A Financial Safe Haven in a Global Storm

Well, what a turbulent year 2008 turned out to be; stock market crashes, shares losing up to 50% of their value, property market crashes, economies going into deep recession and investment incomes slashed. If you are lucky enough to have anything left of your capital after all this, with base rates as low as 0%, you cannot get a decent return on your savings - and 2009 is set to be worse. Is there a safe haven to invest in?

When the economic hurricane blew in 2008 it missed Syracuse in Onondadga County, New York State, USA. In 2008 property prices actually went up by 3.5%, when property prices in many other areas were in a downwards spiral. Prices also look set to hold firm in 2009 when the outlook for many other areas is very gloomy.

So why has Syracuse been so stable?

There are several reasons, the main one is that property prices in the city have historically been low and not subject to the disproportionate increases over the last few years incurred by the majority of other areas, along with the fact that a large percentage of the city’s population are tenants rather than owners.  Also, as you can buy investment properties in good rental areas that give a net return of 20% after annual costs* there is an increasing demand for properties by investors, therefore it would be very difficult for prices to fall. Demand for rental properties is also likely to stay high with the 2.5 billion dollar ‘Destiny USA’ project underway which is expected to create more than 122,000 jobs, add more than 6.1 billion dollars to the Upstate New York economy and generate 92.7 million tax dollars for Onondaga County.

What are the pitfalls that foreign investors should be aware of when buying properties in this area?

Always be sure you have a good attorney representing you; they will protect your interests and complete the purchase for you, addressing any issues that might arise legally. It is usual practice to give the attorney “power of attorney” so they can sign the papers in your absence. Be aware of the area that you buy in; this is equally important as every city has challenged areas and properties in these areas are always difficult to find good tenants for, irrespective of how desirable the property may look. Alternatively, if the property is in a location with high rental demand you should always be able to find new tenants for it within a month. Always have your purchase surveyed and valued so you know the condition and current market value of your purchase. Then, when you have bought your investment, you have to be sure that you have good property management in place as they will be collecting your rents and maintaining your property for you in your absence. It is also of benefit if you have a contact in the area that can be your eyes and ears to advise you on all these aspects. If you buy your property though an agent that can accomplish all these points, thereby providing a complete service, you should be protected from all the pitfalls. Your purchase, if maintained properly, should protect your capital investment and provide an excellent income for many years to come.

This article was supplied by American Dream Investments.

*NOTE: Annual costs = management costs, property taxes, water and insurance costs.