HOW TO AVOID REAL ESTATE SCAMS IN THE USA?

HOW TO AVOID REAL ESTATE SCAMS IN THE USA?

How to avoid real estate scams in the USA?

With the US real estate market booming, many attractive offers are available. However, you need to be careful to avoid unpleasant surprises. Our USA Real Estate expert explains everything you need to know to purchase a property with confidence and avoid real estate scams in the USA.

Real Estate Scams in the USA

Choosing the right real estate partner

On the internet, you'll find many companies offering properties for rental investment. But you need to choose your future partner carefully. In fact, some of them aren't even based in the United States. How can they properly present a property they've never seen? Even with photos, it's still best to be on-site to visit the houses to see if there are any structural issues. If an investor wants to visit a house directly on-site, who will be there to welcome them and show them around? That's why we recommend checking that the person you're talking to has an office in the United States and is as close to the property as possible.

Read also: Is this the right time to buy a house in the United States?

Profits too good to be true

On some sites, you'll see net returns of between 17 and 20%, or even 25%. Returns depend on the markets you're targeting. Generally, expect between 4 and 13% depending on the city. But net returns of around 20% are impossible. In the Cleveland market, where we invest, for example, we offer net returns of between 10 and 13%. To achieve this, a very precise process has been put in place, from the acquisition to the sale of the property: selection, debt settlement, budgeting for work, renovation of the property in accordance with local rental demand, etc. It's important that the on-site team proves to you that everything is under control.

Rental management fees

Since you won't be on-site, you'll need to find a trusted property manager to take care of your property. Generally, property management fees are 10%. Also, research the rental market. The rent you ask for should be in line with market reality. Regarding insurance, maintenance, or property tax costs, be wary of low figures. To take an example from the Cleveland market, which we know well, here's some actual data from one of our properties located in the Collinwood neighborhood. It's a building with four apartments, each with two bedrooms and one bathroom. Expect to pay around $600 for rent and between $900 and $1,000 for insurance with good coverage, although there are better options. Property tax varies, depending on the property's exact location. In our case, it comes to $1,170 for the year. It's important to know that in Cleveland, property tax is paid every 6 months. Another factor to consider is the "utilities" that are the responsibility of the owner: garden maintenance, electricity for common areas, common areas, etc. This is true for an apartment building. When it's a single-family home, garden maintenance is the responsibility of the tenant.

All of these figures must be taken into account when calculating your profitability. That's why you must be careful and surround yourself with a team of experts who can support you throughout your real estate investment process.