What Paperwork Do You Need to Buy Property in the U.S.?

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Buying property in the U.S. can provide a tremendous ongoing income or a profit when you sell. Either way, investing in U.S. residential property can significantly increase your wealth and create a diverse investment portfolio by including property in a foreign country. Australian and New Zealand investors have an advantage when selling a property in the U.S. due to the favourable exchange rate, making a profit of $30,000 in USD closer to $45,000 when converted back to local currency.

 

There are a couple of extra steps to complete when you want to buy in the U.S., but it is relatively easy. Like every investment, you will need to complete paperwork. An experienced coach or mentor expert in the U.S. residential property market can help you through buying property in the U.S. The U.S. government does allow foreign investors to purchase property without making it too complicated, so you’ll be able to grow your wealth by buying U.S. property.

 

This blog introduces some of the notable U.S. paperwork and forms you may need to complete when you buy a property in the U.S.

Taxation Requirements

Note that you will be paying tax in two countries: income earned from your U.S. investment will count towards your Australian or New Zealand income tax. Of course, you can also claim the expenses on the property investment for that income tax.

 

Applying for an ITIN as a foreign investor is a simple process. To purchase property in the U.S., you will need to complete income tax statements in the U.S. too. You will need an ITIN equivalent to the U.S. Social Security Number to meet your taxation requirements. It is your unique government identifying number, so you must provide proof of identity and address.

 

People you will likely employ while investing in U.S. property include property lawyers, real estate agents, property managers, and tradespeople who renovate or maintain your property. If you are hiring anyone in the U.S. to undertake any tasks for your investment property, you need an Employer’s Number. It is like an ABN in Australia, and your employees will quote this number when completing personal income tax on the payments you make.

Property Paperwork

You will need to get the prospective property you consider buying inspected before purchasing the house. The property sales documents you need and fees payable include:

  • Title Search (proving the vendor has the legal right to sell and will have no ongoing debts you become responsible for from the property).
  • Title Report (which lists all the deed history and all the covenants or other limitations on the property’s title).
  • Insurance documentation as you will need insurance to protect your investment, and your mortgage lender will insist on seeing such documentation to protect their investment).
  • The buyer pays a recording fee to the government for registering or recording the change of ownership on the deed (usually a tiny amount).
  • Legal Fee (attorney to complete the official sales contracts showing the change of ownership, what money is payable, what condition the property will be in when settlement occurs, and all the conditions of the sale).
  • Sales Contract.
  • Real Property Transfer Tax – a fee payable to the state when a property sells. Some states do not have this tax, but most do.

 

If you rent the house, you’ll need a copy of the rental receipts and the exchange rate documentation for your income tax. The receipts will verify how much rental income you have received in the financial year for tax purposes.

 

If you have a mortgage on the property, you will need to keep records of all the interest payments you make, as you can deduct these against your income tax. Ensure you have copies of all documents concerning any costs for the property, such as a maintenance bill from a tradesperson or the cost of rental collection by a property manager. Each charge is deductible from your total taxable income, reducing the overall costs of your investment.

Mortgage Requirements

To get a mortgage for a U.S. property, you will need to provide all the usual credit documents as you would for local property, such as proof of identity, proof of income to show you can service the loan, and information on your current expenses. However, the mortgage requirements are less because the buy-in price for property in the U.S. is generally lower.

 

Suppose you wish to get a mortgage from a U.S. lender. In that case, you will need to ensure you have a credit rating in the U.S. It can take several months to establish a credit rating acceptable to banks where you want to purchase your property, although it is an option.

 

Many investors who need a mortgage to cover the total costs of the investment will try an international bank or a large bank with international banking options. You are less likely to get approval for a loan from a small Australian credit union to buy property in the U.S.

 

Remember that the mortgage will require international currency exchange between AUD or NZD and USD to purchase the property.

Money Exchange Service

As a foreign investor, you must employ a currency exchange system. You will need to change your Australian or New Zealand dollars into U.S. currency to purchase the property and to pay for all renovations or maintenance. You will need to pay for reports in the pre-purchase property stage, insurance while you own the property, and marketing costs when you are ready to sell the property.

 

You will also need to change the U.S. dollars you receive for rent or when you sell the property back into Australian or New Zealand dollars. Note that the exchange rate is usually favourable for this, so the income you earn in the U.S. will be increased once changed into local currency.

 

You will need a sound exchange system with lower fees and reliable services.

Getting Help from the Experts

While it is relatively easy to complete the paperwork for purchasing property in the U.S., there are enough differences and practicalities to consider that getting some help could be worthwhile. Experts who frequently help others to buy property in the U.S. will know all the steps and the current legislation that may impact your investment decisions.

 

A property coach can ensure you tick all the boxes, have a plan that meets your investment goals, and provide you make wise choices as to what to buy and when to sell. If you have an expert working with you, you will cover every essential step in the process. You’ll be sure to complete all the paperwork necessary to purchase your investment property in the U.S.

Renovating and Flipping Residential Property in the U.S.

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Did you know that Australian and New Zealand investors are making big profits by buying, renovating, and flipping residential property in the U.S? It is very possible to buy a property for under $100,000 USD, spend $20,000 USD on renovations, and then flip or sell the property for $200,000 within a year. That gives you a profit of $80,000 USD, which is more when converted back into NZD or AUD.

 

Only some properties will have the potential to flip for such huge profits. Still, profits in the tens of thousands are ordinary for investors who buy suitable properties in the U.S. If youve used American house shows like Flip or Flop, youll know that the profit potential is good. The trick is understanding the U.S. property market and what makes an excellent property to flip for quick profits.

 

Flipping a Property in the current U.S. Residential Market

This section will discuss the current economic market, including that you can purchase a U.S. property for under $100k, renovate then flip that property for a profit of up to $50k within a few months or a year. Due to the differences in the economic and property markets in the U.S., compared with Australian and New Zealand property prices, it is highly possible to find affordable homes in good condition, needing only a quick update in the kitchen or bathroom to sell at a profit.

 

Search for U.S. properties under $100k, as you could be shocked to see the quality and size of properties available. Properties have a smaller buy-in price in the U.S., making the houses more affordable. In Australia, we would consider that a house under $100k would be cheap and nasty, but this is not the case in the U.S.

 

The affordability of the buy-in makes investing in U.S. residential property a key to diversifying your investment portfolio to include property, especially if you cannot yet afford property in Australia or New Zealand. You can invest in a U.S. property to flip it for profit and use the profit to create a deposit for your home down under. Then, re-invest the initial investment to buy another U.S. property for your portfolio to keep building your wealth.

 

Buying a U.S. Property to Flip

 

Buying a property to flip is different from looking to buy a property to live in yourself or as a long-term investment, where you want the rental income to build your wealth. When you want to flip a property, you want a low buy-in price, so you can sell it quickly for a profit to make your wealth.

 

Looking for lower-priced properties in popular or growing suburbs can be a great way to select a property to flip. If the area is experiencing a boom or growth period, people will be interested in buying a newly renovated property.

 

You can find bargains that may only need a few renovations, as the vendor needs a quick sale to cover other debts or due to changing life circumstances. Sometimes, a house from a deceased estate will sell at a lower price to sell quickly because the heirs prefer the money to spend on maintenance on a house they do not want.

 

Understanding the local property market can significantly assist you in assessing whether a house is a good option for a flip. Getting help understanding the market and what you need to look for in a flip investment property from a property coach and people who are experts in the U.S. residential property market will help you successfully buy your property.

 

You want to find a suitable house with good foundations without needing complete plumbing or electricity connections overhaul.

 

A minor renovation, such as knocking down an inside (not a structural wall) to create a modern open plan living space or updating a bathroom or kitchen, will not add too much to your renovation bill. It could, however, add a great deal to the sale price of your property after the renovation.

 

How to Organise the Renovation

Once you have purchased your property in the U.S. to flip, youll need to organise the renovation. The reports you receive during the buying process will help you to understand what is needed. Before you finalise the property purchase, you should create a plan for renovation, including costing and time to know how to budget for the renovation.

 

Hiring a local well-trusted property manager can assist you in getting the right tradespeople working on your investment property. Youll also find that communication between countries can be challenging, especially with time differences. Hiring a project manager or property coach who understands the processes involved and how to communicate across time zones will help ensure your renovation costs do not balloon.

 

Plan a definite and clear scope of work for engaging the tradespeople to complete the renovation. Be specific about what is included and any unnecessary items for the work. Commit to a payment schedule that is connected to work completed. Plan the stages carefully and know each stages budget so you can release the funds quickly. Tradespeople who have been paid for Stage 1 are happier to start Stage 2 quickly.

 

Selling the Renovated Property

The renovation is complete, and it is time to flip your property. Selling the property well will make a difference in your profit. It may be worth getting your original real estate agent (the one who sold it to you) to do a new evaluation of the property. They will know how much has changed and appreciate the value your renovations add to the property.

 

Marketing the property as a high-quality, newly refurbished, or renovated property in a sought-after area can help increase your profits. As an investor from Australia or New Zealand, youll realise higher profits than a U.S. counterpart selling the same property because of the advantage of the exchange rates between USD and AUD or NZD.

 

Getting expert help in buying, renovating, and flipping a U.S. property can make a massive difference in the profit you realise. Finding a property coach who can help you to learn through this process will help you to diversify your investment portfolio and make a profit, not only on this first flip property but on the following properties you buy in the U.S. Gaining knowledge and learning from experts who have successfully navigated the U.S. residential property investment market can help you in your journey towards wealth creation.

 

To discover more about the current U.S. property market and how to find a suitable property to flip to create your wealth, click here.

The Strategy for Success – Selecting the Right U.S. Investment Property to Match Your Strategy

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An excellent investment portfolio strategy helps you stay on track and work to achieve your financial goals. When you choose to invest in property, particularly in the U.S. as a foreign investor, you will need a well-considered strategy to implement. You want your property investment to be a success, so you need to know your investment strategy before you purchase a property.

 

Your strategy will change depending on your financial goals, current finances, and what you need to achieve from your property investment. When investing in the U.S., you’ll buy a property that matches your strategy. Suppose you need a regular income from a residential rental property in the U.S. In that case, there is little point in purchasing a property that needs extensive renovation before getting a tenant.

 

When comparing properties to buy within your budget, the final decision should align closely with your investment strategy. If you have a property coach, the coach can help you to ensure that your system or plan for investment will meet your financial needs and goals and that the property you select will successfully align with your strategy.

 

How to Start with a Successful Strategy

Investing in U.S. residential property is a great way to make money, but knowing which property you should buy can take time and effort. A successful investment strategy will start by considering what you need to achieve. Your plan will consider your finances, how much you can spend on a property and associated expenses, and when you need a cash injection to meet a long-term financial goal.

 

Do you want a fast profit, buying and selling a property within a few months? Alternatively, do you need a steady and regular income from your property investment? Does your strategy mean you want payments for a few years and then plan to sell when the property value increases in five years? Are you investing in U.S. property to create a deposit for a property in Australia or New Zealand in the future?

 

If you answer the above questions, you’ll know your financial goals – or what you want to achieve from your investment strategy. After setting your financial goals, you will need to define what sort of property will help you to meet these goals.

 

As a new investor, it can be challenging to know all the intricacies of investing in a property, especially when the property is overseas. Accessing local experts and people with the right experience can help you ensure your investment strategy will succeed. A good property coach or a mentor with experience and knowledge of the current U.S. residential property market can help you finalise your process.

 

Matching Your Strategy to a Property

Once you have a strategy to reach your financial goals through property investment, you’ll need to select the right property. There is little point in buying a property with an established tenant happily paying rent regularly if your strategy is buying a property that you can flip within a couple of months.

 

If you want to flip a property, you want to buy a property in an area where the property is becoming more popular or demand is growing for properties in that area. You also want to consider a property with solid foundations, and a few renovations or cosmetic changes could dramatically increase the property value when you sell.

 

Alternatively, if your strategy is about gaining a rental return to increase your income, you would like to buy a property that does not need extensive (and expensive) renovations before getting a tenant to pay rent.

 

Knowing which areas in a city or country region are experiencing growth will affect where you purchase a property. According to your strategy, understanding how much profit is likely when you plan to sell the property will help you choose the right property for your needs. Local knowledge and expert understanding of how properties increase in value in different regions will enable you to be sure your U.S. property investment will be a success.

 

As a foreign investor, investing in U.S. property can be challenging, especially if you need more knowledge of geography, the current housing market, and where experts predict growth. If you connect with a property coach or access a mentor’s or training program’s expertise, you’ll have the advantage of accessing the local knowledge you need. You certainly want to avoid buying a property in a declining town, where shops are closing, and people are moving out of the region.

 

Steps to Buy Your Perfect U.S. Investment Property

 

You have your strategy for U.S. property investment. You know the property you are looking for and have obtained expert advice to locate the perfect property to meet your plan. All good, but how do you move from planning strategy to purchasing your property in the U.S.?

 

You will need to complete several steps before you can buy a property in the U.S.

 

Step 1 – Limit Liability

Creating an LLC (Limited Liability Company) will provide you with asset protection and structure that ensures you can create wealth.

 

Step 2 – Obtain the EIN

You will need an Employer Identification Number to pay people for work completed in the U.S.

 

Step 3 – Set up Insurance

You will need property insurance in the U.S. to protect the properties you purchase. While you may need to finalise the individual property insurance once you have the property address and the sale is complete, researching the company and property insurance you need will help protect your wealth creation business early on.

 

Step 4 – Review Your Taxation

When investing in a foreign country, you will need to know the taxation rules for both countries, so talking to experts in foreign investment taxation can help you with your tax situation.

 

Step 5 – Decide on Foreign Exchange

You will need to use a reputable exchange service or system to exchange your AUD or NZD for USD and vice versa. Minimising charges on the transfer of funds will help reduce your investment costs.

 

Step 6 – Source Property that Matches Your Strategy

After completing the setup, you can now source the property that matches your investment strategy, considering how much money you can spend and the properties that will meet your financial goals.

 

Step 7 – Select the Property 

Once you select the property you wish to purchase, you’ll need to deposit.

 

Step 8 – Perform Due Diligence

When purchasing any property, you must ensure the building is sound and that no pests like termites are invading the property and eating your profits. You need to know that the person selling the property has the legal right to do so, and you won’t become responsible for debts on the property.

 

If planning a renovation or works on the property, you will want to ensure you do due diligence on any tradespeople or companies who will work on your property. Due diligence includes a title search, property inspections and reports, and rental reports on the property.

 

Step 9 – Finalise the Sale

You can finalise the sale and close the deal if everything checks out in the due diligence phase.

 

Step 10 – Connect with a Property Manager

Your property manager will help you to manage tenants and all maintenance requirements. You will need to trust your property manager to manage your property.

 

Step 11 – Obtain Insurance

At this point, you’ll need to obtain property insurance to protect your investment from damage.

 

Step 12 – Source Tenant

You will need to attract the right tenants, including considering the capacity and ability to pay rent and people who will not damage your investment property.

 

Knowing whom to trust and who will protect your investment property can be challenging, primarily when you invest in a different country where you cannot simply walk past the property to see the condition.

 

Your investment strategy will be successful if you can access the correct information and local property knowledge. Access to a suitable property coach, who has become an expert in U.S. property investment, will help you tremendously.

 

Star Dynamic knows the U.S. property market and can help you to set and achieve a successful investment strategy that will suit your circumstances and financial goals. Reach out to us today to discuss how we can help you.

 

2022 – A Year in Review

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Christmas might be just around the corner, but not sure what happened to summer?! This year could be the first year in Australia, we experience a ‘white Christmas’ with snow falls on Mt Buller a mere 40-50 kms from here just this week… crazy!

With the year coming to an end, it’s a great time for the Christmas parties to celebrate and reflect on the year that was, and while I am not into ‘New Years Resolutions’ it is a perfect time to sit down and plan out the year to come.

So, in that vein, with just 2 newsletters to go before Christmas, I thought I would do a ‘Year in Review’ and then next week, look out for our 2023 Outlook.

2022 – A Year in Review

If there was one word to sum up 2022 it would have to be – volatility.

From very strong growth coming out of ’21, through to rising interest rates and slowing markets in the back half of the year, it was certainly hard to predict what was coming next. Crypto crashing, stock market volatility, exchange rates wildly swinging, it was certainly an unsettled period in most markets.

Inflation has the be one of the key drivers for the year. After the wind back of the quantitative easing policies of most western governments (read money printing) one inevitable outcome was going to be inflation. Now strangely enough, it was not as much about demand driven inflation (higher prices caused by high demand for items) but more about supply chain shortages and simply manufacturers not being able to keen up with the normal demand level. Primarily though, still a hangover of the pandemic issues.

Then, to try and curb the huge inflation rises seen in the economies, the central banks started on one of the most aggressive interest rate strategies that we have seen in recent times, both here in AU and in the U.S. Four consecutive three-quarter-point rises in the U.S. (7 in total for the year) was capped off by a 0.5% rise this month (December) bringing their central cash rate to around 4.25% now at the end of 2022. Here in Oz, the RBA didn’t want to miss out on all the fun either and moved into a period of 8 consecutive interest rate hikes for 2022 – from 0.1% in April to 3.1% now in December.

Wow…

It’s no wonder why some investors just didn’t know which way to turn. Careful property investors here in Australia who managed to secure a positively yielding property, are now seeing negative yields; crypto investors seeing their net worth plummet; stocks and shares are more of a roller coaster than an investment…

All very unsettling.

And that’s before we even mention floods in Australia; our third consecutive La Nina event causing weather havoc all down the eastern seaboard; war in northern Europe – it just didn’t stop.

Certainly cannot blame people for limping across the finish line of the year, collapsing into the chair of NYE with beer or wine in hand, hoping that 2023 will bring normality or stability…

And while I am not trying to paint a negative picture of the year that was, just stating facts, it has also been a year of opportunity. I believe what we have seen is just the markets trying to get back to some form of normality, after being twisted out of shape by the government responses to a global pandemic, and in trying to get back to ‘normal’ we have seen some wild swings along the way.

For those investors that held on through the bull ride, there have been some amazing opportunities this year and within volatility there is always opportunity. As a good currency or stock market trader will tell you, the volatility in a market (or measure of how wildly prices go up and down) is often seen as a good thing and can give the best opportunity for profit, much more so than stable, flat markets.

I think the adage of the year (maybe the past few) is – “That which does not kill you makes you stronger.”

While not an easy year for investors, certainly an opportunistic one if you were willing to brave the waves.

Next week, lets take a look at 2023 and see what might be to come, and how best to tackle our next 12 months.

What are the Benefits of Having a Property Coach?

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Have you ever invested in U.S. property? Do you know the risks you take when you invest in property, whether here or in the U.S.? The benefits of investing in U.S. residential property can be impressive, but there are always risks involved when you invest in any property. A property coach gives you access to information and mentoring that gives you the confidence to know that you have made wise investment choices.

 

Have you heard of a life coach or a business coach? A life coach can help you make wise personal decisions – choosing the career, relationships, and lifestyle choices that will make you happy, healthy, and comfortable. A business coach will mentor you through the business and help you to make decisions to progress your business and achieve your goals.

 

A property coach is similar; they will mentor you, allow you to access information, and help you to make wise decisions to meet your property investment goals.

 

People can make successful decisions in property investment without a property coach. Still, those who access the expertise and advice from a qualified property coach often make more from their first investments and will cause fewer costly mistakes.

 

What is a property coach?

A property coach will help you to achieve your goals through property investment. Offering mentorship and advice that comes from having many years of experience in the U.S. property investment market, a good property coach will ensure you are successful in achieving your investment goals.

 

A property coach offers the expertise and guidance to help you successfully navigate the minefield that is property investment, significantly when investing in a foreign country. It would help if you had a coach you could trust because your investment is essential to your life – providing a rental income stream and profit when you sell the property.

 

Since you are investing from Australia or New Zealand, you’ll want to access a U.S.-based property coach who understands the market. You’ll also need someone who knows the procedures you must go through to invest in a foreign country and can explain any questions about your investment.

 

A property coach should provide the following services:

  • Teaching you negotiation skills and sales strategies so that you can successfully apply these skills in future transactions.
  • Regularly update their clients on the state of their investment and advise on the best time to sell the property.
  • Enabling their clients to access the experts in the U.S. and providing the necessary ‘middle-man’ between Australian or New Zealand investors and the people who will work on the property sale and investment procedures.
  • Providing appropriate workshops or other training sessions to give you updates on the U.S. property market and access to information and skills so you can continue making wise investments.
  • Providing a support network of experts and people you can trust to help you with all your property investment questions, concerns, and risk management needs.

 

What are the Benefits of Having a Property Coach?

Whatever you do in life, you want to do it well. There are many benefits to having a property coach, including access to experience, knowledge, risk management strategies, strategic planning, processes that work, trusted people to work with and a reduction of risk.

 

In learning about the market, a good property coach will have the experience to save you time, energy, and money. Their expertise will help you to avoid the common mistakes that rookies make.

 

Knowledge is king, and the property coach who understands the U.S. market, how it works, and how it differs from the Australian and the Kiwi property markets will give you the confidence to make your investment.

 

A property coach focuses on their client’s success. You are hiring them to work for you, and they want you to succeed.

 

Experts in the industry know what they are doing and will have excellent processes and risk management strategies at their fingertips – methods that have been refined by years of experience – that they can share with you. Using these processes helps reduce your risks and take advantage of your property coach’s hard work.

 

A good property coach will have people they know and have worked with previously to renovate or flip property in the U.S. You’ll be able to use these connections to ensure the work gets finished quickly.

 

Signs You Need a Property Coach

Property coaches are for more than just those new to investing in property. Here are some signs that you might benefit from hiring a property coach.

 

  • Are you feeling anxious? Are you new to investing in the U.S. property market? Any new venture that involves your hard-earned money is daunting, so a property coach can help alleviate your concerns and give you confidence in learning about the new market.
  • Has growth slowed in your investments? Whether you are new to investing or a professional investor, if the development you were expecting is not coming to fruition, it could be time to invest in a property coach.
  • Are you looking to invest in a new region of the U.S.? Even if you have invested in the U.S. previously, a property coach can help you understand the intricacies of a new area or market.
  • Are you time-poor or struggling to juggle all the communication across time zones between Australia, New Zealand, and the U.S.? A property coach can become your intermediary and communicate with tradespeople quickly, saving you time.
  • Do you struggle with accountability? A property coach can help you to take responsibility for your decisions while guiding you in the right direction.

 

Where to now?

After reading this article, you could further explore the benefits of hiring an expert in the U.S. residential property market to coach your property investments.  You won’t necessarily fail without a property coach, but the benefits of a coach can save you time, money, and energy in achieving your property investment goals.

 

If you are ready to take charge of your finances through residential property investment in the U.S. with the right coaching and guidance, check out our Global Investment Coaching Program to achieve your property goals today. You’ll get full coaching and support from a U.S. property coach, including weekly one-on-one calls with your property coach and strategy sessions to build your investment strategy. With the right help, you’ll have the mindset to succeed as a property investor in the U.S.