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Bank On Land For US Property Profits

July 23, 2009Article by Ray Withers

US property investors are finding the going tough despite President Barack Obama promising $275 billion aid to the residential property market, banks are still reluctant to lend and the number of repossessions failing to abate.Real estate experts predict that the number of homes for sale is unlikely to fall and they put the blame firmly in the hands of the banks.

Like the UK, investors are saying they would buy if the banks would release a credit line.Also, following the UK lead, about half of banks have tightened lending criteria for borrowers, asking for bigger deposits and an unblemished credit history. The average interest rate on a residential loan is 5.42%.Currently, an estimated 2.1 million unoccupied houses are for sale.

This leaves two strategies open to people who want to invest in US real estate –

* Traditional investment in below market value US properties

* Land banking – that is buying and sitting on land for future investment.

Sensibly, with more than 2 million vacant homes and more likely to come on the market, investing in below market value property has the r4isk that property prices may keep falling and it’s difficult to peg how below market value you need to buy to stay out of negative equity.

Land banking is possibly a better option. Buying and holding a plot of land until the market rises is a better strategy and eats up less cash. There’s no need to look for tenants and no repairs or running costs.Buying land is fraught with risk as well, because just like in the UK, companies will try and sell land at inflated prices on the promise that the buyer stands to make huge profits.

Many people have been scammed out of money this way – so two good tips are do your due diligence and don’t buy from an offshore, unregulated company.One typical investment is the Fairways Residence at Myrtle Beach, South Carolina.  The city is an East Coast holiday destination halfway between New York and Miami and a lure for millions of older US touristsMyrtle Beach is famous for two things – beaches and golfLand is for sale at Fairway Residence, a gated resort in the heart of the established Island Green Country Club, Myrtle Beach, South Carolina,

Investors can secure a building plot at a pre-launch price of £21,000, exclusively through Property Frontiers, a UK based property consultant.Investors will have the option to develop their plots through a joint venture between Property Frontiers and one of South Carolina’s most experienced developers, Tower Developments. Options will include three and four bedroom-detached houses.  Once build costs are factored in, the property makes an excellent second home and holiday let or a development for selling.


Ray Withers

Ray has over 17 years’ experience in the international property market and bought his own first international property investment back in 2002. Aside from running Property Frontiers, Ray has been involved in residential, hotel, student and commercial property investment and development in both the UK and overseas and co-wrote "Where to Buy Property Abroad - An Investor's Guide". As Founder and Trustee of the Frontiers Foundation, Ray is directly involved with many of its projects to ensure they have a direct and tangible impact in individual communities across the globe. He is passionate about property, travelling, scouting out new opportunities and finding time to spend with his young family.
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