What are the Benefits of Buying U.S. Real Estate When You Live Abroad?
By Jenny Alejandro
The United States has one of the best real estate markets in the world. Now is the time to buy because the U.S. economy has been on an upward climb, and with that comes a favorable housing market. Here are a few other reasons why an international investor would want to buy U.S. rental properties:
- The currency exchange can be in the foreign investor’s favor. When an investor earns U.S. capital, it commonly converts to more and becomes a larger return, when converted to their country’s currency.
- The United States provides a stable, high return real estate investment market.
- America can offer many favorable cities to choose from, with lower cost housing markets than most international locations.
- The U.S. tax system rewards investors with incredible tax benefits – deductions/depreciation, that can, in some cases, leave the international investor owing nothing to the government.
- America offers foreign investors a great opportunity to buy off-market properties at great prices.
There are many moving parts to a U.S. real estate deal, and not being physically present in the country can present a variety of issues. From not having the ability to judge for yourself if the property is 100 percent acceptable, to not knowing who to contact to form a team of professionals to assist with the process, international investors have to be on top of their game to successfully pull the deal off. Some may not be capable of doing this. But the truth is that Mila Realty can take care of everything for the investor.
When it comes to learning how to buy U.S. real estate as a foreigner, we would like to cover a few points that we feel are huge in making an international property transaction easy, as well as straightforward. Let’s find out what are The Best Strategies for Buying U.S. Real Estate if You’re a Foreign Investor, so you can start building your global real estate portfolio.
Use Non-Recourse Financing to Easily Invest in U.S. Rental Properties
Traditional bank loan to fund your real estate purchase can involve a lot of red tape that can make the process either unbearable or not happen at all. There is a secret out there that seasoned international buyers know about that we would like to share. It’s called non-recourse financing, and you’re going to think it’s so great that it can’t be true. First, let’s go over the traditional financing, so you can compare it to non-recourse financing:
What is Traditional Financing (recourse loans)? A recourse loan, or what most refer to as a traditional loan, seems to be the most common type of property financing. This could be due to a lack of knowledge of alternative financing strategies, as well as the fact that many banks do not offer alternative options. This type of loan is in the borrower’s name and is secured by collateral. Traditional loan providers consider your income, spending habits, credit scores, and more. International borrowers will be required to provide a lot more documentation to pass the lender’s tight approval process. It can be a challenge since Foreign investors typically don’t have the usual documentation that a citizen of the United States readily has at their fingertips, such as American tax returns and a U.S. credit history. Plus, it’s simple to verify the identity of a U.S. citizen, but a lot more needs to be done to verify the identity of someone who lives on the other side of the world. Because of all the additional verifications and documentation, the loan can take much longer to get approved.
In contrast, a non-recourse loan is a whole different ball game. It makes obtaining a property loan simple, with a greater chance of being approved. The bank is not looking at your personal credit history or verifying your income, like a traditional lender would. They are only looking at the property you are trying to finance. This is because if you were to default on the loan, the property is the only asset they can take. Your personal assets, wages, and so on, cannot be touched by the lender. The lender would be basing the loan approval on the following type of criteria:
- Was the property built well?
- Is the property located in the area that is appreciating?
- Does the area have a high demand for renters?
- Is there a cash-flowing tenant already in place?
- Does the property currently have a reputable property management company in place?
As you can see, their focus is on the property, not the Buyer. Here’s a summary of what you will NOT have to do with non-recourse loans:
- No U.S. credit check.
- You will not need to supply a SS#.
- No need to verify your income.
What are some typical terms of non-recourse financing:
- This type of loan is not available for foreign investors who want to buy a U.S. home to live in. It’s for rental property purchases.
- Typical loan types are 30-year amortized loans, as well as 10-year balloon notes.
Utilize a Full-Service Real Estate Investing Company that Works with International Buyers
The best strategy for buying U.S. real estate as a non-citizen is to utilize a full-service real estate company that works with international investors. Mila Realty is the turn key provider that helped many investors from across the globe to make their U.S. property purchase a reality.
How Can Mila Realty Make it Easy for International Investors to Own an Income-Generating Performing Asset? Since Mila Realty is a full-service real estate investment company, they can take care of all the details, big and small. This means that it won’t be a confusing or stressful situation, but instead, an easy, streamlined, and professional transaction to buy a cash-flowing rental property, no matter where you are located. Specifically, few things that Mila Realty can do for international property Investors:
- Non-recourse financing is already built into every deal.
- Market Research to ensure that property can provide a maximum cash flow.
- All the confusing paperwork will be taken care of.
- Variety of Options: renovated properties or new construction properties – single-family housing and multi-family properties.
- Complete leasing process
- Lease administration and Rent Collection.
- Property Maintenance.
With Mila Realty team is easy for international investors who are looking into buying U.S. real estate, is a sure-fire way to remove the headaches, avoid costly mistakes, speed up the process, and build up a great global portfolio.
Orlando Property Management Expert
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