Tel: +852 31 017 075

Web: www.ovginvest.com

Email: rebecca.smith@ovginvest.com

There has been a lot of hype about the US housing market recently.

Without doubt there are some excellent opportunities out there.

If you invest in the right US property, you can get very high rental yields

and enjoy strong capital growth.

But with all these deals flying around how do you know where and what

to buy?

After all, you could be buying a cheap property at an inflated price in a

run-down area which will never make you any real money.

Inside this guide you will discover:

What went wrong with the US property market

Why now is a good time to buy

Where and what to buy

How to choose the city and area

How to choose the right property

How to maximise your rental income

The common pitfalls, scams and downright rip-offs and how to

avoid them

The buying process and what to expect

How to reduce your taxes

How to finance your purchase

Your exit strategies

And more...

Page 1 of 58

Overview Overview

To understand why this is such a good opportunity you first need to look

at what went wrong.

In 2007 the US housing bubble burst.

Increased foreclosure rates amongst US homeowners sparked a crisis in

the global financial industry.

In October 2007 the US Secretary of the Treasury called the bursting

housing bubble “the most significant risk to our economy.”

And on December 30th 2008 the Case-Shiller home price index reported

its largest price drop in history.

The Future

Experts agree that the bottom of the market was reached around March

2012.

Since then prices have increased but in many areas they are still a long

way from their peak.

"In the first six months of 2013, the U.S. housing market appreciated a

remarkable 10%. This trend in home price gains is moving at the fastest

pace since 1977," said Mark Fleming, chief economist for CoreLogic.

Many metro regions in the Southeast and Midwest (including Detroit

and Atlanta) are seeing asking price gains accelerate, according to Trulia

Price Monitor.

“Prices are now rising as fast as they were during the bubble years, but

they are still low relative to the levels where they were back then,”

explains Jed Kolko, Chief Economist for Trulia.

Page 2 of 32

What went wrong? What went wrong?

Page 2 of 58

Homebuilder confidence in August 2013 climbed to the highest level

since November 2005.

This was due to improving sales, low inventory of existing homes,

building plots and materials, according to the US Commerce

Department.

And a shortage of resale property in some areas has led to a rise in new

properties being built.

In fact, new construction is up 38% since last year.

Experts predict house prices will continue to climb throughout 2013.

CoreLogic expect a 6% increase over 2012.

While Altos Research, believe 2013’s final tally will be even higher:

“Based on the actual supply and demand data, we are looking at 12%

year-over-year,” said Michael Simonsen, Chief Executive of Altos

Research.

Page 3 of 58

What went wrong? What went wrong? (cont.)

USA House Prices & Existing Homes Available For Sale 1997 - 2013

Page 4 of 58

High Rental Yields

The large number of foreclosures and lack of mortgage finance has resulted

in strong demand for rental properties.

So you won’t be surprised to learn rents were up by 3.9% across the whole

USA for the year ending in June 2013. (Source: Trulia Rent Monitor)

The average rent for a 3 bedroom home in a middle-class area of a typical

US city is now US$ 900 a month.

And with house prices as low as US$ 39,000 in some places you can earn

rental yields around 17%, sometimes more.

That is net - after management fees, property taxes and insurance.

Plus, you can find properties that have tenants already in place.

So you can earn an income from day one.

Strong Capital Growth

House prices are now rising strongly in some areas. Median sales prices

posted their 16th consecutive monthly rise in June 2013 - an increase of

13.45% year-on-year.

Across the whole USA the median sale price for a single family home had

risen to US$ 214,200 by June 2013 - compared to US$ 188,800 in June 2012.

(Source: National Association of Realtors).

However, despite this rebound national home prices are still at least 5%

under valued. And in some areas, like Detroit, they’re as much as 28% below

market value. (Source: Fitch ratings)

So there is still plenty of room for growth.

But a shortage of inventory is pushing up prices in many areas.

In June 2013 foreclosures dropped by 21% from the previous month to their

lowest level since December 2005.

(Source: RealtyTrac U.S. Foreclosure Market Report)

The only thing holding the market back is the lack of mortgage finance.

But as the economy improves and banks start to lend again, demand will

increase considerably.

This means you will benefit from high capital appreciation and have a large

target market to sell your property to when you are ready.

The opportunity The opportunity

Today you can buy 3-bedroom homes in middle-class areas of some US

cities for a fraction of what they sold for just a few years ago.

These are completely refurbished, tenanted properties.

With rental yields often in excess of 16% net.

And you get paid from day one.

This is an easy to manage, fully turn-key investment.

An experienced management company looks after everything for you.

Key Points:

Homes from US$ 39,000

Net rental yields of 17% plus

Already tenanted

You get paid from day one

Prices at their lowest since 1998

Non-status finance available on selected properties

High potential for capital gains

Top quality, 3-bedroom, brick built homes meeting government

standards

Newly refurbished

Fully turn-key, hands-free investments

Experienced management team take care of everything for you

Page 5 of 58

The opportunity What is on offer?

If you have already considered investing in the US, you have probably been

bombarded with properties.

There are all sorts of prices - some as low as US$ 10,000 or even US$ 5,000.

However, just because they are so cheap doesn’t necessarily mean they are

a good buy.

How can you tell a good deal from a bad one?

It is confusing - everyone you speak to claims to be an expert.

And they will give you conflicting advice and opinions.

But don’t worry.

I’ve put together some guidelines to help you sort the good from the bad

and the ugly…

1. Choosing the right area

2. Choosing the right property

3. Is the property in good condition?

4. Maximise your rental income

5. Get the right management company

6. What to avoid

Page 6 of 58

Where and what to buy Where and what to buy

Whichever US city you decide to invest in - you should choose the area

with care.

This can make a huge difference to your returns and capital growth.

You probably know the areas to avoid in your home country, but what

about in the USA?

Without proper research you could end up buying in a high-crime, low-

income area where properties are difficult to rent and even harder to

sell.

What you need to look for are good, safe neighbourhoods, with middle

class families, high-schools and shops.

Middle-class families like areas with good schools.

Amenities such as a library and shops close by are also important.

As is access to a freeway.

But remember not to buy on a freeway exit.

If a property is cheap, it is probably cheap for a reason.

It is often better to pay a little more for a property in a good area - you

will usually benefit from higher rental income and capital appreciation.

If an agent sends you a property - ask for the full address.

That way you can go directly onto Google Street View and check it out.

You can see the property, go down the street and look at the

neighbouring properties and the area.

If you are not given the full address of the property before you buy - ask

why not?

If the developer owns the property, what has he got to hide by letting

you check it out on the internet?

Fortunately, I have done most of the hard work for you - if you want

some help choosing the right area , just click here to send me an email.

If you’d like to know more about where to invest - click here to ask

Rebecca

Page 7 of 58

Where and what to buy 1. Choosing the right area

Investing in the right kind of property is essential if you want to

maximize your income and capital growth.

If cash-flow is important to you (and it should be) - who will you be

renting to? Families, couples, students, holiday-makers or retirees?

The largest rental demand in locations with the best rental returns is

from families.

So you should consider what a family wants when it looks for a home.

1. You should ONLY buy 3 or 4 bedroom family homes

If your target market is families - never, ever buy a 2-bedroom property.

They may be cheap - but they are cheap for a reason - families don’t

want to rent or buy them.

They are no good for families because they are too small.

2. Buy a property with a basement

Tenants love a basement. They provide extra space for storage,

occasional bedrooms or even a play room for the kids.

If you own a house with a basement, not only will it get rented within

days, it will give you higher capital growth than a property without.

3. Buy conventional properties

Don’t buy anything too modern or with a wacky design.

A standard, conventional looking property is perfect.

Colonials, bungalows and ranches are ideal.

Tenants love them.

Home buyers love them.

They are easily rented out and always in high demand.

Stay away from unconventional designs such as bi-levels, tri-levels or

quad type structures. They mainly appeal to single people.

Page 8 of 58

Where and what to buy 2. Choosing the right kind of property

4. Invest in large, attractive properties

You know what looks good and what appeals to you and your friends.

A property over 1,000 square feet is a good size for a family. And in

most cases you will have tenants queuing up to rent your house.

Don’t waste your time with 600 square feet properties just because they

are cheap.

You may have difficulty renting them. And even if you don’t, you will get

a fraction of the rent.

It just doesn’t make sense to buy a small property when US real estate

prices mean you can buy a family-sized, fully refurbished house for less

than US$ 40,000.

5. Never buy a house on a main road or directly off an

expressway exit

Would you want your children playing in the front yard of a house

located on a busy main road?

Or traffic streaming at full speed, 24 hours a day, off the expressway?

Of course you wouldn’t.

Nobody wants to hear traffic noise or risk their children getting knocked

down because they live near a busy road.

Page 9 of 58

Where and what to buy 2. Choosing the right kind of property (cont.)

Many of the properties on offer were built in the 1920's and 1930's -

almost 80 years ago.

Although they are generally very well built - they are not fine wine and

don’t improve with age.

So it is essential to consider the type and quality of refurbishments along

with how recently they were carried out.

If it’s just a fresh paint job, new carpets, curtains and an updated kitchen

- you may be setting yourself up for problems in the future.

The house may cost you less now. But in a few years your property is

likely to need major work such as a new roof - what happens then?

Not only will you have a large repair bill, but you will also have a

property that you can’t rent whilst repairs are being done.

Re-wiring, installing new heating and plumbing - they are all big jobs.

If they are already done you don’t have to worry about taking a huge hit

to your income when they need doing later.

It is much better to minimise any loss of rental income and major repair

bills.

That way you can be confident you will achieve the goals you set at the

start.

As a minimum look for:

A new or renovated roof

Re-wiring

New or upgraded plumbing

A new or upgraded heating system

New or refurbished kitchen and bathrooms

Recent painting, decoration, flooring and curtains

New or refurbished windows and doors

Page 9 of 32

Where and what to buy 3. Is the property in good condition?

Page 10 of 58

The average cost of fully refurbishing a 3 or 4 bedroom property is

around US$ 20,000.

That’s if it is done correctly - not simply a lick of paint, new carpets and a

quick clean.

Here's a quick look at what we do…

Clearing Out

The first job is to empty the house of old clothes, furniture and rubbish.

Once it's cleared we can get to work...

Page 11 of 58

Where and what to buy 3. Is the property in good condition? (cont.)

Walls and Ceilings

Interior walls are stripped of old paint.

Any damp and water leaks are repaired.

Next the walls are calked, sealed and rendered.

Then they're painted with a neutral colour.

New skirting boards are added for a neat finish.

Ceilings are painted white and new light fittings are installed.

Interior doors are sanded and painted with a durable white gloss paint.

Exterior doors are changed for steel security doors with dead-bolts.

Kitchens

The kitchen is one of the most used rooms in any house.

And it's often the room your prospective tenant or buyer looks at first.

If it's in poor condition, we replace the entire kitchen including the floor.

If it's in good condition, we re-finish the cupboards, fit a new sink, new

counter-tops and re-tile the floor.

Page 12 of 58

Where and what to buy 3. Is the property in good condition? (cont.)

Windows and Doors

Many older properties have wooden windows that are often rotten.

We replace old windows with new UPVC ones.

These are maintenance free and last a long time.

They also help to insulate the property, which keeps the heating bills

low for your tenants.

Bathrooms

Bathrooms in older houses often have high quality steel and enamel

baths. It's a shame to throw them out if they are in good condition.

So wherever possible we re-glaze them so they look brand new.

Sinks are replaced with new vanity units.

And new toilets are fitted.

All pipes are checked for leaks and blockages and replaced as necessary.

Finally, the floor is re-tiled.

Page 13 of 58

Where and what to buy 3. Is the property in good condition? (cont.)

Floors

New carpets are laid in bedrooms and living areas.

If there's a solid wood floor, it is sanded and varnished.

Kitchens and bathrooms all have newly tiled floors.

Electrics and Plumbing

Old electrical wiring can be extremely dangerous and a fire hazard.

We check all wiring throughout the house and re-wire wherever

necessary.

A new fuse box goes in along with new power sockets.

Old plumbing is upgraded with PEX piping.

PEX piping is flexible and can withstand extreme hot and cold

temperatures.

Which means you'll have less chance of water pipes bursting in the

winter. It also means lower bills for your tenants.

Because PEX is a good insulator, so water remains hotter for longer.

Page 14 of 58

Where and what to buy 3. Is the property in good condition? (cont.)

The Basement

Many tenants and buyers regard the basement as an additional room.

But it needs to be fit for that purpose…

First, the foundations are checked for damage or subsidence and

repaired where necessary.

Walls are painted with a white emulsion.

The floor is coated with a waterproof sealant.

This helps to prevent damp.

New utility taps for a washing machine and sink are also fitted.

If the basement has an extra kitchen or bathroom we renovate that too.

Heating and Hot Water

One of the most expensive items to replace in a property is the heating

furnace.

On average they cost US$ 2,000 for a single family home.

But they last for many years if regularly serviced.

So first, a qualified heating engineer checks the age and condition of the

furnace.

If the furnace is modern and in good shape it is given a full service.

If the condition is poor or it's old we replace it with a new one.

The same goes for the hot water heater.

Page 15 of 58

Where and what to buy 3. Is the property in good condition? (cont.)

The Exterior

Most houses in Detroit are brick-built and will last many years.

The brickwork and the chimney are inspected and re-pointed where

necessary.

Exterior wood is stripped, sanded and painted with heavy-duty paint.

And we don't just paint it once - it's done 3 times for durability.

Drainpipes and gutters are checked for damage and blockages.

If there's a garage it is cleared out, re-finished and painted.

The garden is tidied, the grass cut and plants given a good trim.

The Roof

Most of our properties have bitumen shingle roofs.

These last around 15 to 20 years.

If the roof is in poor condition or reaching the end of its life we replace it.

It's a costly exercise, but it means your maintenance bills will be lower.

Page 16 of 58

Where and what to buy 3. Is the property in good condition? (cont.)

Safety

The majority of your tenants will be families with children and it's

important they feel safe.

So the house is checked inside and out for any potential hazards.

These can range from an uneven driveway to stairs without a handrail.

In one house there was an open balcony on the top floor which we

enclosed.

These may seem like small things but they could cause a serious

accident.

Any we identify are rectified.

Smoke alarms are also fitted.

This all helps to reduce your risk of insurance claims.

On Completion

Once the work is complete a Housing Quality Standards (HQS) inspection

is completed.

This is a legal requirement if you intend to have Section 8 tenants

renting your property.

Ask the company you are buying from if they complete an HQS

inspection.

Many don’t as it takes time and costs a lot of money to bring a house up

to standard.

Some will just apply for the inferior Certificate of Approval.

Others may not bother with anything at all.

Section 8 Housing Scheme

You may have heard the term “Section 8” mentioned before.

But what is Section 8 and is it a good idea to have Section 8

tenants?

If the rent from your tenants was automatically paid into your bank account

every month by the US Federal Government would that make you feel more

secure?

I’m guessing it probably would.

The Section 8 Housing Voucher Program does just that.

It is used by millions of investors in the USA to earn profits from their

properties every month.

Section 8 is a HUD (Housing and Urban Development Department) US

Government scheme that provides rent assistance to families in need of

affordable housing.

Seven important facts about Section 8

i. Section 8 is not just for poor families who don’t work for a living

Section 8 helps thousands of families who have paid jobs but need some

assistance in their rent because of their family situations: single parents,

health issues with a family member etc.

ii. Section 8 has no time limit

As long as your property passes its annual Section 8 inspection, the US

Government will keep paying you.

Page 17 of 58

Where and what to buy 4. Maximise your rental income

iii. One strike and they’re out

As you know, baseball players get 3 strikes before they’re out.

But the Section 8 Housing Choice Voucher Program is a lot stricter than

America’s favourite pastime.

You see, Section 8 tenants only get 1 chance.

If they don’t look after your property they risk losing their voucher.

And once it’s gone, that’s it.

They are blacklisted from the scheme across the whole USA for life.

It’s one reason why they are such reliable tenants.

You may think if the US Government is paying the rent, your tenants won’t

give two hoots about your property.

The good news is it doesn’t work like that.

Your property has to meet strict requirements, but so do your tenants.

First, they are fully screened to make sure they have no previous evictions or

criminal records.

And wherever possible, we visit them in their current home to make sure

they’re looking after it.

As soon as they have a Section 8 Voucher they can use it to rent any property

they like - as long as it’s approved by Section 8 inspectors.

Once they’ve moved in the inspectors make regular visits to ensure they are

looking after your property.

But unlike in baseball, there is no second or third chance.

One strike and they’re out.

The truth is, Section 8 Housing Vouchers are in high demand.

In Detroit there’s a waiting list of over 8,000 people hoping for their chance to

rent a decent home.

The Section 8 Voucher is their ticket to a better life in a good neighbourhood.

For families, it also gives them the chance to get their children into a decent

school.

And for you it’s a safe and efficient way to rent your property...

Page 18 of 58

Where and what to buy 4. Maximise your rental income (cont.)

iii. One strike and they’re out (cont.)

Your rent is paid directly by the US Government every month.

You know your property is being looked after.

And you’ll benefit from very low vacancy rates.

Because once a tenant finds a property they like, they want to stay.

We are one of the top suppliers of Section 8 Housing in Detroit.

Tenants love the high standard of our properties and the desirable

neighbourhoods.

That’s why our investor’s enjoyed vacancy rates of less than 4% last year.

And when a tenant does leave we know we can find a good, reliable

replacement quickly.

Usually in less than 2 weeks.

If you’d like to see a full list of Section 8 approved properties in Detroit - just

click here to send me an email.

iv. Section 8 does not lock you into a government contract

You sign a normal, 12 month lease with your Section 8 tenant.

There is no obligation on your part to keep renting your property under

Section 8.

If three years down the road you want a non-Section 8 tenant because you

can make more money from them, you can just cancel your contract.

And when you want to sell your property, all you have to do is to give your

tenants 60 days notice and you are free to sell.

Page 19 of 58

Where and what to buy 4. Maximise your rental income (cont.)

v. A huge shortage of Section 8 approved homes

In many areas there is a huge shortage of homes with Section 8

approval.

In Detroit, for example, over 4,000 new Section 8 vouchers were

recently issued and over 8,000 families are now on the waiting list for

properties.

Property management companies regularly get around 30 - 45 tenant

applications a day.

Most properties are rented out within a week of coming on the market.

vi. What about Non-Section 8 tenants?

Of course it is your choice whether you accept Section 8 housing tenants

or not.

You may prefer to charge a higher than average market rent or to rent

to private individuals only.

But if you don’t want to take Section 8 tenants, for whatever reason,

you need to be certain there is a sustainable tenant base in the area

where you invest.

Page 1 of 22 Page 20 of 58

Where and what to buy 4. Maximise your rental income (cont.)

vii. Section 8 Inspection

If you plan to rent your property to Section 8 tenants your property will need to pass

a Housing Quality Standards (HQS) inspection.

This should be completed by the seller before you buy.

The inspection is very thorough.

Here is just a small sample of what the inspection covers:

Front and rear exterior doors must seal, lock and work properly

All windows must have permanently attached working locks

All switches, receptacles and light fixtures must be working

All switches and outlets must have secured covers with no cracks

No cable lines, extension cords or gas lines that can be a tripping hazard

No plumbing leaks

All walls and ceilings must be clean with no holes or large cracks

No loose, peeling, chipped, or cracked paint on interior or exterior surfaces

No evidence of cockroaches, mice, etc.

Carpet and floors must be clean and in a good state

Kitchen appliances must be in place, clean and working properly at the time of inspection

Bedrooms must have a minimum floor area of 8’0” by 10’0” (80 sq. ft.).

Ceiling height throughout the entire area must be at least 7’1”

Bedrooms must have a built-in closet

Out buildings must be in a good state of repair

Protective railings are required when porches, balconies, and stoops are 30” or more above

ground level

Smoke detectors must be installed in accordance with and meet the requirements of the

National Fire Protection Standards (NFPA) 74 or its successor standards

All gas heating sources must be vented and working safely

All heating systems must be able to provide adequate heat either directly or indirectly to each

room. If present, the air conditioning system must provide adequate cooling to each room

The heating and/or A/C system must be in safe and proper operating condition

Your property will be re-assessed every year and any repairs or maintenance will need to be

completed to bring your property back up to Section 8 standards.

Page 21 of 58

Where and what to buy 4. Maximise your rental income (cont.)

When you are thousands of miles away how can you be sure your

investments are being looked after?

Rents need to be collected, tenants issues resolved quickly, essential

maintenance needs to be done promptly, property taxes and insurance bills

need to be paid on time.

And what happens if something goes wrong?

What if there’s a leaking pipe, your tenant leaves in a hurry or there’s a

break-in?

Who is going to deal with those problems?

And who will make sure they are sorted out quickly so you don’t lose your

rental income?

After all, if you are not making any money what‘s the point of owning the

property in the first place?

In most cases, once you’ve completed your purchase your broker will simply

hand you over to the management company.

And that’s it - you’re on your own.

If you have problems, you have to deal with them directly.

Sounds simple enough, right?

But how do you know they are not charging you too much for repairs?

Or even that the work genuinely needs doing?

Often the only way is for you to fly over – at huge expense – and see for

yourself.

I’ve said before, management companies are very much like insurance

policies…

It’s only when you have a problem you find out how good or bad they are.

But they can make the difference between your investment being a success

or a failure.

That’s why we take the management of your property so seriously.

We believe in supporting our investors from start to finish.

That means, as long as they own the property.

And we don’t just rely on the management company…

Page 22 of 58

Where and what to buy 5. Get the right management company

Don’t get me wrong, the firms we use are very good.

But often you need someone to keep a watchful eye on things for you to

make sure everything runs smoothly.

Only then can you maximise your rental returns.

That’s why we employ our own dedicated team in Detroit.

They work closely with the management company to make sure any

problems are dealt with quickly and efficiently.

Camilla is in charge.

She ensures your leases are signed promptly and your property inspections

are followed up quickly.

She’ll also help you with any questions you have about your online account

statement.

When a tenant leaves, she works with the management company to find and

screen a replacement quickly.

If a repair needs doing we use our own contractors.

They’re familiar with our properties as they work on all renovations.

So if you have a problem they can fix it fast.

It also means you get the work done at cost price.

Obviously all this costs us money.

But it’s simply good business.

Because it’s important for us that your investment continues to work for

you.

And if you’re happy and making money we hope you’ll buy more from us.

You may even be kind enough to introduce your family and friends.

Page 23 of 58

Where and what to buy 5. Get the right management company (cont.)

Page 23 of 58

There are 6 key questions you should ask your management company:

i. How will they screen your tenants?

It’s all very well investing in a high yield property. But how do you know your

tenant will be reliable and look after your property?

After all, for your investment to be a success you need tenants who pay their

rent on time and take care of your property.

If they don’t it can cost you a lot of money.

That’s why proper tenant screening is so important.

But you’d be surprised how many companies don’t bother to do it.

There are simple checks your management company can do online.

These include making sure your tenant has:

No criminal record

A decent credit rating

No previous evictions

Which is all very useful.

But it doesn’t tell you what a tenant is really like.

To find out, you need to interview them face-to-face.

It doesn’t matter if tenants are Section 8 or working professionals.

For us, proper screening is essential.

But we don’t invite them to our offices.

We visit them in their own home so we can see if they are looking after it.

We ask their current landlord if he has had any problems with payments or

damage.

And only when we are completely satisfied does the tenant get offered a

lease.

Page 24 of 58

Where and what to buy 5. Get the right management company (cont.)

ii. How far is their office from your properties?

If they are 30 miles away they will be less likely to visit your properties on a

regular basis to carry out inspections.

You should choose a management office which is close to your property,

preferably a couple of miles at most.

That way, if your tenants have any problems they can call into the office and

get them resolved straight away.

iii. How do they intend to manage your property?

You might be surprised how disorganised many management companies are.

They keep records on bits of paper, in their heads or at best on an excel

spread sheet.

Choose a company who use a complete online property management

program, such as www.propertyware.com.

This means you can login from your phone or computer and see what is

going on with your properties wherever you are, 24 hours a day.

You can check that your rent is up to date, insurance and taxes have been

paid, look at reports and view photos from inspections etc.

iv. Are they used to working with overseas investors?

Good management doesn’t just mean finding you tenants and making sure

they pay the rent.

A good company should make sure your assets are well cared for and

maintained.

They should also ensure you have all the documents your accountant needs

to file your tax returns.

They will help negotiate your property taxes with the local town hall, to

make sure you are not paying over the odds.

A good management company can save you a fortune. A bad one can cost

you an arm and a leg.

Page 25 of 58

Where and what to buy 5. Get the right management company (cont.)

v. How much are they going to charge you?

Most reputable management companies charge 10% of your rental

income.

They may also charge you a one month rental commission for finding a

new tenant, if you are renting on a long term basis.

vi. How will you get your rental income?

Your management company should be able to send your rental income

to any account worldwide.

It is a good idea for you to open a USD account in your home country so

you don’t need to worry about exchange rates.

However, make sure you check the transfer fees for receiving money

from overseas so you don’t get any nasty surprises.

If the fees are high you may consider having your rent paid every 3

months or by cheque.

Although you should bear in mind cheques drawn on overseas banks

often take much longer to clear.

If you are planning to visit the USA you can open a US bank account in

person and have your rent paid directly into that.

Page 1 of 22 Page 26 of 58

Where and what to buy 5. Get the right management company (cont.)

Never buy an empty property or one to fix-up yourself

Even if you are tempted by the price - this is one of the biggest mistakes

you can make.

Trying to manage refurbishments and find tenants from a distance is an

almost impossible task.

If you have ever done any refurbishments at home you will know how

hard it can be even when you are there to keep an eye on the job.

If you are thousands of miles away, imagine how difficult that would be.

Even if the house is cheap - I wouldn’t even think about it.

You should only consider refurbished, tenanted properties. Or those

with a property management team in place - who have a signed rental

agreement and got a deposit from tenants moving in the week after you

buy your property.

If not you will just waste time and money waiting for a tenant.

Think about it this way...

You bought a property which needs fixing up and then you need to find

a tenant.

You spend a couple of weeks looking for a contractor to do the work.

You don't know exactly what needs doing but they tell you it will take

about 6 weeks.

While they are working they find more and more problems and it costs

you more and more money, and more time.

You know what some builders are like - this can go on for months.

In the meantime you contact a property manager to find you a tenant.

How much have you earned?

Zero - nothing.

All the time it is eating into your profits. It’s really not a good idea.

Buy a fully refurbished, turnkey property, which is already tenanted.

Save yourself all the hassle and get paid from day one.

The price you agree to pay is what you will pay. You won't have any

major repairs in the near future and you will know how much money

you are going to make every month.

Page 27 of 58

Where and what to buy 6. What to avoid

Make sure your property is a real turn-key investment

The term 'turn-key' is used by many companies these days.

But what does it really mean?

A true turn-key investment property should be one where the provider

does all the work.

Whilst you (the investor) sit back and collect your profits.

Unfortunately, the reality with many so called 'turn-key' investments is

quite different.

You see, this is often what actually happens:

1. The provider uses your money to buy the property

2. Then they renovate it - again using your money

3. Then they find a tenant and a management company to look after it

This approach is definitely NOT turn-key.

The worst thing is all the risks are with you, the investor.

First, the provider does not own the property so you are faced with an

undetermined purchase price.

Your property could even be sold to someone else before they buy it on

your behalf.

This is often a good indicator that your provider is under-capitalised.

Second, the property is not sold with a tenant in place.

So you will NOT get paid from your first day of ownership.

Third, higher than expected renovation costs and delays are also your

problem.

And then there's the time you'll have to wait to find a tenant.

All this can make a big difference to the cost of your investment.

For example, a company who claim to be the leading 'turn-key vendor'

in one particular city end up charging investors about 20% more per

property using this method.

A true turn-key provider will supply you with a tenanted property

already generating income.

No ifs, ands or buts...

Page 28 of 58

6. What to avoid (cont.) Where and what to buy

This removes all the uncertainties.

You know the price you will pay.

There should be no unknown costs or delays.

And you will not lose time and money searching for a tenant.

A true turn-key provider eliminates all the risks of ill-defined prices, delays

and the prospect of you having to cough-up more money than you

bargained for.

To find out if the property you are buying is really a turn-key investment, ask

your vendor the following questions:

1. Do you own the property?

2. Is it renovated and habitable by a renter?

3. Is the property leased to a tenant paying market rent?

If they answer NO to any of these questions you should start to dig deeper.

Otherwise your investment may end up costing you a whole lot more than

you thought.

Don’t fall for the bait and switch

The 'Bait and Switch' sounds like something to do with fishing, but it's not.

It's a common trick some unscrupulous property agents and developers may

try to play on you.

Here's how it works...

You see a great looking property advertised.

The price is less than you've seen elsewhere.

And the rental yield is sky high.

It's seems perfect, just what you're looking for.

You can't believe your luck.

So you sign the reservation form and pay your reservation fee straight away.

You're feeling pretty pleased with yourself - and why shouldn’t you?

But then you get a call from the agent…

Page 29 of 58

6. What to avoid (cont.) Where and what to buy

"Sorry First Name, we have a bit of a problem.

The house you wanted isn't available any more - it was sold to someone else.

But we do have this other one. It's a bit more money and the yield is not as

high - but it's still a great house."

Disappointed, you tell them you'll think about it.

You decide to wait for something else.

So you call back and say; "Sorry it's not really what I wanted. I'll have a

refund instead."

"That's not possible I’m afraid", says the agent.

"You see, you signed a non-refundable reservation. You can switch it to

another property, but you can't have your money back."

And that's where they have you.

They lure you in by offering you a great house at a cheap price and with a

high yield (The Bait).

Then when you've signed the reservation and paid your deposit - they tell

you that house is no longer available but they’ll switch your deposit to

another (The Switch).

Of course, you can be sure the new property you're offered won't be

anywhere near as good as the first.

How do you avoid 'The Bait and Switch'?

Simple.

Whenever you sign a reservation form make sure it clearly states which

property you are buying (with the full address).

And that your deposit is fully refundable if this property is no longer

available.

If the agent or developer won't agree, it’s best to walk away.

You don't want to be the next victim of 'The Bait and Switch'.

If you’d like to see some properties which are actually for sale at the prices

stated and with genuine net yields - click here to send me an email.

I can’t guarantee they’ll be available tomorrow as they sell quickly.

But I will promise you one thing…

I’ll never accept a reservation on a property that is not available.

Page 30 of 58

6. What to avoid (cont.) Where and what to buy

Before you decide where to invest in the USA you need to consider your

own reasons for investing.

For example:

Do you want cash-flow income?

In this case high rental yields are crucial.

Are you looking for high capital gains?

Not every area will recover and grow at the same rate.

Will you use the property yourself for holidays or retirement?

How much money do you want to invest?

Prices vary widely.

Do you need finance?

Many banks still won’t lend so you may need to consider

unsecured financing.

Why are these questions important before you decide where to buy?

Different locations offer different rewards. Some have outstanding

rental yields. Others are tipped for strong capital growth. Some are

driven by tourism. Others by local demand from working families.

Let’s have a look at four different locations and what they can offer you.

Detroit

Memphis

Atlanta

Florida

Page 31 of 58

Location, location, location... Location, location, location...

It is no secret that Detroit was hit hard by the recession. The historical

reliance on the motor industry meant that when the big 3 auto-makers

(General Motors, Ford and Chrysler) struggled so did the city. But things

have changed a lot in the past few years.

Firstly, the auto-makers are doing well after being refinanced by the

federal government.

Last year General Motors' (GM) total revenue increased by US$ 2 billion

from 2011. And in the second quarter of 2013 alone net revenue rose by

US$ 1.5 billion compared to the same period in 2012.

In the first half of 2013 Ford posted its fourth consecutive year of

profitability. And Chrysler reported an eighth straight quarter of income

gains, with sales increasing by 7.1% to $18 billion.

All three automakers had another strong month in July 2013. GM

reported a surge of 16% in U.S. sales, whilst Ford and Chrysler saw sales

jump by 11% each.

So it shouldn’t surprise you Detroit motor companies and their suppliers

are hiring. Ford plan to create 12,000 new jobs by 2015 and Chrysler are

adding 1,250 manufacturing positions.

But the biggest investment by far comes from GM who began

construction of their second Enterprise Data Centre in Detroit in July

2013. Once open, their two facilities will oversee all GM's global IT

operations and house over 9,000 employees.

Secondly, Detroit is not just about the big car manufacturers anymore.

Over the past 5 years private business has invested over US$ 10 billion in

the city. Education and medical jobs now account for more than half of

Detroit’s employment base.

According to Economic Modelling Specialists International, the Detroit

region now employs more than twice as many people in the service

sector than the manufacturing sector. The service sector employs almost

900,000 people - the manufacturing sector just under 380,000...

Page 32 of 58

Average House Prices US$ 39,000 to US$ 60,000

Average Rental Yields Up to 17%

House Price Trend 2013 Up 12%

Detroit Detroit

Many of America's largest companies are now taking advantage of what Detroit has to

offer. Over 60 of them have moved into the city in the past 5 years.

They include; Quicken Loans, U.S. Bancorp, GalaxE Solutions, Blue Cross Blue of Michigan,

Compuware, DTE Energy, General Motors, Twitter, San Diego's Flud, Detroit Venture

Partners, Stik.com and Strategic Staffing Solutions.

Since 2010 these businesses have created more than 11,000 jobs in the city.

So it won’t surprise you to learn that after decades of population decline people are now

moving back to Detroit. In fact, since 2010 the population of Metro Detroit has risen by

4,094.

And Detroit’s resurgence looks set to gather even more pace following the city council’s

application for Chapter 9 bankruptcy protection on July 18th 2013.

You see, Detroit city council has been floundering under a sea of debt for years.

But now the application has been accepted that’s all set to change, because the city can

finally free itself from the burdens created by decades of mismanagement.

Although the media enjoyed putting a negative spin on the story, the truth is many people

have been waiting for this for years. And business leaders welcomed the news.

Dan Gilbert, the founder of Quicken Loans, has invested more than US$ 1 billion in

downtown office buildings in Detroit. He ranks as the richest Detroiter on Forbes’

billionaires list and now owns or runs 30 buildings with a total of 7.6 million square feet.

Talking about the bankruptcy Gilbert said:

“Today’s Chapter 9 bankruptcy declaration by the City of Detroit is the first step toward a

better and brighter tomorrow for our city. It’s important that we ignore the noise that this

filing will surely bring. Many forecasted the end for GM and Chrysler when they declared

bankruptcy just a short few years ago. Today, GM and Chrysler are thriving. Detroit will

thrive again as well and sooner than most think.

Just as the auto companies reinvented the way they do business so will the city of Detroit.

Once our financial challenges are behind us the city, region and state will have a clean slate

to operate with a philosophy and strategy that works for its citizens, businesses and the

entire community. We are more committed than ever to Detroit and the opportunities

downtown. Detroit’s best days are ahead.”

Sandy Baruah, president of the Detroit Regional Chamber of Commerce agreed:

“While nobody welcomes the concept of bankruptcy, it is necessary to solve the long-term

structural financial challenges of this historic city. The private sector is thriving and

businesses continue to invest in Detroit. Addressing Detroit’s financial instability is the final

barrier to robust growth.”

Detroit Detroit (cont.)

Page 33 of 58

Outlook

i. House Prices

According to Zillow Real Estate Market Reports, house prices in Metro Detroit began to

turnaround in November 2011, after falling 52% from their peak.

Since then prices have rebounded strongly. The median selling price of single family homes in

Metro Detroit rose from US$ 87,537 in July 2012 to US$ 129,000 in July 2013.

That’s a rise of 47.4% year-on-year and over double the national average. (Source: Realcomp II)

What’s more, the number of properties on the market fell 27.1% (from 19,371 in July 2012 to

14,131 in July 2013).

In August 2013 Bloomberg Business Week announced they expect Detroit property prices to

increase by 33.1% over the next two years.

ii. Rental Returns

New data shows demand for rental property in Downtown Detroit is outstripping supply. In

Corktown, Downtown, Midtown and Detroit's Riverfront there are almost no vacant rental

homes.

So as you'd expect, rents are going up. The average monthly rent for an apartment was

US$ 1.49 per sq. ft. at the start of 2013. By July 2013 it had risen to US$ 1.74.

(Source: Marcus and Millichap Apartment Research Market Report Q2 2013)

That's a 16.78% increase in just 6 months. It's all happening due to the large number of new

jobs being created. Affluent professionals and graduates are relocating from other states.

Demand is so high property developers are rushing to buy up Detroit's historic buildings to turn

them into upmarket apartments and retail space.

"To us it feels like there's an insatiable demand," said Fred Beal, manager of Motown

Construction Partners who completed renovation of the 124-unit Broderick Tower in Detroit in

January 2013.

Apartments at Broderick Tower were fully occupied within a month of opening, even though

rents are up to US$ 5,000 per month.

"This is truly a public-private sector driven strategy," said George Jackson, President of the

Detroit Economic Growth Corporation. "What's interesting is that the momentum and the

partnerships are getting stronger even in light of the city's financial situation."

And as city rents rise tenants will be forced to look for alternatives in the suburbs.

That means demand will increase for quality properties in neighbourhoods such as;

Morningside, East English Village, Bagley, Belmont, LaSalle Gardens, Greensbriar, Rosedale

Park, Grandale and Warrendale.

Detroit Detroit (cont.)

Page 34 of 58

iii. Population Growth

The Southeast Michigan Council of Governments estimates the population of Metro

Detroit will grow by 10% over the next 25 years. That’s approximately 429,000 people.

They also predict that two-thirds of this growth will be outside the city.

So it clearly makes sense to invest in the suburbs. There will be greater demand for

your properties and your capital growth is likely to be stronger.

iv. Property Taxes

Property taxes in Detroit are currently at their maximum legal levels. As a result lots of

people haven’t been paying.

For this reason an overhaul of the system is planned within the next year which should

see taxes come down substantially. Many people think by around 50%.

Detroit’s Emergency Manager Kevyn Orr said; “The city believes in lowering selected tax

rates - primarily income and property tax rates - to levels that are at least competitive

with surrounding jurisdictions.”

This means when your property taxes come down your rental yields will go up.

So you’ll earn even bigger net rental returns on your investments.

Summary

Despite all these factors, houses in Detroit remain 28% undervalued.

(Source: Fitch Ratings July 2013)

In fact, when adjusted for inflation property prices in Detroit are still 35% lower than in

1998.

But as businesses continue to invest, creating new jobs and opportunities, there will be

an increasing demand for property. This will push up rental yields and prices.

If you invest now you can earn net rental yields of around 17% backed by the federal

government.

So you’ll have all your money back in less than 6 years - and you’ll still own your

property. Once banks start to lend again prices will rise quickly and this opportunity will

be gone.

If you are buying for the highest rental yields and strong capital growth Detroit is your

best option.

My advice: Buy now – hold for 5+ years

Click here to request your full report on Detroit real estate

Detroit Detroit (cont.)

Page 35 of 38

This 4 bedroom, 1.5 bathroom property is typical of the type of house

you can buy in Detroit.

The 1,406 sq. ft. brick-built house was constructed in 1950.

It has just been refurbished, including a new roof, new plumbing,

re-wiring, interior painting and re-finishing.

11100 McKinney Street, Morningside North East Detroit - Price US$ 45,500

Previous sale price US$ 87,955

Page 36 of 58

The Location

The house is in Morningside - a middle-class area of Detroit.

The property is 10 minutes drive to the Country Club of Detroit,

Chandler Park Golf Course and Heilmann Recreation Centre.

Local schools are Beacon Elementary, Denby High School, East

Detroit High School and Wayne County College.

Rental Yield

The house has tenants paying US$ 850 per month.

The rental yield is 16.90% net - after all management fees and

taxes.

If you’d like a full list of investment properties in Detroit - just

click here to send me an email

Detroit What kind of property can you buy in Detroit?

Memphis is one of the USA's major transport hubs.

It is located on the Mississippi River and intersected by 5 major freight

railroads and 3 Interstate highways (I-40, I-55 and I-240).

Memphis International Airport has the 2nd largest cargo operations in the

world by volume. Only Hong Kong International Airport handles more.

Between 2000 and 2012 the population of the Metro Memphis area grew

from 1,135,614 to 1,340,94 - an 18.08% rise .

In July 2013 the median selling price for single family homes in Memphis

reached US$ 161,399 - compared to US$ 148,400 in July 2012. That’s an

increase of 8.8%

There were 1,714 sales recorded during July 2013 - a 22.5% increase from

the 1,399 completed in July 2012.

The number of foreclosures decreased by 13% year-on-year, as of July 2013.

"Halfway through 2013 the Memphis housing market is well ahead of last

year," said Memphis Area Association of Realtors president Regina

Hubbard. "Sales and pricing indicators are on the rise."

Outlook

Memphis has traditionally been a very stable real estate market. It is also

one of the most affordable in the USA.

During 2014 you are likely to see moderate price increases between 5% and

7%. But these may accelerate as more investors enter the market.

Memphis has the advantage of a strong rental market with net yields of

12% to 15%. And rental rates are not likely to decline in the short to

medium term.

If you are buying for stable rental yields and steady capital growth Memphis

is a good choice.

My advice: Buy now – hold for 5 + years.

Click here to request your full report on Memphis real estate

Page 37 of 58

Average House Prices US$ 47,000 to US$ 90,000

Average Rental Yields Up to 16%

House Price Trend 2013 Up 5%

Memphis Memphis

This 4 bedroom, 2 bathroom property was built in 1973.

It is typical of the type of house you can buy in Memphis.

It has recently been refurbished, including a new roof, new plumbing,

re-wiring, interior painting and re-finishing.

12 West Byfield Drive, Whitehaven, 38109 - Price US$ 49,600

Page 38 of 58

The Location

This house is in Whitehaven - a middle-class area of Memphis.

And just a 10 minute drive to Graceland - the former home of Elvis

Presley.

It is a major tourist attraction, drawing over 600,000 visitors a year.

The property is also 10 minutes drive to Whitehaven Country Club

and shopping at Southland Mall and Interstate Centre.

Rental Yield

The house has tenants paying US$ 700 per month.

Your rental yield is 13.45% net - after all management fees and taxes.

If you want to know more about investing in Memphis - click here to

get your full report.

If you’d like a full list of investment properties in Memphis - just click

here to send me an email.

Memphis What kind of property can you buy in Memphis?

Strong job growth coupled with increased demand from new buyers along with

institutional and private investors has reduced property inventory considerably

across the Atlanta region.

This has created a very competitive real estate market in the area.

As a result property prices increased strongly during the year to July 2013.

In July 2013 the median selling price for single family homes in Atlanta was

US$ 235,000.

That’s up from US$ 214,900 in July 2012 and an increase of 9%.

However, houses in Atlanta are still 19% undervalued compared to 1998 prices

so there is still room for capital appreciation.

(Source: Fitch Ratings August 2013)

“Job growth is one of the single most important drivers of home demand, and

Atlanta’s pace of job growth is one of the highest in the nation,” said Eugene

James, Regional Director of Metrostudy Atlanta. “Another important driver for

new home demand is the extremely tight inventory of resale homes available on

the market.”

Outlook

Going forward we are likely to see house prices continuing to rise by up to 7%

per year.

As more inventory comes onto the market (from sellers who have been waiting

for prices to increase and new builds) we are likely to see prices stabilise.

At this point more first time buyers will enter the market.

This could increase the number of properties available to rent and depress

rental rates.

My advice: Buy now – sell within 2 to 3 years. Or hold for up to 10 years.

Click here to request your full report on Atlanta real estate

Page 39 of 58

Average House Prices US$ 60,000 to US$ 150,000

Average Rental Yields Up to 10%

House Price Trend (2013) Up 6.9%

Atlanta Atlanta

This 3 bedroom, 2 bathroom property was built in 2001.

It is typical of the type of house you can buy in Atlanta.

It has recently been refurbished, including new plumbing,

re-wiring, interior painting and re-finishing.

97 Livingston Lane, Covington, 30016 - Price US$ 105,555

Page 40 of 58

The Location

The house is in Covington - a middle-class area of Atlanta.

It is 5 minutes drive to the Newton Crossroads Shopping Centre and

15 minutes to the town of Covington - where you can find shops,

restaurants and nightlife.

Local schools are Oak Hill Elementary, Georgia Piedmont Technical

College and Oxford College of Emory University.

Rental Yield

The property has tenants paying US$ 950 per month.

The rental yield is 8.29% net - after all management fees and taxes.

If you want to know more about investing in Atlanta - get your full

report by clicking here.

If you’d like a full list of investment properties in Atlanta - just click

here to send me an email.

Atlanta What kind of property can you buy in Atlanta?

Florida was hit particularly hard by the recession. Traditionally a market for

holiday makers and retirees, it saw the biggest down turn in property prices of

almost any state in the USA.

Over the past two years things have started to improve. And thanks to rising

demand the median house price in Florida reached US$ 157,000 in July 2013.

That’s up 4.5% from the previous month and almost 25% more than in July 2012.

But it’s still way below the peak values seen in 2006 when the average property in

the state cost US$ 256,600.

Florida Realtors Chief Economist Dr. John Tuccillo commented; "The market

continues its gradual improvement and return to stability. While investors have

been the major driving force in the market, we are beginning to see more owner-

occupants enter the market. This is an encouraging sign."

Outlook

Investors have helped reduce inventory and drive up prices in selected markets

such as Metro Orlando and South Florida. But whether they continue to invest in

single-family homes depends on sales prices and rental rates.

The 3 main factors driving price increases have been; a low inventory of home

listings, a large number of investors and very low interest rates.

However, Florida still has many foreclosed homes which are yet to come to

market. Orlando and Fort Lauderdale in particular have very large inventories of

foreclosures. And in July 2013 mortgage interest rates in Florida began to rise.

As a consequence home prices are expected to increase by around 3.7% over the

next 12 months. (Source: Fiserv August 2013)

In the medium to long term prices should grow at around 3.3% per year.

There will be continued demand for rental properties in key areas, with rental

yields stabilising between 4% and 6% per year.

My advice: Buy only in good areas – sell within 3 years. Or hold for up to 10 years.

Click here to request your full report on Florida real estate

Page 41 of 58

Average House Prices US$ 60,000 to US$ 100,000

Average Rental Yields Up to 10%

House Price Trend 2013 Up 5%

Florida Florida

Florida What kind of property can you buy in Florida?

University Village, Melbourne, Florida - Price from US$ 126,000 These 2 and 3 bedroom condos are typical of the type of property you can buy in Florida.

The Location

University Village at Melbourne, Florida is just minutes from

restaurants, shopping and white sandy beaches.

Walt Disney World Resort, Universal Studios, Sea World and Orlando

International Airport are all just a 10 minute drive away.

And Florida’s Institute of Technology and all major schools are within

walking distance.

Rental Yield

All units are tenanted and guests have the use of all on-site amenities

including; an outdoor heated swimming pool, floodlit outdoor tennis

courts, a fitness centre and a club house.

Rental yields are up to 6.70% - after all management fees and taxes.

If you want to know more about investing in Florida - get your full

report by clicking here.

If you’d like a full list of investment properties in Florida - just click

here to send me an email.

Page 42 of 58

For assistance you can contact Rebecca directly on +66 86 266 7032

Or if you prefer you can email her at: rebecca.smith@ovginvest.com

1. Choose your location and area

Decide which location and area are right for you. If you need help with

this - contact Rebecca.

2. Choose your properties

Please ask for details of what is currently available.

3. Reserve your property

A reservation fee of between US$ 2,000 and US$ 5,000 is paid directly

to the title company (lawyer) and held in escrow.

All funds paid to the title company are completely secure as they are

held in escrow until closing.

4. The title company (lawyer) will do due diligence

Your title company carry out due diligence to make sure everything is in

order.

5. Closing costs are calculated

Closing costs, including property taxes, are calculated and a specific

closing date is scheduled. Contracts are then prepared and issued to

you for your approval.

6. Final payment

The title company will request the payment of the balance plus closing

costs and fees.

This is typically 14 to 21 days from your initial reservation.

Once the sale is completed the title company will send all documents

and your property title to you.

7. Sign a management agreement and start receiving your

money

Your rent (less management fees) is paid directly into your nominated

bank account every month.

Page 43 of 58

A summary of the buying process A summary of the buying process

In the USA all property and land are sold freehold.

There is no restriction on buying and selling - whatever your nationality.

And when you buy property you have various ownership options.

The two most common are:

1. Own the property in your name

2. Set up an LLC to own your property

But which one is right for you?

Let's take a look...

1. Own your property in your name

Buying a US property in your own name is straightforward.

You simply send a copy of your passport to your lawyers so they can

register the property in your name.

2. Set up an LLC to own your property

In case you don’t know, an LLC is a Limited Liability Company

Many people think owning property with an LLC will give them tax

advantages. It will not.

The Internal Revenue Service (IRS) treats one-member LLCs as sole

proprietorships for tax purposes. And multi-member LLC's as

partnerships.

That means the LLC does not pay taxes and doesn’t have to file a tax

return. But the owners of the LLC are personally liable for taxes.

So why do people use LLCs to own property?

The main advantage is it reduces your personal liability.

You see, an LLC gives you 'limited liability' on the same basis as a

corporation. And as you know, in the USA when things go wrong people

are quick to file law suits.

But a simpler solution may be to arrange an insurance policy in your own

name which gives you the same protection.

Of course, whether you buy with an LLC or in your own name depends

largely on your personal circumstances.

So I always recommend you speak to a good lawyer or accountant who

can help you choose the best option for you.

Page 44 of 58

A summary of the buying process Ownership

When you buy a property in the USA the sale is handled by your Title

Insurance Company (sometimes called a Title Agency) or your lawyer.

Their job is to protect you by ensuring your property has a clear title deed

(Warranty Deed) and there are no problems with its ownership and history.

Your Title Company will search public records and check:

Previous deeds

Registered Mortgages

Wills

Divorce Decrees

Court Judgements

Tax Records

Liens

Claims

Maps

If they find any problems or debts they will ensure these are settled before

you take ownership.

Once they are satisfied, they prepare a final settlement statement (HUD-1).

This lists what you and the seller need to pay at closing.

They’ll also send you the sale and purchase documents to sign and return.

At this time you should pay the balance into your Title Company’s escrow

account. They will arrange a closing date and notify you and the seller.

When the sale is complete, they will send your deeds to the Public Records

Office for recording.

Escrow account

An escrow account is a secure, insured bank account usually held by an

accountant, lawyer or Title Company.

When you transfer your funds into an escrow account they can only be

used for the purpose of buying property.

Your lawyer or Title Company will only release the funds to the seller once

the sale has been satisfactorily concluded.

You should never transfer your funds directly to the seller or agent.

Page 45 of 58

A summary of the buying process What does a Title Company do?

For assistance you can contact Rebecca directly on +66 86 266 7032

Or if you prefer you can email her at: rebecca.smith@ovginvest.com

A Warranty Deed is the title deed for your property.

It is the highest grade of title in the USA and gives you the greatest

protection.

With a Warranty Deed the seller warrants that they legally own the

property and there are no outstanding liens, mortgages or other

encumbrances against it.

This means you can hold the seller liable for damages if you later

discover the title is defective.

It is vital you check with your lawyer or Title Company the seller will be

transferring the property to you by Warranty Deed and not another

form of deed.

Once the sale is closed you will receive a copy of the Warranty Deed by

email from your lawyer or Title Company.

This will have been witnessed by a notary and the signed by the seller.

The original deed is sent for recording with the Public Records Office in

the city where you are buying.

After 45 to 60 days the deed is returned and sent to you directly.

You should keep your Warranty Deed safe as it is your proof of

purchase and ownership.

A word of warning...

Some unscrupulous sellers may try to sell you a property with a Quit

Claim Deed.

This should be avoided at all costs.

With a Quit Claim Deed the seller is not only transferring you the

property but also any debts, liens and encumbrances that go with it.

These could include back taxes, previous water bills, mortgages and

even claims to the ownership of the property.

It could cost you thousands and you could even lose the property

My advice is to insist on a Warranty Deed or walk away.

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A summary of the buying process What is a Warranty Deed?

You should always insist you get Title Insurance included when you buy.

A title agency will only issue Title Insurance on Warranty Deeds if they know there are

no problems with the title. Problems can include unpaid debts, liens and other

encumbrances.

You may think if you have a Warranty Deed you don’t need Title Insurance as you can

claim against the seller.

But a warranty from a seller who dies or goes bankrupt may have little value.

What is Title Insurance?

Title Insurance covers you for problems there may have been with the title before you

took ownership.

This could be anything from a dispute with neighbours to encroachment or unpaid

taxes.

These things can cost you a lot of money.

Title Insurance will protect you against:

Errors

Incorrect information on deeds, mortgages and public records.

Liens

Claims against the property or seller which become your responsibility after the

sale. These could include unpaid taxes and other debts.

Claims to ownership

For example, a claim by a family member not mentioned in the estate will.

Forged or invalid deeds

Including, transfer by someone who did not own the property or by a previous

owner who was not mentally competent.

Legal fees

For defending a claim against your property covered by Title Insurance.

Title insurance is provided at the closing of the sale and valid from the moment you

take ownership. It is not a policy you can decide to take out at a later date.

The typical cost is around US$ 499 and can be higher in some states.

The good news is, your title insurance lasts as long as you own the property.

All our US investment properties come complete with full title insurance at no cost to

you.

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A summary of the buying process Protect yourself with Title Insurance

The US tax year runs from January through to December and all tax

returns are due by June 15th.

It is very important to get yourself a good US chartered accountant.

They will fill out all your documents, claim discounts, offset your

expenses and make sure your accounts are filed on time.

The amount you pay them - typically around US$ 350 for a single

property - can save you a fortune and will avoid any problems.

Plus, you can claim against their fees as an expense in next years’

accounts.

Closing costs when you buy

Here is a break down of taxes and fees you need to pay when you buy:

1. Property tax

You’ve probably noticed that property tax varies a lot in the USA.

Sometimes taxes differ by over US$ 1,000 a year for the same size house

with the same size lot on the same street.

Why does one owner pay so much more than the other?

It’s quite simple.

You see, taxes are based on the fair market value of your property.

But many properties still pay tax based on their peak values - before

prices crashed.

So their bills are much, much higher than they should be.

There can be several reasons for this:

1. It was owned by the same person for many years and they never

asked for a re-assessment

2. It was sold but the Recorder of Deeds didn’t notify the Tax

Department

3. A previous re-assessment request was declined

The good news is you can appeal.

And I’d strongly advise you to do that, if you think you are paying too

much...

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Tax, fees and insurance Tax, fees and insurance

These are the basic steps:

You submit your application to the Board of Assessors for review

between 1st February and 15th February

They re-assess the value of your property and send you a letter with

their decision

If you’re successful you’ll have a reduced tax bill the following year

If you’re not you can appeal to the Board of Assessors in writing

They’ll consider your appeal in March and notify you of the outcome

But don’t worry, if you buy your property from us I will do it all for you.

Just click here to send me an email and I’ll be in touch next January.

This year we managed to reduce our investor’s property taxes in Detroit

considerably.

In fact, some tax bills were cut by 45%.

That’s a saving of US$ 900 if you’re paying US$ 2,000 at the moment.

So it can make a big difference to your rental yields.

Of course, there are no guarantees.

But I think you’ll agree, it’s definitely worth a try.

When are property taxes due?

In the USA you have to pay property tax to the County and City (e.g.

Michigan and Detroit).

County taxes are due in Jan/Feb.

City taxes are due in June/July.

You can pay these by credit card or by electronic cheque.

The cost varies from state to state and city to city.

On average you should allow US$ 2,000 per year for property taxes on a

single property.

But these are already accounted for in the net rental yields we quote.

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Tax, fees and insurance Tax, fees and insurance (cont.)

How much is property tax when you buy?

This depends on when you purchase your property.

It is usual for the seller to ask you to pay back any taxes they have

prepaid - an item called ‘pro-ration of taxes’.

For example:

I am the seller. I paid my property taxes on July 1st 2013 for the year

through to June 30, 2014.

You buy my home on January 1st 2014. As the seller, I would ask you to

repay me the property taxes from January 1st 2014 to June 30th 2014.

2. Property Insurance

The USA is a litigious country - meaning they like to sue for everything.

It is very important to have full cover in case of fire, hazard or any other

potential liability on your property.

The typical insurance pay-out limit is US$ 1,000,000 per occurrence and

US$ 2,000,000 aggregate per policy term.

The cost of insurance is around US$ 600 per year per property.

3. Settlement fees

These are charged by your Title Insurance Agency (or lawyer) who

perform due diligence and prepare all the documents for your purchase.

The average cost is US$ 350.

4. Recording fees

When you buy, the local town hall will register the sale to you.

You pay a fee for recording the transfer of property.

The average cost is US$ 20.

In summary

You should allow around US$ 3,000 for all closing costs when you buy.

Most of these can be offset as an expense in your tax return the

following year.

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Tax, fees and insurance Tax, fees and insurance (cont.)

The USA has a marginal tax rate.

This means the tax rate increases as you make more money.

If you are not a US citizen or are a US citizen living overseas you will

need to report your rental income on a 1040 NR (Non Resident) form.

The income tax you pay is calculated on the net rental income after

deductions for management, taxes and insurance etc.

If you have a single property the tax rate applied is 10% of the net rental

income.

Here’s an example....

Let’s say you own one property in Detroit worth US$ 40,000 earning

US$ 7,000 Net Rental Income per year.

Your Taxable Net Income is your gross rental income minus

management fees, property taxes, property insurance, your personal

allowance (currently US$ 3,700), depreciation and other expenses.

You would expect to pay US$ 213.70 per year in Federal Income Tax and

US$ 90.82 to the State in Michigan.

You do not pay tax on your actual rent but on your Net Taxable Income.

You can also usually claim tax credits in your home country against any

tax you pay in the US.

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Taxable Net Rental Income US$ 7,000

Minus Your Personal Allowance US$ 3,700

Minus Depreciation US$ 1,163

Total Net Taxable Income US$ 2,137

State Tax Payable US$ 90.82

Federal Tax Payable US$ 213.70

Total Tax Liability US$ 304.52

Tax, fees and insurance Personal income tax

When your accountant files your tax return he will make an allowance for

depreciation.

This varies according to how long you have owned your property.

But standard accounting practice is to take 80% as the value of the property

and 20% as the value of the land.

So if the value of your property is US$ 40,000

(80% of US$ 40,000 = US$ 32,000).

The Inland Revenue Service allow you 27.5 years to fully depreciate your

property.

Therefore, depreciation (US$ 32,000 ÷ 27.5) = US$ 1,163 per year.

This amount will be deducted from your Taxable Net Rental Income as shown

in the table on the previous page.

Capital Gains Tax

When you sell your property you will be liable for capital gains tax.

If you have owned your property for a year or more you will be charged up to

15% on the net gain.

If you buy and sell within one year, the gains are taxed as ordinary income.

Taxation is complicated and I always think it is better left to the experts.

Depending on where you decide to buy, I will be happy to recommend some

excellent US tax accountants who can do all of this on your behalf.

ITIN and EIN Numbers

Once you have purchased your property you must apply for a tax identification

number.

For individuals this is an ITIN (Individual Taxpayer Identification Number).

And if you have an LLC, an EIN (Employer Identification Number).

You should apply as soon after buying as possible.

As a foreign investor your management company has a legal responsibility to

withhold 30% from your rental payments until you have a tax ID number.

Your accountant will apply for you and it usually takes between 6 and 8 weeks

to get your number.

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Tax, fees and insurance Depreciation

The main reason this opportunity in US real estate exists is due to

finance.

Put very simply, banks lent to people who knew they couldn’t pay it back

on a massive scale.

Then when the housing bubble finally burst - this resulted in an

unprecedented number of foreclosures.

Banks took back the properties (which ultimately fell into disrepair)

and are now selling them off at prices way below their previous market

value.

In many states builders cannot build a house for the same price as a

resale property costs - let alone make a profit.

US banks are not lending

Having been re-financed with tax payers money so they could stimulate

the economy by starting to lend again - US banks still refuse to grant

mortgages.

They are still not lending to many US citizens with good, paying jobs.

So you won’t be surprised to hear they are not lending to overseas

investors either.

They are just not lending full stop.

The fact is, this is one of the reasons that house prices are so low and

rental yields are so high.

Once banks start to lend again supply and demand will cause prices to

rise rapidly in some locations.

A word on non-status finance

We are able to offer non-status finance on some properties.

You can finance your purchase in this way.

But remember, you do not own the property until you have paid for it in

full.

If something happens to the company you are borrowing from, you

could loose your investment and any money you have already paid.

In today’s economic climate you should think about this very carefully.

Page 53 of 58

Finance Finance

As with any investment you need to plan your exit strategy.

After all, that is how you sell your property and realise your capital gains.

So you need to think carefully about who will buy your property in the

future.

Is the market driven mainly by overseas investors or is there a strong

local (domestic) market?

Selling to a local (domestic) market

Most property markets in the USA are driven by local buyers. Although

with the current lack of mortgage financing many locals are unable to

buy.

House prices are rising in many areas of the US - but not all.

Plus, there is a shortage of good quality housing in some cities.

As the housing market and economy recovers it is likely there will be an

increasing demand for good quality housing in these areas.

In the meantime, if you are earning a rental return of 16% or more, you

will get all your money back in around 6 years or less.

And you will still own your property.

With this in mind, I recommend that you view your purchase as a mid to

long-term investment (5 to 10 years) to achieve maximum profits.

Lease-to-own

Another option is to offer your property to your tenants on a Lease-to-

Own basis.

This is an agreement between you and your tenants to sell them your

house at a fixed price in five years time.

You agree a price at the start.

And for five years they make additional monthly payments towards the

price of the house.

At the end of five years, a ‘balloon’ payment is made for the balance of

your agreed purchase price.

If the tenants cannot make this payment, any money they have already

paid towards the house is legally retained by you.

Page 54 of 58

Your exit strategy Your exit strategy

If you bought a property in a good area and it is bringing you a good

rental yield but you need to sell quickly, a good option is for you to sell

to another investor.

You may not make the full capital gains you would like - but you will be

able to sell based on the rental income.

This is a good way to get out quickly if you need to free up your capital.

Page 55 of 58

Your exit strategy Sell to an Investor

1. No finder’s fees - ever

Many companies who offer overseas investment property will charge

you a finder’s fee on top of the purchase price.

We do not believe this is fair.

We receive a commission for the sale and that is our payment for our

work.

Our promise to you is we will never inflate prices or add finder’s fees to

the cost of your property.

The services we provide to you will always be offered free of charge. All

we ask is that when you are ready to buy you come to us first.

2. No hard sell - ever

We promise you will never be sold to.

You will simply receive independent advice – either via our

comprehensive reports and location guides, by email, telephone or face-

to-face. The choice is yours.

We will only offer you opportunities in secure locations with the highest

returns, backed up by thorough research.

If you decide an investment is right for you, great. If not, that is fine too.

We will keep the ideas coming until you find what you are looking for or

tell us to stop.

3. Comprehensive research - always

All the market reports we will send you are based on in-depth research.

We don’t just look at the bottom line and your potential gains, we study

the fundamentals affecting each local property market.

Page 56 of 58

Our commitment to you Our commitment to you

4. Secure investments - maximum returns

In our opinion, the security of your investments is as important as your

potential gains.

We will give you honest, unbiased guidance and present only

appropriate investment opportunities.

All of these will offer you secure ownership structures, high net income

and the maximum possible capital growth.

If we consider any investment to be risky, you will be the first to know.

5. Honesty and confidentiality - at all times

Honesty is a rare commodity these days – especially in the real estate

industry.

Yet, when large sums of money are involved surely honesty is vital at

every stage?

We believe strongly that it is.

After all, if you are relying on our investment advice don’t you deserve

complete honesty every time we talk to you?

And it should go without saying (but we’ll say it anyway) all your

enquiries, questions and investment activities will be treated in the

strictest of confidence at all times.

Page 57 of 58

Our commitment to you Our commitment to you (cont.)

Rebecca Smith has 23 years of experience in real

estate sales and development.

Originally from Leeds in the UK, she is also a

prolific property investor.

Rebecca says; “Research into any real estate

market is crucial. You cannot simply follow the

hype.”

“It is essential to have a long term plan - especially in today’s market.”

Her motto is:

“I will never recommend anything I would not buy myself.”

She has written various investment guides for property investors including:

‘The Investor’s Guide to USA Real Estate’

‘The Investor’s Guide to Detroit Real Estate’

‘The Investor’s Guide to Atlanta Real Estate’

‘The Definitive Guide to Buying Property in Thailand’

You can contact Rebecca directly on rebecca.smith@ovginvest.com

Copyright

The contents of this guide are original copy.

The author would like to state that she is extremely happy for individuals to

distribute this guide to anybody they feel will enjoy and benefit from its

contents.

Just please be sure not to alter it in any way, or claim that it’s yours - that is

just not ‘cricket’.

Disclaimer

The contents of this guide are for a general overview only and should not be

taken as an authoritative statement of international law and practice.

Neither the author nor the publisher is responsible for the results of actions

taken on the basis of information contained in this summary, nor for any

errors or omissions.

This text is not intended to provide legal, accounting or tax advice.

Page 58 of 58

About the author About the author