While Rhode Island is the smallest state in the U.S., it holds big real estate opportunities for the right people! Spanning just 1,214 square miles, Rhode Island offers a compact but diverse market that appeals to foreign investors. Yet, foreign investors interested in buying American real estate often face challenges navigating the complexities of U.S. property ownership regulations. Keep reading to learn more about Rhode Island real estate and lending options for internationals.
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.
Many real estate investors use debt-service-coverage-ratio (DSCR) loans. DSCR loans are tailored to foreign investors looking to buy income-generating properties.
A DSCR loan allows investors to purchase rental properties in Rhode Island without needing to live there. Unlike traditional loans, DSCR loans don’t depend on the borrower’s personal income; they focus instead on the property’s cash flow.
These loans (a type of non-qualified mortgage) offer flexible documentation and qualification requirements, making it easier for foreign investors to buy property in Rhode Island and beyond. It streamlines the process compared to a conventional mortgage.
DSCR loans provide a simple and effective financing option for foreign nationals interested in income-generating properties in Rhode Island. Here’s why many foreign nationals use them:
Lenders consider several factors when reviewing applications. Understanding these can make the process smoother and improve your chances of approval in Rhode Island. Here’s what you should know:
Most lenders: U.S. lenders usually prefer income earned in the U.S. because it is easier to verify. If your income comes from another country, you will need extra documents, such as translated bank statements, proof of salary, and U.S. tax returns if available. Even with the right paperwork, delays or denials often happen because many lenders do not work with foreign financial systems.
Waltz: Income streams vary, and at Waltz, we’re here to work with what makes sense for you. Whether your earnings are from the U.S. or another country, we accept documents like local bank statements, employer pay slips, and rental income from properties you own. We also consider the rental income the Rhode Island property you want to buy could earn, giving you a fair evaluation.
Most lenders: Foreign buyers are often asked to make large down payments. These payments are usually 30–50% of the property price. In some cases, this is two times the amount expected for investment properties. Some lenders also require extra savings to cover possible costs, like repairs or empty rental months, which increases upfront expenses.
Waltz: We offer more flexible options. While 30% down payments are common, some qualified buyers can pay as little as 25%. We also adjust reserves to match your financial situation and the rental income the property could generate.
Most lenders: Many lenders require U.S. identification, such as a passport and visa. For investment properties, buyers are often required to create a U.S.-based LLC (Limited Liability Company), which involves setting it up and submitting its legal documents.
Waltz: We make this process easier for international buyers. All you need is a valid passport for identification. If you need an LLC, our Investor KitToolkit helps you set one up quickly and get an EIN (Employer Identification Number) in minutes.
Most lenders: Most lenders rely on U.S.-based credit scores, which can make it hard for international buyers without a U.S. credit history. Even if you have strong credit in your home country, it can still lead to delays or denials.
Waltz: We understand that building a U.S. credit history can be difficult. That’s why we review your credit from your home country among other factors to determine your creditworthiness. This allows us to fairly assess your financial reliability without requiring a U.S.-based credit score.
Find out how international investors have benefited from working with Waltz.
Rhode Island’s diverse property market offers something for a variety of investment strategies. The type of property you select will depend on your ultimate financial goals. Here are some key property types to consider:
Here’s why Rhode Island real estate stands out:
As Rhode Island’s capital and largest city, Providence is home to over 190,000 residents and offers a vibrant cultural scene. The city is a hub for education, with top institutions like Brown University and the Rhode Island School of Design, contributing to a consistent demand for student housing. Providence also has a diverse economy, with strong sectors in healthcare, education, and finance, and the professionals that work in these fields are always in need of rental housing.
Located 12 miles south of Providence and nestled along Greenwich Bay, Warwick is Rhode Island's second-largest city, offering affordable living and easy access to the airport. The city features a blend of suburban and waterfront properties, providing a variety of investment opportunities for different tenant needs. With strong retail, healthcare, and tourism industries, Warwick’s economy is stable and expanding. In 2022, Warwick was named one of the Top 100 Best Places to Live in the United States, highlighting its growing appeal.
Known for its rich industrial history, Pawtucket has undergone significant revitalization in recent years, making it an emerging rental market. The city offers affordable housing options (an average price of $373,620 and an average monthly rent of $1,750) compared to neighboring Providence, making it attractive to tenants and investors. Pawtucket is home to a growing arts scene, with several galleries and performance spaces. Its proximity to Providence and Boston adds to its appeal for commuters.
Bristol offers a mix of affordable coastal living, rich history, and a thriving arts scene. Despite being surrounded by multi-million dollar properties along the coastline, the average property in Bristol costs $561,213. The town boasts cultural attractions like the Bristol Art Museum, local galleries, a historic downtown, and the picturesque Bristol Harbor, drawing both locals and visitors. With so much to offer, Bristol holds significant potential for short-term rentals, alongside its appeal for full-time residents.
Rhode Island’s real estate market comes with unique factors that investors should keep in mind:
Refinancing your Rhode Island investment property means replacing your existing mortgage with a new one. This allows you to leverage your property’s equity to fund new investment opportunities. For foreign nationals, the refinancing process typically includes:
For foreign investors looking to improve their terms, rate-and-term refinancing offers an opportunity to do just that. This option lets you adjust the terms of your current mortgage, potentially securing more favorable loan conditions. However, even if you refinance at a lower interest rate, it’s worth noting that your total finance charges could end up being higher over the life of the loan.
Cash-out refinancing enables you to tap into your property’s equity and borrow against your house, based on the original equity. For those looking to invest in Rhode Island real estate, the extra funds can be used for a variety of purposes, such as home improvements, debt consolidation, or a down payment on another property. This gives you cash at closing, expanding your investment opportunity potential.
Securing a DSCR mortgage as a non-U.S. resident in Rhode Island can feel overwhelming, but with Waltz, it's a smooth process. Follow these seven straightforward steps:
1. Find a profitable investment
Think about what you want from the property and find a place that fits your budget and your goals. For example, you might want a steady rental income from a multi-family property or a quick flip from a suburban house.
2. Gather essential documents
You'll need a few key documents like your passport, proof of income (pay stubs or bank statements), and details on the property you’re interested in. Having everything ready will speed things up.
3. Select a lender experienced with foreign nationals
Work with a lender who’s experienced with international buyers. A lender like Waltz will walk you through the process with guidance tailored to your situation.
4. Set up an LLC and U.S. bank account
You’ll need a U.S.-based LLC and a local bank account2 for investment properties. It’s a simple process, and Waltz can help you set up your LLC and get your EIN quickly.
5. Submit your loan application
Once everything’s ready, submit your application. Make sure all your paperwork is complete to avoid delays.
6. Perform due diligence
Before sealing the deal, hire an inspector to take a close look at the property. Make sure it’s in good shape, check that the price matches its value, and confirm that the terms fit what you’re expecting.
7. Complete the purchase process
When everything checks out, sign the papers, transfer the funds, and finalize your purchase. Yes, it’s really that easy!
