The USA property market – Cashflow positive properties
Obviously the state of the economy and the implosion of the US property market has been well documented. As a refresher, the abundance of subprime loans which were in layman’s terms poorly secured launch was the catalyst for a global financial meltdown.
In terms of the US property market, it meant massive defaults and a market crash with capital values reducing to 50% to 75% of the peak. One sign of the state of this is the number of foreclosures, a foreclosure being when a person defaults and the bank fire sells the property in an attempt to get the loan off their balance sheet and recover some value. Interestingly enough, the number of foreclosures is still increasing and will probably peak in 3 years or so.
One of the contributors to this is that it is relatively easy to default and walk away due to different regulations in this market; combine this with the massive decrease in property values, even people who can cashflow may be better off financially simply walking away.
Meanwhile people still need to live somewhere, hence renting is the only option; this demand means that rental amounts have remained at similar levels, which combine with the low values means for new entrants to the markets, the property is cashflow positive. The actual amounts will depend on the state and the property, but 10% + is more the norm than the exception. Compare this to Australia where above 5% and you are doing pretty well.
About Mark Taylor….
Mark Taylor is the Founder and Director of Keys To Success Club. A property investor in his own right, Mark helps other people succeed in property investment by connecting them to property experts through Keys To Success Club.
The USA property market – Cashflow positive properties
