Property Investment Checklist – Part 2
Continuing on from yesterday’s post, here is part 2 of our property investment checklist.
Condition of the Property
This sounds obvious, but believe it or not is often overlooked.
A few years ago an investor from the UK went to New York to invest. He was bullish in his approach and he asked realtors (see above re. Realtors) to find all properties under x value and he bought them all.
Low and behold he then found that all of his properties needed extensive repair (he was buying through Realtors remember!) In the US, local government can mandate that a property has to be maintained in a good state and must not be perceived as being a hazard or ‘unsightly’.
If the owner fails to bring the property up to ‘code’, the state authority has powers of enforcement. In this instance, the investor could not afford to do the repairs mandated by the property code. Consequently his properties were seized and a warrant put out for his arrest. He left the US empty-handed!
It is imperative you have a trusted Property Management company to manage your investment from the outset. We at USA Property Investments make sure all purchases are run through our property managers.
‘Section 8’ is the UK equivalent of housing benefits. This means that the tenant has a portion of their rent paid by the state based on their financial circumstances. Buying property that is ‘section 8 approved’ with or without a tenant is a good sign that the property is up to ‘code.’
Every few year an assessment is made on the property and a section 8 is extended providing it is in good working order and meets the criteria as set out by the state. If you’re buying a property that is section 8 approved make sure it is up to code. In the event that it isn’t then at the next annual assessment, benefits to the tenant will be held until the property is brought up to code and your rent will go unpaid.
Like all out of town investors, you will be using a trusted Property Manager to manage your property day to day. Your agent will collect the rents and pay you your rental profits. A UK-US dual tax treaty makes this financially advantageous for us.
However, you must obtain an ITIN (International Tax ID) number before you can receive rental profits. Your Property Manager has a duty to hold onto all rental profits until this is in place. Make sure you apply for this as soon as you can.
Getting an ITIN
1. First off you will need a foreign notary to certify your passport (you can use any notary in your home town);
2. Once received, this will be sent to the Hague for approval.
3. Once approval is received from the Hague, you can apply for an ITIN. The whole process takes approximately 8 weeks.
Avoid these pitfalls and it’ll make your investment run smooth as silk. Just remember, use a good property finder to source your investments; we at USA Property Investors already work with good, reliable property finders and will take the risk out of your investment.