US Property – good idea if America goes broke?

I'm not one of the technical persons on here, but in the process of buying in USA at present.

I agree with Nigel that the market is not falling.

In fact it is getting so hard to buy because the market is moving upwards so fast.

We've had to settle for lower returns compared to what we were aiming for in 2011 because it has changed that much.

I have been looking since May 2012 and to be honest, thought I'd never get into the market at all!

I took a visit there in May 2012 and it's such a different place to A'lia.

Their type of recession is so different to our type of recession. There's just so many ppl there. So much business activity.  A sense of entrepreneurship. A "no give up" philosophy to life.  Strong sense of community and strive.

I don't really know how else to describe it. I think you just have to head to USA yourself to get a real sense of what things are really like.

Sometimes it's just your gut feeling.

But like I said, I'm not technical on this, would be good to hear from others too.

Isnt there only one problem everyone seems to have forgotten in the USA goes broke saga?

The US has been the most consistant provider of ongoing capital in the world for the past sixty years. Reliable .. ongoing capital. And that just doesnt disappear overnight.

The US has been the financing source for a great deal of the world's activities. And however you like to think about it .. the debt structure its facing is not the burden people make it out to be.

What happens when a competant and strong country goes broke to its debtors? It either restructures its debts or invalidates them depending on ongoing terms. Cant happen you say? Ask Argentina how that works in recent times. Nestor Kirchner waved a hammer and the World Bank settled for what it got.

A rethinking of the rules and conditions of states probably needs to be enforced. The working environment in the United States is being made too difficult .. and thats just legalese. That sort of stuff can be straightened out by the wave of a pen.

Do you think in the longer term America will be broke? Hardly. The more likely scenario is it will invalidate the debt holding with the creditor concerned .. or change the relationship of the debt payment structure.

Until it totally rules itself out as a superpower by devaluing its own weath creation structures .. the US will continue to be a major influence .. both in consumption of consumer goods, creation of consumer goods and export of intellectual and scientific solutions.

The wealth of its property market is still quite valid and based on solid foundations. But again .. referring to what i've written above .. the 'fairness' concept needs to be ironed out of its property market. Rents should be indexed and market driven not rated by government agencies. Rental Controls have bankrupted many a landlord and will do so again if not kept under appropriate measures.

America still has the best possible structure in place for ongoing property wealth. It just has to change its legal structures relating to property to make that effort worthwhile to renter, investor and builder.

Hi Adam,

It's not possible for a country which has its own currency to go broke, particularly when its debt is denominated in its own currency as there is always the option of simply issuing more currency. The danger is inflation, i..e. its own citizens and the rest of the world losing confidence in its currency. You are already seeing this in the comparative rise of the A$. In an inflationary environment you want to either be holding assets, be a borrower or both.

I remain neutral on whether people investing in US real estate at the moment will make money, but I would tend to think that those buying quality assets and leveraging into the market will do OK. The biggest issue is the risk on the initial capital sent over there being whittled away by further falls in the value of the $US.. 

Even if for some unforseen reason the currency did go broke. land will always be there and there will always be a demand for shelter.

This is one occasion where I really really push, get good advice first, and make sure it is in no way linked to the transaction.

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Just a wondering from my end.

In Australia we hear so much said about investors from China and Japan coming in and buying up Australia. When you think Australians are quite happy to pop abroad and do the same thing, it kind of puts it in perspective with the various standards being applied.

BigGaz, i very much enjoyed your post on risk. +1

Exactly why you need to have someone make sure you do not invest in these areas, pretty easy problem to overcome

The thing to remember here it is not as hard as some will make you think, by keeping it complicated they are able to charge fees and services and direct people where they want them to guy, not looking after their clients best interest.

Investing in US property is easy and not a hard or high risk  thing to do as long as you get the right independent advice from a person not related to the transaction.

A reputable Property Coach or mentor who has reliable professional contacts in the area will be able to look after those risk factors like buying in slums etc. If you think about it, it is really no different than investing in Australia, just follow a proven investment strategy, keep to the rules and it will be fine.

There is a lot of hype and hysteria about buying in the US whether it is founded or not time will tell, if you go back to commentary just after the GFC there was the same type of hysteria here, saying our property market is a bubble expecting to drop by at least 25% etc.

5 Years later, whilst things are no where near perfect, we survived it pretty well to date.

My personal opinion is if your looking to invest to take advantage of the potential high growth involved in a rebound forget it, there are enough opportunities here to do that with a much more stable economy behind you.

For a long term hold investment it is defiantly the time to do it, this could be a once in a life time to purchase at these types of properties at such low prices, seriously how much lower than $40k can  a 15 square home on 600m2 go

 Even if it drops by another 50% your unrealised loss is only $20k, over a 10 -15 year period this small amount will be made up at least 10 fold

Whilst there are hints that the US currency may crash, one thing is for certain the USA will always be there and nearly 1 billion people need a place to live and i don't know of anyone who can make more land (apart from maybe in Dubai lol)

I personally know many savvy sophisticated investors who are buying multiple properties in the US, they are very happy on the purchases.

I am yet to hear or read of any major horror stories from people who have been burnt in the US, which kind of confirms my original comment.

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It's good to see the blind helping the blind here. 

I don't really have a problem with it provided it doesn't become a blatant spruikfest. Tony went off the cliff big time so I wouldn't want to tar the other pro's here (who even though they indirectly and occasionally directly self promote or allow proxies) because he lost the plot. 

I tend to think the pro's here, including yourself, add far more to the sites value than they ever take away.