Have You Ever Been Tempted To Buy An Investment Property In The USA?
You may have heard the hype or perhaps know someone who has been pitched USA properties. There are many distressing stories about Australian investors who have been caught up in these get rich quick schemes. Many have lost thousands of dollars trying to claim overdue rent. Some have spent a fortune on constantly repairing damages and replacing fixtures and fittings.
At The Successful Investor we recommend staying away from USA properties. If you are looking to buy a quality built residential investment property in an established area within Australia, call us today. We can show you a selection of great properties that have passed our strict set of criteria.
Even if you have already bought an investment property and are concerned about the way your property is being managed. We can put you in touch with Property Managers we know and trust.
The following story is by writer Scott Pape, this should be all the warning you need to stay away from USA properties.
Eve buys some discounted US property
In 2005 Eve, a single mum from the suburbs of Sydney, was approached by ‘buyers agents’ offering her properties in the US, that they claimed “stood to make her 20 per cent a year returns”.
She was told of the wonderful buying opportunities in the US city of Buffalo, New York. “It actually turned out to be more of a sales pitch, but the rental returns looked really good, so after a few more meetings I ended up buying three homes.”
Here are her US property ‘bargains’:
A six-bedroom home (split into three apartments) for $US79,500, which she was told would rent out for $US18,000 a year – a 23 per cent (gross) return.
A four-bedroom apartment for $US51,900, which she was told would rent out for $US11,400 a year – a 22 per cent return.
A single family home for $US34,900, which she was told would rent out for $8,100 a year – a 23 per cent return.
Converted to Aussie dollars, the three properties (plus the spotter’s fees paid to her US real estate helpers) ended up costing her $250,000 – which she paid for by mortgaging her family home.
Sadly, it didn’t take long for things to go sour.
“The properties have been completely trashed at least a half a dozen times”, says Eve. So far that’s cost her $95,000 in maintenance and repairs.
All up she spent around $350,000, and she stands to recoup about $37,000 – she sold one for $US8,000 and another for $US19,000, and has the last one, which has been completely looted, on the market for $US10,000.
Hopefully another Aussie investor doesn’t scoop up her ‘bargain’.