A gift from the U.S. Government

The US government is offering a 3 per cent FHA (Federal Housing Administration) non-recourse loans to investors. This includes foreign investors.

In my opinion as an investor the 3 per cent FHA non-recourse loans are the best thing since the invention of the wheel.  The loan has a low interest rate guarantee by the government with no recourse (if you default on the loan they cannot come after you) and is assumable by another party if the property is sold (thus if interest rates go to 10 per cent the loan by itself is worth a lot of money). 

In addition, foreign investors are treated as domestic persons. Basically they are a gift from the US Federal Reserve Bank to the buyers of multifamily complexes.  Why they are doing it, I have no idea, although it would likely be to stimulate the economy.  It sounds too good to be true, but it is true.  Worst case is collecting the rents and best case is increasing rents and the expenses stay the same (probably simplifying this a little too much). 

At some point interest rates will begin to rise in the US.  That will mean the loan will become very valuable and the rents will probably go up.
Therefore I have been asked how I do as an Australian investor benefit from this always seek assistance when investing in multifamily property. Only work with people who have experience in this area of investing. In essence, I do invest in US multifamily and can obtain a Cap Rate (net rate) of say 9 per cent interest (more likely 12 per cent to 15 per cent before expenses), pay my 3 per cent and I can walk away with 6 per cent net. Tell me where you can get a better deal than that. These are in all cities across America.

Basic steps to success below:

Choosing the best location, timing the market cycle and having an effective management team with the right strategy will have a tremendous impact on both NOI (Net Operating Income) and the resale value of the multifamily property.  A good property manager can help increase NOI by increasing and retaining paying residents, and a location with falling CAP (Net) rates will ensure that the resale value is even higher.

There are a multitude of variables that go into real estate investment and management, but paying attention to these 7 items – location, market cycle, cash flow, asset management, motivated seller, depreciation and mortgage reduction, and appreciation – will help to generate higher cash flow and create value for the real estate investor to ensure maximum return on investment.

About Mark Rooney

Investinus Group's Mark first found out about the advantages in the U.S real estate market in February 2002, whilst on a business trip to Canada and the U.S.A. The initial contacts made were able to assist with learning and studying the market place and how an Australian can invest into the U.S market safely and also have assurance that a team there can protect the asset.

For the next 4 years Mark researched the U.S real estate market and looked for opportunities to build further relationships with people. Over the next few years Mark gained an understanding of the various cities and what investment outcomes they provided a foreign investor.

In 2009 Mark was asked to assist others with purchasing property in the U.S.A. This was the initial beginnings of Investinus Group, whose focus is ensuring that their clients have a safe and secure investment in U.S. real estate. 

The group aims to build strong relationships with their clients and the people who work with them, suppliers, property managers, attorneys, accountants and developers.