Australian Property Investment? Or Overseas Property Investment

I hear rumour that a few brave aussie property investors are eyeing up the US market where there are some very cheap residential property investment opportunities at the moment. Forget a mortgage, houses can be had for under $10,000 in Detroit - that's credit card country. Even allowing for the currently lousy A$ rate that's around A$16,000 - for a whole house, and yes including land!

Here in Australia we get excited about anything which offers property investments for less than $100,000!

So should Australian investors be looking to the US for overseas property investment opportunities? To be honest I am not so sure.

Advantages of the US Market for Overseas Property Investment

• its cheap
• its really,really cheap

Disadvantages of the US Market for Overseas Property Investment

• we have no idea how much further the market can implode - but there is no real sign of it bottoming out yet;
• the US market is completely different in terms of real estate laws and lending. You really need local professionals to guide you- no not Realators (as real estate agents are inelegantly known as) - real professionals: lawyers and accountants;
• currency risk - especially if you borrow in Australia for US assets - remember when there was talk of the two currencies being on par - remember how that was less than a year ago
• urban decay - yes some parts of Sydney are a bit rough at night - but if you haven't seen Detroit recently rent Blade Runner!

Overseas Property Investment - Can Have Risks!

So should investors be looking to buy in Australia's real estate market yet? I'm not convinced personally. In the formerly boom states of Queensland and Western Australia the real impact of massive job losses and quite likely population losses as those that came to town recently for those late-departed jobs leave again - I can see prices stagnate for a very long time.  However if you are looking for a nice place on the beach to live yourself you will currently pick up a, relative, margin as many in the more expensive suburbs try to service sharemarket margin calls.

At the bottom end of the market - watch to see what happens if the government stays firm on the 30 June deadline for the current bonus levels for the first-home buyer's grant. If the level drops again to $7,000 there may well be some desperate developers looking to off-load. In the meanwhile first home buyers are in a buying mood and the investor is probably priced out of this sector - especially in new builds and house and land packages.

If you are determined to buy property in Australia its always a good idea to check out homes for sale by owner - these tend to be either the desperate or the insanely optimistic (i.e. the agent doesn't understand that the house is worth at least $100k more than the estimate). If you find one of the desperate you may get a good deal!

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