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Across The Pond

Veteran international investor John Corey offers his latest thoughts

My wife and I are visiting family in the USA. While there, I have been taking the last two weeks to get a bit up to speed on what is going on with USA real estate investing - a focus on one specific micro-market to be more accurate. I have attended three property meetings in the last two weeks in Philadelphia, PA.

Until I started writing this article, I never knew that Philadelphia is the 5th largest city in the USA. In the UK, it would rank 4th largest by population. Who would have guessed?

I have been surprised by the range of creative deals people are putting together, strategies which do not exist in the UK. I am not sure how much of the added creativity is a function of local market conditions vs. USA-wide market practices. What I do know is this. People are doing deals, the property values are pretty low ($70K to $300K) for row (terraced) houses to multiple units - all freehold. This was a pleasant surprise.

The other surprise was the lack of crowdfunding, in the UK sense of the term. The FCA is not the SEC. The Federal Government in the USA passed the JOBS Act several years ago. The legislation created the opportunity to crowdfund and instructed the SEC to come up with specific regulations. What appears to be more popular than crowdfunding is syndication using a particular set of rules set out by the SEC as part of the mandated update. If anyone reading has heard of Grant Cardone, he is using syndication blended with social media to reach a broad audience of possible investors. Promotion of these syndications, within the new boundaries, has become legal and common.

I believe the USA is still more advanced in terms of creative financing, yet the UK leads in terms of crowdfunding for retail investors. I will be continuing the research and digging into the USA framework. If anyone else is interested, let me know and I can keep you posted. If there is enough interest, I can create a follow-up article for Property Investor News.

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