Home prices in a larger number of cities are forecast to inflate in value in 2012 as many U.S. cities make inroads towards a housing recovery.

Signs of progress are developing in a growing number of U.S. states, including hard hit Florida, Michigan and Mississippi.
Improving conditions in many cities are attributed to growing job creation and higher prices being paid for some commodities, spurring home sales and higher prices as a result of growing demand. Near record low mortgage rates are also pushing the marketplace.

International demand for crops, particularly corn and soy beans are driving the prices to record highs being paid for commodities. The increase has moved into the local economy in the Corn Belt, with Nebraska, Kansas and Indiana home sales picking up. Banks holding off on formally foreclosing on many homeowners as a result of the robo-signing scandal has developed a shortage of discount priced foreclosures, driving the prices in some cities higher.

As the fallout from the robo-signing scandal develops, bankers will increase the number of foreclosures and are already improving the number of short sales with homeowners who are unable to make their mortgages. Average home values in Nebraska are forecast to increase in 2012, with Omaha leading all of the states cities at 3.9%.

Kansas was forecast at the beginning of 2012 to experience higher housing inflation for the year. Kansas cities are making progress towards their projected improvement. Indiana is now forecast to experience higher home values than first projected at the start of the year as an improving economy begins to fall in place.

Strides towards better conditions are also projected in at least one southern state, Mississippi. The real estate crash has been particularly tough on the hard hit Mississippi state economy, which has endured years of economic weakness as one of the nation’s highest prone poverty regions.

Home values are also forecast to improve in cities in Alaska, Oklahoma, West Virginia, Wyoming and Texas, where average home values are forecast to show healthy gains. Most cities experiencing higher home prices won’t see huge price increases, but with growing home sales in many areas higher values will develop.

Originally posted on Housing Predictor by Mike Colpitts

There is a certain level of anxiety when you are buying a house you have never seen in a foreign country you may never have visited in an economy that has seen better days. Yet on the other hand, investors the world over know that now is the time to buy property in America. Is there anything you can do to reduce your worries or even build your confidence?

Let us take a few minutes and check out what authorities are saying about their economy as a whole. This will help us gauge the investment potential within the real estate market.

One indicator of the economic recovery is an increase in job creation. The US Labor Department reports that job openings in the U.S. increased in February and hiring climbed to 3.3 percent which is the highest level in more than three years, indicating that employers are more optimistic about the economic outlook. Additionally, the unemployment rate has fallen to 8.2 percent in March, a three-year low.

“There is a pretty strong, solid uptrend in job openings,” said Michael Gapen, a senior U.S. economist at Barclays Capital in New York. “The labor market is gradually getting better when you continue to look across a broad swath of indicators.”

Another economic indicator is wholesale inventory. When this figure increases, it indicates that companies are seeing an increase in consumer demand. The Commerce Department reported a 0.9 percent advance in stockpiles following a 0.6 percent gain in January. This was more than initially estimated.

Now let us look into the foreclosure market. Much of the loss in real estate values has been caused by the glut of bank repossessed homes on the market. As long as the percentage of foreclosed homes is high, home prices will stay low.

And according to a recent report, an additional 1.25 million foreclosed homes are set to flood the market following a year-long investigation into lending practices. Walter Molony, a public affairs officer at the National Association of Realtors (NAR), says that this inventory problem has been a prime factor in the inability of the market to gain traction.

“The high level of foreclosures in recent years dampened overall home prices, and they have now over-corrected in most areas,” Molony says. “Homes are selling for less than replacement-construction costs in most of the country, and in most areas, it’s now cheaper to buy than rent a comparably-sized property.”

What does that mean for an Australian investor in US properties? It means that the economy in the USA is recovering. They are creating jobs which will lower unemployment which will provide their citizens with greater financial security which in-turn will increase spending. The positive cycle has begun.

Meanwhile, they will continue to have millions of foreclosed homes on the market. This will keep values low enough for international investors to scoop them up at discounted prices. Additionally, due to a recovering economy, you will be able to demand top dollar rental rates. The evidence is clear, now more than ever, it is a good time to buy US property.

So you are an Australian buying US property. You like the house. It is a good size. It is in good condition. Rental rates are high and so is the demand to rent in this city. This will give you a good cash flow.

But, what about the neighborhood? Have you considered this feature?

Buying a house in the USA without first looking at the neighborhood is like looking through binoculars at only one healthy tree and not seeing that the whole forest is diseased. The condition of the neighborhood has a huge effect on the value and the market appeal of a home.

What should you look at in a neighborhood? First examine the obvious. How do the surrounding houses look? Do they suffer from neglect? Are they abandoned? Are the windows boarded up? Just because you found an oasis in a dessert does not mean that anyone will want to live there in the midst of such depression. Before you buy a house, make sure that you get photos of the houses on the same street.

Another consideration is the crime level. If the neighborhood is suffering from multiple foreclosures and abandonment, the crime rate will increase as well. To see how the crime rate compares to other places, here are a couple websites to check out: Areaconnect.com and Bestplaces.net.

You should also consider the amenities that the area offers. Is the house close to schools, shopping, transportation, fire and police? Is it in a quiet area, off the main street with all the noisy traffic? Ideally, renters want to be close to everything but they do not want to hear or see everything. Houses in the center of town but on a back street have good market appeal. To see what is nearby and explore the neighborhood, visit this site: Walkscore.com.

Is the home surrounded by businesses? If so, then you could be buying a house that may be changing into a commercial property. That is not necessarily a bad thing. Commercial properties generally sell for a higher price and typically, in the interim period before a property is rezoned, they are usually rented for a competitive rate. If you find a property that is very close to commercial zoning and it appears that the city is expanding, you may want to buy this house to capitalize on the increase in value that will come as a commercial property.

To learn about this, you will first need to know what zoning jurisdiction the property is in. If the house is in the city limits, then you will need to check with the city zoning department. If it is outside the city limits, then most likely it is handled by a township. These days, a lot of zoning departments have their information online. For example, check out the zoning maps for Detroit, Michigan property.

Understanding the neighborhood before you buy a house in the USA is like knowing a show dog’s lineage before you buy. You can’t judge a winner just by good looks alone.

My own experience has shown me that there are so many factors that need to be considered going into this market, and your exit strategy is just one of them. Whether you are buying for the medium or long term, how easy it is to get out is just as important as finding the right property in the first place.

Check out this interview of me with my friend Bill where he describes just one of the main things to consider when thinking about exit strategy.

Would you like more information about how you can safely get in and out of the US real estate market? If so feel free to call 1300 039 662 or you can Book A Free Consultation with me or a member of our team.

Investors in US real estate are looking for ways to reduce their liability and lower their investment risk. Creating a Limited Liability Company (known as a LLC) is a great way to do this. This is the most commonly used structure for foreign investments.

What is a LLC? Think of a Limited Liability Company as the cross between the simplicity of a partnership and the shield of protection offered by a corporation. It offers limited-liability protection to all the owners (like a corporation) yet it has a pass-through tax status (like a partnership) which means that the taxes skip the company and are passed only to the members. In addition, a LLC has a second layer of liability protection that shields the business from any personal lawsuits or bankruptcy.

What does this mean for Australians who are buying property in the USA? Suppose you buy property in America and the tenant falls off the deck and sues you. If the renter wins the lawsuit and your name is on the deed as the owner, guess what? The court can seize your personal assets (including any and all of your other investments) to pay the judgment. Ouch! But if each investment property is under their own LLC, then you and all of your investment properties are protected from each other. This is huge!

How difficult is it to create a LLC? Limited Liability Companies were made to be easy. They are easy to understand and easy to run. Here are a few basic steps:

* Choose a unique business name. The name must end with either LLC, Limited Liability Company, Limited Company or an abbreviation of this phrase. The name cannot include the words bank, insurance, city or corporation

* File a document usually called Articles of Organization and pay the filing fee which is between $100 and $800 depending on the state. Most are around $100.

* A foreign partner must also obtain an Individual Taxpayer Identification Number from the Internal Revenue Service. This number is used on all tax documents.

* Obtain licenses and permits that may be required for your business.

* Create an LLC Operating Agreement. Even though operating agreements need not be filed, it is essential that you create one. In an LLC operating agreement, you set out rules for the ownership and operation of the business such as member’s percentage of ownership, rights and responsibilities and how the LLC will be managed.

Before you start buying investment property in the USA, you need to protect yourself and your investment. Forming a Limited Liability Company for each property that you purchase and then placing them under an umbrella LLC is a great way to do this. It is a small price to pay to protect your real estate.

Note: The information presented in this article is to serve as a general guide and is not to be construed as legal advice.

You have read about the buyer’s market in United States real estate. You hear others talking about the great buys to be had. You want a piece of the pie. But the US is big, really big. Where do you start? How do you decide where to buy? What to buy? How much to buy? Just thinking about it can be enough to freeze you right in your tracks. But it does not have to be that way. In reality, you only have to make a few basic decisions.

1. What to Buy.
There are three types of real estate: Residential, commercial and vacant land. Since most likely you won’t be able to turn around and immediately sell your investment for a profit, you will need to rent it to create cash flow. That eliminates vacant land. Commercial real estate can be difficult to rent in a recession and they can take long to resell. So that eliminates commercial properties. So, here is your first decision: Buy residential properties.

2. How much to Buy.
The answer to this question will be based on your investment strategy as a whole. You will need to determine what percentage of your total investment dollars should be allocated to US real estate. It is best to be conservative. Although the returns are great, it would not be advised to put a large percentage of your wealth in this market.

3. Where to Buy.
There is no need to become overwhelmed with choices. An organization like Splash Property Group has been created to help Australians buying property in the USA. We have a highly skilled and experienced team set up here in Australia and in America to find the markets that offer the best chance of a high return.

Here at Splash, we are not buying agents. We are investors ourselves first and foremost. Our team of investors purchase property in theUSA, complete any necessary remodeling and place it in our rental program. Then after all the hard work is completed, we simply make the properties available to other investors like yourself.

Investing in US property need not be a risky gamble. When you have the right team working for your best interests, then buying property in the US becomes an easy and super highly profitable investment strategy.

One of the great things that has happened in the US real estate market space over the last 12 months is that good information is becoming more and more readily available. Four years ago, you had to search high and low to find even basic information on how foreigners could access this market.

The downside to this however is that there is a lot of misleading and incorrect information out there too. Many websites like Zillo and Trulia are being heavily relied on, when in fact they may or may not contain accurate information.

Check out what a highly regarded local investor reveals about these so called ‘authority’ sites and why they can’t be relied on…

Have you ever found yourself worrying about what would happen if you bought a US property investment and then you find out it has major problems? That is a valid concern. Buying a home warranty at the time of the closing can help you sleep better at night.

What is a Home Warranty or Home Protection Plan? It provides for discounted repair and replacement service on a home’s major components. It is not the same as a home insurance policy which covers catastrophic damage such as fire or theft.

What is covered? Typically it includes: Air conditioning, dishwashers, doorbells, heating systems, water heater, garbage disposal, inside plumbing stoppages, ceiling fans, electrical systems, range and oven and telephone wiring. If an appliance is malfunctioning and cannot be repaired, depending on contract coverage, the home warranty company will pay to replace the appliance.

What is not covered? Outdoor items like sprinklers, spas or pools and permit. Faucet repairs, refrigerators, washers and dryers and garage door openers are not covered under all plans.

How much will it cost? They are fairly inexpensive, about $250 to $400, depending on the coverage. The policies are prepaid for a year in advance and they can be renewed. In addition to an annual premium, they charge a service fee of around $60 every time you need a repair service.

Who pays for the policy? Well it depends on the area. Many times the seller will pay for it as a gesture of good faith. Sometimes realtors offer it as a gift at closing. Of course you can buy them too.

What are the benefits? Like all warranties, it is supposed to protect against expensive, unforeseen repair bills and provide peace of mind. For a homeowner who doesn’t have an emergency fund, a home warranty can act as a buffer. They also make sense for people who are not close by the property such as an Australian buying US property.

What are the drawbacks? One major problem is that the policy will not cover items that have not been properly maintained and that is usually based on the opinion of the insurance company. In addition, warranties have numerous exclusions as well as dollar limits per repair and per year. Also, there may be many years when nothing at all breaks down or wears out. In these years, the homeowner gets nothing (except, perhaps, peace of mind) in exchange for his $350 premium. That money could be put into an emergency fund for making the same repairs and replacements that the home warranty would cover.

The bottom line. A home warranty is not a perfect solution for the risks homeowners face. Before purchasing one, read the fine print in the contract and carefully consider whether it is likely to pay off. But for the first year, it could help cover unseen items until you are familiar with your US investment property.

If you are an Australian buying property in the USA, it is helpful to know what renters are looking for before you buy. We contacted Apartment Guide, which drew an estimated 19 million visits in 2007, to see what were the most searched for amenities in the last 90 days. Here are the top five:

1. Washer and Dryer. This is by far the most requested amenity.

2. Air Conditioning. This does not necessarily mean that you need central air but even window air conditioning units appeal to renters.

3. Pets. Pet owners are often very loyal tenants. Apartments.com conducted a survey of 1,000 renters and 90% said that they had a pet. Of the renters that did not have a pet, more than half said that they plan to get a pet within the next year. More than 80% of respondents said a pet-friendly policy played a major role in where they chose to live.

Many investors are worried that having pets in the home will damage their investment. One way to offset the risk is by requiring a pet deposit or a monthly fee. More than half of renters surveyed said they paid more than $200 for a pet deposit. If they do not follow the rules you set in the lease agreement (such as not picking up Fido’s poop,) you can always charge them a fine.

4. Dishwasher.

5. Washer and Dryer Hookup. If you do not want to maintain the washer and dryer make sure your residence has hookup for them. Remember that the dryer can either run on gas or electric. Having both these options available will appeal to more renters.

Here are some other things to think about before you buy US investment property such as:

• Is it safe? Are there plenty of street lights? Are the shrubs around the house well pruned?

• Is there off-street parking?

• Is there a porch or deck? A fenced yard?

• Is the property close to schools, parks, grocery stores as well as public transportation?

Also make sure that your property management company responds quickly to the concerns of your tenants. Nothing will drive a good renter out of your property than poor service.

So, before you begin buying property in the US, look at the property through the eyes of a renter. This will help you to create a stable cash flow during the time of your investment.

Always keen to find out what my financial mentors are saying and doing, I was fascinated to hear the world’s greatest investor, Warren Buffett as he explained his preference for the US real estate market for investors seeking high returns. Watch this clip to see exactly what he said.