Investing in Real Estate in Arizona: A Guide for Foreign Nationals

Empower Your Real Estate Ventures by Investing in Real Estate in Arizona

Waltz empowers foreign nationals to maximize their Arizona real estate investments. We offer exclusive financial solutions tailored to your needs, including competitive interest rates, flexible loan terms, and access to equity for future opportunities. Whether you’d like to secure a mortgage for a new property, refinance, or access equity for further investments, Waltz provides custom foreign national mortgages to help you invest in Arizona real estate. Discover how our team can help you achieve your financial goals with Arizona real estate investment.

We are providing the following discussion to you for informational purposes only. All investments, including real estate, involve risk, and we encourage you to invest carefully. The information in this article is not intended to replace or serve as a substitute for any legal, real estate, tax, or other professional advice or service. You should consult with a professional in the respective legal, tax, accounting, real estate, or other professional area before making any decisions or entering into any contracts relating to a rental property.

What are Foreign National Mortgages?

Securing financing for a U.S. property as a non-resident can be complex. Foreign national mortgages provide a tailored solution for international investors seeking to own Arizona real estate.

At Waltz, we specialize in simplifying the U.S. real estate financing process for foreign nationals. Our deep understanding of the Arizona market and expertise in foreign national mortgages empower you to confidently invest in this thriving state. Let us guide you through the intricacies of U.S. real estate financing and unlock the potential of your Arizona investment.

Why Should Foreign Nationals Invest in Arizona Real Estate?

The Arizona real estate investment landscape offers a unique blend of opportunities. The state is known for its robust economy and diverse job market and continues to attract both domestic and international investors. In fact, the state's real estate market benefits from a steadily growing population—which includes young professionals, families, and retirees. By 2025, 7.6 million people are expected to live in the Grand Canyon State, making the area ripe for investment opportunities.

Furthermore, the state has seen an increase in expansion projects from over 35 international companies in 2022, representing $31.954 billion in investment, ranking the state first in the nation for foreign direct investment (FDI).

As Arizona's economy continues to expand, property development is surging as well. In 2023, Maricopa County, which encompasses Phoenix and its surrounding areas, saw over 35,000 new home builds—the highest number since 2007.

Home values are also expected to climb, offering investors chances for capital gain and long-term growth, especially in comparison to more mature real estate markets across the country.

Here are several more reasons why foreigners love to invest in the Grand Canyon State:

Arizona has a vibrant cultural scene, excellent educational institutions, and extensive transportation network, all of which enhance its appeal.
Arizona has been recognized for its strong market potential, with towns such as Phoenix and Tucson developing as hot spots for real estate investment.
Along with a booming population, the state boasts historically high employment rates and an unemployment rate of just 3.4%, which is lower than the national average of 4.3%. This makes Arizona ideal for lucrative rental properties.
Arizona is still relatively affordable compared to real estate in places like New York and California, making Arizona an appealing choice for investors seeking to maximize their returns.
At 0.63%, property tax rates in Arizona are relatively low compared to the U.S. average rate of 1.10%. This helps ensure good cash flow for investors.

Specific Considerations for Mortgages in Arizona

Arizona real estate can be a goldmine, but there are some things to watch out for. Here are some things to consider before diving headfirst into an Arizona investment property:

Harsh Climate: Arizona's arid climate presents unique challenges for property owners. Water scarcity and strict regulations on groundwater pumping can impact property management, especially with tenants. The state's intense summer heat also contributes to wildfire risk, leading to potentially higher insurance costs.
Local Wildlife: Depending on the location, Arizona properties may share their surroundings with native wildlife like coyotes, rattlesnakes, and other creatures. Pest control might be necessary to protect your investment.‍
Long-Term Concerns: Arizona's future is influenced by climate change, with water scarcity and potential land use restrictions becoming significant factors. These challenges should be considered when evaluating long-term investment potential.

Which Arizona Cities Offer Strong Investment Potential?

Arizona boasts several dynamic cities presenting excellent investment opportunities for foreign nationals. Here are some of the state’s top real estate markets:

Phoenix: As Arizona’s state capital and largest city, Phoenix offers a thriving economy, diverse housing options, and a strong rental market.
Tucson: Tucson, known for its rich history, cultural attractions, and affordability (2% below the statewide average) offers a compelling investment opportunity.
Scottsdale: This upscale city about 12 miles from the heart of Phoenix is known for offering luxurious, high-end real estate.‍
Chandler: A rapidly growing Phoenix suburb with a strong tech industry, Chandler offers a mix of residential and commercial investment opportunities.

Types of Mortgages Available for Foreign Nationals Investing in Arizona Real Estate

Foreign nationals can access a variety of mortgage products in Arizona, each with its own benefits:

DSCR Loan: Debt service coverage ratio (DSCR) loans make it easier for foreign investors to buy US rental properties. Unlike traditional mortgages that heavily rely on a borrower's personal income and credit, DSCR loans focus on the property's ability to generate income. By focusing on the property's income-generating potential rather than the investor's personal finances, DSCR loans eliminate the traditional hurdles often faced by international buyers. Waltz specializes in DSCR loans for foreign investors. Contact us to get started.
Non-Resident Conventional Loan: These loans offer competitive rates but typically require a higher down payment (often 30% or more) and may not require a U.S. credit history.
ITIN Loan (for certain non-residents): This program allows qualified borrowers to use an Individual Taxpayer Identification Number (ITIN) instead of a Social Security number. It often has down payment requirements around 30% and may have specific requirements for employment and income verification.
Jumbo Loan (for high-value properties): Jumbo loans are for mortgages that exceed $766,000, and sometimes over $1 million. These programs are more exclusive and cater to foreign investors with substantial assets and strong financial profiles.
Hard Money Loan: This is a short-term option from private lenders. It can be useful for quick closings but comes with higher interest rates and stricter terms.

What's the Process for Refinancing Loans for Foreigner Nationals in Arizona?

For foreign nationals living in Arizona, refinancing your real estate investments in locations like Phoenix, Tucson, and Scottsdale means carefully replacing your current mortgage with a new one. This entails taking out a mortgage to use the equity in their residences to fund new investments.

Waltz offers comprehensive and effective solutions to ease this process as we understand its crucial importance to Arizona real estate investors. Our knowledge ensures that you may securely and successfully optimize your Arizona real estate investing strategies.

The refinancing process for foreign nationals generally involves:

Determining your property's current market value
Exploring different loan terms and interest rates to find the best deal
Preparing financial documents, including income verification and property ownership proof
Completing the application process
Once approved, finalizing the refinancing transaction

Please note that even if you refinance an existing loan at a lower interest rate, your total finance charges may be higher over the life of your loan.

Arizona Refinancing Choices for Foreign National Mortgages

Rate-and-term refinance

This option can appeal to foreigners interested in Arizona real estate investing because it allows you to adjust the terms of your current mortgage— with the potential that it can result in a better deal on your house loan.

Cash-out refinance

At Waltz, we proudly offer this option to Arizona foreign investors as it allows you to access your property's equity— allowing you to borrow more than the current mortgage balance (based on the original equity).

For those interested in Arizona real estate investments, the additional funds can be utilized for various personal objectives, such as home upgrades, debt consolidation, or a down payment on another property. This provides you with cash at closing for a range of needs, broadening your investment opportunities while leveraging the best foreign national mortgages Arizona has to offer.

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Tax Considerations for Foreign Nationals with Arizona Real Estate Investments

Seeking advice from a tax expert is always a smart move. Please note, this does not constitute legal or tax advice. Understanding the tax implications of investing in Arizona real estate is essential for foreign investors. Key tax considerations include:

Property Taxes: Arizona imposes property taxes on real estate ownership, contributing to your overall property expenses.
Income Tax: In Arizona, income tax applies to the rental income generated from your investment property. Arizona has a flat-rate state income tax of 2.5%, which is lower than the rates in many other states and below the national average. In contrast, the average American pays about 8.9% of their annual income in state taxes.
Federal Income Tax: Rental income from your Arizona property is also subject to federal income tax.‍
Foreign Investment in Real Property Tax Act (FIRPTA): If you sell your Arizona property, you may be subject to FIRPTA withholding, which requires a portion of the sale proceeds to be withheld for potential U.S. capital gains taxes.

Waltz Will Help You Invest in Arizona Real Estate

Waltz is dedicated to helping foreign nationals achieve their Arizona real estate investment goals. Our expertise in foreign national mortgages, combined with our in-depth knowledge of the Arizona market, allows us to provide tailored solutions. We offer comprehensive support throughout the entire investment process, including:

LLC Formation Tailored for You: We'll establish a Limited Liability Company (LLC) that meets your specific investment needs. This protects your personal assets while keeping you compliant with Arizona regulations.
EIN Secured: If you want to open a bank account and manage your property finances, you need an Employer Identification Number (EIN).² We’ll provide one for you.
Operating Agreement Made Easy: Got 20 minutes? That’s all the time we need to handle the operating agreement, outlining ownership structure and management within your LLC.

Best of all, after you purchase your Investor Kit, Waltz provides loans up to 70% LTV.³ You’ll also be able to open a U.S.-based bank account through Waltz to handle your property’s financing