When it comes to foreign investment opportunities, the U.S. has plenty to offer. Especially in states such as California, the real estate market is booming and houses are flying off the market.
If you’re a first-time foreign investor seeking property in the U.S., you probably have a lot of questions regarding what you can do, what you should do, and how to do it. In this guide for foreigners investing in U.S. property, we will take you through the process.
Learn what types of property you should invest in and what you must know before investing — including why a hard money lender will be your best bet for getting the loan you need.
What type of investment property do you want?
Fortunately, foreigners interested in investing in the U.S. don’t need to be a citizen or have a green card. You don’t even have to live in the U.S. or plan to live there. Of course, purchasing property in the U.S. won’t affect your legal status, either, or give you additional rights.
The one thing a foreign investor does need is an Individual Taxpayer Identification Number (ITIN) or an established entity like an LLC corporation, or limited partnership in the U.S.
Before you begin the process, you need to know what type of investment property you want. You can choose commercial or residential real estate, for business or consumer purposes.
Commercial properties include:
- Apartment complexes
- Office buildings
- Shopping centers
- Hotels
- Warehouses
Residential properties include:
- Single-family homes
- Multi-family homes
- Condominiums
- Duplexes, triplexes, or quadplexes
- Townhomes
Once you decide your investment property type, consider the real estate market.
Look for areas with a high renter population, increasing overall population, and job growth in various industries. You also should evaluate the city of your choice for rental incomes and listing prices.
Of course, all this work can be accomplished easier with the right real estate team, which we will dig into later. While you have plenty of opportunities as a foreign investor, the process can be a pain if you don’t know what you’re doing.
What’s your loan scenario?
How a foreign investor can get a loan in the U.S.
When it comes to getting a loan in the U.S., even citizens can have trouble with traditional lenders such as banks. This is due to the strict requirements set by Government-Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac, which buy these loans.
It gets a bit more complicated for foreign investors — Fannie and Freddie won’t buy your loan since you’re a non-citizen. You’ll have to get a nonconforming loan, then, which will be a long, costly process of verifying your finances and assets in your home country.
As a foreign investor, you don’t have time to jump through all these hoops. You have another option: hard money lenders.
How a hard money lender can help a foreign investor
Hard money lenders — also known as private money lenders — offer loans to people in unique situations that banks deem too complicated. These lenders are individuals or private funding groups who don’t follow such strict guidelines to make their deals.
Instead, hard money lenders focus on the deal. They make decisions based on common sense, backed by years of industry knowledge and experience. They will have some requirements to meet, but these are determined on a case-by-case basis and the value of your deal.
The greatest benefit to hard money loans is the speed — especially for investors.
In California, Marquee Funding Group can close on deals in as fast as seven to 10 days. Marquee understands the unique needs of real estate investors, and aims to build real relationships for years of lucrative deals to come.
Put together your real estate team
To navigate the process as smoothly and efficiently as possible, a foreign investor needs the right team to guide them.
This team should be knowledgeable not only on real estate investing for non-U.S. citizens, but also must be willing to dive into the requirements and restrictions from your home country.
Include the following professionals on your team:
- Real estate attorney
- Real estate agent
- Property manager
- Mortgage broker
- Hard money lender
- Title professional
- Tax professional or accountant
This team will help you make sure everything is being done correctly. This is especially important when it comes to filing taxes — if you fail to file or do it incorrectly, you might owe the IRS a lot of money.
With the help of an attorney and accountant, you will know how to properly structure your investment and file taxes.
Find the right hard money lender for your investment deals
Hard money lenders will help to guide foreign investors to make the deal and invest in U.S. properties. These types of loans are popular with investors due to the flexibility, speed, and numerous options available.
To find the right hard money lender, you need to look for someone experienced, knowledgeable, and respectful. In California, Marquee Funding Group is the ethical standard for hard money lending. The team can efficiently guide foreigners investing in U.S. property.
Marquee offers:
- In-house underwriting, processing, and servicing
- Loan amounts from $50,000 to $20 million
- Owner-occupied or non-owner-occupied consumer or business purpose loans
- Single-family, multi-family, commercial, industrial, construction, and land loans
- Purchase money, rate-and-term refinance, and cash-out refinance options
- Loan-to-Value up to 70% (deal specific)
Reach out today to speak with the Marquee team and start building your relationship with your lender. Even if you’re not yet ready to apply, we encourage you to ask questions, tell us about your situation, and learn about all your options.
Photo by Francesca Saraco on Unsplash