Hi Michael,

I'm not against investing in the USA!
I invest there myself.
BUT if you are not very well informed of the costs, risks etc, you stand to lose your parents house for them, as they get ready to retire. Have you even considered what happens if the AUD/USD exchange rate moves against you? Do you know what your accounting costs will be in USA, is it worth investing to buy one $30K investment property there? No, not in my opinion.
DANGER!

Pay down any debts, save some money and invest at your own risk, for your own benefit.

You are young and can risk taking a loss (which may or may not ever happen).
But how would you feel if your parents had to sell the house because it didn't work?

Please think twice.

The Results course is not Steve's course, and is not covered by any government subsidies (I'm pretty sure.)
Its a great way to build up your knowledge.
If you have enough of a deposit to act on the knowledge you gather, (ie buy a property) it would be a great idea.

If you don't have any equity or a deposit for investing, maybe start saving in earnest first.

Go to the top of the page, click on "contact us" and ask.

AussieMika,
I have a few remarks which may be of help to you.

If you have a LLC set up interstate from where you are investing, you should register for business in that state.
Which involves an annual fee, and a registered agent who can provide you with an address in that state.

Having done it the other way around, I recommend you have your LLC set up where you intend to invest.

Once you have a LLC, you will automatically get a EIN.
In Aus, a family trust does not pay tax itself, but determines who out of the beneficiaries receives the income, who then pay tax on their FT income from their personal tax return. Similarly, a LLC does not pay tax but allocates the income to an individual (or individuals) who then will have to pay tax on it via their personal tax return. (An LLC is known as a "pass-through" entity for tax purposes. Hence yes, you do also need an ITIN. But having a LLC and EIN, and owning property in the LLC name, makes it obvious that you need an ITIN, and it should then be somewhat easier to get one.     

The nearest thing I know of to a manual for overseas investors buying in USA, is Steve McKnight's USA Power Pack.

As far as contacts on the ground, that is a difficulty.
Even a visit personally will not necessarily help you get reliable contacts.

In my opinion, there is not a clear correlation between purchase price and rental return generally. (Residential).
As discussed, this can be different with blocks of units. But I'm talking about houses/units here.
And I'm not talking about specialised areas eg mining towns. where there is a definite correlation between rents and purchase price.

Purchase price depends on how many buyers there are, in relation to sellers, in a given area.
Obviously more buyers causes prices to go up. This is affected by many different factors, eg employment rates, interest rates, confidence in the economic climate, etc.
The rental price in the same market depends on the rental vacancy rate, and how many investors are buying in that area.
eg an area with lots of rental units, unless it is very popular with tenants, the rents may not increase because there is no shortage of rental properties for tenants. If too many landlords flood that market, they may be competing for tenants.

In difficult economic times (eg recent and continuing) purchase prices do not tend to go up, even if interest rates drop, because the confidence of the buyer is reduced and the seller has to take the price offered, or not sell. However, if less people are buying (including investors) and some investors are concerned their capital growth will not be very good, there may be less properties available to rent. This applies if the investor is negatively gearing, as the only incentive is capital growth, and if that was minimal, why would they bother?
So it is conceivable that prices may go sideways or down, and rents may go up due to shortage of places available to rent.

Great if you're an investor!

But the cycle then changes, as prices to buy are more favourable in comparison to rents for a tenant, and interest rates are dropping, so you get to a point when first home buyers come back into the market en masse. (ie some tenants become first home buyers). So then there are more buyers between investors and first home buyers, and prices for modest homes will gradually rise.
 Investors will not buy if their return reduces (due to higher purchase prices) and unless there is a shortage of rentals, the cost of rent will not increase just for the sake of the investors. 

Suffice to say, there is a relationship between purchase prices and rentals, but it varies depending on where we are in the economic cycle. its more about the demand and supply of houses to buy (for purchase price) and houses to rent (for rental cost.) 

I do not claim to be an expert on land values in any area of USA.
I would make the observation, as an Aussie investor, that to buy land only, even at bargain rates, is pure speculation.
If you can afford to buy and hold land (and pay taxes on it ) for a very long time in the hope that one day you will make a capital gain, then by all means go ahead.

If you are looking for cashflow and/or capital gains in the next 5-10 years, I would be very wary. 

It is my observation that there are a lot of houses for sale, for less than you can build the same house.
ie If you got land for free, and built, you would have possibly few buyers, and for your break even price, you would be competing with much cheaper houses in more central locations.

eg we saw some new display homes in Gilbert (Phoenix suburb) AZ for mid $200's.
Other newish homes in the area would sell for less than half of that.
 
Food for thought.

I am sure there are areas where land may be a good investment, but unless you are an expert in that specific market, buyer beware!

Hi Merf,

Maybe the next step is to go back to the agents and ask if they have any recent sales of properties with DA's approved.
Then do your sums carefully!

Lots of questions arise. (Which you may have considered.)
Will council allow 2 townhouses on this size block? (Read their Development Plan and discuss with Town planner.) If their DP plan says minimum of 600 m for 2 dwellings, including duall occupancy, then don't try to get a plan thru that they wont approve (like banging your head against a brick wall!) 
How is the proposed street access, not near intersection or infrastructure (eg water or  sewer, powerpoles will add to cost if need to be moved.)  
Are there easements that need to be considered on the block?

Another consideration, if you proceed with the DA application and no-one wants to buy it (eg sharemarket instability, economics predictions bearish), what is plan B for you?
Would you be prepared to engage a builder and have it built? ie can you afford this?
it will involve heavy negative gearing on the property, plus finance to build.
Or will you sell at "block only" price (maybe at a loss.)
 Are there buyers for vacant blocks?

Maybe it is worth consulting with a local builder to see if there is interest from them in partnering with you?
Or if they'd like to buy the block, DA ae buyers for your pproved, from you.
They may have ideas of what they want the townhouses to look like in that area and may want to be involved in the DA process.
(If so, get a contract drawn up with them that they have to buy after DA is approved, for a set price.)

We tried to sell with DA, but had no interest so needed to have it built.
We should have decided on a builder and have them get the plans drawn up thru them, would have been more time efficient (and therefore, profitable).

You can send money direct into escrow via OzForex.We have used OzForex quite a few times and have never had a problem at all.
I would allow 3 days to be sure to have it there for settlement.

Jamie,In regards to which bank to use…

Be aware that most banks do not operate in every state of USA.
Also, the way we do online banking in Aus to transfer money from one bank to another, does not work in USA.

ie Seriously, they sent a written cheque in the mail, from one bank to another bank to transfer money.
And it took over a week!

So first, identify which state(s) you want to invest in.
Then find out which banks operate there.
Then choose between them!

US banking is a whole different system to ours, and much more complex because there are hundreds of banks, which may operate in a small area or across most of USA.

We opened an account with a bank which operates in Florida.
Then decided to invest in Arizona, and found that the nearest office of the bank was Chicago (half of USA away!)

We are now with Wells Fargo, who have been fantastic BUT only because we go over frequently and have built professional relationships with the staff.

I would not buy a negatively geared property, so that's my bias.
The strategy is commonly known as "buy and hope".

With the current economic climate, Aussie's not wanting to spend much (see recent retail plunges in sales), the general trend to saving more, I don't know that we have a huge prospect of capital gain per year.
I am not pessimistic about our property market, I believe jobs are strong and population growth will support housing prices.

Your investment strategy should reflect your market outlook.
Right or wrong, it gives you a  rationale of why your strategy should work in the current market.

Does anyone believe we will have an average of 7-10% capital growth over the next 7 years?
If so, that may be a good reason to buy negatively geared property.

If not, you pay weekly to have a chance of making a capital gain, when you don't believe we will have enough capital gain to make it worth your while! I know that property anecdotes suggest a property will generally double in price over 7-10 years. But with overseas economic uncertainties and local ones (not the carbon tax again!), I don't expect that will work currently.    

I prefer NOT to have my borrowing capacity tied up by property that makes me poorer, based on a long term hope.
For those who have a large wage, one negatively geared house may be a good inclusion in your strategy.

Jo is not currently on a high wage (been there at home with young children myself) and may have better uses for her (limited) investment dollars.  

Recently we have been in the midst of a small development, (moderately negatively geared in the development phase) which has drained our cashflow. And reminded us why we like cashflow properties! Although it should hold a worthwhile profit.
Of course, depends also on your risk tolerance, and what you consider to be a risky strategy.

Terry, I am well aware of the $16K threshold of taxable income, but again it brings the focus of one's investment back to tax-minimisation. Depends on the viewpoint of the investor, I'm sure there is room for a variety of opinions.