US Dollar Weakness & Foreign Investors

Great point, Noah. I've heard that Europeans had been buying condos in Manhattan during the recent boom years.

In your experience have you seen this trend continuing?

Well I haven't sold to any European investors as yet who told me the reason they are buying is take advantage of market trends in hte currency market, but from colleagues and other brokers I speak to out in the field, I hear that they have foreign investors who are looking to get into the NYC market as it cools.

Im only assuming that at least one reason a foreign investor would look at the nyc market as an attractive investment is currency valuation and the fall of the us dollar. Quite simply they can get much more for the buck.

If I do run into a client buying with this reasoning, Ill certainly pass it on to the blog.

I could be your first client then Noah. I'm watching both the NYC housing market and the sterling:US dollar market to look at taking advantage of the nearly $2 we get to sterloing right now, which is the weakest the dollar has been against sterling for 14 years, when the UK fell out of the ERM in 1992. Personally i'm still on the fence with this, thinking the dollar could go one of 2 ways, and most "lauded" economic forecasters vary in what they say between it being "too strong" to "too weak" so go figure!

I certainly think with year end approaching and corproate repatriation going to occur, where we might see a further decline in the dollar as firms sell it off and repatriate funds back into their home country currency, as well as a continued$ very large US current account deficit and the shift of central banks around the world looking to move into sterling based holdings (the UK has a similar central bank interest rate to the US), we could see the dollar continue to slide.

However, just yesterday i was reading that forecasters at Goldman and Leheman are predicting a sterling slide next year, ending down at $1.65+ against the pound which, for us considering getting a place in NYC, would be pretty devastating. You can read more here:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/12/12/cnster12.xml

Anyway, i still think it's too early to call, but for currency traders and those thinking of buying in the US, it is interesting times indeed, and certainly a good time to watch both the housing and currnecy markets like a hawk.

Noah, could you please briefly outline the sorts of entry costs/issues first time foreign investors like myself might incurr when purchasing there? My wife is a US citizen from NYC but lives here in London with me and we could always purchase in her name to make entry issues easier, hence our desire to perhaps pick something up now "on the cheap", but i'm wondering what sort of barriers to entry we might find.

Any thoughts or pointers would be appreciated.

Cheers,

Dave

Cheers Dave..good to hear from you again! I am not aware of any significant barriers to entry from a foreign investment standpoint other than that you will probably want to purchase a condo.

If this would be an investment property or second home, than a co-op would be a tough purchase. So, buying a condo would at least give you the flexibility of using property as investment and a no headaches process on both buyside and sell side. However, your costs to do the deal will be more.

Calculating about $20K per $500,000 worth of house you buy is a quick aproximate guide to estimating what total closing costs would be, adding in a 1% mansion tax over $1M. But closing costs will include your first months mortgage payment and some tax deductible items. Your attorney should go into this part in more detail.

Interesting points you bring up. Love it!

Surely the thing to do for UK investors would be to buy dollars when the dollars weak, then wait for the US housing market to bottom out, with most folk predicting the worst is not over yet, presupposing you can get a dollar mortage if required?

c.f..

http://www.moneyweek.com/file/23207/why-a-dollar-correction-is-unavoidable.html

I was thinking of buying a small Manhattan apt (NOHO, SOHO, CHELSEA, W.VILLAGE). My questions are:
1) As a non-US citizen/resident what would be my tax liabilities in the US if I were to subsequently sell at a profit?
2) As a non-US citizen/resident what would be my tax liabilities in the US if I were to rent it out for part of the year?
3) What sort of outgoings might I need to budget for municipal taxes etc ?
4) How much would I need to purchase a 1 bed/loft in one of the above areas??
Best regards

hey noah as a non us citizen from ireland i have alot of equity which i would like to invest in a 3 family home in newyork i visit the city around 5 times a year just want to know how i would go about this and is it possible...

Hello Ciara

Were you able to purchase in New York City as yet? Were you still interested? I have some really good below market properties right now I can discuss with you and anyone that is interested.

Naima

Nsanowar@aol.com for further information

Naima

Hi,
I am british, new to the game of property investmeant so excise my ignorance!I am looking to buy in new york city while the doller is so low to the pound. I still have a lot to learn before I go ahead and would be greatful for some advise. I have invested in property in the UK but no little about the american system

First if I was say to buy a studio in chelsea, soho or some place like that for around 400 000 to 500 000 and put down a deposit of 20 % I would have about 1500 to 2500 dollers to pay towards the morgage. I hear that I could get a rent of around 2300 to 2700 a mouth... Would you agrea?

If the abouve is the case what other costs would I need to factor in other than what is unaversal for a land lord
ie does the land lord pay for water,gas and electric? Or is it the tenants duty like here in the UK?
Who pays the servise charge ?
What tax would I be expected to pay? Any other costs you might know of?

Overall I want to buy a place that at least pays for its salf or near enough. I don't inteand to make great returns on the rent but hope that by buying soon I can gain more form my pounds.

Finaly how easy is it to find tenants in a good area of new york at this time. Ie here in london there are a lot of propertys up for rent making it sometimes quite a slow process.

Thank you in advance

Dion

America for Sale... 30% to 40% properties off Actual Value

Attention Buyers/Brokers

We have discount real estate investment properties in the U.S. market at 30% to 40% off its current retail value.
See short list:
SFTRU143: Single family 6 bed 7 bath in atlanta,georgia
Appraised at $2.4 million USD for only $1.7 million USD. That's a lot of equity.
SFBS105: single family 5 bed,2 bath in houstan, texas
Appraised at $700,000 USD for only $483,000 sales price. Lots of equity.

We have much more than this. Visit
www.wileywholesaleholdings.com
www.wileywholesaleholdings.com
and ed@wileywholesaleholdings.com

Refer a buyer and receive 1% of sales price

Up till around August 2008 when the GBP/USD rate fell from grace we were still seeing continued increases in clients moving into the US real estate in particular selling sterling. This seemed to be motivated more by currency-related savings. Manhattan does appear to be the destination of choice.

Even now over the past 8 months having seen the sharpest drop in the rate in more than 15 years we haven't seen any drop in demand into the US market. This seems now to be more value-related no doubt due to the ongoing credit crises where good deals are still to be had and the general weakening outlook of sterling.

Tejpal
Ireland FX
http://www.irelandfx.com
info@irelandfx.com
+44 (0)2890 998 578