Buying Property in the USA

[iceman]

Hi guys, my wife is a US citizen but we live in NZ. We want to buy property in NZ. Could we take out a mortgage with a US bank to fund this? (Their interest rates are much better than NZ)

As FP already said, no problems doing this if the lender agrees. Interest rates are definitely much lower in the US but don't forget the FX risk if you live in NZ and have your income in NZ$. Can be much greater than the interest rate differential !

[GTM 3442]

Hi guys, my wife is a US citizen but we live in NZ. We want to buy property in NZ. Could we take out a mortgage with a US bank to fund this? (Their interest rates are much better than NZ)

You certainly can, but future exchange rate movements could leave you naked up a gum tree if you were intending to use NZ funds to service the loan.

[Aaron]

You certainly can, but future exchange rate movements could leave you naked up a gum tree if you were intending to use NZ funds to service the loan.

I would have thought access to a 30 year 4.5% fixed mortgage from a US bank would be all you need. Provided your net yield on the rental is over say 6%. Also provided you can find a good tenant the US federal reserve should take care of the required inflation to get rid of your debt. The rent should cover it anyway.
Trips to US become tax deductible. I am just not sure how I find the property, how I manage it and if a US bank will lend to me and give me an amazing 30 fixed interest rate.
I wouldn't be surprised if it were cheap Chinese and us money pushing up property prices in NZ.

[GTM 3442]

I would have thought access to a 30 year 4.5% fixed mortgage from a US bank would be all you need. Provided your net yield on the rental is over say 6%. Also provided you can find a good tenant the US federal reserve should take care of the required inflation to get rid of your debt. The rent should cover it anyway.
Trips to US become tax deductible. I am just not sure how I find the property, how I manage it and if a US bank will lend to me and give me an amazing 30 fixed interest rate.
I wouldn't be surprised if it were cheap Chinese and us money pushing up property prices in NZ.

There seem to be a lot if "I would have thought"s, "would be"s, "provided that"s, "Also provided that"s,"should"s, "I am just not sure how"s, "how I"s in there.

Would the 2001 exchange rate of NZD1=USD0.33 have any effect on your workings?

. . . if you were intending to use NZ funds to service the loan. But you don't seem to be intending to do that.

[Aaron]

No I have no real plans just spit balling as they say in the US of A. I would have thought that the 30 fixed interest rates offered by the US banks would be the big draw card, then only your initial deposit is exposed to the vagaries of exchange rate fluctuations. Set and forget for the next 20-30 years exchange rate risk minimal interest rate risk non-existent. I am guessing the Federal Reserve will just about guarantee inflation (they haven't even got the helicopters out yet). Rental yield 6% interest rate 4.5%. Distance and cost of airfares could be a problem but if you have family in the US like slamdunk then I would be doing more than spitballing. Next problem, where to invest in the US, it looks like a big market.
Funding from NZ throws up the big problem of exchange rate fluctuations.
The Federal Reserve could be successful in destroying the $US(bad news for NZ funded investment)

[Snapper]

Just heard a very cautionary tale about investing in the US housing market from a friend. She bought a number of houses over there which rapidly turned into a whole lot of trouble. She's now out of it but lost a good deal of money in the process. The big yields might look attractive but trying to deal with corrupt property managers was a nightmare. She went over there to try to sort it out but these guys were scary. Tread carefully.