10 QUESTIONS TO ASK WHEN BUYING USA BUY TO LET INVESTMENTS
Real Estate has produced many of the worlds wealthiest people and one of the most lucrative Buy to let markets at the moment is the USA. Investors all over the globe are taking advantage of the low priced homes and the high returns offered by different housing markets in certain States.
But like any investment it is better to be well versed before diving in with all or even some of your savings. You need to arm yourself with as much information as possible so you can make an informed decision before making the plunge.
Manchester Based firm Global Investments Incorporated have been selling these types of investments for coming up to 6 years and lead the market in sales to the overseas investor. We asked CEO Mike Moodie what his advice would be and what questions a first time buyer should ask before they get involved.
Mike suggested the below 10 points investors should consider before investing.
Which Company should I buy from? – In my opinion this is one of the most important choices and obviously this is the first decision you will make before even looking at the properties. This is very important as you will be looking to build a relationship with this company moving forward and taking their advice and guidance on many matters so its really important that you feel comfortable and confident in them. You should always look to speak with someone rather than just email communication. I would also look for a company that has a good track record in this given market and has at least a few years in this business.
Which State should I buy in? – Well this is a hard one as its really a personal choice sometimes and depends on the individual. All of the areas we sell in offer excellent returns and also good capital appreciation, some more than others. I guess that the investor really needs to decide whats more important? The net return or growth or in some cases getting a balance of both. ( My advice would be to look at all the options before making a decision and see what each area offers you and your given budget )
Should I buy in my own name or a company? For the fist time investor I think its probably better to initially invest in their own name and later if we want we can always open an LLC and transfer the ownership over from them to the company. It is really only beneficial to own in an LLC if the investor is looking at purchasing multiple homes. So its very easy to make this decision after the first purchase has been completed. Obviously if the clients intention is to build a portfolio then we would advise the company set up and purchase in the name of the LLC from the start.
Should I buy a vacant or tenanted property? I think that both of these options are good, again it is sometimes a personal choice. Buying a tenanted home is great as it gives an immediate income from day 1 but the buyer should ensure that all the correct due diligence has been done on the lease agreements and rent history of the current tenants. On the other hand I do speak with some investors that like to buy a vacant refurbished home that they can have an involvement in the tenant placement with the new management company. The downside is that maybe it may take a month or two before they find the right tenant but I do remind my investors that a few months on a 5-10 year investment is really small and not a big issue. So again really its down to the individual.
Can I have an Inspection? This has to be the biggest question the buyer should be asking they should never close out on a property unless they can see a full independent inspection. They should also ensure that any fees or deposits are subject to this inspection and that should they not like the report these funds can be transferred to an alternative of their choice.
Should I buy a Section 8 house or private? Again this comes down to personal choice. Both tenants can prove to be excellent but agin comes down to how well they have been vetted. Obviously a lot of investors like the idea of Section 8 as the rent is paid direct to the landlord but if a private tenant has been vetted correctly by the managing agent then the rent should be as good as guaranteed anyway. (Section 8 homes would also normally come with a premium due to the guaranteed factor )
Can I have a US account for my rent? This is one of the biggest questions that we get asked and its really simple. The bottom line is it doesn’t actually matter. The managing agents that we use will send your rent to which ever account that you nominate. Obviously it can save on wire fees etc. if you do have a US account. You can only open a personal account if you are present in the bank in the US however we can open company accounts for our clients without them being present.
Who will manage my property when I am so far away? This is probably the most important of all of the questions and in my opinion the management company you use is as important as the property you choose to buy. Like I tell my investors you can buy the best located house in the world but if its managed badly it can turn into a bad investment. Ensure that the company has a lot of experience and years in their given filed and also that they provide full support and on line portals so you can manage your property from further a filed. Also from our experience most management companies only like to work with their clients via email. My advice is only work with management companies that are happy to deal with you on the phone or via Skype when needed.
Do I need to pay income tax? Again this is a very common question and unfortunately the answer is YES you do need tom pay income tax on the rental however the questions should be how much income tax should I pay as in some cases like on one property the income tax would be zero. This is advice that you should get from an independent tax advisor. As a company we do provide this service for our investors.
Who will insure my property and what Insurance should I take? It is vital that whichever company you decide to purchase from can source good insurance options for you and that the day the you close on your property the insurance would be in place. Most insurance companies would offer different policies but we normally advise our investors to take the comprehensive policy but again this would be personal choice.
“ I could go on and on really and I think each individual investor is different and will have different questions that may come up which is why I have recommended in one of my points to ensure that you always have a call with your advisor and ask as many questions as you can think of before making the decision to invest. “ Mike Moodie – CEO. Global Investments Incorporated.
Global Investments Incorporated provide turn key properties in Detroit, Up State NY and also Ohio. If you would like more information on these investments or to see the latest available homes, please email Mike or any of the team at Global at firstname.lastname@example.org