Building Australian Dream (or any dream) in America

The Australian Dream is kind of similar to American Dream, buy a house, raise a family and live a happy life!

However, skyrocketing real estate price in Australia has prevented many Aussie families in building their Australian dream, and this is especially the case for younger generations where they are likely to rent for the rest of their life. It is a sad trend, and I had seen many if not most of my friends who are in 30s or 40s still unable to buy any property in Australia, those who had purchased are often under enormous mortgage burden.

Building your Australian Dream in America is becoming a trend amongst many Australians. When I moved to the United States, I had been conducting surveys amongst clients and on social media, and find increasing number of Australians interested in buying U.S. properties even the current exchange rate is not as favorable as before.

Many mentioned they “simply” want to buy a home for their kids, “at least my kids have some properties somewhere in the world”, and America is the best place to do this because of cultural similarity, stable economy, affordability amongst best factors to consider American properties for Australians.

Indeed, I was quite amazed by how many contacts from Australia simply from my Blog as I hadn’t spent a lot of time in advertising and gets a lot of referrals from existing clients. On some days, I will receive random phone calls from Australia asking if I can help them to find properties in the U.S.

I purposely plan my strategy amongst 3 main types of clients, so that I can cover and service different markets.

Type 1: Foreign Home Buyers – this is increasing as many people are moving to U.S. whether for several years or on permanent basis. I get a lot of clients especially from Asia who are here as international students but “on mission” to buy houses, this is typically for them for 4 to 5 years, and if they get jobs, they will keep living there, if not, they will resell or rent them out as an rental home. This is certainly a growing trend as they can not afford a house at home country, and quality of living in the U.S. is far superior at a much lower cost.

Type 2: Capital Growth Investors – I often advice my clients to consider both capital growth and income, this is same as building up a share portfolio. There are 2 ways to capitalize on capital growth opportunities in the U.S., the first one is obviously resell in future, at the moment, Dallas market is experiencing 8% to 10% growth rate each year, and as population continues to grow, some areas are anticipated to grow by 50% over next 3 to 4 years, and add additional rental income (yield), this is quite a possible target, as you can expect 16% to 18% growth combined.

The 2nd strategy is even better which is to refinance and cash-out based on current value. Australian investors will know this strategy very well as it is something many Australians already know. By cashing out through refinancing – then use the cash-out funds to buy more properties.

What I normally suggest my cliens is to allocate capital into capital growth areas such as Dallas, then utilize the capital growth to cash-out and buy income (higher yield) properties, we help our clients in mixing Texas and Ohio properties. Some areas in Dallas are also producing higher yield such as Mesquite, Dallas or Arlington areas, but faster growth areas like Plano and Richardson tend to have lower yield.

Type 3: Income Seeking Investors – income is important for many of our investors. For Australian investors, they typically want to find cash yield opportunities above 10%, adding the potential growth and also investment return from exchange rate, as USD has been rising, this can add to quite a significant investment income over long term. With high yield seekers, we ask our clients to consider properties in Ohio as they can produce higher yield, albeit, capital appreciation is slower.

With our experience in Ohio, we are able to identify investment opportunities with gross yield above 15%, some of these properties will require renovations to improve rentability to attract a long term stable tenant. A very important strategy to acquire properties in medium to better areas, even though some areas may have super-attractive yield like over 30%, you do not just chase the “highest yield” and get blinded by other facts. I personally like medium rated areas the best, they are in safe neighborhoods but schools may not be that great, but at least in safe areas, and we can typically attract renters without children, sometimes single occupants or older couples where they do not care about school district but willing to pay more rent and often sign multiple year lease.

In our future articles, we will also continue to provide strategies how investors improve their property and rentability, and tips and traps about investing in the U.S.

Thomas Su is a licensed realtor and experienced investor in the United States, he specializes in helping international investors investing in the United States.