Because the Great Recessions is gradually fading away using the about eventual recovery turning up coming, foreign buyers and investors beginning to pursue opportunities in america real estate market again. Despite the fact that stable recovery of the housing market continues to be "work in progress", many foreigners notice that American real estate is "On Sale", as well as the dollar is historically weak, a lot of buyers are trying to snatch the bargains in residential and commercial properties here. However, an overseas buyer investing in the united states will need to take extra diligence to plan the acquisitions due to nuances in taxation laws, title holding rules, money transfer rules and several additional factors. There are lots of aspects to think about, I'll focus on some key points:
(1) DOCUMENT EVERYTHING: Before you decide to transfer a dollar here, be sure you can verify where the money came from. Any transfers over $10,000 in to the US, including your all cash real estate buys, will be reported to the federal authorities, and when the Feds come asking them questions, you need to ensure that you can prove legal sources of your money. Based on 2001 Patriot Act and the Money Laundering Control Act of 1986, escrow and title companies, brokers, banks must report to the federal authorities any large deposits and money transfers over $10,000. Be sure you have documentation copying your sources of income, taxes paid overseas, bank account statements, investment account statements, in other words - the paper trail.
(2) FINANCE OR ALL-CASH? If you are planning to buy with all cash, you'll have several benefits as the "all cash" buyers might enjoy deeper discounts from motivated sellers in lots of areas. All cash buyers can close deals extremely fast, plus some sellers prefer to deal with buyers like this. However, I recommend that you're planning the acquisitions having a investment adviser to see if buying with some type of financing is going to be financially more beneficial for your investment strategy because of leverage-enhanced ROI and distribution of risk among several properties.
If you're looking to finance your real estate acquisition in america, be ready to encounter some tough times. Property Financing is fairly tough for even Americans nowadays, but for foreigners it's even tougher. You will find only a number of institutional lenders who will consider loans for foreign nationals, but they will all need a large downpayment (at least 30% or even more) and verification of income out of your country. For those who have a piece visa in america, such as H or L, and have a recognised credit rating in america, you may be able to be eligible for a regular financing with less than 3.5% down even though you are still considered a "foreign national".
For those who have established relationship with your bank throughout your home country or another foreign bank, you may consider obtaining financing from them and then bringing the loan proceeds into the US as "all cash" purchase, again just make sure to have documentation regarding where the money came from.
Alternatively, there a many private lenders who'll lend up to 65% of the asset value at 9-12% annually regardless of your immigration status, so if you're looking for a commercial property, you may be in a position to finance it easier too, because commercial lenders underwrite loans primarily on the merits and salary of the property itself, rather than the borrower.
(3) Take control of your ASSETS: In america you can hold title to the property in many different ways: as an individual, corporation (either domestic or foreign), Llc, partnership, living trust, pension fund, or a number of other form of entity. All these forms has pros and cons, particularly when it comes to taxation of the rental income received out of your investment property, transfer of the property to related or unrelated parties, estate planning and many other situations. You need to decide Before you purchase a house in america the way you will own the home, spend time having a knowledgeable international tax advisor to learn about your options.
Purchasing property is a very hands-on enterprise. You have to think through the facts before you buy the very first property. It is extremely hard to operate a rental business when you aren't seeing what is happening yourself. I'm dealing with many investors and also have owned many rental properties, and may tell many horror stories about property management companies embezzling money from out of town investors, renting units for cash but reporting them vacant, overinflating repair bills, etc. How are you likely to control your investment physically while residing in India or Russia and owning properties in america?
(4) Before you decide to ENTER, PLAN YOUR EXIT. Are you currently likely to cost profit? How long prior to selling? Have you take into account the near future capital gain tax? Are you going to go ahead and take money from the country? If you are planning to market to make money but re-invest proceeds into another property, you need to become familiar with 1031 tax-deferred exchanges where you can trade and consolidate properties for years and decades without paying any money of taxes until their final disposition. It's a useful gizmo for smart investors that can make you very wealthy, however, you need to arrange for this tactic ahead of time and consult with a knowledgeable person. Besides, when you're selling a property here as a foreign individual, you are susceptible to a myriad of withholdings regardless if you made any profit or not, including 10% withholding under FIRPTA simply because you are a foreigner, 3 1/3% withholding in California because the property is non-owner occupied, etc. But, you are able to avoid some of these withholdings if you learn the rules and plan your title holding strategy in advance!
(5) VISA CONSIDERATIONS: Important misconception among many foreign buyers that Let me address here: don't think that owning property in the US will automatically entitle you to definitely an american visa. You are able to own $10 million of properties in the US, but nonetheless be denied an entry visa. So, be sure to get the visa status cleared first after which arrived at the united states to look at regions of interest and specific properties. DO NOT EVER BUY PROPERTIES SIGHT UNSEEN!!!
(6) WHY Property? Finally, think about honestly: why are you purchasing property in the US? Because of visa, residual income, future market appreciation, or because you are thinking about which makes it your future home? If visa and investment potential are your main decision factors, consider some alternatives that can provide you with similar ROI (roi) and visa opportunities, for example EB-5 visas ($1 billion dollar minimum), "Regional Centers" ($500,000 minimum), E-2 small investor visas ($200,000 investment), etc. Or combine several strategies, based on your preferences and use of capital.
Main point here: your purchasing real estate here should be an effect and the FINAL STEP of some serious planning path. Measure seven times, cut once, as we say in Russian. It's much easier to avoid costly mistakes before you step into the forex market than waste time and cash undoing mistakes made in the course of a rushed poorly planned property venture. Happy Investing!