When investing in real estate as an international buyer, it’s important to know that there are many rules and regulations. For those unfamiliar with the compliance requirements, it can feel like investing in real estate has more red tape than a crime scene!
Unfortunately, there will always be strict guidelines for getting an investment property loan. That doesn’t mean you should have to play detective to figure out how to follow the rules, though.
Having an idea of what to expect throughout the mortgage process will allow you to understand how to keep compliant. In this article, we’ll share insights that make the process more transparent.
As you begin to explore investment properties, remember that your lender examines all risks associated with giving you a loan. By understanding what’s expected from the start, you can begin to do the heavy lifting.
Your lender will likely verify your identity with a KYC. International property purchases may also require extensive documentation, varying significantly between countries. Essential documents may include:
Start collecting necessary documents early to avoid delays, and consider using document translation services for non-English paperwork.
A loan-to-value (LTV) ratio essentially shows how much the lender is willing to lend the borrower in relation to the value of a property. LTV ratios for foreign buyers often differ from those for local buyers and can significantly impact your financing options. The key points include:
Start your property search with a clear understanding of local LTV requirements to ensure you focus on properties within your financing range.
International property transactions often involve significant currency exchanges and cross-border transfers. These are subject to strict regulations. Essential aspects include:
Consider the timing of transfers to mitigate exchange rate risks. You should also work with financial institutions experienced in international transactions to ensure compliance with all currency-related regulations.
As you can imagine, the United States government along with your lender want to ensure that you are not a money-launderer. AML compliance is crucial in international property transactions to prevent illegal activities and ensure the legitimacy of funds. The primary compliance measures are:
Engage with financial institutions with robust AML processes to ensure your transaction meets all necessary standards.
Once you’ve provided the documents necessary to start the mortgage approval process, it’s time to get your house in order–literally. This includes what to expect during an appraisal as well as how to properly insure your rental property.
Before securing a loan, your lender will need to verify the value of your investment property. This helps them feel confident that they are receiving an asset that is worth more or equal to the amount of money that they’re lending you. Keep the following in mind:
Work with your real estate agent and lender to get a deeper understanding of the local market and specific considerations.
Insurance requirements can vary by lender. They also change depending on the location of your investment property.
Be sure to get quotes from various licensed insurance providers to find a policy that best meets your needs and offers you the best rate.
**Investment and insurance products are not guaranteed, may lose value, and are not insured by any federal government agency.
Congratulations, if you’re reading this then you’re probably a landlord!
As you’re collecting rent checks and enjoying the benefits of rental property ownership, you still need to keep compliance in mind. Here’s what you need to be aware of.
The first step in ensuring mortgage compliance is to thoroughly comprehend the lending laws and regulations of the country where you purchase property. Some main points to consider include the following:
Consult with local legal experts and tax advisors to get a comprehensive understanding of the legal landscape for landlords.
International property purchases often have complex implications that vary significantly between countries. Critical considerations include:
Work with tax experts and legal advisors to develop a comprehensive strategy that ensures compliance in both your home country and the country of investment.
Real estate-related regulations for landlords and foreign buyers can change rapidly, so it’s crucial to stay informed. Fundamental strategies include:
Establish a network of local contacts to inform you about upcoming changes that might affect your investment.
After reading this article, it’s pretty clear that real estate compliance is complex. That’s why it’s crucial that you have a team of experts that understand what it’s like to invest in American real estate as a foreigner.
Waltz is here to make your life easier– our all-in-one platform guides you through a clean, paperless, app-like experience so that you can start investing in real estate with the few clicks of a button.
*We care about you and want all of your real estate investments to be successful. And while we are excited to share this information with you, this Article does not replace your need to consult with legal, real estate, tax, insurance, and financial advisors in your home country and the United States. All investments, including real estate, involve risk, so please invest carefully.
Fill out a quick form and we'll get back to you shortly.
