darkageahead2

I looked in to buying an apartment in the US, a couple of years ago. I went to the only part of the US I know, the area around emory university, Atlanta, because I have connections there. This is a nice area, good economic basis - as well as the university there is a strong commercial and manufacturing base. On paper, the yields are good as well- $600 per month rental on a small $40,000 foreclosed condo. In other words, its like an 18% yield , on a nice property, in a nice block. I did my research and the homeowners association is active - which is clearly a good thing and the whole complex was fully occupied and there was only one apartment for sale. My overall reasoning was that if you can find a safe place to live like that it is a good bet - because lots of streets in Atlanta, are just no-go areas - of course you can buy a house there for $7000 dollars or whatever, but why would you bother? what would be the point of buying a house in an area you don't know and it can just be firebombed or burgled or vandalised at random? Because that's the reality over in the US, A lot of streets are just totally worthless and too dangerous to inhabit. Of course there is no end to human folly and stupidity so some people will go over to the US thinking they have hit the jackpot and will be able to rent those houses out for $500 a month, but in the vast, vast majority of cases, that just turns out to be an expensive delusion, an idiots money pit. My calculation was that the trend over time will be that people will want to move out of the big detatched houses in dodgy parts of the town, which cost a fortune in energy bills, to condo's in safe areas, near to amenities and public transport. Once people are able to get mortgages again, the demand, and the value of those type of properties will rise to something more relative to income levels, so if the average income level is 30,000 dollars, a fair value will be something like 3.5 times income level - 105,000 dollars, and I would expect my 40k apartment to rise to that level over the next few years. So, its an 18% yield and a very good prospect of a significant capital gain. It all looked very, very good. In the end, I didn't go through with it. I had a lot of knowledge and information, but I wasn't totally sure about this particular complex. I just don't know if it will succeed and continue to be as successful as it is now, or whether it would falter. I knew a lot but I didn't know enough about the area to make that kind of long term calculation. Fact I am not living there means that any problems will be hugely expensive to resolve. I think that you could do really well in the US if you were running around 20 properties in a similar location, and was running it on a scale... but to just do it as a one off would be more of a time consuming hobby rather than a serious investment. So yep, there are opportunities if you have the knowledge and ability to manage the project over time, and if you have local knowledge. but if you are just an internet armchair speculator, the odds are against you, in my opinion at least. As for the girl, I think thats great. If you read Buffets biography, he owned a farm when he was 14, and had a tenant farmer.

HI I don't have a family etc but I guess I am in a similar situation, sort of. My own opinion is that I would not buy a house in your scenario. The only way you can really protect yourself against negative equity is by not borrowing huge sums of money from the bank to invest in a hugely volatile housing market, in the middle of a massively uncertain economic situation.