USA and Canada – Interest Rates

Do you wish to invest there??? In which case unless you have a large amount of money and are willing to travel and set up corporations, I would encourage you to buy at least one here so you can get a feeling for investing (rather than trying to chase low interest rates). Also travelling costs could kill any rental return.

Also you will have to set up a corpoation and will have to study tax agreements between the US and Aust, if you want to bring $$$ back to Aust.

Rgds.
Lucifer_au

In response to the following:

“have a large amount of money and are willing to travel and set up corporations”

No more money is necessarily needed to invest in the US or Canada than is required in Australia or New Zealand, the question is how do you leverage the investment if required, i.e. institutional funds, and obtain legal rights to acquire the property.

A “corporation” is not “required” or the best vehicle for acquiring and owning property. The most beneficial, flexible and cost adverse entity is a LLC [Limited Liability Company].

However, in order to establish an LLC – or any corporate entity in the US, you require a social security number – and therefore must be a permanent resident or citizen. Alternatively, if you have a trustworthy relationship with a resident or citizen, a partnership can be entered into in order to form the LLC.

The above assumes you need to leverage a bank or other lender in the US, otherwise, there are ways to acquire property in the US and Cananda – although I am not as familiar with Canadian law – if you finance by way of equity/assets in your country of origin, cash reserves, or a combination.

“I would encourage you to buy at least one here so you can get a feeling for investing”

Am I missing something, or did Henry say he is “not totally new to property”.

My point being, buying 1 or 100 properties in Australia/New Zealand will not necessarily be an advantage. The US real estate market is logistically quite different, in terms of tax and legal considerations, needless to say the size of the market and many economic variables that come into play.

“rather than trying to chase low interest rates”

True – there is a reason why every real estate investor in the world is not clammering to buy property in the US or Canada, eventhough these countries offer low to moderate interest rates.

“travelling costs could kill any rental return.”

Not necessarily true – this is why property managers were created. If the investment does not stack up, taking property management and other professional services [legal, accountant] into consideration, it would not be worth your time.

“you will have to set up a corpoation”

Incorrect.

“[you] will have to study tax agreements between the US and Aust”

Gaining an understanding of “double-tax agreements” should take no more than an hour or two, but of course, a qualified accountant would manage this aspect of any cross border transaction. Again, a cost that needs to be taken into consideration. A cross border accountant may also be required at the North American end.

My recommendation to anyone interested in investing in the US – in particular, is do not approach this market on a small scale when located offshore, i.e. pick up one [SFH] property, then plan on another several months or a year later.

This is even more prevalent if you have to establish legal means of acquiring the property and/or are not 100% confident the capital growth will significantly outperform an investment in your own country.

If this “small scale” strategy is preferred, the risks and costs can be significantly lower – counteracting the lower interest rates – if the same method is applied in Australia or New Zealand.

— Michael