Is it worth investing in US Real Estate?

Foreign buyers have the right to purchase real estate in the U.S. and people from all over the world take advantage of this opportunity. Moreover, real estate investments are considered to be the most protected and legitimate (followed by Germany, Canada, France and Australia). U.S. property price is also much lower than equivalent sized properties in Europe – making American real estate investments popular worldwide.

How to become an investor in the US?

1.Choose the location of your investment. For example, buying an apartment on Miami Beach area, and renting it out.

2. Analyze the return on investment (profitability). 

Determine how much of your capital you can spend on the purchase (i.e. renovation and other foreseen/unforeseen expenses). Calculate the return on investment. If the investment makes financial sense, start your real estate search.

3. If you are a foreign investor located away from your prospective real estate investment area, you will need assistance from locally based professionals. 

First, find a broker (realtor) in the state where you would like to buy property (each state has its own license – a broker from Miami cannot help you buy a house in Chicago). You must then decide if you are going to complete the transaction yourself, or entrust the agent to act on your behalf. Keep in mind that if you choose to entrust the agent, they will provide pictures, videos, reports, inspection and lawyer’s report by e-mail throughout the entire process.

Agent Services are free of charge – Brokers receive compensation from the Seller as commission. However, lawyers and home inspections are additional expenses.

4. The purchase and registration of the real estate property.

This is possible without your physical presence. The lawyer can check and prepare all the papers, and send them to you. You will then be registered as the owner of American property.

How does a property purchase work?

In America, you can only buy a property by wiring money (this is a serious matter – if you bring a suitcase of cash, no one is going to deal with you).

Can a foreigner get a mortgage?

Most foreign real estate transactions are cash deals – but it is possible to get a mortgage. In order to get one, the buyer must initially have proof of funds (equaling to 50% down payment) in their account. The mortgage can be obtained by the buyer for the remaining amount. It is important to note that the buyer must show proof of a good credit score and source of income for the mortgage application. Due to the recent events in Russia and Ukraine, this process can be complicated – but there is no need to worry, as we have a great team that helps with 90% of all transactions.

Regarding mortgages for foreigners in the United States – what are the considerations?

Information may vary because each bank has its own requirements, and the process of getting a mortgage varies from bank to bank. But for the most part, the requirements are the following:

1. You must have 40-50% for a down payment. The money should be in the savings account for at least 1 month (preferably 6 months). All money must be of legal origin (you may be asked about the origin of the money and you may have to prove this with additional documents).
2. In addition to the down payment on the buyer’s account, there must also be money available to cover the closing cost and backup amounts, which pay for maintenance of the property for 12 months (plus mortgage payments, taxes, insurance).
3. Mortgages can be taken for a one-year period to up to 30 years.
4. The interest rate will be higher than US residents by 2-5%. This is because some foreign citizens cannot show credit history, meaning the banks will be taking more risks financially. In 2015, the bank interest rate was about 10%. There are also so-called private investors who have 15-20% interest rates for a period of 5-10 years.
5. Mortgage amounts start at $250,000.
6. Banks require proof of income from you or your company. They accept letters from employers or company audit reports – basically any legal evidence proving that the company exists.
7. To obtain a mortgage in the US bank most likely will need you to attend in person with your passport and American visa. The application process will take up to 30-45 days. However, you do not need to stay in the US for that time. In order to wait for the bank’s decision in your home country, you must sign a power of attorney for a lawyer, real estate agent, or other authorized person.
8. Foreigners can get a mortgage for specific properties. This means the property will be required meet the bank’s criteria. Consequently, it would be difficult to get a mortgage for a cheap apartment in poor condition.

How does the registration of real estate ownership work?

Real estate ownership is confirmed by the registry in the Record of Deeds, which is known as a Deed. There are various forms of ownership. When you buy property in the US, the buyer owns the land and all of the buildings and plants on the land that have been bought (as well as underground and the air above the building).

The most important thing to note is that even as a foreigner, you have the same rights as American property owners. So, no one can trespass on your property in America.

What else does a foreign investor need to know?

When buying property in America, you as the owner will have to pay annual property taxes, homeowner association fees and so on.

Where to buy real estate in America?

As a general rule, foreign investors prefer buying real estate either in the resorts or big urban cities. Foreign investors mostly invest their money in properties in cities such as New York, Chicago, Los Angeles, Houston, San Diego and Miami. See, it is not that difficult J.

You only need to choose a dream house (or apartment with stunning views) – and look forward to seeing your dream come true…