Everybody talks about the financial and real estate crisis in the USA.  But one’s misfortune is someone's else luck.  Currently, with prices so low,  many Americans can afford to buy a home. 

This economic environment has created a unique environment for virtually everyone and those outside the U.S. see an opportunity to buy real property in the USA; the current crisis on US market and a very weak US dollar make investing in this sector a remarkable occasion.   Tightening lending guidelines do not prevent foreigners from buying a property in the States.  It is still possible to obtain a mortgage without US citizenship.  It is not only possible, but EASY.

Currently I work with many Canadians and Europeans, who decided to invest in Arizona.  People buy second homes, investment properties, and they even relocate to this state.  The low prices do not tell the whole truth.  Everybody who enjoys sunshine, beauty of the natural environment and slower pace of living falls in love with Arizona.  Many friends of mine, who initially came here just to seek investment opportunity, now live in Arizona.  They say that moving down south was one of the best decisions of their entire life!

It is understandable that if one might like ever-sunny weather, another one might like some seasonal changes.  But financial fundamentals are objective, so let’s take a look at them; and let’s try to understand why investing in real estate is so hot right now.

With U.S. currency extraordinarily weak many foreigners want to use that fact to their advantage.  It is a great approach because there is no doubts that US dollar will get much stronger with time.  So that approach is one of the income generating vehicles.

To buy a property in the USA you do not have to have Social Security number, nor a green card. Everything that is needed is a valid passport and money for a down payment plus a few other details. It is so simple.

Let’s take a look at $130,000 transaction.  A person who bought this 3 years old, 2,400 square foot home made over $28,000 just by the signing a contract. Why? Because a true, appraised value of the property is $158,000! And the seller paid all his closing costs!!!  While it's not uncommon to find built in equity buying at current depressed values for the long term will yield good results as well.

Now it is time to look a bit closer at his business plan:

He put down payment of 40%, what gave us a loan amount of $78,000. With the interest rate of 6.95%, his monthly mortgage payment is $516. He has to add a real estate tax to his monthly payment in the amount of $81, home owners insurance premium $37. His total monthly payment will be $634. But he must pay additional fees: HOA - $32; and he wants a professional manager to supervise his property - $80.  All monthly expenses are $746.

He rented this property for $1,050 a month.  Therefore his monthly, positive cash flow is $304.  He plans to keep the property for next 5 years. He hopes that average yearly appreciation will be about 5% a very reasonable and historically accurate appreciation rate in greater Phoenix. If he is correct his house will be worth then $165,916. So after five years his total income from that property will be $82,156! How did I get this number? His initial gain is $28,000; his net rent income for five years is $18,240; and the appreciation is $35,916. He invested $52,000. Within five years this money brought him 158% return. Not bad. And remember we did not count his gain on currency exchange difference.

Ralf Sztorc, 623.388.3798 Mortgage Lender.