A guide to
usa property investment 2015
property investment in THE usa Vertigo Property Investments remains a solid, dependable and high yield investment opportunity. The housing market looks good, and so does the US economy. Money is still pouring into the US from less stable markets such as Europe, China and Russia, adding to the yield on the dollar and strengthening the US economy. The World Economic Forum Global Competitiveness Index Report 2014-2015, which sets the prosperity and growth potential of an economy, including its ability to sustain a high level of income and return on investment, ranked the US 3rd after Switzerland and Singapore; very encouraging indeed. 2014 was a good year for our investors, and real estate as a whole continued to bounce back in the US. Predictions for 2015 are still very good, although property prices are expected to increase slower than they did in 2014.
in the prior year, and every month in 2014 saw a drop in foreclosures compared to 2013. The prediction from Jed Kolko, chief economist at Trulia, is confident that rents will increase this year. The rent increase will be driven by 25 to 34 year olds, many of whom do not have a deposit to buy a house, pushing the demand for rentals up, therefore increasing the rents. This prediction is echoed by Stan Humphries, chief economist at Zillow who estimates that rents will rise an average of 3.5% in 2015. All the 2015 predictions and expectations from 2014 are beginning to bear fruit for our clients. As the winter subsides and the market begins to thaw, the signs for the rest of the year are extremely encouraging for our US property investors in 2015. call us on
CNN Money reports that many Millennials are expected to start looking to buy homes of their own this year, helping to fuel an increase in first time buyers. The US housing market is still very strong. From January through November 2014, foreclosures were down about 17.2% from the same period
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WHY INVEST?
About our U.S. Investment Properties We chose our select USA locations because we have seen them work steadily over time. The USA remains a very solid option for income property investment, and the economy as a whole is looking good. Foreign investment is also adding strength to an already boisterous property market. If you want to know more about investing in low-risk, high yield property investment, in markets that have proven their worth over time, please contact Vertigo today. We will take you through the process step-by-step, and answer any questions that you may have. We do not try and hard-sell you or persuade you to do something that is risky, or that you are not comfortable with. We offer an honest and transparent investment service, and our aim is to develop a long-term relationship with all of our clients. We are proud that we continue to thrive on repeat business and word of mouth introductions.
call us on
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ATLANTA
Great weather, tax breaks, and wonderful green areas on offer make an attractive city to live in. It has the strongest economy in Georgia and the fourth largest concentration of Fortune 500 companies in the country.
ATLANTA
The recent influx of job seekers has helped to grow the already sizable professional tenant market, spurring an increase in demand for homes and an inevitable rise in house prices. Atlanta is a proven and solid market for our investors. The housing market grew, and a very active job market flourish in 2014. An 11% increase in the median sale price in Atlanta helped many of our investors benefit from an equity gain in their property portfolio, in addition to the 7%+ return and positive cash flow they received from renting their property. There is currently major construction in the city. In fact, Atlanta was the number three city in single family house building permit applications in the country - proof that there is a lot of investment and faith in the city. Projects starting construction were up by 18%, and new homes that closed were up by 23%.
Job creation was up 2.6% in 2014 and has averaged 2.3% over the last two years. The resultant growth is a new record for total people employed in the area, even though the relatively high unemployment rate is much attributed to the large influx of people into the region, which the economy is trying to keep pace with. Realtor.com recently calculated the 10 housing markets that will record the fastest sales growth in 2015 and beyond, Atlanta was one of them. Jonathan Smoke, Chief economist from Realtor, predicts that Atlanta will see an “11% increase in new home owners,” and that the city is “showing signs of leading the country in population and household growth.” Over the next 5 years, the Atlanta metro area is expecting a 6% increase in home owning households.
CLICK TO VIEW OUR CURRENT ATLANTA PROPERTIES Atlanta is a very strong place to invest in buy to let property. If you are thinking of investing in Atlanta, or any of the other great cities that we offer property in, or even if you are just curious about how we can help you with your property portfolio, please contact us: call us on
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buffalo
BUFFALO, Western New York, offers one of the steadiest and most reliable property markets in the USA. Known as ‘The City of Good Neighbours’, Buffalo has a culture of renting that has created a strong rental market with steady, consistent growth. Three years after New York’s Governor Andrew M. Cuomo announced the historic $1 billion investment in the local economy, to help create jobs and spur investment and economic activity through the Buffalo Billion Investment Development Plan, things have taken off for the region. In addition, there has also been widespread private investment and an increase in average annual earnings. Buffalo’s unemployment rate is below the national average, with a 5.7% drop in unemployment the tail end of 2014. December 2014 saw housing market sales increase by a healthy 22%, having the highest number of closed sales in 15 years, according to BNAR (Buffalo Niagara Association of Realtors).
the local experts to predict that this upward trend will continue well into 2015, and that there will be at least a 3.1% increase in home prices this year. The rental market remains strong, and the equity gained in Buffalo property, while not as large as some areas in the US, has increased 9.1% over the last three years. What sets Buffalo apart from many ‘younger demographic’ cities such as, Seattle, Tampa or St. Louis, is that Buffalo still gives you a lot for your money. The Millennials are moving to Buffalo for its affordability and new opportunities the city offers. John Leonardi, the CEO of BNAR, sees a strong year ahead “The upcoming year is poised to be stronger than last year.“ I think we will see inventory rise as soon as we get out of the cold weather. Typically the spring market explodes, and that is what is expected for 2015.”
CLICK TO VIEW OUR CURRENT buffalo PROPERTIES Vertigo Property Investments specialise in fully-refurbished, single and multifamily homes in select neighbourhoods in Buffalo. All the properties we sell are fully-refurbished to a high standard, including roofs, floors, boilers, kitchens and bathrooms; and come with a six month maintenance warranty. Prices range from $40,000 to $60,000 and offer yields of 14% to 18% net. Buffalo is highly recommended by us if you are thinking of investing in buy to let property. call us on
+44 (0) 1903 530 949
contact@vertigoinvestments.com Pending sales reported in December were 6.2% higher than in 2013, leading
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cleveland
cleveland
is the largest city in Cuyahoga County (the most urbanized and populous county in Ohio) and has healthy manufacturing, insurance, education and health-care industries that combine to make up the cities strong economy. 1.2 Million people are resident within its 459.8 square miles. The area has a reliable employment and solid rental tradition, yet still manages to retain low residential house prices despite appealing vacancy numbers. Generous tax breaks have boosted the local health-care economy, resulting in 11 Fortune 500 companies maintaining their headquarters there. The median family income in Cuyahoga County has risen 11.8% since 2000. Single-family homes price between $40,000 to $60,000, with a 10%+ Capitalization rate, making this a market primed for anyone interested in a ‘Cash Flow’ investment.
Cleveland has been well monitored and makes a worthy addition to our other high yield markets. Facts that helped us select Cleveland as a great market: • 26 fortune 1000 companies
CLICK TO VIEW OUR CURRENT cleveland PROPERTIES
• Ranked in Top 5 US industrial markets • 1.2 million residents • High number of renters • Single family investment homes for between $40,000 and $60,000. • The median monthly rent on a three bed, single family home is around $900 (*Dept of Numbers) • The vacancy rate has fallen by 3.33% since 2005 • The Price Per Square Foot has Increased by 5.1% compared to the same time last year
A lot of investment and development has taken place since 2005, the positive signs that we look for are there in Cleveland. The inventory price is low and provides a prospective cash flow of around $5000 to $6000 per annum for investors If you would like to find out more about Cleveland investment property, or any of our other exciting markets, please contact us: call us on
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orlando
ORLANDO
The annual median home price increased every month in 2014, and by the end of the year we saw a 9.1% increase over 2013. This was welcome news for investors who purchased buy to let properties from us in the Orlando area over the past few years. Many of them enjoyed the positive cash flow they received from renting their property, but also benefited from an equity gain in their property portfolio. Statistics from ORRA (Orlando Regional REALTOR速 Association), show that over all types of sale, there was an increase of 18.56% in November, and an increase of 11.13% in December in the Orlando area, compared to the previous year. Traditional sales rose by 14.04% over December 2013, and of the houses sold overall, the average closing price was 96.50% of the asking price. The number of pending sales were13.81% lower in December than in November 2014. This all adds up to a market that is on the move has helped push up
the median house price. There was an increase of 22.67% in properties available for sale in December over the same time in 2013, and a 40.22% increase in available properties over 2013 as a whole. Things are happening in Orlando. This jump up in inventory has brought new confidence and activity to the market and we fully expect to see a similar median house price increase in 2015. Orlando is one of our more established markets and this continued growth in 2014, up over 2013, was spurred on by these steady sales and house prices. There is still much development in the Disney area in Orlando, largely driven by the popular vacation rental market. We offer many of these type of properties, many close to Disney, making them appealing to vacationers.
CLICK TO VIEW OUR CURRENT orlando PROPERTIES Investment in all areas is high in Orlando, not just in tourism and housing. Life Sciences and Education investment continues to boost the economy, and an excellent employment market, make short and long term prospects for the area very good. If you are thinking of investing in buy to let vacation property in Orlando, or you are just curious about how we can help you with your property portfolio, please contact us: call us on
+44 (0) 1903 530 949
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FAQs
Q. I don’t live in the USA. How can I own property there? A. We do all the hard work for you. We have years of experience in the US market and have specialist partners in place in each of our locations. We know what to look for, what to watch out for, and how to put together good, solid deals that perform as they are supposed to. You tell us the type of investment you want and we hand-pick the matches for your personal needs.
Q. How can I know what or where to buy? A. Each of our locations offers different benefits and we have selected the bestperforming types of property in each. All our properties offer good, steady income and come in at different price ranges to suit different budgets. In Atlanta you can buy modern, single family houses in good, suburban neighbourhoods which typically come in between $90,000 to $150,000 (which is around 33% less than peak pricing and 25% less than rebuild cost) and
offer yields of 7% to 9% net. Often Atlanta tenants have signed a future option to buy, so this location also offers a solid exit strategy. In Buffalo you can buy fully-refurbished single and multi-family homes in select neighbourhoods. Prices range typically from $40,000 to $60,000 and they offer high yields of 14% to 18% net. Buffalo is ideal if you want a low capital requirement and a high income. In Florida we specialise in refurbished condo apartments and family houses, primarily in the Orlando area. These range between $75,000 to $110,000 for condos and $90,000 to $120,000 for houses (around 50% discount from peak values) and offer yields of 9% to 11% net. Florida is ideal if you want a solid investment to hold, with an option of selling at the top of the market. In Cleveland, Ohio, we specialise in refurbished, multi-family houses and single-family homes that are available in the area for between $40,000 to
$60,000, with a 10%+ yield, making this a market primed for anyone interested in a “Cash Flow” investment.
Q. Do I have to visit the USA? A. You do not have to visit the USA as all parts of the transaction can be done by email, post, web chat and/or telephone. You are, of course, welcome to visit and meet our partners and view properties and we can help you arrange this if you wish.
Q. I’ve heard horror stories about investing in US property. How can I trust this won’t happen to me? A. This is a very good question. It’s true there have been some worrying reports about types of property and locations in the USA. We simply do not work in those locations and/or with those partners. We only offer quality, refurbished, performing property in tried and tested locations with tried and trusted partners. We’ve worked in the US market for years and know what to look out for and who to avoid.
Q. How do you get such large discounts? Is there something wrong with the property? A. The property we offer is typically repossessed and bought directly from the bank or foreclosure (repossession) agent/s. Many Americans lost their homes in the property crash and recession and are now looking for property to rent and to buy. This provides an itinerary of available housing stock at discount prices and also a readymade rental market with future tenant purchase options.
Q. How do I know I am not buying run down property? A. We provide you with photos and/or videos of the property so you can see it is in good condition. In the case of an ongoing refurbishment, we will offer before and after images so you can see the work completed. Our properties also come with home and maintenance warranties and are tenanted with carefully-screened and placed tenants who have signed leases and paid security deposits. You will receive all information pertaining to the warranties and tenancies, plus the security deposit/s will be transferred to your account/s upon completion.
Q. How can I manage my property and tenant/s if I’m not in the USA? What if something goes wrong? A. All properties are fully-managed for you by our specialist partner management teams in each location. Simply, you do not have to worry as everything is done for you.
Q. Do I need a USA bank account? A. It is best to have a USA bank account as your income will be paid in dollars and exchange transactions between the USA and UK are chargeable (circa £60 per transaction in the UK, charges and stipulations in other countries may vary). The type of bank account you open will depends on your existing bank account/s, country of residence, credit history and whether you wish to visit the US to open an account in person. Some banks require your presence and ID when opening accounts. We can help you with this.
Q. Do I need a USA company? A. You do not need a USA company and can use your personal name and accounts. Most investors with just one property use a personal account, but it might be worth considering opening an LLC (US equivalent of a UK Ltd company) if you own a number of US investments and/or have a large number of assets. Typically, if you are investing in between one and four properties and have less than £1 million of assets, you probably won’t need an LLC. If you do, we can help you set this up.
Q. How do I receive my income? A. The management team will pay your rental income into any bank account of your choice, anywhere in the world.
Q. Where do I pay my tax? A. You pay your tax at source, in the US, according to US laws. You will not be double-taxed in the UK due to a Double Tax Treaty being in place to safeguard
FAQs against this. Other countries will have different rules and regulations so it is best to conduct further research and take advice if you are not a UK citizen.
Q. How do I pay my tax? A. In the USA you pay tax on profits. This includes rental income and/or profit through sale. If you hold a property for more than 12 months (as opposed to a selling as a fast ‘flip’) any sale profit is defined as ‘long term gains’ and will be taxed at a lower rate, typically 5% to 15% lower than standard income tax. If you are planning to buy a new investment property with your sale profit, you can roll this over into the next property and defer tax payable. Different locations have varying rules and regulations, so we strongly advise personal research and professional advice for your own personal circumstances.
Q. How do I file US tax returns? A. USA tax returns are filed annually. Typically, a ‘tax year’ is a calendar year, so your return should be filed by the 15th of the sixth month after the end of the tax year. So for a tax year ending 31st December 2013, your last filing date would be 15th June 2015. This gives you around 18 months to complete and submit your first tax return.
Q. Can I claim any expenses on my US tax? A. Yes you can claim tax relief against a number of costs. These can include business travel to the US; an annual deduction for depreciation against income (typically the cost spread out of 27.5 years, thus a $110,000 property would allow you a deduction of $4,000 a year); advertising; cleaning and maintenance; insurance and legal fees; management fees; periodicals and subscriptions; repairs and utilities, etc. Again, we strongly recommend you take professional advice pertaining to your own personal situation on all tax issues.
Q. Will a US LLC impact my tax in the UK? A. The UK laws assume an LLC is a taxable entity in its own right. This means if you are an individual member of an LLC you will be taxed in the UK on the distribution of profits from the LLC and not taxed on the profits themselves. It is most tax-efficient, therefore, to keep the profits inside the company for your investment/s. If the shares in the LLC are at least 10% owned by a UK corporation then underlying tax relief will be given.
You can research more about tax via
http://www.irs.gov/
Q. What is an ITIN or EIN number? A. These are taxation numbers. An ITIN is an Individual Tax Identification Number (for personal accounts) and an EIN is an Employee Identification Number (for LLCs). You will need in order to make your annual tax returns and it will enable
FAQs
you to receive a higher rate of rental income from your property (by law, the management company must withhold a percentage of your income if you do not have a tax number). These tax numbers will be needed for a US bank account and can also help you build up credit in the USA. Again, we can help you set these up.
Q. What happens if I want to close my investment or sell my property? A. There are a number of exit strategies available if you wish to close your investment and sell your property. You can sell on the open market to a homebuyer. Our location partners will be able to refer you to local, trustworthy realtors (estate agents) to help you with this. You can sell to your tenant. Some will be eligible for standard mortgages, but others who aren’t may still be able to get a government-subsidised FHA insured mortgage (similar to Help to Buy in the UK). You can also sell to your tenant on a lease option. This is an agreement whereby the tenant is given the option to buy the house for an agreed price after a specified period of time. This is popular in Atlanta with many tenants having signed a lease option agreement. You can sell the property as a performing investment to another investor, ideally one with liquid assets who would be interested in a cash deal. This means you would be able to avoid commission fees and chains and simply sell the whole investment as opposed to just the property itself.
You may also be able to refinance by taking out a loan (e.g. a small mortgage) on your property. This, however, will depend on your individual circumstances and the rules and regulations of the banks within that particular State. call us on
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ABOUT VERTIGO vertigo property investments are a small team of dynamic and forward-thinking professionals who specialize in high yield property investment in the USA. We are a boutique company, and provide a very personal and efficient service for our clients. We maintain the highest of standards, and are not just some faceless, large scale operation of sales people trying to make a commission. When you contact Vertigo, you will be served by a dedicated investment expert, who will guide you through your investment opportunities, and answer any questions that you may have. A high percentage of our business is maintained by word of mouth and repeat clients. Our reputation and level of service are what make us the best at what we do. We are just like you, investors and family people. We are here for the long run, not just a hit and run. We know the major and minor players in our market. We see how they operate, witnessed their mistakes, and have learned from them.
From conception, Vertigo has brought and maintained a high ethical standard and level of service to property investment than ever before. Something that has effectively raised the bar far higher than anyone else in the market can hope to achieve. Once you become part of our investment family, we will help you personally, and we treat every deal and transaction like it was our own money being invested. Vertigo’s years of US property investment experience and extensive knowledge of the market will make sure that you find the perfect investment property, no matter what your budget. We offer an honest and transparent investment service, and our aim is to develop a long-term relationship with all of our clients and maximise the return on their investments. call us on
+44 (0) 1903 530 949
contact@vertigoinvestments.com OR FOLLOW THE LINKS
+44 (0) 1903 530 949 contact@vertigoinvestments.com
Vertigo Invest Ltd t/a Vertigo Property Investment is an agent which introduces clients to property investments. Vertigo may assist clients with the provision of information regarding the investment/s and may introduce clients to partners such as vendors, property management companies and/or other relevant professionals. Such provision should not be construed as taking responsibility for any arising issues or events which are properly the responsibility of the client, the vendor and/or other relevant professionals. Vertigo does not provide any financial or investment advice. We strongly recommend clients seek their own professional advice before entering into any contract. Details as supplied are correct at the time of provision and projections are based on available facts and reports at the time of provision. However clients should be aware that the value of an investment can go up and down. Property products are not currently regulated by the Financial Conduct Authority (FCA).