FAQ for American Foreclosure Property
1. Are these cheap American properties free from debts and liens?
Yes, all properties we offer have had any liens and debts cleared before being marketed. We do not offer properties that have any outstanding taxes, which many repossessed American properties may have.
2. Why are these American houses so cheap?
The answer is public money. The banks can afford to write off mortgages of $70,000 and more which were typically held on these houses because billions of government money is being poured in to their businesses. In short, the American government is subsidising your investment!
3. It seems many of the properties will need work to get them into a rentable condition, can you assist with this?
We do assist clients with renovation and have links with a building/project management company who can provide a quote to renovate your property. For further details of building management, please contact us.
4. Do you offer rental management for American property?
We don’t offer rental management ourselves as this is a very specialist area but do recommend the services of a local rental management company. They will find tenants, vet them and deal with managing the tenants for a percentage of the rental income.
5. I know unemployment is increasing in the US and that may affect my tenant’s ability to pay rent. Is there anyway to avoid this?
Many landlords are taking advantage of the ‘Section 8’ scheme whereby the government covers the majority of the rent.
6. That sounds good but do I risk getting bad tenants as sometimes happens with the UK’s ‘DSS’ scheme?
The American system is more closely monitored than the UK’s DSS housing scheme and Section 8 applicants and tenants are required to abide by the rules. Failure to do this does result in eviction and permanent removal from the Section 8 scheme. This helps ensure that tenants respect the home they live in and the Section 8 scheme in general has very few evictions.
Section 8 covers up to 100% of the rental amount and in the cases where, 60% or 70% of rent is covered, the landlord (or rental management company) collects the difference from the tenant. If the tenant does not pay, then after 30 days Section 8 officers are brought in to rectify the situation. Those paying a portion of the rent are generally employed but earn less than the designated median wage for an area.
7. I want to visit Detroit, is it easy to get there?
Yes, there are regular flights (direct) with Northwest Airlines daily from Heathrow to Detroit Metro airport. As well as Northwest, there are a number of indirect routes which stop at either Washington or Chicago.
Total flight time on a direct flight is approximately 8 hours.
8. Why invest in Detroit and Cleveland?
Property prices in Detroit and Cleveland are some of the lowest in the country and purchasers can pick up houses than dropped on average between 6 and 7 times in value.
9. What is multi unit property?
A multi unit house is a property that has been divided into two or more apartments
10. What kind of prices were these properties selling for in the peak sale period a few years ago?
We provide a breakdown of the previous sales history on each property so you know exactly what your home was worth previously.
11. Can I get a mortgage to purchase this property?
No, these properties are cash only purchases so please ensure you do have the funds to complete within the set deadlines. Failure to do this will result in the loss of your deposit and/or penalties.
12. I have heard of grants being offered to renovate properties, can I take advantage of these?
Grants are available for renovating properties and also tax credits of up to $8000 can be used to offset against the purchase of a property. However these are only available to American citizens. So whilst you may not be able to benefit directly, home values on your street will improve if your American neighbours take advantage of these schemes.
13. I have heard that a lot of people have lost their jobs in Detroit, so how can people afford to rent these properties?
Job losses throughout America are an increasing problem and for those that earn under the median income or who are struggling financially, the government has put in place the Section 8 scheme (detailed above).
14. Do these properties come with a building survey or structural inspection?
These properties are sold ‘as is’ and we do not offer surveys or guarantees as to the condition of a property. However, before we place a property on the market each house is personally inspected by us and we do not take on houses that have structural problems. Generally, we choose only one in every twenty houses that we see ensuring we provide only better quality houses.
We always provide up to date photos on a property so you can get a clear idea of what condition it is in and also, what the street and neighbours look like.
15. Do any properties come with tenants already?
Some houses we offer do come already tenanted and in these cases, we will state that in the advert. The majority of houses that we offer however do not come with tenants.
16. What kind of income tax will I be charges when renting out my property?
Rental income tax is approximately 29% after deductions, capital depreciation etc have been taken into account.
17. What is Capital Gains Tax (CGT) in the US if I decide to sell my property?
Approx 15%
18. I’ve heard I need a Certificate of Occupancy to rent out a property in the US, is this true?
Yes, a certificate of occupancy is a document that an owner obtains from the council to be allowed to rent/live in the property. It currently costs 295 USD for the certificate.
19. What are property taxes in the US?
Taxes vary depending on area, house, location and price/value. It is difficult to give figures as these houses are currently being sold under value at a low price. Typically annual property taxes for middle class homes can be anything between 1500 – 4000 USD.
20. How can I open a bank account in the US for the rental income and payments?
Please seek financial advice but it is possible to open an account from some countries without visiting the US. HSBC offer the service for a small fee.
21. Can I bring the money into UK/another country easily?
Please seek financial advice but the US has a dual tax treaty with most major countries so taxes would only need to be paid once.
22. What rights do I have if I have problematic tenants, especially if they default?
Please speak to our recommended rental management companies for full information however the US does have strict tenancy agreements and normally eviction can be arranged within a few months.
23. What kind of refurbishment costs can I expect?
This really depends on the property… some need very little improvement but others more. Our property management team would be happy to offer estimated renovation costs or obtain an accurate quote.
24. Are properties let furnished or unfurnished?
They can be let either way.
25. Can I re-mortgage the property after I have bought it?
Credit is available in America, as long as you have good security in your property, credit history of over a year in the US, and tax returns filed for 2 years.
