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"This is the year smart money invests in America". - Sam Ally

"America On Sale"

Why 2022 Could be a Historic Opportunity for Non-US Citizens to Invest in US Real Estate...

By Mike Henderson

Monday

January

01

1999

Wealthy Americans are known for their love of buying overseas properties. But in 2022, the tables may have turned. According to real estate expert Rick Melero, we’re witnessing a rare “watershed” moment for Non-US Citizens to diversify their portfolio by investing in the US property market. Here’s why…


Many people are surprised to hear that America's decade-plus real estate bull market still has further to run. But it's true. Even the US Federal Reserve expects further house price growth in the coming years - a view supported by two fundamental factors.

First of all, real wages continue to rise. This underpins household incomes and the spending power of middle class America. And second, the US property market simply isn’t experiencing a supply overhang like it did before the crash in 2007.

Rick Melero, principal of real estate investment group HIS Capital, believes US real estate is the best medium-term bet for everyday investors from all over the world. Even so, he says the window for locking in above average returns could be relatively short.

There are three key strands to this view:

American properties are still surprisingly cheap. That’s particularly true when compared to European housing markets, such as the UK and Ireland. In many states, you can still pick up a two-bedroom house for under $50,000 (£37,000 or €44,000). This may change, though, as more foreign capital starts to flood in.
Recent uptick in US inflation. Hard assets like houses are an inflation hedge and tend to hold their value better than paper assets during bouts of accelerating inflation. Not only this, but by using (sensible) leverage, borrowers can multiply their returns since nominal mortgage debt is fixed, but rental incomes rise with inflation.
Low yields in global financial markets make real estate a very attractive relative play. Interest rates are stuck at rock-bottom in the advanced world and property is one of the few traditional asset classes where investors still have a realistic chance of earning 10%+ annual returns.

Most experts agree on one thing –- we’re likely to see more overseas interest in the US housing market over the next 3-5 years. Melero cautions, though, that at some point it’s inevitable that US real estate’s record-breaking run will have to end.

In his view, therefore, it’s critical to have a diversified portfolio. Too many investors follow a one-dimensional approach e.g. just wholesaling or fix-and-flip. But for Melero it’s important to use multiple strategies that can make money at different stages of the real estate cycle.

Simply put, during the downturn every serious investor needs to have income-paying assets. Melero’s company, HIS Capital, uses this approach to stay liquid and navigate through the ‘lean’ times. “It puts us in a fantastic and unique position to buy distressed properties for pennies on the dollar at the bottom of the cycle” Melero noted.

HIS Capital’s diversified Fund III is based on a proprietary “40-40-20” strategy. To date, it’s proven extremely popular with US institutional investors, many of whom are hungry for additional yield. (Fund III targets an annualised rate of return of 13-17%).

What’s more, a game-changing regulatory ruling means that anyone can now tap the same property strategies as Americans and accredited investors. Melero’s passive fund opened its doors to everyday non-US investors from all over the world in early 2022. 

To find out more, including how to take advantage of this time-sensitive opportunity to invest passively in lucrative US real estate, watch/listen to Rick Melero’s recent interview on the Alternative Investor Podcast.

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