Why Invest in the US of A

Can somebody explain something to me? If the Central bank's interest rate is close to 0% and the cashflow from the property is +ve (assuming that the gross yield is around 20%). Why would the bank still provide a lend at 70% with interest rate near the 7%, rather than at 3%? Is it because:

1) they don't like the tenant?
2) they don't like the area that the property is in?
3) something wrong with the bank's appraisal system
4) all of the above?
5) none of the above?

Thanks for your feedback

Richard

Yes you will need to open a US Bank Account but regretfully ignore of lot of the previous posts as neither Citibank nor Bank America will lend to Foreign Nationals. Didnt in the good old past nor will they in the current climate. 

A lot of the US lenders who used to lend to FN's such as World Savings, Indy Mac, Alliance Bancorp this list goes are in adaministration or have been merged and taken over.

HSBC although they have an office in Oz dont lend to FN's either.

hi Richard

Do you know of any way of obtaining finance on US homes? I noted in one of your prior posts that u know of a lender who will do 65% loans… is that the only one you know of?

Also, I'm curious about all these "cheapies" – houses for under $5000 – some even for under $1000 and some for $1.
What's the catch with buying these cash? is it perhaps because there are thousands of dollars outstanding on council rates?

Even so, it may still be a good buy.

Assuming a house costs $5000 and has a further $5000 in outstanding taxes, and say another $5000 in repairs required.
I'm assuming then that the 65% finance would only be for the $5000 purchase price (which would be presumably from a bank) and that the remaining $10 000 in tax and repairs would have to be forked out in cash??

This is true, but they are linked. The question is why the gap between the two rates are so large. Historically they have been far closer.

I would guess that its related to the perceived risk which the banks attach to property in the current climate.

In 'bullish' real estate markets where there is little percieved risk the two rates are far closer.

Just my opion… feel free to shoot me down!  ;p

John

Might want to read the article i wrote in this months API mag.

Tim

2 posts to date both advertising your own properties for sale.

Can you answer the last question left on your other post and also advise us why these are such a "wonderful opportunities".

I agree with Richard, Up until afew months ago it was impossible to get finance in the United States. Irt is starting to free up a little. You can get beteen 60-70% funding. My view is that small apartment complexes work the best. They tend to have lower maintance issues and better cashflow. Properties with very high returns tend to be in slum areas. Personally I would rather have a lower return but buy in a blue collar area. I like San Antonio. The market is still flat. Good buying in a city that will continue to grow.

Mny American do not invest in property. Part of the reason is that in the United States you can claim your expenses against your tax on your own home.

The current finance issues in America will mean that few people who are working class will get ans over the next few years. That will over time increase demand in the rental markets. If you can get finance this is a good time to buy. However if you want to do this invest the time and go over and do you own due dilligence. If you buy over the internet you deserve the result you get.  

I would say it is very tough to manage a huge money in a short time to buy a house. There are also many formalities that have to be maintained that discourages people. Many one can not manage such big amount.