So, I'm in a position where I have a substantial amount of cash at my disposal, so I don't need to go through the hassle of setting up a HSBC Singapore account, or trying to get finance through a US bank etc.
Does this make the process of purchasing in the US much easier? If I make an offer on a place and it is accepted, can it be owned in my personal name or the name of my company/trust in Australia? If so is it just a simple case of transferring funds from my account in Oz to the RE Agent/Lawyer/Conveyancer in the US?
Any advice would be much appreciated.
Cheers
Having cash to invest in the US property market puts you in an excellent position right now. Financing for US citizens is tough right now so imagine trying to obtain finance as a foreigner (no matter how good of a financial position you are in).
Commonly, an Australian citizen who has a private company or discretionary trust in Australia would incorporate a limited liability company (LLC) in any given state within the US. The members are the owners of the company. The management of the company is carried out by its members, unless the articles of organization provide for management by managers. Governance is set forth by the articles of organization or an operating agreement which in this case would detail the relationship with the Australian entity.
Your US based LLC would then have it's own bank account and file it's own tax return etc. You could transfer your funds from your Australian entity's bank account to the LLC bank account using a service such as http://www.ozforex.com/ for the purposes of investing.
I am sure there is many other structures individuals and entities are using to invest in the US market and some work better than others depending on each person's cicumstances. It's best to seek the intial advice of a CPA who has knowlege in both US & Australian tax affairs. I suggest seeing somebody in Australia and I can guarantee that just by speaking with 3 you will be able to identify if they are confident or not in what they are saying. It is a relatively 'complex' area.
Remember, if you're netting $5 – 6k per annum on a rental in the US and you're paying a 5k accounting bill (even though it's a deductible expense) you have to ask yourself the question. So be sure that you do as much investigation yourself and be confident in the services of any persons or companies you engage. Some people charge in excess of $700 to incorporate an LLC yet the first thing I learnt when I went to the US was that I could do it myself for $100 by completing a 2 page form. It took less than 30 minutes and I had it registered within 48 hours. This is just one example!
So what areas are you looking to invest in?
Best of luck!
It is definately easy to invest in the US if you use cash, but it is difficult to get a return on capital that is sufficient to make up for the hassle and various risks asscoated with investing overseas. There are plenty of opportunities in the US, but i would suggest a lot of caution and due diligence before committing to anything over there.
Hi Orks,
Where abouts are you considering investing? I'm in a similar position with regards to a significant amount of disposable cash and was thinking of investing in the U.S. too as I can just buy a house outright and not have to deal with banks, mortgages etc. There's a lot of info just on the forums here about the best places to invest (maybe too much!) and how to go about it.
Obviously it's a great time for investors to buy but I have heard there is a tremendous amount of hassle involved so still unsure as it would be my first foray into property but I can imagine in the long term it would definitely pay off. There was an article on Somersoft.com that detailed the negatives of a members experience over the last 2 years or so and it did seem quite a challenge, even more so from another country.
I know someone who bought a house in Missouri for US$33k and after all expenses, he gets US$650 deposited into his bank account every month. The house will pay itself off after 6 or so years and can only increase in value during this time. This is something that may be worth the hassle and considering you can buy a house in the U.S. for what is usually just a deposit in Aus, it's a great deal.
Regards,
Derek
Thanks for the comments so far guys.
I'm looking the Orlando region, small multifamily arrangements similar to these:
Ideally I'd like to get something bigger like these 30 townhouses for $1.6m but would need to finance a fair bit and don't want the hassle.
If I just want to buy something to live in do I still need to setup an LLC? Or is that more straightforward?
I'd quite happily live in something like this little one bedder on prime Central Park West in Manhattan, it's cheaper than my almost identical size and age apartment in Randwick in Sydney! Ridiculous!http://www.zillow.com/homedetails/485-Central-Park-W-APT-2A-New-York-NY-10025/72534366_zpid/#{scid=hdp-site-map-bubble-address}
APerry wrote:It is definately easy to invest in the US if you use cash, but it is difficult to get a return on capital that is sufficient to make up for the hassle and various risks asscoated with investing overseas. There are plenty of opportunities in the US, but i would suggest a lot of caution and due diligence before committing to anything over there.
This is a true statement. I am a private money lender in the states specialzing in the asset class that Aussies are buying and I read here on the forums all the wild claims of 18 to 25% cash flow. The one glaring thing is there is no offset for all the training you pay for the travel the LLC accounting etc etc. Not to mention the turn key operators by and large grossly understate ongoing expense's. If they gave you the real world expenses and vacancy you would never buy their product. We have over 400 single family rentals in our personal portfolios all through the country, And when I see these pro forma's calling for 50 dollars month maintenance and no real reserves for vacancy, then I see the price points that people are paying for houses, just does not add up there are going to be an awful lot of Aussies sorely dissappointed.
There are great buys here in the States no doubt. Just be realistic about the returns and invest for capital preservation do not get rate of return fixated.
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