Monday, April 16, 2012

China : Investors Want More USA Real Estate

I'm on my way to China tomorrow for a two week excursion for both business and pleasure.  As I've never been there before, I am very much looking forward to experiencing the customs, culture, sights and sounds of this powerful and massive country.  By land area, it has 3,722,027 square miles, landing #3 overall in the world, just slightly larger than the United States (3,678,190 square miles).

What's important to understand is that we live in a global economic system now and that investors worldwide are looking to put their money in the highest return, lowest risk investments.  These investors are everywhere, but with the massive rise in the economic power of China over the last decade in particular, there are many investors who have garnered substantial wealth in a short period of time and are among those individuals looking to park their money in the best, most viable investments for their personal goals and criteria.

What's not typically known or advertised is that the price of real estate in the United States in major cities compared to that in China for similar properties is a massive bargain, not only in terms of price for the Chinese, but the fact that the Chinese government does not allow citizens to own the land on which a property is built.  The land is leased to the owner of a property in comparison with complete ownership ability in the United States.  The following Forbes article explains further why the United States is such a popular country for the affluent Chinese to invest their money.  There are many positives that the influx of foreign capital will help with in the USA, and the Chinese do have plenty of capital to spread around.

For those that have an interest in what foreign capital will do to a real estate market, just look north of the border into Canada where there is a completely different market in comparison with the USA.  There has been much said about the strength of the Canadian banking system, and this is one of the driving factors for the long term appreciating real estate markets north of the border, however foreign capital influx has had a bigger impact than the banking system, with much of that coming from Asia and in particular, China.  

The major real estate markets in Canada have been appreciating without a drop for many years beyond that of a typical market cycle and even during the last "great recession" contrary to conventional wisdom.  A vast influx of foreign capital flowing into "relatively safe" Canada has boosted and pushed the real estate markets up in cities like Vancouver and Toronto to astronomically inflated values.  As long as that capital continues to flow, prices will continue to rise and will likely do so in the near future, but this cannot be expected to continue much longer as many experts are now in agreement with including the Bank of Canada.  Without that foreign capital influx, and the "safe" impression that the Canadian Real Estate markets have to foreign investors, the markets for all intensive purposes there should have declined somewhat at minimum over the past few years but didn't as a result of foreign capital influx.

As the tide begins to shift in the United States and the tough times that have been prevalent since about 2007/8 begin to show increasing signs of improvement, expect to see more foreign capital coming into the USA, and a substantial amount more so from China.  There are still many that see the USA as a risky place for investment.  I absolutely disagree with them for a multitude of reasons, but as my business partner Nate Mack of PinPointe Partners in Atlanta says, there is no such thing as a good or bad market.  There are only good or bad investment strategies.

I wish everyone a great balance of April and I will check in again upon my return in May.


  1. Hi Alex,
    I invest in Tax Deeds and Tax Liens. This is a sector of real estate investing that most mainstream REI's aren't aware of and it is where great returns are happening. The beauty of tax lein investing is that the rate of return (ranging from 4%-36% annually depending on municipality)is guaranteed by municipality and backed by the real estate the lien is issued against. The scenario is simple: the property owner pays the deliquent tax plus interest to you the lien holder or you will gain the right to claim the property. Either way, it is a win-win for the investor.
    Tax Deed investing is a great way to get properties at low, low prices. What makes these sales so amazing is that the bids start at what the municipality deems reasonable. Many times that is much lower than the mortgage or the price the banks will ask for a short sale. The time period to gain ownership is much shorter: you bid, you win, you own.
    There is a tax deed auction coming up on 5/2/2012 in Monroe County, PA. I will be attending and will be able to represent your clients as a 3rd party bidder. I have access to setting up foreign bidders with business entities, the ability to set up bank accounts and the capability to transform the tax deed into a warranty deed in 30-60 days when the normal process is 9-12 months (and at much cheaper prices).
    I also attend New Jersey Tax Lien Auctions, which offer rates of 18% annually.

    You can email me at for more information or call 570-431-9821.

    I look forward to hearing from you.
    Shawn Hobbs
    SJH Investments, LLC

  2. Excellent insight and information, thank you for posting! Enjoyed our conversation this morning as well. Have an abundant minded week :)