Hey all, new member, first posting..
Been reading through BB Miami Advice thread, very good.
Im looking to invest in the US, preferably cash flow positive property initially and hopefully look for CG in 2nd or 3rd properties.
My situation:
-22 years of age and will have about $38k in cash by Feb 2011 (when i plan to invest)
– I live at home with minimal expenses, $300 per week max, and save approx $3.2k a month
– i have a property economics degree so im not a total newb with regards to property ie valuation, DCF, cash flow, market research.. but admittedly was more commercial focused and slept a lot through accounting and tax type stuffim not looking for advice on what area to invest in the US (I can do this myself), im just a little hazy on what the best approach would be?
– will i still be able to get FHOG if i buy my first property in US? (i assume it depends on where the loan originates?)
-US loan vs Australian loan? (Id be happy shorting AUDUSD atm so an Aussie loan aint too far out of the question)
-Do i have to physically go over there to inspect, sign documents etc or should i work through a company that does this for me?
– should i be setting up an LLC?
– US bank account – do i need one?
– IRS tax implication stuff
– other cash flow type stuff I need to know besides land tax, strata fees (they called HOA fees over there? what is HOA?), management fees etc?ive given myself to February to get this done cos I want to get into the US market sooner rather than later, as I love buying dips, and this represents an amazing opportunity that im afraid we wont see in my home city of Sydney any time soon due to current market fundamentals…
thanks for any help, links, advices cheers…
Hey white,
I am in a similar boat to you at the moment, started looking into the US a couple months ago, similar age to you, just a bit older, and also seems that we have similar goals and ideas in that we both want to achieve some financial independence for the future, and see the US as a great oppurtunity to do so.
Unfortunately I cannot answer all of your questions, but I will do my best
– FHOG only applies on property purchased in Australia, so purchasing an investment property in USA would not stop you getting this.
– US vs Aus Loan depends on alot of things, mainly the interest rates you can get, and how you think the USD will go against the AUD in the long term future. I made a quick spreadsheet which compares the two scenarios so you can see which is the best for you. Feel free to PM me to have a look at it. Keep in mind it is difficult sometimes to get a loan from a US Bank as a non-resident, not impossible, just difficult.
– From what I have seen you do not physically have to go over there to sign documents or anything, everything can be done from this side of the world, however depending on the size of your investment it may be worth the trip. For example if you are going to spend 150k on a property, you may want to spent 2k on a holiday to check it out.
– US Bank account is essential and should be the first thing you get organised, even if you do not use it right away. I recently just signed up with HSBC in Sydney and once that account is set up I will talk to them about getting a US account set up, HSBC is useful because they have branches in both countries.
– Tax implications are pretty similar to Australia, I am not 100% sure on how it works, but basically you pay around 30% tax on any income earned from an investment property, but you can claim deductions such as interest repayments, maintenance, advertising etc to minimise the tax paid. Also note you have to put the rental income made on your Australian tax return as well, but you can claim some offset thing which should allow you to claim just about all of it back. There are some forms which calculate how much you can claim, it is normally all of it, stops you getting taxed twice at least.
– I believe HOA (home owner association) fees are just like strata fees here. When looking into purchasing a place which has a body corportate, you should be able to see what sorts of fees these are. There is also property tax you have to be careful of, once again you should be able to know what it was in the past couple years and it does not vary too much, but sometimes it can be a significant amount. Note that property tax varies between the states and counties.
– As for an LLC, I do not think it is essential, at least not at the start, but further down the line you may want to create one and put the properties under that title, it should not be too difficult to transfer them across.
Anyway, do not take everything I say as 100% truth, I have not done it before, and what I told you I have only got from researching and these forums basically. If anyone reading this could point out any mistakes I make then that would be greatly appreciated.
If you wanted to discuss this further then feel free to PM me and we could talk through some things
Cheers
James
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