Hi Richard
Are you talking about residential finance or commercial?
Thanks Richard

The Detroit economy relys heavily on the car industry. I used to work in Automotive Design and have seen over the 12 years that I worked in it, more and more of the work going to China. In my view the major auto manufacturers in Detroit and elsewhere will continue to downsize significantly. I am sure there are better areas in Detroit as well, but unless investors are willing to travel there and research fully, they are in danger of making expensive mistakes. The fact is if you compare the net inward migration figures and unemployement figures of Detroit against any of the big Texas cities, Texas is much stronger and will provide a more stable rental income and long-term capital growth.

I would say keep it simple. Complete a US tax return for your USA activities and an Australian return for your Oz activities and keep the two separate. With the depreciation, deductions and business expenses for the LLC you shouldn't pay any tax in the US anyway.

With regards to getting cash back from the US, I would avoid the ATM card as the charges will work out high. Use a wire transfer or foreign exchange broker.
Richard

Josh
Although I do have my property in Niagara Falls, it is not an area I recommend. To be honest my properties in Indianapolis and Texas are much better investments (higher net returns). The property in Niagara is built around 1910 and requires a lot of maintenance. Up until now the tenant who is through Section 8 has been pretty good, but in the last few weeks has stopped paying their rent. The government leased housing has recently reduced their portion of the rent payment and I think the tenant is struggling. The eviction is in the process of happening. My property manager has been fantastic.

When I bought it looked great as I only paid $28,500 and the rent was $500 per month. But after you take out the maintenance and expenses the net is closer to $200 per month and I it needs a new furnace for $2000!

As far as Texas goes it is very stable. My properties require very little maintenance and just tick along each month. Finding tenants was very quick and they have stayed long term.
Richard

I agree with Tony's post above. The amount of deductions you can claim on a US tax return should mean you pay no tax. Claim on all the above and don't forget travel and meal costs if you are visiting properties. If you have a LLC in the US then you can claim business expenses also.

Hi Todd

I can recommend the property manager I use for my property in Niagara Falls. They are my third manager, the other 2 being crooks. I have been with them for over 18 months and they are great.

Rosato Management Services Inc.
http://www.rosatomanagement.com

They do charge above average rates per month, but it is worth it.
Richard

You are correct finance is an issue and due diligence is a must. Using your equity is the best option at the moment as it is pretty impossible to get finance in the USA. I was over in LA October last year and the main factor affecting property prices appeared to be the school district. You can use Zillow or other research sites to check out the schools. I would recommend flying over to check out different areas as neighbourhoods vary greatly.

Using an LLC is a great way to hold US property. It provides another layer of protection from holding property in your own name. I would also recommend getting landlords insurance with a large amount of liability protection.

Unless you are a US citizen you can't form an S or C Corporation.

When you buy investment property, whether in the USA or in your home market, it has to make sense the day you buy it. The only time value is important is when you buy it. What you are really buying is an income stream. My portfolio of USA properties had really good net returns when I bought them and still provide an excellent cash flow each month. I don't really care what my properties are worth as it is the rental income that counts. Any growth in value is just the icing on the cake.

I agree with Nigel that this is a great time to buy and the worst time to buy is when property investment in 'fashionable' and the bubble is about to burst.

I think the Atlanta example above is a bit exagerated, however you can get 9-14% net returns or higher in Indianapolis, with most houses being less than 10 years old and range from $50-$90k. Most of these are bank-owned properties and I have contractors that carry out the work to get them rent-ready.

If you want a really safe investment then Dallas, Austin and Houston are very strong areas and should appreciate well over the next few years.

The exchange rate is very favourable for you Aussies at the moment to invest in the USA and at lot of the US is at (or at least near) the bottom in terms of values. Financing is a problem but the situation will get better soon. I was lucky enough to get an ITIN mortgage a couple of years ago.

If you can use an Australian line of credit now to secure some great properties, within a few years you will be able to refinance using US borrowing and pull all your money back out again, while still hanging on to your properties.