Investing in Washington Real Estate: A Guide for Foreigners

Washington: an exciting destination for foreign real estate investment

Whether you know it or not, Washington state is closer to home than you think. Have you ever received a package from Amazon or logged onto a Microsoft computer? How about sipping a latte from Starbucks? All of these businesses started in Washington. With its thriving economy, diverse culture, and breathtaking landscapes, it’s no wonder Washington has become a prime destination for international real estate investors. Not to mention, Washington state does not leverage a personal income tax, making it an even more appealing destination for foreign investors. Purchasing a Washington investment property as a non-U.S. citizen involves navigating complex legal, financial, and market-specific challenges. This guide provides foreign investors with a comprehensive overview of the Washington real estate market and what you need to know as a foreign investor.

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.

Understanding Washington’s real estate market

Washington's real estate market is diverse and full of potential. Cities like Seattle, Bellevue, and Spokane are particularly attractive for investment, offering everything from luxury condos to multifamily homes. The demand for housing in Washington remains strong, driven by the state’s booming tech industry, high quality of life, and robust job market. It is important to highlight that major employers such as Amazon, Microsoft, Boeing, Starbucks, Costco, and Expedia contribute significantly to the region's economic stability and job growth, making it a prime location for real estate investment.

For foreign investors, understanding each area’s unique dynamics is essential. With its tech-driven economy, Seattle offers high demand for rental properties, making it ideal for long-term rental income. Conversely, smaller cities like Tacoma provide more affordable options with the potential for significant appreciation over time.

Top 5 cities for Washington real estate investment

Seattle

As the largest city in Washington, Seattle offers a strong job market, beautiful recreational areas, and a diverse economy. Seattle’s population is growing fast, too – some studies predict that Seattle’s population will surpass that of San Francisco by 2040. All of these factors, in addition to the fact that home prices have appreciated 9.4% year-over-year,  make Seattle a prime location for rental property investments.

Tacoma

Tacoma is an up-and-coming city with a growing economy and affordable real estate prices compared to Seattle. In fact, new figures show that it is one of Washington’s most populous cities– with the population estimated to be at 225,100. This is supported by a higher birth rate and more new residents.

Spokane

Located in eastern Washington, Spokane offers a combination of affordability, a robust job market, and a thriving tourism industry. With an average home value of $389,697, Spokane presents a more budget-friendly option compared to other major cities in the state. The city's popularity as a tourist destination also contributes to increased demand for short-term rentals.

Bellevue

For investors with a larger budget, Bellevue, an affluent suburb of Seattle, presents an attractive option. Bellevue offers high-quality rental properties with strong potential for appreciation and average monthly rents around $3,300.

Vancouver

Not the Canadian city. Vancouver, located in Clark County, is a growing city with a strong economy and affordable housing options. It is also attracting numerous tech companies and startups that create job opportunities for skilled workers. Its strategic location along major highways and railroads enhances commerce and makes it a hub for business expansion. Its proximity to Portland, Oregon, also makes it an attractive location for commuters, especially considering median home prices are around 11.9% lower

Selecting the right property type

Choosing the right property type is critical for maximizing your investment. Washington offers a variety of options, including single-family homes, multi-family units, condominiums, and commercial properties. The choice should align with your investment goals, budget, and risk tolerance. 

  • Single-family homes in suburban areas often provide steady long-term appreciation because there is limited supply and high demand in certain areas. 
  • Condominiums and townhouses are often cheaper than single-family homes and are more available in cities. Since these units often have HOA (homeowner associations) fees , there may be less maintenance than a standalone property.
  • Multi-family units in urban centers can yield higher rental income. That’s because you are paying one mortgage, but have several income-generating units.

Careful research and market analysis are essential before deciding what type of property you are interested in buying.

Typical documents required for foreign national mortgages

It’s important to be aware of common documentation requirements that lenders have for foreign nationals. That way, you can keep these in mind and prepare for requests as you begin your investment property search. Many lenders will request the following documents:

  • Valid passport: proof of identification.
  • Visa: if you are located in the United States.
  • Proof of income: showing how you make money in your home country.
  • Credit report: some lenders may require U.S. credit, others may request credit references from your home country.
  • Down payment: sufficient funds for your rental property down payment.

Legal and tax considerations for foreign investors

When buying investment property in the state of Washington, there are many legal and tax questions to consider. While you should discuss all considerations with legal and tax professionals, here are some terms to be aware of:

  • Income tax: Washington has no state income tax. However the IRS of the U.S. oversees federal taxes, which applies to income generated from your rental properties.
  • Property taxes: Washington state has property taxes on real estate ownership. Tax rates vary by county and municipality.
  • Foreign Investment in Real Property Tax Act (FIRPTA): If you sell your 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.

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Let Waltz help you buy Washington real estate

Explore your options with Waltz

Investing in Washington’s real estate market can be rewarding and challenging for a foreigner. With careful planning and guidance, your investment in Washington real estate can yield substantial returns.

Waltz is an ideal partner if you’re a foreign national interested in buying investment real estate in Washington state. As mentioned before, you’ll need a registered business in order to obtain a DSCR loan. As part of our Investor Kit, we help you get started by providing you with: 

  • LLC with an EIN: We'll create a Limited Liability Company (LLC) tailored to your specific investment goals, ensuring your personal assets are protected while maintaining compliance with Washington law. We'll even secure an Employer Identification Number (EIN) for you, a necessary step for opening bank accounts and managing your property's finances.2
  • U.S. bank account: This makes it easier to do business in the United States. You can transfer money, exchange currency, and operate your rental property business more easily.3

Fill out our investor interest form to learn more about our comprehensive services and how we can help you achieve your Washington real estate investment goals.

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