Why Invest in United States Real Estate

Sydney and close by regional cities were out. So they looked elsewhere in Australia.

Wayne’s view of the economy outside of Sydney and Melbourne was poor. Wayne remembers reading that quite a number of areas were technically in a recession, but the Australia wide numbers hidden by what was happening in Sydney and Melbourne.

So Perth was out as the market was staring to slow down there.

Take out mining towns generally as the big projects moved towards operation and not construction and the impact of the China slow down.

Adelaide and South Australia was out, on the back of predicted job losses in the car industry and probably as we have a bias about it being a sleepy old town.

Hobart and Tasmania were out, as they had not gone anywhere for ages, once again on the back of a poor local economy.

Gold Coast was out. Even though it looked like some growth was happening, its historical boom and bust property cycle is too much for Diana and Wayne.

Melbourne was borderline. It had some areas of potential growth, but Wayne had seen the previous experience of over development in several areas of Melbourne, which reduced the growth rates. This combined with too many inner city apartments coming on line would depress rents and capital growth.

This left Brisbane, which Wayne had been following for a number of years. Historically, Brisbane grew on the back of Sydney and Melbourne price increases. Wayne believes this was as people were priced out of Sydney and Melbourne and they moved to cheaper housing in Brisbane. But Wayne had a problem in 2015. Wayne felt the Queensland economy was not performing strongly and very few new jobs were being created. Wayne felt that if people could not get jobs, why would they move the Brisbane?

So now Diana and Wayne had a quandary. If there was nowhere to invest with the right numbers (and property investment is all about the numbers) in Australia, then where?

So they started to look elsewhere. They looked at the United Kingdom, parts of Europe and the United States.

Each was tempting on their own way.

But the main deciding factors for investing in the United States included:

• The price of properties. Property prices in many areas were substantially lower than Australia. So the entry point is much lower.
• The return on properties was much stronger. A million dollar house in Sydney might rent around $650 /$700 a week. A gross yield of 3.6%. A $100,000 house in many areas of the US would rent for at least $250 a week. A gross yield of 13%. And this is considered low.
• Potential future capital growth in the right markets. Whilst the US real estate market is recovering from the crash in 2007 and 2008, there are still a number of markets below that peak which have potential for good capital growth.