When you’re a foreign investor, finding good places to purchase an investment property is only half the story, and arguably the easier half.
Diving into zip codes, checking out school districts, comparing median incomes… anybody looking to invest in real estate will take these steps. It’s standard due diligence for finding the right market to watch your property grow in value no matter what kind of investor you are.
But there’s so much more to this. Those looking at buying property in America as a foreigner should start by looking for the most favorable places to be a businessperson and landlord.
As we know, the investment process comes with quite a few more hurdles for a foreign investor than it does for the average investor or property buyer. When looking for key investment markets, foreign buyers need to look for locations that have ideal conditions for owners, are well-positioned as investor-friendly states, and designed to put money in your pocket.
Ask yourself: Does the state make it easy to invest? What are the property tax and insurance rates? Is there substantial population growth in that area? Is it easy to open an LLC? Or a bank account? On an even more practical level, investors should be considering if properties in surrounding areas have proven long-term price appreciation, as well as other equally important factors, like labor costs, in case renovation becomes something to pursue.
If the answers are no, you haven’t found the right market for you.
Then there’s understanding the investment location’s view on landlords. States’ landlord and tenant rules and regulations are not all created equal.
For foreign investors, investor-friendly states are landlord-friendly states. Before you look for that prized investment property to buy and rent out, make sure the location will not only allow it, but encourage it.
Do you know what rights landlords have with difficult tenants in your target market, or if tenants stop paying rent? Are there support measures in place to ensure tenants are paying on-time so you don’t have to worry about flying from your home country just to make sure a check is paid on time? Are there lease restrictions or rental regulations? Can you do short-term leasing or rentals between tenants?
Wrong assumptions in this area can turn the best property for homeowners into a nightmare for investors.
In my time making my own investments as a foreigner, and then while building my business, I’ve learned that the regulatory and legal hurdles as a business owner and landlord are the biggest barriers to success as a foreign investor.
There are already enough challenges for a foreign investor to get into the U.S. market. So why make it harder on yourself to do an already hard thing? Identifying an investor-friendly market from the start will give you true peace of mind, and let you sit back and watch your money grow without all the unnecessary hassle.
For real estate investors, and especially for foreigners, investing in good places to invest is more important than investing in good places to live. While these two things might feel the same and often overlap, the attributes of desirable investment locations and desirable living locations do have some key differences. Some of the most attractive places to live can be trouble for investors. Putting your investor hat on first is the most important step of your journey, especially for those looking for a foreign national mortgage.
When it’s time to navigate the legal and compliance challenges that come with foreign investing, Waltz can help with that. We’ve spent years building out our legal and compliance program to make investors’ journeys through the fine print as barrier-free and compliant as possible.
Reach out at www.waltz.com to get started!
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