“ReFresh” Detroit Success Has Bearing On Real Estate Market

When once there were automobiles, now there are businesses. Two weeks ago Detroit’s Mayoral Office announced it had selected five new neighborhood commercial corridors in the district as part of its on-going drive to encourage re-investment in the city.

Since the projects inception just over a year ago, the Office of Neighborhood Commercial Revitalization has overseen the birth of 211 new businesses, 700 new jobs, and delivered technical assistance, and start-up loans to a total of 2,000 firms seeking advice on business growth, and expansion. As a direct result of the ONCR influence, over $100 million of private investment has been pumped into the Detroit economy.

It’s good news for Detroit, and possibly the catalyst for a surge in domestic property investment as now has never been a better time to acquire a foothold in the market. Prices have been rising steadily since the turn of the year, and Ollie Booth of USA Property Investor (UPI) is quick to point out that those prices will keep on rising now in light of the recent upturn in fortunes for Detroit’s business community:

“While it’s good news for the city’s businesses, it won’t be good news for those looking to get a foot on the property ladder,” Ollie says earnestly. “Prices have continued to climb in the housing market, and really now is the best time for all those looking to invest in single homes for families, or multi units of two, three, or four apartments, or even commercial properties.”

And that’s where real estate firms such as UPI come in, bringing all their experience and know-how to make such investments easy, and stress-free. Detroit has been hot for a while, and UPI has been busy spreading the word that Detroit has been the place to make serious financial stakes for some time.

“Our aim,” says Ollie, “is to recycle low cost housing, turning foreclosed and uninhabitable houses in Detroit into refurbished, clean, safe homes for low income and often homeless families. These families are homeless, in many instances due to landlord foreclosures.

We provide a much-required service to a region struggling with a shortage of 30,000 rental homes. We are offering all our investors the benefit of a ‘hands free’ or ‘armchair’ investment. In return our investors will receive solid, passive income every month and a property that is poised to appreciate in value in the coming years. We refurbish all our investors’ properties at outset, within one all encompassing cost.
Our investors receive excellent yields with the additional benefit of knowing that they are helping to solve a housing crisis, assisting low income families in US, often not as fortunate as themselves, with the security of the Section 8 HCV Program backed by the US Government. This ensures that your rents are paid on time every month with no exceptions.”

So with the Mayor of Detroit giving the city ‘Refresh’, perhaps, says Ollie, it is time for private investors to Refresh their stakes in the city too.

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
‘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.

Rental Profits
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.

Property Investment Checklist – Part 1

Here is a checklist of things to consider when making an assessment of what makes a good investment. These are the things I’ve seen a lot of investors fall foul of and with a little care and attention, you can avoid these pitfalls.

Water Bills
The law in New York State mandates that the landlord is responsible for paying the water bills, regardless of who is living in the property. The authorities can repossess the property if the water bills remain unpaid, so definitely do not rely on the tenant to make this payment.

The best thing to do is to factor the extra cost of the water bills into your rent and just pay it yourself – no exceptions, its not worth the hassle or worry.

City Taxes
City taxes are similar to UK council taxes, and are used to pay for emergency services such as rubbish removal, upkeep of amenities etc etc. Each property has a semi-regular assessment which indicates what the property is worth and what taxes are applicable; quite often, this assessment is totally incorrect.

You see, if you want low taxes then you want it to be assessed low, but if you’re selling you want it assessed high. Be careful, use good property finders (not Realtors!) who know the true market values and whether it’s been assessed in your favour.

Realtors (Estate Agents)
Having had plenty of dealings in the US, the same comment I always get is that ‘Realtors would scratch your eyes out to make a sale.’

But we need to be clear on the point here; the Realtor has a duty to the seller so for them, every property is a good property regardless of its condition or location.

If you’re looking for investment properties, you need to use a professional property finder to source your properties. These guys know where to invest, and more importantly where to avoid. Only a property investor knows the true mechanics of what makes a good investment and what doesn’t.

Tomorrow we’ll cover part 2 of the checklist.

My model for financial freedom

What does it take to have financial freedom? An interesting question, I guess if you asked 100 people, you’d probably get 100 different answers. One man’s idea of financial freedom wouldn’t necessarily satisfy another’s, so we all have our own definition of would make us financially free.

How much does it take to be financially free? The answer is of course personal to your own circumstances, which of course change from year to. Children, marriage, work, etc these will all affect your personal wealth and impact on your lifestyle.

The great thing about working towards this goal is that you have total control over everything you do and your decisions are entirely yours to make. Imagine working 1 hour at home for yourself. It’s the equivalent of working 8 hours for your boss! That’s how it feels to me.

My own goals are pretty modest in the scheme of things…..I want to be a property millionaire within 5 years. That is to say I want equity within my portfolio to exceed £1M. As for monthly cash flow, I figured that for every property I buy I can cash in £150 per month net profit from the rent. Now if I own 100 properties, that’s an income of £15,000 per month. Of course I will have to keep an eye on my investments and I may sell some from time to time, but I will have full control over all my investments.

I’ve always tried to do things by following a simple model: for every additional expense I have, whether a car loan or house move, I motivate myself to off set that extra debt with new investments. It helps me focus and keeps a consistent balance of cash flow and investments.

My advice to you is to ask yourself what you want personally. Maybe you want to build a portfolio; maybe you just want one or two properties to leave to the kids. Whatever you want, write it down. Open up Excel and start by putting down all your outgoings. If that’s the figure you need to live the lifestyle you want, and then work out how many investments you need to get there. Last of all put a timescale on it….before you know it, you’ll be well on your way to financial freedom.

PS: One last thought, most people fail to realise their goals or ambitions because of one thing…they fail to take action. Those people that do overcome the hurdle of inaction mostly tend to succeed. So take the first step and take action!

Am I allowed to buy property in the USA?

One of the most common questions we get in this business is: are foreigners allowed to buy properties in the US? This is partly due to well-publicized restrictions in certain countries and partly due to a lack of information on the subject.

Well the simple answer is YES, foreign nationals are perfectly able and legally permitted to purchase property in the US.

As it has always been US government policy to encourage inwards investment, the US authorities have not placed any restrictions on UK (or any other nationality) investors buying property. Whether through cash or financing, there are no restrictions.

But buying a property in the US does not entitle you to US citizenship or a green card, but it may help if this is your ultimate goal. You should obtain an International Tax ID (ITIN,) and this is very straightforward.

Travelling to the US is also pretty easy for nationals of EU countries with an online Visa waiver procedure applied which normally results in a visa being granted within seconds.

As UK and European property markets have crashed due to the global downturn, the US is becoming more and more attractive for potential property investments with high yields.