Wanting to know how to buy an investment property in the US as a foreigner might sound odd to some, but why not do it? After all, it is possible to do so. People who are not US citizens or do not have a Green Card are able to own a property in the US. Plus, the US market is among the top in the world. Why not participate if you can?
Still though, there are things that could be challenging or different if you want to know how to buy an investment property in the US as a foreigner.
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The number one question asked when wanting to know how to buy an investment property is how to find a property. And if you’re investing from abroad, you’ll be asking the same question. The answer for those abroad is slightly different for nationals. As a foreigner, finding properties through newspapers, ads, or word of mouth can be difficult, so that is out of the question. No need to worry though, since the vast majority of property search isn’t even done through those means. Instead, most investors turn to the Internet, specifically property searcher sites, to find properties.
Since you’re already on Mashvisor, there’s no need to look further. Finding properties has never been more efficient, especially in terms of property analysis and time. You’ll be provided with detailed information based on smart and recent data on any property you want. The search isn’t limited to traditional properties either, you can find any Airbnb property you’d like.
Anything relating to finance, such as receiving rent or paying the down payment, will be treated differently for foreigners. For instance, when purchasing a property, a foreigner may have to pay a 40% down payment at the minimum. This is double the average for US nationals, of 20%. The main reason why the down payment is much more is due to one reason: risk. Being a foreigner who wants to know how to buy an investment property in the US raises risk for the seller, since a foreigner is hard to track down and may not directly be involved in legal processes relating to the purchase.
What about the top thing on the minds of investors? What about receiving rent? You could opt for the most convenient choice, using PayPal. This is a solid choice, but receiving rent through PayPal is probably the only real estate financing you could conduct through the platform. PayPal prohibits using their service to buy and sell real estate. A conventional, reliable, but more tiresome way is to receive rent through bank wires. If you are a US citizen or Green Card holder but are abroad, using a US bank account should be a piece of cake. If you are not, the process might not be as smooth. You will have to take currency exchange and time delay into account. This is no more than a slight nuisance; it should not be discouraging. If it does work you up, you could instead end up using online rent collecting services.
One of the main reasons people want to know how to buy an investment property is to know what kind of tax benefits they could be eligible for. And as a foreign national, you will be in for tax benefits too. For example, foreigners who pay a 40-50% down payment are normally exempt from paying income tax on the rental income for 10 to 15 years. Expenses relating to the property, such as repairs, renovations, insurance premiums, and legal fees, are also deductible.
Taxes, as they always are, can be complicated. This is especially so as a foreign buyer. You will definitely be under US tax laws for the property, but you might also be subject to your home country’s taxes as well. To find out whether or not or how the laws of your country will apply, consult a tax professional. Also, keep in mind the taxes on the state level will vary. Therefore, you should also consult a tax professional in the US before you plan on figuring out how to buy an investment property there.
When learning how to buy an investment property, there are some intangibles you need to know. Communication is important in any business, so for starters, make sure you know the language. And obviously, in the case of the US, that language is English. If English is your second language and you are not too fluent, go ahead and improve it. And as important as speech is with deals, make sure your writing is clear and accurate as well.
Another thing to consider is time zone differences. This could become an annoyance when not tackled properly. Since those you will be dealing with, whether it’s tenants or attorneys, will be in the US and you will not, there will be only a certain time period in which you can communicate. Most of the time, communicating through voicemail or email is fine. There will be times when you need to contact each other directly though, and in those cases, you will need to be flexible on your time.
To sum up,
Wanting to know how to buy an investment property in the US while being abroad is not a bad idea. It will require efficient planning and action, so be prepared. Still, the gains could be very lucrative and worth it all in the end.
To find out how to buy an investment property and how to find a suitable investment property, check out Mashvisor.