The real estate market in and across the United States of America is as varied and expansive as the country itself. Although the age old adage comes off a bit trite and certainly overused, when it comes to real estate investment and other real property purchasing opportunities in the United States, there actually is something for everyone. There are many different opportunities available to the savvy shopper.

Investment Property in America

In the 21st century, an ever growing number of men and women are electing to make the purchase of investment real estate in the United States. This includes both residents of the U.S. as well as people living abroad who wish to become a part of the generally burgeoning U.S. real estate marketplace. As a general rule, people who are snatching up investment property in the United States are doing so in three different arenas:

First, investors are electing to buy into commercial real estate holdings.

Second, men and women buying investment property in the United States are also spending a goodly share of their funds on residential rental property.

Finally, people who are purchasing investment real estate in the United States are putting at least some of their money into vacation types of properties.

Residential Real Estate in America – Single Family Properties

No where is the commentary that the real estate market in the U.S. is as varied as the country itself when it comes to the matter of residential real estate. Depending on where a person is interested in residing, in making the purchase of residential property, will dictate how much money will need to be spent on such a purchase.

In some cities in the United States — many of the major cities on both the east and west coasts of the country, for example — the prices of residential properties continues to increase rather dramatically over time. On the one hand, the ever rising cost associated with the purchase of residential property in some cities in the country is keeping some people out of the housing market all together. There are some cities in the America that are experiencing a flat housing market. In other words, the appraised value of real estate is remaining level and not increasing much over time.

Residential Real Estate in America – Apartments

In addition to stand alone, single family residences, the market involving apartments, condominiums and townhouses in many communities has become more active in the past five years. This has particularly been the case as the so-called “Baby Boom” generation begins to move towards the empty nest phase of their lives (their children have left home) and even towards retirement. As a consequence, people are moving towards purchasing apartments, condominiums and townhouses because they are more convenient and generally less difficult and time consuming to maintain. In many instances, these properties are also smaller in size than the typical single family residence.

The overseas buyers are also seen buying these types of property with greater frequency over recent years. In some instances, citizens of other nations are taking to the purchase of these types of properties in order to allow them the opportunity to have a second home in the United States.

Holiday Property in America

One of the most significant trends that has developed in regard to real estate in the United States in the past twenty years revolves around vacation property. In the 21st century, a growing number of people within the United States — as well as an increasing share of property owners from abroad — are investing in vacation and holiday property.

Investment in holiday property generally has been seen to occur in two different areas. First, people both in and out of the United States are making purchases of second homes or vacation homes for their own usage. (In some instances, these people do turn around and rent or lease out their vacation or second homes to other people during those segments of the year when they are not using the property personally.)

Second, men and women residing inside and outside of the United States can also be found investing in time shares in record numbers. A time share situation is one in which a person buys “time” in a piece of real estate. In other words, they are buying an interest in a particular piece of property that interests the purchaser during a specified period of time each and every year.

Mortgage Options

When considering the options for a mortgage on your overseas property there are a couple of choices to consider;

1. Do you consider raising finance on your existing property in the UK to cover the whole cost of your purchase abroad? A good idea if the interest rate in the country in question is a lot higher than it is here in the UK as you will pay a lot less in monthly repayments.

2. Do you secure a mortgage against the property from a local bank in the country of purchase? This can be a wise option especially if the interest rate is lower than our current UK interest rate. Most overseas mortgage / bank lenders will require upto 30% deposit on mortgages. However, you will need to give some thought to how you will service your mortgage payments each month especially if you are not living or earning in that country as you may well lose out on exchanging money each time to cover monthly expenses. Check out our Foreign Currency page to see how you can save money in this example

3. Some Builders and developers may well offer their own mortgage facilities on their properties for sale. This can be beneficial to both parties depending on the logistics of the mortgage or loan facility. Always check and compare with the two options above before making your final descision.

For more details on Mortgages in America visit our Mortgage page in the American section on our website.

Specific steps to buying real estate property in America

A person interested in making the purchase of any kind of real estate in the United States needs to give serious consideration to engaging the assistance of a qualified and licensed broker or of an equally qualified real estate service that has been established to service the needs of those people seeking to purchase investment, residential or vacation property within the U.S. When shopping for real estate in the United States, a buyer needs to keep in mind that the agent or Realtor works for the seller. The real estate agent or Realtor is legally obliged to protect and further the interests of the seller.

In addition to engaging the assistance of a qualified broker or real estate service, it is also important to note that the real estate markets found across the United States vary significantly from location to location. As a consequence, a person looking to buy real estate in the United States will want to make very certain that he or she has resources that are specifically knowledgeable about the real estate market in a particular region of the U.S.

One step that a person interested in buying real estate in the United States will want to consider taking up front is obtaining a financing commitment from a bona fide lender before beginning the search for specific pieces of real estate. In recent years, in the United States, lenders will extend mortgage facilities to people interested in purchasing real estate (provided that they are credit-worthy) in advance of identifying a particular piece of property for purchase. By having such a lending commitment in hand, a person looking to buy real estate will be in a better position to more efficiently and effectively procure real property in the least amount of time.

When making the purchase of real estate in the United States, the general practice and law in most states is that a purchaser accepts the property in the actual condition it is in at the time of the contract for sale is executed. In other words, a buyer generally buys the property in the condition it is in and cannot complain about significant defects after the deal is closed between the buyer and seller. (The one caveat is if the seller willfully and intentionally withholds material information about defects or problems of a significant nature associated with the real estate.) As a result, it is imperative that a buyer makes certain that the property is closely examined for flaws and defects before a contract for sale is finalized and certainly before the closing date on the transaction.

Once a particular piece of property has been identified for purchase, a contract is then drafted. In the United States, real estate cannot be sold in the absence of a written contract. Often, when residential real estate is sold, a standard form of contract is utilized to memorialize and effect the sale. However, if a person is making the purchase of investment or commercial real estate, more often than not a specific and individualized contract is created for the transaction.

When the contract is signed by the parties, a closing date is established. In the U.S., the closing date is the date on which all of the duties and obligations under the contract need to be satisfied — including the obligation of the seller to make certain that the title to the real estate is “clean” and including the obligation of the buyer to make certain that his or her financing is in order.

Generally, a closing date is set approximately 30 days from the signing of the contract for sale. However, there is no hard and fast rule pertaining to when the closing is to be held. The closing date is established between the parties to the real estate sales contract.

One of the items that a buyer will want to make certain he or she obtains after the contract is signed and before the closing date is title insurance. Title insurance will protect the buyer of real estate should a situation arise in which the title to the underlying real estate ends up being clouded. A clouded title is one in which another person or entity ends up having an interest in real estate that may not have been found or properly disclosed during the time period between the signing of the contact and the closing of the sale itself. For example, a prior lender may have a lien on the property that for some reason was not discovered. While such an encumbrance on the property’s title should have been discovered, there are countless examples in which mistakes occur and liens and other interests in a particular piece of real estate are not discovered. Again, title insurance protects a buyer of real estate from any expenses or loss that he or she might experience as a result of a defect in or cloud on the title to real property.

In most jurisdictions in the United States (but not all) local units of government assess property taxes on real estate. If a person is making the purchase of real estate, he or she needs to understand that they are likely to be responsible for paying a pro rata share of taxes that will be due and owing for the portion of the year of the purchase during which the buyer actually assumes ownership of the real estate. Often, the taxes will be due to be paid at the time of closing to avoid any problems between the buyer and seller in the future.

Additionally, insurance on the real estate needs to be in place to benefit the buyer on the closing date. A purchaser of developed real estate will not want to assume possession of the property without making absolutely certain that proper insurance is in place.

Property Abroad always recommends using a Solicitor or Lawyer

The recent economic uncertainty sparked by the meltdown of the US sub-prime mortgage market has created a rare set of financial conditions in North America. Much of the developed world (and even more so in some developing nations) has enjoyed one of the longest periods of sustained economic growth. While this has led to an ever-growing gap between rich and poor, the total number of relatively wealthy people has also risen.

Such changes in financial status have put many Americans in a position of affluence, with the freedom to wisely use their wealth to wield greater influence over their future. Some of them choose to pursue a careful acquisition of residential investment property.

The so-called “credit crisis” has sparked some fears of a coming recession within the US. Naturally, no economy wants a recession. The major corporations, government, financial institutions, and private investment consortiums are doing their best to prevent an economic slow down. These entities, of course, are engaged in protecting their own interests though they are working to prevent a fiscal slump.

Most economists are agreeing that a recession is still possible, though not immediately likely. Instead, you will probably see a slowing of the rate of growth as markets compensate for what has been billed a recalibration, rather than the sort of economic collapse that usually precedes recessions.

For Americans fully invested in paying off their first mortgage, this is an uncomfortable position to be in, but not desperate. You are, however, much safer if you’ve managed to capitalize on the decade of relative prosperity, and you’re in a position to start thinking about purchasing residential investment property.

First, banks and other lenders can reasonably see you as a safe risk when considering an investment property loan. Such positive consideration plays a part in ensuring your access to credit at favorable rates. Because credit has, to some extent, dried up for riskier loans, the housing market has stalled, and there are some fears that it may even collapse, leading to plummeting prices in some areas. This is a bleak scenario, but like recession, not very likely according to many analysts.

Those who have failed to invest, or are themselves busy paying off their first house, can be forgiven if they don’t look favorably on the stalling market. Many buyers see a family home as one of the biggest investments they can make.

If you’re a savvy investor and can secure credit on favorable terms, however, current conditions present a rare opportunity. By applying the oldest rule of investment, “Buy low, sell high”, you can take advantage of your economically sound position and capitalize on the sluggish housing market. Applying investment property loans to new residential investment property drastically increases the value of your venture.

This could expose you to some risk in the unlikely event that the markets take a turn for the worse, and inflation and interest rates climb, while the housing market collapses. If you already own your own home, however, your additional residential investment property should serve as the collateral on new loans, to ensure that you do not extend yourself beyond your means.

This can be a tricky balance, especially if the cost of failure is your hard-earned family home, so novice investors would be well-advised to heed the advice of finance professionals.

For most people, buying an overseas property is a dream. However, with all the intricacies and complicated procedures with overseas banks, developers and solicitors, a lot of people get discouraged with the concept. However, the overseas property mortgage in the UK has undergone a sudden surge in the recent years.

This can be attributed to the growing number of people wanting to buy properties abroad for reasons of settlement or property investment and actually do something to achieve it. The majority of these people are retirees seeking a more peaceful abode, while at the same time enjoying tax benefits.

Overseas Investment Mortgages

A good number are simple investors who have seen how promising overseas investments are fast becoming. The strength of the pound is a major contributor to this improving trend. Also, the mortgage market both in the UK and in overseas banks has also become more flexible. If you are one of those seeking to buy properties overseas, you will probably want some mortgage to finance your investment.

In terms of getting a mortgage, you will be faced with two very common choices: getting an overseas mortgage or settling for a local mortgage in your local UK bank.

An overseas mortgage is available in most countries with an established overseas property market. This includes most of Europe (Spain, France, Switzerland, and Italy) and the United States of America. Relatively new to the industry are Greece, Poland, Bulgaria, Cyprus and Turkey, among many others.

Similarities Between Overseas and UK Mortgages Overseas property mortgages are much like your ordinary mortgage that you get from any UK bank. You are taking out a loan that is secured against your own property. You have to apply for a loan, wherein you need to submit necessary documents to prove your income. In both cases, your documents and finances will be reviewed, and your mortgage will be approved if everything looks seamless. The entire procedure for getting an overseas property mortgage is very similar as well.

Differences Between Overseas and UK Mortgages

There are major differences that can be seen between getting a UK mortgage and an overseas loan. It is important to note that the very nature of the market abroad means that everything about it works quite differently from the normal and typical approach that the UK market has adopted. For example, many lenders in other countries in Europe generally do not offer mortgages based on interest only or on the concept of buy-to-let.

They base the mortgage amount on your actual earnings rather than the potential rate you may receive. Consequently, the income multiplier that is all so common in the UK is not typically used in banks abroad. Instead, the affordability model is predominant. This model in turn, relies on the debt-to-income ratio that you have. You need to prove that no more than 40% or less of your income goes into paying debts and mortgages (including the one you are applying for).

By far the most obvious distinguishing difference between a UK-based ! and an overseas mortgage is the currency that the mortgage is to be denominated in. So if you buy a property and get a mortgage, you will be earning in sterling pounds but you will have to pay your mortgage in a foreign currency (USD, euros, and so on).

Advantages of an Overseas Mortgage

Getting an overseas mortgage has considerable advantages. Foreign banks and lenders have become very flexible when it comes to lending to UK buyers. This is largely part of their strategy to draw in more investors and property buyers. As if that was not enough, interest rates in the Euro zone for example are sometimes lower than rates in the UK.

Overseas mortgages are effectively back-supported by the foreign property market. So if you buy a property in Spain on a Euro mortgage, your interest rates will likely be based around the rates in the Euro zone as set by the European Central Bank. Today, most of these rates are less than those offered in the UK. Considering this and depending on the amount of loan, you may have a big difference in your monthly amortization and repayment.

Disadvantages of an Overseas Mortgage

The main disadvantage that can be discouraging about overseas mortgages comes from the fact that it uses another currency. This adds a relatively thick layer of risk into your investment. With this set-up, you earn in sterling pounds and pay in another currency. The sterling pound equivalent of your debt in another foreign currency will surely fluctuate with time as the exchange rates go up and down. If you are unlucky, and the rates move against you, the sterling equivalent may become so low that you actually end up with so much more debt than you originally had.

Another disadvantage to be pointed out with getting an overseas mortgage is the physical and communication barrier that exists. If you buy a property in Cyprus, for example, you would need to visit the country at least once to arrange your paperwork or to personally attend to matters regarding your mortgage. (You can ask a lawyer or solicitor, but nothing matches being fully aware.) Also, in countries where only few people can speak good English, communication will prove to be difficult.

There is definitely no room for miscommunication in mortgage application and processing, either oral or written. You will need to demand all transactions and documents be written in English. Which one is better? One can not say that getting a UK mortgage is better than getting an overseas mortgage. What is good for you may not be good for another. While UK based mortgages are generally easier to proceed to (considering how used you are with the system), the rates can be very slightly higher.

On the other hand, overseas mortgages may prove lower in terms of interest rates, but the additional procedures, permissions, and other complicated systems may take more effort, time and money on your part. The best thing to do is to consult an independent specialist who can offer you objective advice on your options considering your current circumstances. Remember that all decisions about investing abroad should be informed and wise, and more importantly, realistic.