How to find out about the safe and walkable neighourghs

www.homefacts.com . Also you may talk to the local police station. www.walkscore.com

Prepartion for the trip

In order to make the most of the time spend in the USA its important to have a few issues sorted before getting there. Some things like opening a bank account and setting up the EIN etc are compulsory while in the US, so while not start looking at .. Where are you going to stay? some of the good wepgaes where you can get this info are www.airbnb.com www.craigslist.com This is important to be able to have an address as soon as you are there and avoid wasting valuable time looking for a place. The longer the stay the better the price so its important to take into consideration to make the whole stay in one place rather than arriving in one place and move to another afterwords. Phone card. I was considering creditind to a skype account and using this to make phone calls but I wont be able to be accessible 24 7 so I look at the following options.. Another option, for while in the US, as these don't work outside of the US,is to get a pre-pay cell/mobile SIM card, it can provide a much cheaper option for incoming and outgoing calls. Some companies now offer a 1-year expiration if you put $100 of credit on your phone. Opening a USA Bank Account: You can open a bank account, even though you may not be a permanent resident of the USA. It is recommended to choose one of the larger banks, that has wire transfer facilities, on-line banking and can offer property investor loans, etc. JP Morgan Chase Bank could be one of the options. With them all you need is ato go to one of their branches with a passport and proof of address. And then from the main accounts be able to send out US dollar checks directly to pay bills and taxes, without having the waiting time sending checks from the the other side of the world. The problem is most of us don't have ITINs. Once you get this with your first tax return, your wiring will be easier. So while you wait for an ITIN, the key is getting in with a good retail bank manager. Establish yourself in with someone. Sure some companies can set you up with a bank account but being able to use the account is key! Address in the USA: The property title can be registered in a foreign address, along with insurances and other registrations. Although you may find having a USA address is just more convenient, especially when using US web site registration forms. As they may only allow USA addresses to be entered. If you have a Limited Liability Company (LLC) then your Registered Agent will need a US mailing address. Getting a US Mailbox There are companies that will provide you with a US mailing address and then forward your mail to you on a regular basis. Make sure your mailbox company offers a street address and not a PO box, as banks and certain mail order companies won't accept a PO box address. Most mailbox companies will take delivery of packages also and then forward them on to you. The UPS Store its one of the options.

How to select a Realtor in the US - Questions to ask.

In order to find a good Realtor to help you with the property acquisition you must first find out if the Realtor is a buyers Agent then: 1) To have them set you up on automatic MLS listings 2) Ask them: - if they have an in-house property management system and at what percentage of gross rents - what do they charge to lease a property in the first place? - Do they charge a renewal fee (ie if your tenant renews their lease and extends for an extra year) - Are they familiar with the nuances to dealing with foreigners - Do they charge to wire the funds back to you in another country? (It might be better to leave the funds in the Property Management company and have them wire even if it costs you $25 a quarter, This can be cheaper than US bank fees. - do they have contractors that they can recommend for repairs and what is their rate sheet if they have one. 3) Make sure you have built into your property management agreement that you have 6 monthly inspections conducted, that you MUST be consulted for any repairs over $200 (always ask for receipts!) 4) Are they familiar with dealing with foreign investors - there are a MILLION nuances to this. 5) They need to know your proof of funds MUST match the name you are holding title - if this is a Pty Ltd, you will be needing certified copies of the constitution most likely 6) You operate on a different time zone - can they ensure that even in rushed closings they will give you at least 5 days for money transfers if you are using Oz Forex etc 7) Are they patient enough to explain what HUD means and other terminology means? 8) Is the attorney that they use to close with, familiar with us problem foreignerss. You need to be receiving your Power of Attorney to have the real estate agent or someone physically in the US to be at closing for you. That needs to be mailed a minimum of 10 days before the closing date. 9) How many REO (essentially foreclosures) have they dealt with and at what price level. 10) For every property that you see that you like - ASK FOR THE GEOJET REPORT of neighborhood sales (who owns the houses next door, how much did they pay for it etc) - obviously rental comps, sold comps - historical data, neighborhood demographics etc.

The begining of a long journey...

After researching about properties in the US for over a year, I had made up my mind to buy a property in Atlanta. This was changed by an investor I talked to a couple of months ago who put the idea of buying in Atlanta really down. His arguments where that there is very high vacancy rate, low class of tenant for the type of property I could afford. Instead he suggested to buy in Florida. I have been doing some research and I am looking at buying either in Miami or in Ft Myers/Coral Coast. But time its slowly running out as we are planning to fly to the US late next month...

Inspection Period

During that one month period you are supposed to have the property checked out physically and legally (by doing a title search to check there are no outstanding liens against the property). Liens can include the following: 1.IF money is owed by the property since the old owner didn't pay his property tax or his HOA fees. 2. If lawsuits against the property since the old owner had renovations done, but didn't pay the renovation company 3. fines against the property because the person did illegal alterations that violated the building code

How to find out how much taxes you will pay on your property:

If you want to find the most recent assessed price for any property in Miami (ie. the amount of property tax you'll pay) go to this government website: http://gisims2.miamidade.gov/MyHome/propmap.asp

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Location location Location

One of the main important consideration when buying property its location.
When assessing the area where to buy you have to consider the following factors:

- Is it close to places of work? how long does the commuting will take?
- Is there adequate parking?
- Is it close to public transport?
- Is it in a growth suburb or has it already boomed?
- Is there noise from traffic, trains, planes and factories?
- Is it close to amenities?

Look at google maps or a street directory to find out more about the suburbs amenities  and transport.  Also make sure if there is a project under way in the area, this can potentially affect the value of the property in a good or bad way. Loss of view, for instance, can have a serious impact in the market value.

Capital Gain tax rates in the US

2008-12

ordinary income tax rate - 10%   15%   25%   28%   33%   35% 
short term  tax rate         - 10%   15%   25%   28%   33%   35% 
(less than a year )

long term
ordinary income tax rate - 0%   5%   15%   15%   15%   15% 

In 2013  This will change as follows

ordinary income tax rate - 15%   15%    28%   31%   36%  39.5
short term  tax rate         -  15%   15%    28%   31%   36%  39.5
(less than a year )

long term
ordinary income tax rate - 10%   20%   20%   20%   20%   20%

Warning!!
 Reporting requirements to comply when buying an asset in the US

In the US there is an entity called Bureau of Economic Analysis which regulates the purchase of properties by foreigners and any acquisition should be reported to them.

Failure to report a purchase could carry up to a 25k fine or jail time.


http://www.bea.gov/surveys/fdiusurv.htm
which form to file?
http://www.bea.gov/surveys/pdf/form_trans_2011.pdf

Usefull web pages

Great web pages when doing your due diligence!

www.redfin.com
www,gosection8.com   - to see what is available in your area for tenants.
www.listingbook.com
www.spotcrime.com
www.rentometer.com Great web pages when doing your TAX return http://www.trexglobal.com/property-management/landlord-resources/rental-property-tax-deductions

Quotables Quotes by Donald Tump

Business is an art whether its real estate or anything else. Treat it that way by developing your technique being tenacious and remaining passionate.

Real estate has a way of evening itself out. There are always ups and downs and that;s a fact not an aberration.

Don't depend on anyone else for providing your financial security.

Big problems can equal big opportunities.

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Real estate Tips

The financial numbers given when purchasing a home are only estimates. Take them as the best case scenario so always take them as a relative way of how the property its projected to perform not how it actually performs.

When protecting yourself against vacancy consider saving at least 1 year reserve money that will allow you to maintain the property in the case your tenant leaves.
Note that if there are more likely to fail to pay the rent if the tenant its a single person or a single person working in a family household.

Use insurance as only one way to protect your property there should be other asset protection in place.

Property Acquisition Investment for tax lien: what to look for

When looking for a property which has a lien you want one that is likely to be allowed to go for foreclosure. So look for the following:

Properties that have been abandoned by the owner or its owned by someone who is living out of the country. 

Properties that has several years of unpaid taxes (more than 5) and the ownership is free and clear of other liens. 

Properties where the owner has passed away, has file for  bankruptcy  or the owner is a minor or active member of the military  are more difficult to foreclose.

This information its not hard to find and  could avoid you a lot of headaches. The owner of a property its public information and you can find it by searching in the country assessor's office. You could also go to the county recorder and find out if the owner has file for bankruptcy

Criteria when considering a property acquisition investment strategy on tax lien

You have to consider the following points:

1. Chances of the owner paying the lien
2. How long you are happy to wait to forclourse the property
3. Other property taxes that will have to be pay in the future
4. How likely are you to foreclose the property
5. Does the property stand in a good area with potential growth? 
6. Does the property need repairing?
7. How much is the property worth.

Criteria for interest rate investment strategy on tax lien

You have to consider the following points:

• What would be the rate of return
• what is the level of risk you would be happy with
• How much money are you planning to risk
• Time you are happy to hold the lien for

Different strategies for Tax lien

There are 2 tax lien strategy. You could decide you are happy earning interest at a stated rate or if the lien never gets paid by the home owner then you can foreclose the property. It is important to decide which of this options you want to go for as you will have to proceed in different ways. 

Say for instance you will be happy with accruing interest. This is a great investment for a short or mid term when your main goal is to get cash flow and you have cash sitting around waiting to do some other investment. 

If you would like to go for the property you have to consider that this is going to be a long term investment, you would have to consider that the property will need to be foreclose and  check out the area as it could be in a zone with good appreciation potential and its depreciation and leverage potential.

Tax Lien Investment strategy

Here is a summary of how a tax lien occurs:

1. 1. A landlord does not pay taxes due on the property
2. The government puts a non consensual lien (which is a form of security interest granted to secure the payment of a debt) over the property for back taxes
3.  This lien is offered for sale at an auction or at a fixed interest rate 
4. If the lien is sold at an auction there could be multiple investors bidding on the interest rate of this lien
5. The interest will be accrued until the landlord or any other lien holder pays the back taxes. 
6. If the lien is not paid then the investor who purchased the lien can foreclose against the property and therefore own the property for the price of the back taxes. 

1031 Exchange: how does it work

The government wants to incentive the type of real estate investment in the long term. That is why it has created some of the tax benefits that you can profit from.
One of them is that you are allowed to write off the cost of the property over some time thought annual depredation deductions and this could be use to offset other income that you have earned.
When its time to sell your property the best way to make the most of the tax benefit its to profit from the 1031 exchange. When you sell your property and buy a new investment property you can roll the gain from the previous property to the new one without paying the tax until some time in the future. Note that all exchange have to be like kind. For instance it wont be the same if you are selling a property in the US and buying another overseas. The IRS must approve to do this exchange.
The property has to be hold for one year or more and be for investment purposes in order to be eligible to use the 1031 exchange.
There is also the rule of 45 days identification period in which (from the sale of the old property) you have to come up with a list of properties you are interested in buying and replace the property within 180 days. Although this might be quite challenging the IRS doesn't accept any extensions.
Other rules include to use a qualified intermediary and follow the title holding requirements as well as buy a property or real estate of equal or higher value and reinvest all cash.

Property types and how are they taxed

There are 4 types of property types:

1. Property development - is taxed as ordinary income
2. Short term property (fix and flip) - is taxed as short term capital gains
3. Personal Residence - it could qualify for a gain exclusion depending on the marital status
4. Investment property -  you can profit from some tax benefits.

Property Management

Nothing is more important in the success of your investment in real estate than the Property Management. Real Estate vales are based on performance so make sure to do some due diligence in this regards when it comes to choosing your property management.
There are 3 key general areas in which a property manager should know in how to improved the value of your property. These are the income (that is generated by the rent, the occupancy and other revenue opportunities) the expenses and systems.
It is common for a property management to skip the step of running a criminal background check. This mistake can be a quite costy one, a bad tenant not only will increase the cost of eviction an court but also will increase your vacancy rates and maintenance of the property.  The credit checks are always paid for by the potential renter so there is no excuse to skip such a key step.
While you have little control in the expenses of your property you can find out if your management company has a better purchasing power when it comes to insurance premiums. They will also have good leads for accountants and other related professionals.

So how do you choose a good properly manager?

Here are some tips:

Verify every information you get, get a client list and get in touch with existing clients to see what they say about the company.
Ask other professional in the industry if they know the property management company you are intending to use and what is their opinion on them.
Find a management company that understand your type of property. They can be specialise in different type of properties such as commercial or apartment. It will pay off to get a company that understands the type of asset that you hold and knows how to manage it.
This is not an area where you can save.  Make sure that you get what you pay for and you understand and are clearly explained all the fees upfront.
Make sure that your property management has a very good accountant as part of their team so they understand not only what is going on with your property's operations side but also with the financial part of it.


Here are a couple of good web pages where you can learn more about property managers:
www.irem.org
www. naahq.org

Tips for asset protetion

Always double check what they advise you. Usually there is a commission involve, so do your own due diligence and don't believe everything they suggest. Pay for good advise, its going to be very well worth it.  Shop around for a good lawyer don't just go with the fist one that sounds professional.

Property Criteria and Analysis

1. More cash flow from your property is an important factor in the building value.
2. In order to know the vale of your property follow this formula:  NOI (net operating income= the income after expenses) / Market cap rate.
3. Cash on Cash Return is how long does it take for the property to produce what you have invested. Is good to keep this as your main criteria and cap rate to compare one property with others. 
4. Gross Rent Multiplier (GRM) = Sale Price / Potential Gross Income   or   Sale Price = Gross Rent Multiplier x Potential Gross Income   is another way you could work out the relative price of the property. Note that the GRM can be deceiving as from property to property it may be much different the vacancy rate and taxes, this system of comparing and selecting investment properties only when the expenses are uniform across properties.
5. Observe the trends of what people are doing is the key to find new opportunities.
6. Check the demoghraphics of the area you are willing to buy a property. see  http://www.freedemographics.com/
7. Watch out for up coming trends. 

How to improve your chances of renting your place

First impressions do count. So when looking at a property either to buy or to put in the market to rent/sell you have the know that the property can stand out from the rest and improve the chances to get a higher demand.

Consider looking at the following factors:

Is the property in a good location?. As the popular says go, in real estate is all about location, location location!
Does it have a good curb appeal? Make sure that the garden and the front yard its well kept and clean. Does it have nice plants and flowers around that highlights the property?.
Is it easy to access? Remember that with a growing baby boomer population the property has to be ADA  (American with disabilities act)
Can you help with the views? People pay a lot of money for the vies. Specially if its water views. Make sure that you do all possible to highlight the potential view by chopping branches and putting plants in strategic places.
Highlight some feature of the house. Make sure that the house has some wow factor to it. This will make it stand out from the rest. Remember that when they are house hunting after looking at so many properties eventually they all becomes a blur, so you make sure your property has a nice feature  to remember it by.
Anything that makes the house safer is an extra selling point. Gates, alarms, safe, etc  Families with kids would be happier to pay more rent for a safer place.
Make the house show neutral features and colours, remember that the red walls its not everyone taste, you have to make sure to appeal a broaden audience of potential buyer or renters by making them seeing him/herself living there.  In order to achieve this try to depersonalize the house, any personal objects like trophies, and pictures should be removed as well as try to uncluttered the house a much as possible. Needless to say the house should be spotless and well decorated with nice healthy looking plants.  It's crucial that that feeling that the person get from the house is a positive one.
High quality finishes without going over budget its always something that can make a difference in the outcome of an open home.

Demographics that favor your investment

• Are there more female than males?  (females tend to nest)
• Are there more singles or married people? It there are more single it would be better to buy an apartment.
• Are there more middle age or youngsters or older people? This can affect how many people can afford to buy a place.
• Stability and profitability of major companies in the area
• Are there more professionals in the area?

Other factors to consider::

- There are approx 75 million in the baby boomer population.

- Last year there was a 13 percent of the USA population over 65 years of age

-The current average life expectancy in America is approx 78 years.

So Americans are not only getting older but they living longer, important factor to consider when buying real estate as you be looking in the long term.

What is a HUD?

A HUD is a settlement statement document.

The first page you have a summery of the buyers transaction (on the left side) and the sellers (on the right) There are a contract purchase price settlement charges, earnest, taxes, security, rent and prorated.

On the second page you have the itemised brake down of the 1st page.
The buyers pay all the closing cost which are title insurance fee, wire express fee, document preparation fees etc.

Things you should look out for when you are hunting for a house

Make sure you take your notepad and write what you think about the following:

In terms of area:
Overall impression of the suburb
General condition of the buildings
Quality and condition of the cars
Area landscapes
Traffic paters
Quality of business of the area

In terms of building:
Location within area
Lighting
Parking
Ease of access
General condition
Curb conditions
Fits what you are looking for
General condition



Make sure you drive around in different times of the days to notice the difference.

Tip: find out what projects are underway on the area by contacting the city officials and staff.

Transfering your title to your entity:

Once you have formed an asset protection entity its time to transfer the title of the property to the LLC.
You have tho make sure that you:

- Sign and approve the operating agreement.
- Sing the minutes of the 1st meeting
- Issue a membership certificate
- Notify your insurance that your property its under your LLC and not your individual name. This is quite important as in the case of a claim this can be an reason for not paying our. 

What is probate and how can you avoid it?

Probate is the process in which the estate of a deceased person gets resolved. In this process it gets probed that the testator's will is genuine and decides the executor as the personal representative of the estate. It gets interpreted what the decease person wanted to do with his state.
Probate usually takes several months and it can be quite expensive.

Some of the ways to avoid probate in the US are the following:

 -  Execute a living trust.
-  Set up a POD or paid on death designations on bank accounts
- Set up of a TOD transfer on death on brokerage accounts.
- Placing the property in joint tenancies (the person that survives inhalers the other party estate). A life estate deed could be executed and a testator can add a named beneficiary to it.

Note that avoiding probate does not eliminate the estate taxes.
  

Asset Protection in real estate

Asset protection on your real estate its one of the key factors to be able to sleep sound at night. In a country like the US where most of the lawsuits in the world are filed its paramount that your property its well protected in the case something doesn't go as planned.

Here are some key points:

= Insurance: don't t be fooled to believe that with this you are cover, this is just one single step to get your real estate protected. Make sure you are always cover against natural disaster, you don't want to wait until a flood comes to realise that floods was one of the exclusions in your policy.
= Don't do joint tenancies. In the case one of the persons in the tenancies gets suits you might loose everything too..
= Never use a C corporation (you will pay more taxes)
= Only youse a LLC (or TIC Tenancy in common with both parties protected by a LLC)
= Get a living trust (for provate avoidance) and the LLC (for asset protection)

Property Management websites - with interesting articles and more!

National Apartment Association
NAA serves the interest of multifamily housing, owners, managers and suppliers and promotes a high lever of professionalism in this industry.

http://www.naahq.org/Pages/welcome.aspx


Institute of Real Estate Management.
Is dedicated to ethical business practises and maximisation of value in real estate across different type of properties.  Find also interesting articles and more.
http://www.irem.org/

Property management Rating

Here is a great web page to check your property management rating. Make sure that you check how is the rating based on and the amount of complains filed in the last few years. Also note that the bigger the company the more likely to have a disagreement with a landlord.

http://www.bbb.org/atlanta/business-reviews/property-management

Taxes and real estate

Did you know that travel, meals and even entertainment can be treated as tax deductible expenses?
To lower your income tax the rule in the US is that you have discuss your property during, before or after a meal or entertainment you can deduct the cost of it. Make sure you keep all record of who you where with, what did you discuss and where.
Travel its also deductible as long as during your trip you have spent more than 50 per cent of your time (8 hours business days) doing business.
Depredation: Personal property like all what a house could hold that is not for its basic operation can be deprecated.

Real estate as a business

In order to succeed in real estate you have to treat your investment as a business.

Here are some tips:

-Good accounting its critical, not only to do the sales return at the end of the financial year but also to keep track of what the numbers are telling you and therefore make a good financial decision.  For this its paramount to keep good book keeping using a software such as Quick books, to be able to analyse all the information.
-Make a chart of accounts to be able to see where the money in expense its going (appliances, repairs, general, etc)
- Detail transactions in the debit (depreciation expense) or credit (accumulated depredation).
- Have a journal of entries.
- Make sure you put this info frequently to avoid an overwhelming amount of work accumulated.
- Keep track of your cash flow
- Capital rate should never go below your interest rate otherwise its negative leverage.
Cap rate is the net operating income divided the value of the property.
- Calculate your ROI periodically.
- Comparison Report: Compares data from your real estate with other data.

Real Estate Tips:

- If you don't know your numbers then you don't know your business
- In the USA real estate is a highly favoured investment under the tax laws.
-Appreciation will cover some of the investors mistakes.
-Don't believe that its possible to get in the very bottom of the market, building value from real estate development over time takes not only skill but expertise.
- Know intimately the area of city or town you choose. Understand and know well your preferred type of real estate investment.
- Recognise the signs of a declining neighbourhoods.
- You will be better off giving up a little ground and generating some good will and resolving any disagreement before it becomes too serious.
- As Benjamin Franklin once said" "Due Diligence is the mother of good luck"
- Have your team lined up before you make an offer.
- The property management company you choose it will the key member of your team. Find the best one you can and work with them closely.

Comments from the USA

I would be really grateful if anyone that is looking at this blog from the USA would like to comment of how is like to live in the following cities: Phoenix, Atlanta, Kansas, Miami and Las Vegas. In terms of weather, transport, safety, entrainment, work, environment, etc.

Thank you!!

Termites in Atlanta

When doing your due diligence make sure you watch out for termites as these pests can cause serious structural damage to buildings. They live in colonies so if you see one you are likely to see more around. 

A termite inspection could cost aprox. 75 dollars, but if you want to save get an inspector that is both qualify the home and the termites.  Termites also like the dark so if you see some signs of termites in the outside of the property you are likely to have many more inside.  More often than not you their  presence goes undetected until the timbers are severely damaged and exhibit surface changes.

Here are some precautions for termites:

Avoid the contact of susceptible timber with ground. This can be done by using termite resistant concrete, steal or masonry foundation with  appropriate barriers. Termites could even chew through piping made of soft plastics and even some metals, to exploit moisture. In general, new houses should be constructed with embedded physical termite barriers so that there are no easy means for termites to gain concealed entry.

- Use timber treatment and pre treatment.

- Use naturally resistant timber such as Turpentine Tree, Teak or White Cypress  

US Property: There is light at the end of the tunnel

It looks like finally prices in the property market are reaching the bottom end, and although its expected to stay there for a while there are some early indicators that tells us that there is light and the end of the tunnel and we can expect to see a slowly improvement in the real estate market.    Supply and demand are starting to show some balance. Rent its now more expensive than buying in most of the USA. 

There is a growth in the US population of  around 3 million  year, so taking that into account its not hard to see than in 10 year there will be the need of  a lot more homes. 

As the economy improves all those kids that have moved back with they parents will be looking for their own place.

With the creation of new jobs there will be the increase of rents and the housing construction will resume. 

  

USA Property Today Tonight: Buying advice (as seen on Today Tonight)

5 Pitfalls when you are buying property in the USA.

Never buy a property because it looks cheap on the Internet and make sure that:

1. You are aware of all the charges and rates, as they differ from state to state
2. What are the tax implications in your circumstances.
3. Make sure that there is no mortgage mix up otherwise you can end up owing a lot on your new property.
4. Make sure you have a good property manager you can trust.
5. See it for yourself. Make a trip to the US it can be well worth it!