When it comes to buying property in the U.S. with a foreign partner, you’ll face some important decisions and considerations.
The bottom line is that while you certainly can purchase U.S. property as a citizen with a non-U.S. citizen partner, this type of partnership is subject to complex tax laws and potential lending restrictions.
For the greatest success, you’ll need to know what you’re doing.
This involves putting together a trustworthy team of professionals to help you make the right decisions.
We’ll help you get started. Read on to learn how and why you should invest in property with a foreign partner, and what you need to do to make sure it’s a success.
How to invest in U.S. property with a foreign partner
Investing in property in the U.S. with a foreign partner doesn’t generally look too different than investing with another U.S. citizen. Your foreign partner can inherit property and be named as a beneficiary, just as a citizen can.
The differences lie in the details.
The best choices for your property will depend on your relationship with the foreign partner, your goals, and the laws of the state you’re purchasing in.
Who is a foreign partner? This type of investment partner is anyone who is not considered a U.S. person. This includes:
- Nonresident aliens
- Foreign corporations
- Foreign trusts or estates
Foreigners don’t need to be a citizen or have a green card to purchase property in the U.S. They don’t even need to live in the U.S. or plan to live in the U.S. Instead, they will need one of the following:
- An Individual Taxpayer Identification Number (ITIN)
- An LLC corporation
- A limited partnership in the U.S.
Prior to entering your partnership with a foreign investor, you will need to decide which type of property you want, and in which state. Then, you can put together the right team to help properly guide you based on this choice.
What’s your loan scenario?
Property choices for foreign partnerships
Foreign partnerships fortunately have many property type options. It all depends on your personal and joint goals as to what you want to do with the property.
Deciding your property type goes hand-in-hand with considering the real estate market. You’ll want to look for areas with job growth, increasing population, and a high renter population, if you’re looking for that type of investment.
You also will need to examine your location of choice for rental incomes and listing prices. California, for example, is a popular state for investments of all types due to the population, multiple-industry job outlook, beautiful weather, and rental property needs.
In California, you can choose commercial or residential real estate, for business or consumer purposes.
Examples of commercial properties includes:
- Apartment complexes
- Office buildings
- Shopping centers
Residential property types include:
- Single-family homes
- Multi-family homes
- Duplexes, triplexes, or quadplexes
While performing your initial research on property type and real estate market, you should be forming your team of real estate professionals to help you make the most accurate decisions.
Put together your team of real estate professionals
Your ideal real estate team should have experience with non-U.S. citizen investment partnerships.
The purpose of this team is not only to make sure you are properly structuring your investment, but that you’re following the rules and regulations of the state, the U.S., and your foreign partner’s home country — especially when it comes to filing taxes.
If you fail to file taxes or file them incorrectly, you could potentially owe the IRS a lot of money.
Consider including the following professionals on your team:
- Real estate attorney
- Tax professional or accountant
- Real estate agent
- Hard money lender
- Mortgage broker
- Property manager
- Title professional
Now for the one of the most important questions — how are you planning to get a loan for your investment?
Work with a hard money lender to achieve your investment goals
Seasoned investors know a hard money lender is the best way — and often the only way — to make your investment deals a success.
Especially when non-U.S. citizens are involved, any traditional forms of acquiring a loan become extremely difficult.
That’s where hard money lenders come in. These types of lenders are focused solely on the merits of the deal, and make their decisions based on common sense and a deep industry knowledge.
The biggest benefits to hard money loans are the speed and flexibility, which makes them the perfect choice for investors who require this type of service.
The right hard money lender also will be interested in forming a relationship with you, for many more mutually beneficial deals to come.
Reasons to invest in property
Investing in real estate comes with a long list of benefits if you make the right choices. Make sure your foreign partnership is set up for success by entering a real estate market rich with opportunity and trustworthy professional guidance.
Investing in real estate can result in:
- Stable cash flow
- Passive income
- Tax advantages
In California, Marquee Funding Group is the ethical standard for hard money lending.
This tight-knit group of lending experts specializes in unique, complex scenarios, and wants to build long-lasting relationships with investors.
If your deal makes sense, the team will execute it quickly and simply, closing on deals in as fast as seven to 10 days.
- In-house underwriting, processing, and servicing
- Loan amounts from $50,000 to $20 million
- Purchase money, rate-and-term refinance, and cash-out refinance options
- Loan-to-Value up to 70% (deal specific)