When you consider the investment opportunities offered by USA in 2020, you would have several options. You could think about stocks, emerging technologies, green energy, and many other “hot” sectors. Another option for foreigners looking for investment opportunities in the USA in 2020 is real estate. Let us start by discussing the reasons for investment in real estate in USA.
What are the top 5 benefits of real estate investment in USA?
- Appreciating returns: Real estate is considered one of the safest investments because of the appreciating nature of real estate value over time. As long as you carefully choose the property, you are likely to get good returns on the purchase a few months down the line.
- Flexibility: How long you remain invested in a property is up to you. You can invest in property that offers returns quickly or for the long term. One example would be fix and flip type properties, which tend to remain in the investor’s hands for just a few months before they are sold. On the other hand, you might choose to invest in rental property, and let the rental income flow in for years to come.
- Stable value: Unlike stocks, that can crash overnight, and other types of investment, real estate generally tends to have less volatility. This is because the demand for real estate generally holds steady, since having a roof over one’s head is one of the basic necessities of life. For investors who look for certainty, real estate investing might therefore be a good choice.
- Political stability: This might be an important reason for foreign investors considering the USA as their next investment destination. Since the USA is seen to offer a politically stable atmosphere, investing in real estate in the USA could give foreign investors a reliable form of financial security.
- Affordable pricing: Price-sensitive foreign investors would benefit from the many price tiers offered by the real estate market in the USA. Depending on your budget, you could invest in prime property in major cities, or choose property in smaller cities that are priced lower but also offer great returns.
Discussed next are some of the common questions that foreign investors may have about investing in the US real estate market.
What is the best place for real estate investment in the USA?
California is seen as an ideal investment destination. It offers properties that suit different budgets in major cities and in small towns. With an expected boom in real estate prices driven by greater demand being just around the corner, this might be the right time to invest in real estate in California. Some of the things to consider would be:
- Expected growth in population: The more people move into a city, the greater the demand for accommodation, stores, and other types of real estate. Therefore, if a city is experiencing a boom in the numbers of residents, this might offer a good opportunity for investment.
- Growth in industry: Industries create jobs and jobs attract people. So, if a particular city is seeing an increase in a particular sector or several sectors, it might be a good idea to invest there.
What options exist for foreign nationals planning to invest in US real estate?
Foreign investors can invest in different types of properties:
- Commercial property: This category includes office buildings, apartment complexes, industrial buildings, retail buildings. Whether you purchase the property for your own use or for investment, there are many options for the investor.
- Fix and flip properties: Investors looking for quick returns on investment, and willing to locate the right property after some research can choose this option. This involves investing in a property, renovating it, and then selling it at a profit.
- Rental property: You may choose to rent out the property, rather than sell it right away. Rental properties can fetch stable income for years. You may purchase commercial or residential property with the goal of putting it out on rent.
Which is the best real estate investment forum in the USA?
Foreign investors can start by looking at online forums that will enable them to understand the real estate market in the USA without having to travel to the country. Generally, these forums will offer information on two types of investment options. You can choose to invest in the property itself, or invest in the stocks of a real estate investment company. Some forums are open to all types of investors and others cater to a niche, such as small investors.
What are the benefits of commercial real estate investment in the USA?
If you are planning to buy and lease commercial real estate in the USA, there are several benefits awaiting you. Commercial buildings carry longer lease terms than residential buildings, so owners need not look for tenants too frequently. Commercial buildings also offer higher return on investment.
Can you get a green card if you invest in real estate in USA?
One of the benefits to foreign nationals who invest a particular amount of capital in the USA is the acquisition of a green card. The EB-5 program targets investors from other countries who invest at least USD 500,000 in the USA. However, simply purchasing property is not sufficient for eligibility toward citizenship. The EB-5 program is aimed at generating employment for people within the USA. Therefore, your investment must also directly generate jobs for at least 10 people. As such, it is important that you choose a property that will help generate employment for people. This could include commercial properties such as stores and hotels or residential rental facilities that employ caretakers and other staff. There are other conditions you would need to meet, if you are planning to get citizenship of the USA. For further clarifications, you could consult an immigration attorney.
How much do foreign investors pay as tax?
Tax restructuring is one of the more important aspects of property investment in the United States, as it is with any other type of investment. You need to ask a tax advisor for guidance when planning to invest in real estate in the USA. The good news is that real estate investment in the country offers scope for tax savings if you opt for smart investment structuring. Some investors may benefit from setting up a limited liability company for investment.
How to find financing options for your property investment?
For most investors, financing is one of the major concerns, whether you are investing at home or abroad. As a foreign investor, you may find it tough to get financing through traditional channels such US banks, as mortgages are not offered to foreign nationals investing in property in the USA. However, you can still find funding through other types of lenders. You can apply for loans to purchase commercial property, apartment buildings, rental property, and fix and flip property.
How should you find the best investment opportunities in the USA?
If you are investing in property, you would preferably want to visit and inspect the property prior to purchasing it. As a foreign investor, your ability to do this frequently may be limited. As such, you can look up some of the properties referred by lenders to give you an idea of the nature and amount of investment needed. Many foreign investors often hire a team of specialists to locate good investment options.
What is The Foreign Investment Risk Review Modernization Act (FIRRMA)?
A 2018 regulation mandates the scrutiny of foreign investment in properties located close to sensitive installations such as military bases, airports, and so on. If the property is located close to such an installation, or you feel that you need more clarification on the purchase, you have the option of notifying the Committee on Foreign Investment in the United States before you purchase the property.
How does a foreign national sell their property in the United States?
If you own real estate in the United States, you would need to pay capital gains tax on the sale. If you plan to obtain rental income by holding on to the property, you would need to pay tax on the income. Based on how your investment has been structured, the amount you pay as tax could be lessened.
Can foreign investors appoint property managers for rental property?
Investing in rental property in the USA is one way to get assured passive income. However, for investors who reside outside the USA, appointing a manager who looks after the property and collects rent is a good option. That said, managers for such properties are subject to certain regulations, such as paying tax from the rental income they collect.
Can a foreigner buy land in the USA?
There are generally no restrictions on buying land in the USA. However, there may be restrictions on how you use that land. For example, there may be certain types of buildings you may not construct on a piece of land. These rules are applicable to all buyers and not solely to foreigners, but you would need to be aware of these rules when you buy land. Foreign investors who purchase farmland are required to disclose the transaction to appropriate authorities.