Weak Dollar Is a Huge Draw for Foreign Investors in US Real Estate

The weak US dollar has been good news for real estate. Taking advantage of the favorable conversion rates, foreign investors are eagerly picking up real estate in major cities across the US. Who is buying and where are they investing?

WHO IS INVESTING?

In recent years the US real estate market has seen the highest amount of investing from foreign investors in Germany, Britain, Canada, Japan and the Netherlands. Germany was the strongest player in 2004 reporting over $4 billion in investments for that year.

Where are they buying? In the past Europeans were drawn to East Coast properties and Asians to the West Coast. Now, because of the lower interest mortgages and a weak dollar, foreign investors are picking up property, commercial and residential, in all major US cities, including Chicago and Las Vegas.

CANADIANS AND AUSTRALIANS BENEFITING TOO

Even neighbors north of the border in Canada are seeing the benefits. Although the Canadian dollar has been weaker than the US dollar for years, many Canadians own vacation homes in the US, particularly in Arizona. They are one of the highest volume investors in the US real estate market. Whether buying or selling, Canadians are enjoying stronger purchasing power while the US dollar remains low.

Some Canadians, instead of buying, are following the lead of foreign investors who are selling current US properties in preparation for buying at an even better rate if the US dollar continues to fall.

While Germans are slowing down in the volume of investments due to recent caps, Australians are picking things up. Australia, with one of the largest pension funds in the world, must look beyond their own real estate market for investment opportunities. Investing in US real estate permits them to invest their huge national pension funds into diversified holdings.

HOW LONG WILL IT LAST?

Although the current mortgage rates are an appealing draw, they will not remain low indefinitely. However, lower priced properties such as foreclosures would make the financial investment potentially lucrative for foreign investors despite the interest rates as long as the dollar remains low.

Foreign investors looking for long run profits anticipate an increase in the US dollar as an incentive to buy. Investing while the euro is strong and the US dollar is weak means they can pick up real estate for a relatively low investment. Already some countries are seeing up to a 35% discount based on the favorable exchange rates. However, the aim is to hold the property until the US dollar is strong and then the conversion to euro would be highly profitable.

With the availability of properties online it is easier than ever for investors to find properties without crossing an ocean. Some of the best deals, such as foreclosures, can be researched and purchased without coming to the US. This makes investing in US real estate a great opportunity for investors no matter where they live.

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2 South Korean Cabinet nominees resign

2 South Korean Cabinet nominees resign
Boston Globe – They are the second and third Cabinet nominees to resign over allegations of real-estate speculation and other irregularities. His choice for gender equality minister was the first.

Terrapin’s troubles
Chicago Sun-Times – CALENDAR NOTES: Sun-Times investigative ace Chris Fusco and I will be part of a “press the meat,” a k a “meet the press” lunchtime panel March 6 sponsored by the Commercial Real Estate Organization.

Are you Unsure about Real Estate as an Investment Strategy?

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Financial advisors are always telling us to invest our money and save for our retirement years. The problem is everyone recommends something different. It’s great if you have enough to spread around into various enterprises, but if you have to make one choice, real estate is a win-win investment choice. There are several ways to do it, so do some investigating and find the perfect property to make your retirement years turn golden.

If you’re still young and earning money you can start out slowly by buying a rental property in your home area. Fixer-uppers are a good way to go as are foreclosures. Look for something affordable that is structurally sound and free of mold or any chemical problems. With some small improvements that you can do yourself, you should be able to rent it for more than your mortgage payment. New carpet from a discount store, or sanding and finishing hardwood floors, new paint and a lot of elbow grease should be enough to make for a very attractive home. Also be sure to spruce up the yard if it needs it.

Another great option is to find a duplex. If you buy it with the right kind of mortgage (meaning good rates with an affordable payment) you can live in one half and rent out the other. That way you’ll always be able to keep an eye on your tenant and if you do the financing well, the rent will cover your mortgage.

Those who have the time often buy homes strictly for the purpose of reselling them for a profit. This works well during hot market times, especially if interest rates are low and housing prices are steadily moving upwards. If you’re planning on this as an investment strategy, unless you have some money put aside, it can be a bit risky. That’s only because you don’t know for sure when the market will slow down, making it possible that the house could sit empty for a while. In other words timing is everything, and you can’t always plan on a quick turnover. The house will sell but it may take a few months. There is always someone looking for a short term rental or you could use the time for some attractive, inexpensive cosmetic work. We aren’t saying this is a bad idea, just that it’s not the best strategy for growing your money if you’re already operating on a shoestring budget.

Lifetime real estate investing is a great way to build up your nest egg. Start with one rental house and when you can, buy another. Or you can buy your duplex and when the time is right, sell it. Each time you sell, buy something bigger and better. This will take some time, but eventually you may own an apartment complex , land, or some commercial space; or a nice mixture of property types.

Some people are just lucky, but most of us have to carefully plan our real estate investment strategy. Before you buy, research your market as to growth potential or predicted stability. Also look at your earnings and determine how much you can realistically put into real estate. Then get busy, and get that money working for you in the real estate investment market.

About the Author

Click here to get a free copy of Jeff Nelson’s, “7 Tips to Avoiding the Biggest Mortgage Mistakes,” a 10-page report that describes the mistakes to avoid when purchasing your new home in Phoenix, Arizona.