Investing in property in another country can be rewarding. However there may be pitfalls that you need to be aware of. Different countries have different rules, standards and laws to those in Australia, and many foreign investors have found themselves in hot water, because they didn’t use a respected agent, and they didn’t do their homework.
Greg Bell from the Ray White Surfers Paradise Group has some advice for overseas investors that may save you a lot of time, money and heartache.
It’s important to think carefully about what type of entity you should consider for your property and where you should incorporate. Consider what ownership structure you need to put in place and how you can minimize your tax liability. It is important to make sure you are complying with all state and federal laws.
Get good legal advice
There are a number of organisations that specialise in foreign investment to ensure your new business is structured correctly. Make sure your accountant and attorneys are well versed in foreign investment. Once the initial setup of your business structure is complete there will be the ongoing tax and compliance issues that will need to be met.
Utilise your property manager
A professional property manager knows how important it is to achieve the goals of their clients. This means managing the investment by taking a common sense approach with open lines of communication. A property manager should pay attention to the finer details and have the experience to manage large numbers of investment properties.
They will have technology that allows access to monitor the rent received and expenses paid, they will be able to instantly provide rent statements, owners financial statements, property maintenance records and lease details. They must have a regimented approach to the collection and monitoring of arrears, routine property inspections, and the appropriate maintenance.
Location, location, location
Ray White has opened its first US office in Atlanta, a city which maintains one of the most rapidly growing economies in the United States with a current population over five million which is projected to double by 2015.
An unprecedented opportunity exists to enter this property market and enjoy high yields and long term capital growth, as the US government moves to boost home ownership after the global financial crisis.
The location of your international investment property will be your most important decision. Ray White has a strong reputation in Australia, giving investors the confidence to do business with the company on an international scale.
Consultants are facilitating investment from Asia not only into Australia, but a number of countries, most notably the United States. “There has been plenty of interest from buyers who are looking to diversify portfolios while prices are low and returns are high in America,” says Ray White International sales and marketing manager Simon Worthington.
After careful research, Atlanta, Georgia was chosen as the prime location for property investment and AU1 Property has been purchasing foreclosed homes in the US$80,000-100,000 bracket on the courthouse steps, before renovating the properties and putting them on the market. “We looked at the market two years ago and chose to look at Atlanta, as it is a fast growing city with low tax rates and low union representation, which is why there are a number of multinational companies set up there, plus a number of universities and the world’s largest airport.
The city is experiencing capital growth and these foreclosed homes won’t last forever,” says Worthington. “Through the Ray White networks people are buying their fifth and sixth properties now, so we like to prove it is working to people who want to dip their toe in the water and take it one step at a time – we prove it is a solid investment.”
Ray White has a team of Australians in the United States, headed by Sandy Moore, managing the properties and they host regular tours for those who want to see before they buy. “Some people feel they need to see the properties and they are more than welcome, we take them through the homes, they meet the property managers and gain a deeper understanding about how it all works,” he says.
Foreigners can own properties in the United States by setting up an American company and bank account, with assistance from Ray White consultants. Julian Sutherland, director of Ray White New Projects, has been working the Asian network for about six years.