People have been trying to call me for several years to ask if it is still a good idea to invest in property in the United States? I have been buying properties in the United States for more than 20 years already.
Buying real estate in the United States started in the late 80s when I got involved in the loan debacle and savings. This was when the banking system in the southern states was failing, and we even had to make transactions of the property buying and selling without any banking system since there were virtually no banks around.
Now it’s as if there are bank crises every 20 years in America. Prices significantly dropped, sometimes 95 cents on the dollar, when I was buying properties. We can even buy properties for 5 cents on the dollar! There were even home units that we could buy for as low as $600 and a couple of thousand dollars per house.
Because Americans are going through a central bank crisis, many Australians are apprehensive about taking advantage of the U.S. market. Perhaps you don’t have to worry about this issue if you are not living in the United States.
In the late 80s, I spent a lot of time with some Australians trying to save what’s left from their capital, the capital they have invested in the U.S. After 20 years, and I’m doing it again – helping Australians. The latter lost a lot of money to get out of the United States and will still keep the remaining capital that they have invested.
The American and Australian Culture Differences
Why do you think this happened? Why do some Australians invest in the United States and end up being disappointed? Even if we read about 15% returns – 25% returns. I will examine that fact for you in a little while. But before that, I’d like to go back to analyzing the differences between the way Australians do business and Americans do business. Most of this is outlined in the book, written in the 1970s, called “American and Australian Cultural Differences”.
In the book that Donald Trump wrote, “The Art of the Deal”, he mentioned there is no such thing as a win-win in business. It has always been ‘I win, and you lose. Here’s the first significant difference, in Australia, people come first, then money comes second. While in the United States, it is the other way around; big business and the big bucks come first before the people. This doesn’t mean that Americans are wrong and we are good; we have a different culture. Also, our governing laws lean that way.
Our Australian culture and mentality are reflected in our legal system, a system that is shared with both legal and equitable law. Once a judge sees a contract that he doesn’t like, he can overturn the contract under the natural law, which means fair play law. Unfortunately, this is not how it works in the American playing field. The real deal is always on the piece of paper.
On the lighter side of playing in the U.S. market, we can both sit down and talk work out a contract. I can even trade a portion of a property in the U.S. for only $7. As long as we both sign a one-page General Warranty Deed or Warranty Deed, that property is bought for $7. And it costs that much because that is what cost me to record this at the local courthouse and make the purchase. That is the deal whether we had a creative lease option or an installment contract. Unfortunately, if you get into some bad terms, you have no government body to come in and look after you. The deal is, the dollar comes first.