Why The Timing Is Right For USA Property Investment!

We've explained the core reasons to invest in the USA but there's more to the story. Timing is everything so let's examine 'Why Now?'

In our view the conditions today represent a 'once in a generation' opportunity for investors who want to earn cash fast, generate high levels of income or exceptional capital growth.

Buy at the bottom of the property cycle

This graph reveals the market cycle in Florida, but reflects a similar picture to much of the US. Check the strong growth up to 2006 then a huge fall. Note these two points:

First, prices have roughly halved, which has changed the investment perspective completely. Property that was overpriced is now, in many areas, astonishingly cheap!

Secondly, the price crash is now levelling off and in some areas prices are already increasing. The timing is perfect for investors buying now as they invest at the bottom of the cycle with limited downside. As prices rise the 'bottom of the market' deals will vanish. There is a time limited opportunity to buy bargains!

Buy foreclosures at bargain prices!

The property crash happened because mortgages were given to sub-prime borrowers who couldn't afford the repayments when interest rates rose. In 2008 alone, 3.2 million homeowners filed for foreclosure. These homes were repossessed by the lenders as the owners defaulted. These are now available to buyers (Axis clients!) at bargain prices. However, the stock of foreclosed homes is falling fast and when its finished this cheap property will no longer be available.

US Government incentives

To kick start the housing market the US Government introduced incentives for home buyers in early 2009. These include first time buyer tax credits up to $8,000 and improving the FHA loan program - Government guarantees for loans to low income families. Some incentives are scheduled to finish at Easter 2010, but may be extended. Others are more permanent but may become less generous.

Demand for property, particularly from first time buyers, has increased and the housing cycle has regained momentum as a result of these incentives.

Extremely high rental yields

For five years Axis stayed out of the US market. The high prices meant that rental yields were poor and prices, in our view, overinflated. Now that prices are dramatically lower our view has changed. Rental yields have typically doubled and investors can expect positive cash flow. In some places we offer extremely high rental yields of up to 20% net due to local factors on top of the general market situation.

Favourable £ / $ exchange rate

From 1960 onwards the UK/US exchange rate has fallen in every decade, with the single exception of the one ending in 2010! It's difficult to be sure about the future, but our guess is that the downward pressure on the £ will resume sometime in the next few years.

If that happens, today is a great time to invest. Why? Because historically the rate is higher than 2000 and likely to fall, which will benefit UK investors who invest now.

Local factors improving investment profitability

The US is so large that there are many regional variations in opportunities for profitable investment. We've located areas that offer above average profit due to the local situation. Each of our locations has its own story which offers investors superb returns for a limited time!

Where next?