Be careful what properties you buy Pt.2

Following on from my last post. Here are a few other things to consider when making that all important investment.

3. Realtors (Estate Agents).
I have relationships with several property investors in the US, and they all tell me the same thing. ‘Realtors are mostly women who would scratch your eyes out to make a sale.’ I apologise if this sounds sexist. The point is, Realtors have a duty to the seller so every property is a good deal regardless of its condition or location. If you’re looking to invest use a professional property finder to source your properties. Make sure they know where to invest, and more importantly where to avoid.
Only a property investor knows the true mechanics of what makes a good investment and what doesn’t. Most Realtors don’t own investments properties themselves.

4. Condition of property.
Sounds obvious doesn't it. A few years ago a guy from here in the UK went to New York to invest. He was bullish in his approach. He asked his realtors to find him any property that was under x value and he bought them all. He then found all of them needed extensive repair (he was buying through Realtors remember!) If a property is not maintained and is perceived as being a hazard or unsightly, local
government can enforce that the owner brings the property up to ‘code.’ In this story this guy couldn’t afford to do the repairs. His properties were seized and a warrant put out for his arrest. He left the US empty-handed. Make sure you have a trusted Property Management company to manage your investment from the outset. When I buy properties I always run it by my property manager who will either tell me yes or no.

5. Section 8.
‘Section 8’ is our equivalent of housing benefits. Your tenant has a portion of their rent paid by the state based on their financial circumstances. Buying property that is ‘section 8 approved’ with or without a tenant is a good sign that the property is up to ‘code.’ Each year an assessment is made on the property and a section 8 is extended providing it is in good working order and meets the criteria as
set out by the state. If you’re buying a property that is section 8 approved make sure it is up to code. In the event that it isn’t then at the next annual assessment
benefits to the tenant will be held until the property is brought up to code and your rent will go unpaid.

6. Rental profits.
Like all out of town investors, you will be using a trusted Property Manager to manage your property day to day. Your agent will collect the rents and pay you your rental profits. A UK-US dual tax treaty makes this financially advantageous for us.
However, you must obtain an ITIN (International Tax ID) number before you can receive rental profits. Your Property Manager has a duty to hold onto all rental profits until this is in place. Make sure you apply for this as soon as you can.
First off you will need a foreign notary to certify your passport. You can use any notary in your home town. This will be sent to HAGUE for approval. Only then you can apply for an ITIN. The whole process takes approximately 8 weeks.

There you have it. Avoid these pitfalls and it'll make your investment run smooth as silk. Just remember, use a good property finder to source your investments, make sure you cover all these issues listed here and that they understand them.