If you’re thinking about buying property in the USA then you’re in very good company. The USA is one of the most popular countries in the world to invest in property. According to The National Association of Realtors foreigners bought 284,455 properties here in the year to March 2017, around a third more than a year earlier. The value of these sales grew by nearly 50% to reach $153bn, a record figure.
So let’s take a look at some of the points you need to bear in mind if you are thinking about buying property in the USA:
What kind of property should you buy?
Needless to say the USA is a very large property market offering a huge range of different types of property. There’s almost too much choice – so start by narrowing things down a little.
First and foremost, think about what you plan to do with your property. For example do you plan to let it out long term to professionals or for holiday rentals? Then think about what kind of property would best suit your investment objectives.
Types of property you can buy in the USA include condominiums (apartments), duplexes (similar to a semi-detached or maisonette in the UK), triplexes, quadplexes, townhouses and single family homes.
You might go for a resale property, or consider the many benefits a new build offers.
If you’re planning to buy property to let out bear in mind that, as elsewhere, the US rental market is quite competitive. So try to go for property that will have strong tenant appeal. For example, tenants are often attracted by property in a secure gated community with good onsite facilities. Waterfront property also has strong appeal.
Location, location, location
The basic fundamentals behind buying property in the USA are pretty much the same as elsewhere. If you’re buying with investment in mind look for locations where there is good rental demand and good yields on offer plus, ideally, good prospects for values to rise.
Consider whether you want to invest in a city, suburban location, rural location or a resort/coastal location. If you’re investing in a city areas with good transport links, good proximity to employment or colleges/universities etc. should always perform well. If you’re buying a holiday property look for proximity to tourist attractions or beaches and so on.
For example, Florida is probably head and shoulders above the rest in this market. Orlando itself is one of the most visited cities in the USA, with around 100m tourists annually.
Finance, closing and the practicalities
Next, consider the practicalities. US mortgages are readily available when buying property in the US. However, if you’re not resident in the US you’re likely to be offered different terms and/or need a larger deposit than local residents. So it’s sensible to plan your finances and take professional advice before you start the buying process.
The purchase procedure in the US, known as ‘closing’, not only varies from that in other countries but it also varies from state to state, each of which have their own laws and procedures. According to US real estate site Zillow the costs of closing can vary between 2% and 5% of the purchase price.
Other considerations to bear in mind when buying in the US include: Any restrictions on occupancy or letting, eg. some communities restrict short term or holiday letting. What community fees or home owner association (HOA) fees might be payable.
Also if you’re buying to let and aren’t actually in the USA yourself you’ll need to ensure that you have good management in place. This will help ensure your property is let to its maximum potential, is well maintained and that the rent is collected on time.
Lastly, although buying in the USA is generally very safe and straightforward, it’s often said that the USA and UK (or any other country for that matter) are two nations divided by a common language. So don’t be afraid to take professional advice when sourcing and buying US property when needed.
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