It is no secret that the US property market has experienced a difficult time in recent years, however plummeting house prices and repossessed properties mean that there are thousands of bargains to be had for outside investors. There are definitely signs that the housing market is on the road to recovery, but until the large amount of repossessed properties on sale are cleared the recovery will be slow. As a result of this some properties are valued way below their market price and are being sold according to their replacement build cost.
It is this value for money, rock-bottom prices and cheap interest rates that are proving attractive to buyers who are realising the long term rental potential that these properties have.
HSBC’s Overseas Property Report issued last September showed that your money goes furthest in Orlando than anywhere else in the world, with £125,000 possibly getting you a four bedroom house. Combine this with 300 days of sunshine a year and some of the world’s most popular tourist attractions, it is easy to see why Florida remains the most popular state amongst purchasing Brits.
Other favoured states include; California, Colorado and New York, all of which offer very different types of property and lifestyles. Many people are also showing interest in investment states such as Arizona, Texas, Georgia and Nevada where you can get excellent value for money.
There are few restrictions on foreign buyers and the property market in the US is well-regulated. Another bonus is the fact that it is an English speaking country, so there will be no issues with contract translations and misunderstandings with the real estate agents due to not speaking the language.
Finance would normally be obtained from a US lender rather than an overseas lender and mortgages are from a maximum of 70% loan-to-value in the majority of States, or 75% loan-to-value in selected States such as Arizona, California, Colorado, Florida, New Mexico and Texas.
Loan-to-values on a ‘Condo’ (essentially a leasehold apartment) are lower than single-family homes by approximately 5% to 10%. A Condo is normally either a multi-storey block of flats or a row of four or five terraced houses. Condos have to be ‘Fannie Mae’ (the national mortgage association) approved. That is to say the financial management of the Condominium has to be solvent and certain ratios of occupancy have to be fulfilled, such as the balance between owner occupied, investment and buy-to-let.
It is essential that a mortgage is pre-approved before making an offer on a house, as without this an offer cannot be accepted. The completion of a mortgage can take up to 45 days, but will depend on how quickly the supporting documentation is received, plus the time for the valuation and legal work to be carried out. Closing needs to take place either in the USA or at a US Embassy or Consulate by utilising an approved Power of Attorney.
This market still has a supply of distressed properties, both short sales and foreclosures, but competition for the best deals can be fierce. It can take several months for the lender to approve a short sale and mortgages should be pre-approved for foreclosures before signing a sales contract, as the selling bank will wish to close within 30 days. Buyers should make detailed inspections to uncover defect, debt or repair issues with these homes, so taking independent legal and valuation advice is crucial.
There is most definitely something for everyone who is looking to invest in any of America’s fifty states and with the current low prices now is the time to cross the Atlantic and grab your dream home before it is too late!