America is having the biggest real estate sale in history. It’s fair to say with these bargain basement prices, we’re not likely to see deals like this repeated for generations to come. The US home property market is that good right now. So good in fact, that I’m one of those Aussies that has jumped on the bandwagon and invested in five US properties myself.
However, time may be running out. America is one of the most dynamic and powerful economic nations in history and an economy like that won’t lie down forever. The real estate market is already showing early signs of recovery. The great news is that you don’t need to be an American to buy American property. You don’t even need to set foot in America to buy property.
Of course, purchasing property overseas, sight unseen, can be daunting – and it should be. Demographic and economic factors need to be considered and understood before buying US property. Unfortunately, a plague of companies that don’t have a clue what’s happening at a city by city level can become a trap if you don’t do your due diligence first. You need professional investment property advisors who truly know the game and can provide you valuable insight on US real estate, whether you plan to purchase property seen or unseen.
Since many operators are springing up in an attempt to make quick money from unsuspecting Aussie investors, it was refreshing to meet Salena Kulami, a leading authority on US property investing and a chartered accountant for over 15 years. I was very impressed with her honesty and transparency. She began investing in the US real estate market herself in 2008 and during the next couple of years was able to help many Australians purchase US property as well. After hearing some horror stories from investors who had problems with US buyer advocates, she decided to formulate Splash Property Groups.
Salena says that nine out of ten of her clients have not visited the United States. That’s why she begins the process with a comprehensive consultation to fully understand their goals. For example, is their focus on long term appreciation or immediate cash flow? Do they want a property that needs very little work or are they looking for a home in an affluent neighborhood that is run down and needs a face lift? Salena understands the fears and concerns of people investing overseas and can convey comfort in the process by providing recommendations of experienced professionals who can set up structures, provide accounting services, property management, and other necessary services. However, clients are by no means required or pressured to go with her recommendations.
In addition, she has found a unique way for Australians, especially those who are asset rich, to finance their investment with incredibly low interest rates between 2 and 2.5%.
I found my discussions with Selena extremely informative and think you will too. If you’d like to learn more about the risks, remedies, and rewards of investing in US property and/or Salena’s services, you can listen to my interview with her by right clicking on each of the tracks below and downloading to your chosen devise for easy listening on your Iphone, Tablet, Ipod or MP3 player.
To Fun and Fortune!
Australian investors are looking to America where property is at rock-bottom prices after the sub-prime mortgage meltdown. However, financing is definitely an issue in the US where lending conditions are clearly more difficult than a few years ago. Unfortunately, most major US banks are not receptive to investing foreigners at the moment.
I have spoken to people who have assured me that I can get financing but then are unable to come with the goods. Or when they have, they’re talking about high interest rates from 9 to 18 percent. Then I spoke with Salena Kulkarni, owner of Splash Property Group and a leading authority on US property investing with 15 years of experience as a chartered accountant. She caught my attention when she mentioned the possibility of getting financing for US property at a remarkable interest rate of 2 to 2.50 percent.
First, Salena talked about a number of strategies people can choose to adopt if they’re looking at US real estate. Obviously, the easiest option is to use available cash. Superannuation or investing through a self-managed super fund is another increasingly popular alternative because of its tax advantages. Australian banks often allow customers to access equity in the form of an offset account or line of credit to buy US real estate. Joint ventures or syndicates, when a number of people pool their money and assets together to invest as a group, are other options. Some people choose to assume an existing mortgage or borrow money from “high-money lenders.”
However, if none of those ideas appeal to you, Salena came up with what she calls “the hybrid solution.” Essentially you are borrowing money from here in Australia with the safety and knowledge that they are working legitimately within our legal system. An international bank is offering interest rates, as I mentioned before, varying between 2 to 2.5 percent. Although this may sound unbelievable, keep in mind that cash in America is only earning less than a half percent – close to zero in fact – so they are still making a 2 percent margin on the money.
To illustrate how these loans work, imagine you have an Australian property worth $800,000 with a loan of $400,000 and you’re paying 6% interest here in Australia. You go to this particular lender and refinance the whole debt and borrow an additional $80,000 to buy a property in the US… using US dollars at 2.15% . The theory is that if your US property earns $10,000 per annum, it would cover the interest payments on both properties. There are three different options you could consider which Salena explained in some detail during the interview.
Of course, at the end of the day, you have to sit down with an accountant and assess the risks associated with these options. For example, it would be foolish to get excited about the phenomenal opportunity to save a massive amount of interest using one of the options without understanding that there is an associated risk with the exchange rate. With proper advice you would weigh up the potential risks and rewards of the options to decide which of the 3 was most suited to you.
If you’d like to find out more about financing US property, listen in to my conversation with Salena by clicking this link.
Maybe you’re frustrated by Australia’s high housing prices and thinking about joining the large wave of Australians investing in American real estate.
The idea is certainly appealing with the high value of the Australian dollar, the beaten up valuation of US residential property, the possibility of strong rental yields, the potential for strong future capital growth, and a strengthening American real estate market.
In fact, I’m one those investors who got involved in the US property market because some of the rock bottom prices of properties absolutely blew me away – plus I happen to love adventure and traveling. The US property market is a large and diverse one and there are certainly opportunities to be found. However, as with anything, there are risks.
A quick search online provides a long list of companies offering their expertise in the US market to Australian investors. Obviously, not all of them are trustworthy and without due diligence, you could easily get sucked in by scammers. The quality of the relationships you build will literally make or break your investment experience.
So how do you find a trustworthy and reliable resource to help you avoid the pitfalls and hurdles, and take away much of the hassle of investing overseas? How can you work out what’s fact and what’s fiction? Experts agree that research is needed to find a company with a proven track record that is run by people with extensive experience and expertise in buying American property.
That’s why I was excited to meet Salena Kulkarni. She has been a chartered accountant for over 15 years and I was very impressed with her genuineness, honesty, and transparency. She began investing in the US market herself in 2008, and during 2009 and 2010, Salena helped many Australians purchasing US real estate. Interactions with investors highlighted problems with US buyer advocates which led her to formulate Splash Property Groups. Her structured approach to investing led her to become a national speaker and a leading authority on US property investing in the current climate.
Unlike some US promoters who try to take advantage of Australian investors dazzled by cheap US prices, Splash Property Groups involves their clients in the decision process with a comprehensive consultation. “We want to make sure it’s going to be the right kind of investment for them, as well as whether we’re a good fit and can satisfy what they’re looking for,” Salena explained to me during an interview.
“We are very much about full transparency with our processes. We’re very clear about what we want to achieve from the buyer of the property. The consultation process for us is critical because it’s really important that we understand what the goals of the investor are.”
The great thing about Salena is she will introduce you to contacts she feels very good about to set up structures, but clients are not required to go with her recommendations. In addition, she has found a unique way for Australians, especially those who are asset rich, to finance their investment in US property. Read more about that in my next blog.
For those either intending to invest in the US or simply curious about this exciting way to invest your money, you can listen to my interview with Salena and become more informed about the risks, remedies, and rewards of such diversification. Click below to listen to each part of the interview.
If you would like to meet Salena’s team on the ground in Atlanta, and look at the area and properties for sale personally, then you have a small window of opportunity! John and I will be travelling there late in March 2013 and are offering a few people the opportunity to join us on a mini property tour. Click here to find out more.