There are some strategies that are essential to understand when investing in U.S. real estate.
Investment Income Strategies
When investing in real estate in the U.S., the investment income consists of two value-added factors: the appreciation of the property itself and the rental income.
There are two different scenarios in terms of the proportion of total income.
When the property itself accounts for more than the rent, it is a value-added investment.
If the location is well chosen, the return on the value-added investment will be much greater than the rental investment.
However, it does not mean that value-added investment is better than rental investment, which is proportional to the investment risk. If the location and timing are not well chosen, buying at a high price point may also result in a loss of overall investment income.
Rental investment areas are usually not too expensive, such as some cities in Texas, Austin, Dallas, and Houston, where the investment threshold is not high, rental returns are relatively high, and income is relatively stable.
Since rental data can be obtained from the market, which is known, while the rise and fall of house prices need to be judged by experience, which is unknown, so value-added investment is relatively aggressive and rental investment is relatively conservative.
Do not follow the trend blindly, understand the laws of the U.S. real estate market, follow the economic cycle and house price cycle, and choose the right investment for you.
Home Price Strategy
U.S. real estate prices also have obvious geographical characteristics, with high prices on the east and west coasts and low prices in the middle.
There is a wide range of housing prices in the U.S. $200,000, $500,000, $1,000,000, and $2,000,000 can all be used to invest in different homes.
For example, $200,000 can buy a house for rent in a big city in Texas, which belongs to the above-mentioned rental investment.
For $1,000,000, you can choose some cities with better school districts on both sides of the east and west, which are value-added investments.
US house selection strategy
There are many factors to consider when choosing a house, such as house type, location, size, community, transportation, amenities, school district, security, etc.
Good location is important, this is the consensus of all investors. But, what kind of location is a good location?
A good location usually has the following characteristics:
- Highly rated school district
- Safe community with harmonious neighbors
- Close to big companies and famous universities
- Excellent surrounding facilities
- Convenient transportation
These are all advantages of the location. Some buyers have their own unique preferences, such as ocean or lake views, oversized pools, or high privacy requirements, all of which can be considered in combination.
A word of caution here is that while convenience is important, a house on a busy road, especially at a highway intersection, can pose a great risk to the safety of children.
About the house
The house itself is also important. A well-chosen house will be easier to rent and sell, and is good for investment.
Usually the most sought-after houses have the following characteristics:
- Most single-family houses
- 3-4 bedrooms plus bathrooms
- Reasonable layout and plenty of common space
- Traditional and minimalist appearance and decoration
- Well maintained house with no quality problems
- No title issues
There are three points to note here:
1. Single-family houses are the preferred type of housing for Americans, and the gains from land appreciation are something that investors should not overlook.
In addition, the size and layout of the house should be suitable for family living, not too big and not too small.
2. The appearance and decoration of the house should be traditionally simple, too special decoration will lead to difficulties in renting and selling.
3. Houses in the U.S. are older and there are many houses that are decades old and occasionally over a century old.
In the United States, do not give up on a house immediately because of its age. It is important to understand the quality of the house itself.