THE RISKS OF INVESTING IN US REAL ESTATE
With the fallout from the post-bubble Global Finacial Crisis still affecting US real estate, some investors have turned to the United States to take advantage of low prices and plentiful real estate. But, why should Aussie investors take this risk, says Nathan, when their home country still has so much to offer?
INVESTING OVERSEAS REQUIRES MORE CAUTION
Nathan doesn’t invest in USA real estate – or any overseas real estate, for that matter. He says, if you purchase real estate in another country, you will be subject to different legislation. In order to understand how to structure your foreign investments, how to manage your properties and how to deal with tax implications, you would need to do some thorough research into that country and its legal system before you could know if investing there would be worth it.
CURRENCY FLUCTUATIONS INCREASE RISK
Nathan says that anyone who invests in properties overseas needs to be aware of the risks that currency rates impose on their investments. He says, if your investment doubles in value but the Australian dollar goes up, you may end up wiping out all of your profits. Investing in Australian property does carry risk, however, it is not affected by how well the Aussie dollar performs against the Greenback.
AUSTRALIAN REAL ESTATE HAS A BRIGHT FUTURE
According to Nathan, Australia is a young country that has an undersupply of housing and a growing population. This has created a strong market that has grown in value thanks to consistent demand. One of the problems with the US housing bubble before it burst was oversupply. When defaulting borrowers needed to sell their homes quickly, in droves, there was such an oversupply of properties that many couldn’t sell at all.
In contrast, Australian real estate is still underpinned by undersupply and strong competition between buyers. There are still opportunities to buy under market value with a good upside for growth in Australian capital cities and metropolitan areas.
Why take on extra risk by investing in the US when the Australian market is so strong and offers so many possibilities to make money?
Have you invested in USA real estate? What about properties in other countries? Please share your experiences in the comments section below.