Buying Property in USA

Oh no, I am not a property investor. My background is in equities and that is where I am happiest. I would only consider property as an investment if I could find that cost no more that 15x the annual rental stream - and then I would never buy overseas as it is just too much hassle. I would buy close to where I live so that I could keep an eye on it.

I was just trying to bring a little balance to the debate. I am still of the opinion that most amateur property investors will only make money by sheer luck. I also believe that the whole credit/property bubble is gradually unwinding but there is a lot more pain to come (and not just in the US).

However, having been a bear I have to acknowledge that the US property market is now doing what I thought it would do, and consequently, I have to adjust my thinking. Just as there were (eventually) cheap stocks to be bought after the dotcom bubble, so too will there be value in residential property.

To date in the US, the national price declines have been relatively modest (though I suspect there are large regional variances) so it is too early to jump in. Housing bubbles tend to unwind over a period of years so I would sit back and watch and let everyone else take the pain.
 
IFT said:
I have an investment(recent) in one of those REITs mentioned on wikipedia. Whilst I am unsure about the dollar ( but would hold more of a contrarian view on its future value) , it is hedged in that the REIT has a large international exposure.
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Don't know much about US REITs. What's the typical p/e & eps, what price now, Hi and Low in 52 weeks? Curious to know more. REITs react fast and typically have a 12 month view already built into price. Some are bound to be better than others from their investment choices etc, any ideas on the good from the bad?
 
IFT said:
Michael.........might be an interesting day to watch the US stocks. The jobs report came in good and seems like there is alot of pre-market activiy.
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Per my earlier thread IMF is still set to cut US Growth – I would follow their hunch. The main view was that jobs were expected to increase somewhat on the back of the currency devalue & temp teachers starting back to school (Sept only)... although as high as 110,000 somewhat of a surprise. Regarding the devalue in 2007, exports are up 14% whilst imports are only up 5%, export growth is three times import growth. However, this was already factored into the US story according to Goldman Sachs (I know…never rely on a bank only but there is also IMF data). During 2005 exports in the States were 50% of total imports but now it is 70% of total imports. Therefore job numbers were expected to go up.

Expansion off to East (China, Japan, India -same GDP as America at $14trillion 2006) has led the IMF to also raise global growth in 2007 from 4.9% to 5.2%. But the problems in the US economy are deeper as the country relies too much on imports. The inflation plus paralysis in the property market is going to be a double edged sword. It will cause the Fed major headaches. The subprime CDO mess will filter through 2008. In addition to CDO's etc, imported inflation is coming out of China anyway regardless of any devalue.

Also, America is maxed out on their consumer debt, it now stands at $16trillion, of this $2.4trillion are personal loans. It has little or no saving and many are fuelling their extravagant lifestyles by debt consolidation. Their country, similar to ours, has been fuelled through consumer spending since 2001 to fund its growth. The country is running on empty and the Fed cut will do nothing to sort out the delinquent situation, other than weaken the greenback further. For a real bloodbath wait the retail and construct stats. Going forward a forest fire is necesscary and Mervyn King of the BoE is right to hold his nerve, where others have not.

I know considering the complexity of the issue, this is a short post and more could be said… but that my 4 cents. Stay away until 2009 let things stabilise in property – short the market or quick trade in stocks for quick profits only. Other views welcome....do not think the market ready yet for property investment, any bulls disagree?
 
MichaelDes said:
An interesting article on Bloomberg as background to above www.bloomberg.com/apps/news?pid=20601103&sid=aUA7tGpsmAPc&refer=news . Also for those looking for growth area’s in the market ,courtesy of tyoung www.nytimes.com/interactive/2007/08/25/business/20070826_HOUSING_GRAPHIC.html#
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IMO

US

Over 1 year into a housing correction
Oil at US$80 a barrel
Interest rates were 5% plus
Inflation - relatively subdued given dollar has dropped big time and oil is up

Yet Jobs market still strong and retail still doing good.

As housing supply drops off the glut of houses will clear and US home prices are not expensive by international standards. Once the price drops have taken place then construction will not be such a drag.

What does US$ debt per head look like at current rates compared to Europe

Asia is gaining from weak dollar but US MNCs are well positioned to gain from open growing asian economys through buyouts and financial muscle. Thats the trade off. As every year goes by the Chinese will find it more difficult to turn back the clock - they now have as much to fear from global recessions as anyone else. The longer term game is who gets the upper hand in Chinese markets - Chinese MNCs or US MNCs - who does the buying and who gets bought out

At the moment the weaker US$ is making US MNCs very competitive in the global market

For non US the US$ is cheaper but residential property carries alot of taxes in the US
 
Maine said:
At the moment the weaker US$ is making US MNCs very competitive in the global market

For non US the US$ is cheaper but residential property carries alot of taxes in the US
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IMHO US MNC's will win the day..but where is the story for US property in 12 months or so. Are there Irish, Euro or US syndicates for commercial plays in the past or present, don't like REIT's. Would consider an apartment off Manhattan and manage through ex-pat family, but that's hassle and time consuming. Anyone have a heads up on the prospect area's - it can't be Detroit surely.:confused:
 
Folks,

Some great posts here, very informative. What about investing in Commercial Property in US? Does anyone have firm opinions on it??

Where is my best source of a well researched report on the comm market in US (East coast especially) ??
and who are the main agents there??
 
I am a licensed realtor in the state of Arizona in the USA. My company specializes in investment properties all over the United States. We seek out only properties that make sense from an investment perspective, and avoid the areas that are struggling - like Florida. If you're interested in discussing properties in the US that are structured for positive monthly cash flow without any questionable temporary incentives, please feel free to contact me at [email protected]. I would also be glad to offer more information via this thread if you're interested. My company also arranges financing and can help you with your US Visa status.
 
mteneyck said:
I am a licensed realtor in the state of Arizona in the USA. My company specializes in investment properties all over the United States. We seek out only properties that make sense from an investment perspective, and avoid the areas that are struggling - like Florida. If you're interested in discussing properties in the US that are structured for positive monthly cash flow without any questionable temporary incentives, please feel free to contact me at [email protected]. I would also be glad to offer more information via this thread if you're interested. My company also arranges financing and can help you with your US Visa status.
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Hi,

So where can you get +ive cash flow in the states? And I'm not refering to s*** holes like Detroit where yields are high for a reason.

Can you provide some figures?

What % fee do you take as Agent?
 
I guess you've all already seen the recent reports on the BBC web site about US property. It is a pretty generic story, and of course there may be pockets that are not performing in line with the general market, but I think it is worth a read anyway, see: Housing meltdown hits US economy http://news.bbc.co.uk/2/hi/business/7078492.stm One interesting quote: "There is nearly a year's supply of unsold houses standing vacant."
 
This Is the Sound of a Bubble Bursting

From The New York Times.

http://www.nytimes.com/2007/12/23/b...em&ex=1198731600&en=adb997dd0bbe41fd&ei=5087

Message = steer clear. The place is gone down the pan and there is further to go. I feel quite sorry for the people caught up in this mess. All those shattered dreams. One moment you are on top of the world, living the dream, and believing the hype, everything is going well.

The next moment you are staring into an abyss


Murt
 
The crash in the US is breaking records……. Property prices recently dropped 6.1% year on year.

“home prices dropped 1.4 percent, the biggest one-month decline since records began”

http://www.bloomberg.com/apps/news?pid=20601087&sid=aV3TsKARpFKI&refer=home

The crash in the US (just like the credit crunch is just getting started). It’s worth looking at how ‘National’ stats can hide what’s really going on.

In the last UK crash between (1989 and circa 95) prices for the UK nationally only fell circa -17%. Prices in The North East, the North West and Scotland continued to rise long after they started falling in the West/East Midlands, East Anglia, the South West and London and the South East. This skews the figures and hides the fact that in large areas prices on hundreds of thousands of properties fell -30 to 35% (peak to trough) and reductions of 50% were common place.

Likewise currently in Florida (a market I have been involved in since the early 1990’s) the ‘effective’ price of most property is down circa -30% from its peak of autumn 2005.

In Florida the areas where many Irish and UK buyers have bought in have 3,4,5…10 and in some cases 20 years supply at current demand levels and remember there is plenty more bad news (vis a vis the subprime/credit crunch) to be fessed up to by the banks in 2008, so prices will fall a lot further, as bad news depresses demand even further.

Florida is and always has been a boom/bust market, however generally property is expensive to buy, expensive to run/maintain and expensive to sell (this is different from the price/value of the property equation). Add to this that historically prices increase in Florida at circa only 2.5% a year and the recent boom was always going to end in the mother of all busts.

Many Irish and UK buyers Mew’d ‘equity’ out of their homes or BTL properties to buy in Spain, Bulgaria, Dubai and Florida; now with prices falling at home they are caught by a double whammy. The power or leverage and gearing increase losses in a falling illiquid market, just as they magnify them on the way up.

A $200k property that increased 100% to $400k only has to fall 50% to get you back where you started. And when you take into account (in Florida) the $10k cost of entering the market, the circa $20k cost of exiting the market and the annual operating losses of between $8 and $25k many buyers are running on Florida properties they bought in the last 5 years or so, the whole thing is a disaster for thousands of people.

 
Re: This Is the Sound of a Bubble Bursting

Murt10 said:
From The New York Times.

http://www.nytimes.com/2007/12/23/b...em&ex=1198731600&en=adb997dd0bbe41fd&ei=5087

Message = steer clear. The place is gone down the pan and there is further to go. I feel quite sorry for the people caught up in this mess. All those shattered dreams. One moment you are on top of the world, living the dream, and believing the hype, everything is going well.

The next moment you are staring into an abyss


Murt
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Good God, never has the phrase 'A fool and his money are soon parted' been so apt!
 
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