For the last couple of years, the US Dollar has been taking a beating... a serious beating.
Back at the beginning of 2007, a single Euro could buy around $1.20. By April 22nd, that single Euro could buy about $1.60. Think of it this way, 200,000 Euros could buy a $240k home in January 2007. But in April, 2008, that same 200k Euros could buy a $320k home.
But, today, August 15th, the USD had struggled back to about $1.47... or a $294k home.
So, we are seeing oil drop, and the US Dollar has been solidly coming back since early July. The big question is whether the US Dollar is on a long term up-trend.
For international investors, there are two things that need to be watched. Exchange Rates and Property Appreciation. In many markets, prices may have bottomed, and it looks like there is a chance that the Dollar will be gaining strength. That is the 1-2 punch for successfully investing in US properties.
Look at the numbers for a minute... If buys a home in the US for $300k, and it costs 200k Euros, and that house gains value to $330k over the next couple of years, and the Dollar comes back to $1.20/Euro, the property would be worth 275k Euros... That is a 37.5% return... And if it was done with 20% down (40k Euros), with no principle reduction, the return is 62.5% (65k Euros after paying off the loan). Of course, this assumes a break even on rental of the property, and discounts tax penaties... but you can see the point.
Now may be the time to buy US property for appreciation in foreign currencies
Unless otherwise noted, all content of this blog is the property of Lane Bailey, ©2012 Lane Bailey.
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