Are you looking to buy investment property in the USA? If so, you should ask yourself the following questions before doing so.
If you’re looking to buy investment property, there are two key things that any investor should to be seeking out: affordability of property and growth. Currently, there are wonderful bargains to be found in many of the USA’s southern states, especially in Texas and Florida, as well as up in the north-east of the country in Boston. If you know that 2017 for you means investing in US property, you will need to give as much thought to the process as if you were buying your primary residence. Today the USA Property Guide runs through a list of important questions to ask yourself before you begin the process.
Currently, there are wonderful bargains to be found in many of the USA’s southern states, especially in Texas and Florida, as well as up in the north-east of the country in Boston.
1 – What are your financial goals?
What kind of return are you hoping to see from your investment property? It pays to establish this prior to commencing your search, as the answer will determine the type of property you purchase, and the areas that you look in. If your primary aim is to earn a monthly income from the property, you’ll need to consider what kinds of tenants you want, which areas and amenities attract such tenants, and what features the property needs in order to fetch the monthly income you’re hoping for.
Alternatively, if you’re hoping to snap up a holiday home that you can rent out while back in the UK, it’s important to consider tourist footfall. You may well love the isolated corner of Florida you’ve discovered, but it’s unlikely to attract regular guests if it’s not close to all of the state’s major attractions and airports.
If it’s an attractive long-term investment that you’re after, you’ll need to conduct thorough research into the areas that present the best options.
TOP TIP: Sit down and establish exactly what your property needs to be a success, and then stick to that list rigidly when searching for properties. Having these deal breakers noted down will stop you being distracted by attractive properties that don’t tick the necessary boxes.
2. Can you afford unexpected expenses?
As with a primary residence, there are going to be additional costs involved in purchasing and owning an investment property that you may not have factored in. It’s important to establish the outgoings on your rental property prior to committing. You’ll need to consider taxes, rental licenses, and maintenance costs, and if you’re not planning on being close by to manage matters, you’ll need to factor in the cost of a property management company who can look after the property in your absence, and manage bookings.
TOP TIP: We recommend starting a separate account where you can set aside funds specifically to pay for costs relating to your investment property.
3. Where should you buy?
Sure, you may love the idea of buying a beachside property in California, or an apartment in Manhattan (don’t we all!), but if you’re looking for the best investment out there, you’ll need to consider where you’re likely to get the best return on your investment.
Research areas that may not have even been on your radar. Certain metropolitan areas are most attractive to the country’s largest population groups—millennials and boomers — and are growing much faster than others. Some of these markets have relatively low land and housing construction costs like Dallas and Houston. But other markets, particularly on the coasts, have much higher land and construction costs, which means less housing will be constructed there.
TOP TIP: Research, research, research! You need to investigate all of your options – from foreclosures to new builds, in order to establish which type of property will give you the most return on investment.
Research, research, research! You need to investigate all of your options – from foreclosures to new builds, in order to establish which type of property will give you the most return on investment.
4. Are you finances in good shape?
It’s important that you understand right off the bat that rental mortgages often require a larger deposit than mortgages for a primary home. There are ways around this – for example if you’re eligible for a Federal Housing Administration loan you might be able to get away with putting down a deposit of as little as 3.5% of the purchase price. These loans are available to property investors with up to four properties, as long as one of them will be your primary residence. If you don’t plan on living in the property at all, you will need to secure a standard mortgage. Securing a US mortgage is much the same process as in the UK – what you can secure will depend upon how good your credit score is.
TOP TIP: Check your credit score online and consult an expert to see whether there are any steps that you can take to improve this score prior to applying for a mortgage.
If you have any questions at all about making your dreams of moving to the USA a reality, give the Resource Centre a call today on 020 7898 0549.
The USA Buying Guide covers every stage of the property buying process, sharing our experience and knowledge to ensure a safe and successful property purchase. The guide will help you to: