Why are US property prices so cheap and their yields so high?

Undoubtedly this would be the number one question we are asked, especially as New Zealand property prices soar to seven figures in many places for small properties on postage stamp.

There are actually three parts to answer this:

1. They build for only 1/4 of what we pay here. Because of there huge economies of scale they can build a house for $150K that we would pay $600K for
   
   
2. They have plenty of land. Therefore where land would cost us $1M, they will buy something comparable for  $200-$400 or even less
   
   
3. Their cost of borrowing is much less than here in NZ. For example if you bought a high quality commercial building in Houston TX, the CAP return (before borrowing) could easily be 7% and you would likely have a selection of lenders offering you permanent mortgage finance at around 4%. This would therefore offer you leveraged return of 15% or more on your investment capital
   
    

 To find out more play the video below