Reports of Australians buying properties in the US for less than the price of a car have been fairly common over the last few years.
In the wake of the GFC, there has been a massive drop in the price of housing in the US and many companies have sprung up here, which tout great buying opportunities for investors.
However, Aussie’s executive chairman and founder John Symond said it was a concern that many Australians are buying properties in markets they have very little idea about.
“I’m very concerned about Australians going abroad and buying what appears to be cheap properties, particularly in the US,” he said.
“It’s easy to fall into the trap and say look at the Australian dollar, it’s worth so much more compared to the US dollar.”
He said while the US market may have dropped in value by over 40 per cent, investors need to know more than just the selling price – even if it does seem cheap.
“They might have dropped 40 per cent, but were they at an inflated price and more so, can you rent those properties out?,” Mr Symond said.
“You’ve got cities in the US which have thousands and thousands of properties which can’t be rented and they will probably stay empty for years to come. “
There are also very different practices and laws in regards to property sales in the US and other countries, and a host of other factors to consider.
Mr Symond said investors need to seek advice regarding any potential tax benefits they may have from investing in property.
“Unless you generate an income you can’t offset the holding charges with negative gearing, so you’ve got to be very careful here,” he said.
“I think you want to tread very carefully when it comes to investing in real estate in these foreign territories, particularly in these tricky times when the world is in a mess.”