London Based Property Investor Requiring Advice for US Property Investment

[dommachala]

Hello All,

I'm new to this forum so please do excuse me if I've posted this in the wrong section. Im currently based in London as a full time property developer / landlord. Recently the government has introduced new taxes that are going to be implemented over the next few years effecting all landlords/property investors. The UK government is trying to make it a lot less lucrative and harder to make money from investment properties. These new taxes that have been introduced have currently halted me to a standstill with investing further money into property in England as i do not want to carry on building my property portfolio for the tax man to reap all the rewards. Although i am at the tender age of 21, i am not new to the property game so I'm aware of everything to do with it, however i am new to the american property market.

I have recently been doing some research into migrating to USA and carrying on with building a property career in the US, however due diligence is proving rather difficult on the web as its provides such a wide spectrum of answers. I am looking to build a portfolio of rental properties as well as buying,flipping and selling. Before i dig deep into the due diligence, id like to ask some basic questions that would scratch the surface. Could i kindly ask advice from you guys on here for the following


Rental Properties
1. Where in the US has the strongest rental demand for residents? Generally what rental yield?
2. Where in the US has the strongest rental demand for tourists? is the rental here seasonal or all year round?Generally what rental yield?
3. What are the tax thresholds? Is property rental income taxed differently?
4. Is there a stamp duty that has to be paid when purchasing a property?
5. What are the typical buy to let mortgage rates?
6. When building a portfolio i buy properties under market value with a 25% deposit, that require work. I do the work, increase the property value and rent the property out. I then have the property remortgaged to release the equity i have just made. This is then used to buy another property and so on. Is the a possible method in the US?
5. Are there any other major costs with buying a rental property? (I am aware of all conveyancing costs I.E. Accountants, solicitors etc.)
6. Any significant laws i wouldn't know about?


Buying, flipping and selling
1.Where in the US is it most lucrative for purchasing, refurbishing and selling?
2. When selling a property is there any extra taxes you have to pay on the profit you have made? For example in the UK we have Capital gains tax. (Percentage charged on the profit after sale costs... this then is taxed again due to it being your left over wage.)
3. Any other taxes/ laws i should be aware of?


I totally appreciate i have only scratched the surface with these questions, however id like to know the main things before i dig any deeper with due diligence. If i have missed any obvious questions/things i should know, please let me know!
Look forward to hearing from you guys!

Thanks,
Dom

[Damap]

Rental Properties
1. Where in the US has the strongest rental demand for residents? Generally what rental yield?
Any city with strong population growth has demand. I invest in Memphis but there are hundreds of cities that are good. Yields vary from 5% nett to 15% nett. Generally if you can get close to 8 to 9% nett in a good city you are doing well.


2. Where in the US has the strongest rental demand for tourists? is the rental here seasonal or all year round?Generally what rental yield?
No idea

3. What are the tax thresholds? Is property rental income taxed differently?
As a non resident you will file a personal tax return. The tax rates are scaled based on income. Because of straight line depreciation you are unlikely to pay any tax for many years.

4. Is there a stamp duty that has to be paid when purchasing a property?
No.

5. What are the typical buy to let mortgage rates?
For foreigners loans are tricky to get but possible. We can get around 7% now. IF you are able to borrow as a local it is 4%

6. When building a portfolio i buy properties under market value with a 25% deposit, that require work. I do the work, increase the property value and rent the property out. I then have the property remortgaged to release the equity i have just made. This is then used to buy another property and so on. Is the a possible method in the US?
YEs except as a foreigner you have to do it differently. You buy the house under market and either use hard money loan at 12% on 50% deposit or pay all cash. Once you have 400K worth of homes you refinance the portfolio out at 6% with a portfolio lender. This gives you all your capital back and you start again. It is relatively simple to buy houses under value that don't need rehabbing and still execute this.

5. Are there any other major costs with buying a rental property? (I am aware of all conveyancing costs I.E. Accountants, solicitors etc.)
Not really. Allow $1500 USD per property. Title insurance adds a bit to it.

6. Any significant laws i wouldn't know about?
Make sure you opt out of non resident withholding tax and make sure you set up your LLC in a state that doesn't have franchise tax.


Buying, flipping and selling
1.Where in the US is it most lucrative for purchasing, refurbishing and selling?
There are heaps of them. Visit the forum bigger pockets it is a US version of this site basically you can get local knowledge there.

2. When selling a property is there any extra taxes you have to pay on the profit you have made? For example in the UK we have Capital gains tax. (Percentage charged on the profit after sale costs... this then is taxed again due to it being your left over wage.)
In the US it is basically just income tax.

3. Any other taxes/ laws i should be aware of?
Some states have state income tax. In some states it is considered illegal to flip unless you are a realtor.

[dommachala]

Thank you Damap for the time and knowledge you have provided me with. I also understand that in Florida even though i wouldn't have to pay any income tax (overseas investor) id have to pay HOA fees, does this apply to all states?

Id be keen for others to share light on the expenses/laws id encounter being an overseas property investor OR a residential property investor as there is a chance of me migrating to the US to start a new life.

[Damap]

I also understand that in Florida even though i wouldn't have to pay any income tax (overseas investor) id have to pay HOA fees, does this apply to all states?

No this is 100% wrong. You pay income tax on all income and you only pay HOA fees on condos. Any condo anywhere in America you pay HOA fees.

If you move there the whole situation changes as there are fewer tax benefits but you can invest through a ROTH IRA and other vehicles. Plus you can get cheaper money of course.

[dommachala]

No this is 100% wrong. You pay income tax on all income and you only pay HOA fees on condos. Any condo anywhere in America you pay HOA fees.

If you move there the whole situation changes as there are fewer tax benefits but you can invest through a ROTH IRA and other vehicles. Plus you can get cheaper money of course.

Thanks Damap, appreciate the due diligence