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FAQ for Cheap American Property 1. Are these cheap American properties free from debts and liens?
Yes, all properties we offer have had any liens and debts cleared before being marketed. We do not offer properties that have any outstanding taxes, which many repossessed American properties may have.
2. Why are these American houses so cheap?
The answer is public money. The banks can afford to write off mortgages of $70-$100,000 and more which were typically held on these houses because billions of government money is being poured in to their businesses. In short, the American government is subsidising your investment!
3. Do you offer rental management for American property?
We aim to provide a hassle free property owning experience for our clients and therefore our properties are offered with full rental management services. Our recommended local lettings agency will take care of headaches of dealing with tenants and when your lease expires, will find new ones.
4. I know unemployment is increasing in the US and that may affect my tenant's ability to pay rent. Is there any way to avoid this?
Many landlords are taking advantage of the 'Section 8' scheme whereby the government covers the majority of the rent. Irrespective of that, we source our property close to major employment centres and in desirable locations in the city to ensure that our properties will always be popular for rent and resale.
5. That sounds good but do I risk getting bad tenants as sometimes happens with the UK's 'DSS' scheme?
The American system is more closely monitored than the UK's DSS housing scheme and Section 8 applicants and tenants are required to abide by the rules. Failure to do this does result in eviction and permanent removal from the Section 8 scheme. This helps ensure that tenants respect the home they live in and the Section 8 scheme in general has very few evictions.
Section 8 covers up to 100% of the rental amount and in the cases where, 60% or 70% of rent is covered, the landlord (or rental management company) collects the difference from the tenant. If the tenant does not pay, then after 30 days Section 8 officers are brought in to rectify the situation. Those paying a portion of the rent are generally employed but earn less than the designated median wage for an area.
6. I want to visit the US, is it easy to get there?
For Detroit: Yes, there are regular flights (direct) with Northwest Airlines daily from Heathrow to Detroit Metro airport. As well as Northwest, there are a number of indirect routes which stop at either Washington or Chicago. Total flight time on a direct flight is approximately 8 hours.
For Atlanta: There are regular flights from nearly all major worldwide airports to Atlanta (it is one of the largest airports in the US), so accessing the city is not a problem.
For Florida: The majority of our offers are located in the Fort Myers and Orlando areas, so depending on what properties you would like to see, you will need to check for the nearest airport.
Let us know when you are visiting so that we can arrange for someone to show you our properties. If you decide to purchase then we are happy to refund part of your trip costs so please feel free to contact us for more information.
7. Why invest in Detroit?
Property prices in Detroit are some of the lowest in the country and purchasers can pick up houses that have dropped on average between 6 and 7 times in value. With prices rising each month as local purchasers and investors from elsewhere in States realize what bargains are on offer, you can be sure your investment is going to give you genuine capital growth over time.
The US government is pouring billions of dollars in aid into the city, giving the local economy a huge boost. Plus many homeowners in certain parts of the city are being given up to $8000 in aid towards home improvement. Sadly it is not available to UK purchasers but the benefits to neighbourhoods that are being targeted are clear.
Plus the rental returns are excellent in Detroit. Our properties will usually pay for themselves in around 5 years on average!
8. Why invest in Atlanta?
The fastest growing metropolitan centre in America has got to be the place to buy your investment property in. Over 76,000 people were added each year to its population over the 10 years to 2008, bringing the population of the greater Atlanta area to nearly 6 million. Although the recession has made it difficult for as many people to sell up and move they’re still coming.
No wonder. There are jobs as the city hosts 75% of the Fortune 1000 companies in the USA, with names like Coca Cola, CNN, Delta Airlines and a heavy duty financial sector. This underlines the place’s status as “Capital of the South”. It even has the fastest growing number of millionaires in USA!
Last but not least, the warm weather is attracting migrants from the cold North. Even in January, the temperature rarely falls below 11 degrees C. And in summer it really warms up!
9. What is multi unit property?
A multi unit house is a property that has been divided into two or more apartments.
10. What kind of prices were these properties selling for in the peak sale period a few years ago?
We provide a breakdown of the previous sales history on each property so you know exactly what your home was worth previously. Unlike some parts of the US where homes have never been worth much, some of our properties were sold for up to $170, 000 just before the crash! Which goes to show what incredible value these homes really are. The air has been stamped out of this market so you know that you are purchasing at rock bottom prices.
11. Can I get a mortgage to purchase this property?
Finance is available on some properties, please ask for full details. However, please note the minimum loan size must be above 100,000 USD to apply for finance on a property in America (correct as of September 2010) and a deposit of 30% is required. The majority of clients are purchasing cash as property prices are so low. Once you are available to provide approximately 1-2 years worth of credit history in the US then you are likely to be eligible for a US mortgage.
12. I have heard of grants being offered to renovate properties, can I take advantage of these?
Grants are available for renovating properties and also tax credits of up to $8000 can be used to offset against the purchase of a property. However these are only available to American citizens. So whilst you may not be able to benefit directly, home values on your street will improve if your American neighbours take advantage of these schemes.
13. I have heard that a lot of people have lost their jobs in Detroit, so how can people afford to rent these properties?
Job losses throughout America are an increasing problem and for those that earn under the median income or who are struggling financially, the government has put in place the Section 8 scheme (detailed above). We source our homes in stable neighbourhoods that are located close to employment centres such as hospitals, the local universities etc so that a an economically stable tenant is going to be found.
14. Do these properties come with a building survey or structural inspection?
For properties that are sold ‘as is’ and we do not offer surveys or guarantees as to the condition of a property. However, before we place a property on the market each house is personally inspected by us and we do not take on houses that have structural problems. Generally, we choose only one in every twenty houses that we see ensuring we provide only better quality houses.
We always provide up to date photos on a property so you can get a clear idea of what condition it is in and also, what the street and neighbours look like.
If you are purchasing a tenanted property from us then before a sale can be completed, the property must have been inspected by a government appointed surveyor to ensure the home is 'up to code'. Once the property has been passed, then we can close and transfer the property to you.
15. What does it mean having a property 'up to code'?
In many parts of the US, properties that have been repossessed, such as the ones that we offer, they are often in various states of disrepair having been unoccupied for sometimes up to two years. Before they are lived in, the local council will require a surveyor to view the property and ensure that it meets their safety and quality requirements. Until it does, a property will not be classed as habitable and you will not receive a certificate of occupancy (see question 17).
When we sell our tenanted homes, we ensure that all our properties meet the local council's code.
16. What kind of income tax will I be charged when renting out my property?
There is a dual tax treaty between the US and most major countries so you would only pay tax once, and we would advise paying tax in America (we can recommend an accountant to help with this). Rental income tax varies depending on the amount of income received, it ranges from 10% to 35%. On an average 1 property purchase, earning around 10,000 USD income (before costs/deductions) per year, you would end up paying no income tax if you file taxes in the US as you can expense many items through your investment and you also receive a tax free allowance in America.
Please ask for further details however please note that p4p are not financial advisors, we would recommend you seek financial advice for all tax related questions.
17. I've heard that I need to apply for ITIN number. What is this?
If you intend to rent out your property and receive rental income within the States it is strongly recommended that you apply for an ITIN number. This is an 'Individual Taxpayer Identification Number' and is a nine digit number used by the IRS. It is issued to those who are not eligible to apply for a Social Security Number (i.e. non-residents).
You can apply for an ITIN number directly on the IRS website here: http://www.irs.gov/pub/irs-pdf/fw7.pdf and then follow the instructions.
Or you can use the services of our recommended ITIN and accounting specialist company. Not only can they fully assist you with the ITIN application process (approx. £120 for a single application) but they can also handle tax submissions to the IRS. For details, please contact us on 0044 1795 844004 or on office@property4peanuts.com
18. What is a Certificate of Occupancy? Do the cheap American properties you sell come with these?
The properties that we sell are repossessed houses and have been designated as being empty so do not come with a valid Certificate of Occupancy. In order to be able to live in them/rent them out, you will need to apply for a certificate of occupancy. To be approved, the property must be put into a habitable condition (any faults must be corrected) and be safe to live in.
The Detroit Municipality will send round a surveyor to inspect the property and depending on approval, you will receive your occupancy certificate. Typically this costs around 295 USD. If you are purchasing a tenanted property from us, then we cover this cost.
19. Do I need to get home insurance?
Yes, it is strongly recommended that you apply for home insurance. We can provide you with a quote upon request.
20. Do I need to open a bank account in the US?
It isn't a requirement that you have a bank account in the US prior to purchase, but if you are buying a tenanted property from us, it is recommended that you set one up at some point to be able to receive rents. We can recommend a reliable UK based service that can deal with this on your behalf without the need to have to visit the US.
21. I see your Atlanta properties properties come with a home warranty scheme, what does this mean?
For your piece of mind we offer investors a home warranty scheme which covers appliances and major systems in your property in the event of a break down. There is a call out charge of $60 should a repairman need to be called out however it provides valuable protection should a major breakdown happen.
22. Do you guarantee rents?
Our Detroit and Florida properties that are sold with Section 8 tenants in place have the majority of the rental amount paid by the US government. Those properties with private tenants do not have guaranteed tenants but we go to great lengths to ensure that full checks are done and the most suitable tenant found for your property.
All our Atlanta properties have rents guaranteed for one year irrespective of whether the property has a Section 8 tenant in or not. | 
01/30/2011