arts and culture scene, with more than 400 theatres and art galleries and 552 parks. 

Narrowing down your investment options isn’t easy when there are so many great locations to choose from, but reviewing these seven states and cities is a great place to start when it comes to investing in the U.S.A., given that they promise high returns to your potential residential property investment. 

If you need help choosing which state (and city) to invest in, book a call with us

Linz’s Friday Musings – Don’t lose focus

As another Friday comes to a close (well here in Oz anyway) we close the chapter on another week in our lives.

It’s a great story we are all creating – unique, jam packed with action, drama, and suspense (oh, and lockdowns!), and I am sure it would certainly make for interesting reading in time; sitting on our front veranda at age 85 reading to our grandkids or great grandkids the story of our lives – them sitting in awe at the twists and turns…

But how will YOU like the story?

Think about how you will FEEL when reading to them? Will you notice the missed opportunities you should have taken? Will you regret the decisions you didn’t make at crucial crossroads? Mourn for the missed time you had with family and friends at times we were “too busy” living and ignored life?

It’s hard when we are up to our neck in crocodiles and viruses, to really see when we are at a crossroads, and often how important is that next decision. In hindsight, we can look back and say “Wow, if only I had taken that step to do <insert thing here> how different might my life have been!” But at the time, is just another thing, that in our busy day to day lives, we just dismiss… I don’t have time… oh, sounds good, but I will do it later…yes I would like to, but not right now…

Then, soon turns into later, and later, and we keep missing these chances.

Particularly right now, with most of the country in some form of restrictions, the pressure on us is almost at breaking point.  It is very easy to miss opportunities as they present, or even just miss living…

And I don’t mean existing, I mean really being in the present, noticing all life around us.  Do you see how the wind rustles the leaves of the trees?  Maybe notice what your pet is doing, right now.  Don’t let the pressure force you to miss life, and to live to the fullest.

Even if we can’t get out and travel, forge that story of life; those next chapters in the book – with excitement, experiences, growth and learnings…don’t just rewrite the last chapter again..

What is Luck?

Happy Friday the 13th! Apparently, an unlucky day. Interesting what we deem in western culture as ‘bad luck’…

While there is certainly evidence in history to reasons why the number 13 might be bad luck, and possibly Friday (historically in the Middle Ages, Friday was deemed to be an ‘unlucky’ day to begin journeys) there does not seem to be any significant reason why Friday the 13th of any particular month should be so…

I guess as time moves on, a lot of us, particularly still working in the J O B, would deem Friday to be good luck, as it symbolises the end of the work week for many.

Truthfully though, I believe we all make our own luck. As was purported quoted by Samuel Goldwyn (Famous Polish film producer that some say the founder of Hollywood) – “The harder I work, the luckier I get.”

Whether it was indeed his quote or not, this rings so true…

While there are often things that are out of our sphere of control, and we might see outcomes as ‘unlucky’, the harder we work on areas INSIDE our sphere of control, the more favourable outcomes we get.

Those looking from the outside may say, “Wow, she is lucky!” or “How lucky is he?!” truthfully that ‘luck’ is made up of many hours of hard work, practise, and perseverance.

Particularly now, during times like the Olympics in sports, or even in business, we may see businesses or athletes succeed and think they are lucky, when really, they are just determined and never gave up when things got hard.

The road to luck is through perseverance.

So, while half of our country is still suffering under government-induced lockdowns, chin up Australia! Keep focusing on what we can control, rather than watching what we cannot, and you will see your ‘luck’ improving.