10 Tips and Advice on How to Invest in the US

On our Aug 12, 2009 Meetup on "How to Invest in the US," I learned from the advice of Dario Lorenzo, our mentor, some tips I'd like to share with my readers.


1) Understanding Real Estate Market Cycles - Know where on the Real Estate Cycle the city of your interest is (see picture) through the news headlines and the stats (i.e. unemployment rate, immigration trends, housing inventory, etc.) you read.

2) Get a mentor that has experience in Real Estate Investing - so you can avoid costly mistakes. My mentor has 20 years of experience and I count on him to give me solid advice.

3) Analyzes After Repair Reno Costs - let's say a property is worth $100K, and the reno costed $10K. We should not be paying more than $60K for this property. Essentially, before you make any improvements to your property, or decide on how much you'd like to spend, CONSIDER: A) the AGE of the property and B) the QUALITY OF TENANTS you'd like to attract.

4) Know your MAO - Maximum Allowed Offer.

5) Stay away from rehabs. There's no need to do more than a "lipstick" job on houses these days because with the inventory available out there, you don't need to spend money and buy a fixer-upper in the States. This means, all you should be required to do is repaint the walls, maybe replace the carpets, landscaping, and maybe repurchase appliances if you're buying a foreclosed home where the appliances have been stolen.

6) Find a knowledeable realtor. He/She can help give you pointers and guide you to the right neighbourhoods to invest and provide stats regarding the city.

7) Find a reputable and licensed home inspector. With foreclosed properties, it is very important for investors to be careful. One horror story is where the previous home owner would pull out the toilet, pour concrete down the drain, and put the toilet back, concealing the permanent damage that was caused to the property. Because foreclosed properties usually have their water lines and electricity shut off, a poor inspector would not know how to test or discover these problems until it is too late!

8) Build a competent team of professionals. This team includes but is not limited to an Appraiser, Licensed Contractors/Trades People (always get at least 3 estimates), an Insurance Broker, a Leasing Agent, an Accountant, a Licensed Mortgage Broker, a reputable Title Company, and an experienced Escrow Agent (the latter two handle your Closing transaction - something that is particular in the States). They can help you obtain the information you need to do proper due diligence and research.

9) Source out a Property Management company that is not only experienced but actively manages properties in the neighbourhood you invest in. Knowledeable PMs can tell you what the going rents are in your area and know how to properly market your place to your desired tenants. You can and should also ask them for a rental survey so you can know the rent comparables in that neighbourhood, as well as read up on your competition (whether through Craigslist or local rental websites). To find good PMs, you must interview them.

10) Know the Tenancy Acts in your city/state. This allows you to better manage your Property Managers. If you violate the rules in the States, you are completely liable, and it would not be any fault of your Property Managers! So be careful!