May 12, 2011 (Powerhomebiz.com) First it was the Savings & Loan crisis of the 80s, now it is the global recession, but whatever the cause, it is possible to purchase investment properties in the US at deceptively bargain-basement prices.
The trouble is that foreign investors, particularly the Australians being targeted, assume that laws and regulations, and the rental environment in the US are similar to what they are at home. They soon find that this is not the case, and that instead of reaping the rewards promised, they face huge maintenance bills and a property management minefield.
Australian Rick Otton has been investing in property in the US and Australia for over 20 years, and he knows the pitfalls.
“When Australians buy property in America, they assume that the laws and regulations are same as at home. Not so. The rental property market is weighted heavily on the side of the tenant,” explains Mr. Otton, “and the maintenance costs can be crippling for offshore investors.”
Pitfalls Revealed
Otton has for years been sought out to rescue investors who have been lured into US property investing by slick presenters who speak of huge returns on minimal investment. He understands how people can be attracted by the proposition of buying a house in the US for a few thousand dollars.
“What they just don’t understand,” he says, “is that it will likely cost thousands of dollars every year to maintain those properties.”
One of the biggest differences is a result of the American fear of being sued. Tenants call their property manager when something as simple as a light bulb needs replacing. Rather than having a handyman come in, the agent will call in an expensive licensed electrician instead – just so they are covered if any problems occur.
The same applies to other maintenance – air conditioning, ice makers, ‘winterizing’ pipes, blocked sewers (and beware: US sewer pipes are just 2” in diameter) and so on.
“US property investors should be prepared to completely re-carpet and re-paint their properties every two years, at least. Anything less would be unacceptable in the US rental market,” continues Mr. Otton.
Management Monitoring
Because they are living offshore, Otton knows from experience that monitoring the expenses claimed by management agents is challenging. Verifying whether a property is vacant or occupied, or that it is being well maintained is impossible when the owner is thousands of miles away.
Profit by Investing in US Property
Otton believes that the only way that foreigners can make money through US property investing is by actually living there. Otherwise, he advises them to keep their money at home, where they know the rules and the market.
Investing in Australia
As more of the pitfalls of US property investing (see Otton’s free report) are exposed, Australians are now searching for alternative ways to invest locally, and Otton believes that this is the smarter course to take.
“There are ways to buy a house in Australia with no deposit and no bank loan, and by legally avoiding Stamp Duty,” he says. “You just have to know how.”
The days of going ‘cap in hand’ to your bank for a loan are long gone, something Otton discovered when he looked into alternative ways of property investing. He shares his strategies in his books, homestudy courses and 3 day live training boot camp.
About Rick Otton
Rick Otton is an original pioneer of creative property strategies. He is founder and CEO of We Buy Houses, a leading property enterprise which operates in the property markets of the United Kingdom, New Zealand, USA and Australia.
In 1991 he uncovered an innovative strategy of buying and selling real estate and went on to amass a portfolio of 76 properties in his first twelve months of active investing.
Since 2001, Rick has taught over 30,000 students to buy, sell and trade residential property without banks, debt or risk. By employing these same strategies many of Rick’s students have made over a million dollars a year in cash and equity, using little or none of their own money, year after year.
He has appeared in the 2004 ABC documentary ‘Reality Bites’ and on Today Tonight, Insight and A Current Affair. In October 2007 Rick gave a way a house on national TV during 2 episodes of Channel 9’s Hot Property.
Rick Otton has also been featured in Australian Property Investor, Lifestyle Trader Magazines and in the books: The Secrets of Property Millionaires Exposed!, Ideas: Original Perspectives On Life and Business From Leading Thinkers, Think and Grow Rich in Property, Insider Property Secrets, and Walking With The Wise.
For more information visit his website: rickotton or real estate http://www.RickOtton.com