Tons of Opportunities and Potential Pratfalls for Foreign Real Estate Investors in the U.S.

The real estate market today is a veritable garden ripe for picking for foreign investors flush with cash and capital. Last year saw a record number of real estate transactions closed by foreign investors who flocked to hot spots in Florida, New York, and other hot locales, all seeking incredible deals with distressed properties and foreclosures galore. This year is no exception, but while there are still plenty of great deals to be had, there are some potential pitfalls to avoid, too.

Real estate agents and foreign entrepreneurs alike should be cautious and well-prepared when digging into local real estate for some of the best deals in the country.

Make Sure You Bring the Green

One problem that surfaced last year with foreign investors flocking to the U.S. for real estate deals and steals was financing. To put it simply, lenders are less likely to lend to foreign nationals than they are to American citizens – and they aren’t too eager to lend to Americans.

Financing stateside is still possible, of course, especially if the investor is representing or operating as a corporation (see more below for that). But having cash on hand is highly preferable. The main issue with cash is timing, so an experienced real estate agent is a virtual requirement. If you stay too long, you could be taxed as an American citizen.

Additionally, it helps to secure lending – if required – from a lender in your home country, then using the bank’s relationship to have the money transferred for the purchase.

Buy as a Corporation, Not as an Individual

Many foreign investors may already practice this, but it generally is a better idea to buy property as a corporation, rather than as an individual. There is a myriad of reasons why this is so, namely due to American tax laws (particularly estate taxes). You also avoid personal liability issues that could arise if you rent the property and hire a professional property management company to oversee it.

With a B-1 Business Visitor visa, you can even incorporate in the U.S. and buy and sell property (although you will have to have an American property management company manage your holdings).

Distressed Properties Give You More Bang for Your Buck

Finally, be sure to turn to the foreclosure market for the best deals in the market – by far. Prices are still incredibly depressed, so there is plenty of upside potential available. REO homes and HUD homes in particular are prime targets for quick purchases – perfect for foreign investors looking to make a steal in a hot market.

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