You have many options when it comes to purchasing property in the U.S. as a non-citizen.
Many foreigners choose to invest in U.S. property as a lucrative addition to their portfolio.
Especially in states such as California, the market is strong and there are plenty of opportunities for investors. However, just because foreigners can purchase rental property in the U.S. doesn’t mean it’s simple.
Traditional loans in the U.S. have strict requirements in general, and this extends to foreign buyers.
What other options does a foreign buyer have? A hard money lender can simplify a complicated process.
Why should a foreigner buy rental property in the U.S.?
Investing in rental property in the U.S. has numerous benefits, including 30-year mortgages, strong rent-to-property value ratios, and a growing population that always is in need of living spaces.
Foreigners who buy rental properties can then have a passive income in the U.S., even while in another country.
You don’t need a green card or visa to purchase property in the U.S, because you aren’t required to live there to reap the benefits of your investment. However, you will need an Individual Taxpayer Identification Number (ITIN).
Foreign buyers are able to purchase properties such as:
- Duplexes, triplexes, and quadplexes
- Single-family homes
- Commercial property
- Industrial property
You can then rent these properties out to local tenants to help you cover the mortgage payment or simply land bank to establish wealth in the U.S.
The downside to buying property in the U.S. comes from traditional loans offered by banks.
These lenders see foreign buyers as more of a risk, since they often don’t have credit established, pay taxes, or have a permanent residence in the U.S.
Traditional lenders usually won’t offer loans to foreign buyers, and if they do, these non-conforming loans will have higher interest rates and a longer approval process.
The best way for a non-citizen to purchase property is through a hard money lender.
What’s your loan scenario?
How does a non-U.S. citizen purchase property?
Investors are proud of their real estate portfolios, and they understand the business. The red tape of banks can be a frustrating experience when you know the value of your deal.
Fortunately, hard money lenders understand this, too. Hard money lenders — also known as private money lenders — are individuals or private funding groups rather than banks.
These lenders focus simply on your unique situation, your plan, and your exit strategy. They use their years of experience and industry knowledge to make decisions based on common sense, rather than meeting strict requirements.
Why is it difficult for foreign buyers to get a loan from a traditional lender?
In contrast to non-conforming loans, conforming loans meet the requirements of government-sponsored enterprises (GSEs) such as Freddie Mac and Fannie Mae. As a result, these loans can be sold to the GSEs.
The problem is, GSEs have strict requirements on credit scores, down payments, and property types. Since foreign buyers would need non-conforming loans, and these loans can’t be sold to the GSEs, they are a higher risk to lenders and often have higher interest rates.
Foreign investors face even more difficulties than a U.S. citizen purchasing a single-family home, for example, because certain investment property types can have tighter restrictions.
What types of loans are available to foreign investors?
A full-service mortgage banking firm that specializes in hard money loans, such as Marquee Funding Group, offers the following types of loans:
- Owner-occupied consumer or business purpose
- Non-owner-occupied consumer or business purpose
- Single-family or multi-family
Loans that banks deem too complicated are everyday occurrences for hard money lenders such as Marquee.
Even if a traditional lender is willing to work with you, it can take several weeks or months to close, depending on the requirements.
The greatest benefit of hard money loans is the speed — loans can be closed in as quickly as seven to 10 days, with same-day approvals.
For an investor, timing is everything. Hard money lenders understand deals need to happen quickly.
How do foreigners pay real estate taxes on a rental property?
First-time foreign investors seeking property in the U.S. should create a support team of real estate experts to help navigate the rules — both in the U.S. and in their home country.
When it comes to real estate taxes, foreign investors could potentially pay a lot if they aren’t properly filing. The right team can help you avoid additional fees and penalties.
Your team might include:
- Real estate agent
- Mortgage broker
- Private money lender
You will need your ITIN to file a tax return with the IRS. It will be beneficial to find professionals who have experience with foreign investors.
Finding the right hard money lender as a foreign buyer
When searching for a hard money lender as a foreign investor, it’s important to look for someone with experience assisting non-U.S. citizens. If the lender has experience with your home country, that is even better.
You’ll need to understand the rules both in your home country and the U.S., because your home may have certain rules or restrictions of its own. That’s why having a team of experts is essential for the smoothest process.
If you’re searching for property in California, Marquee Funding Group has the most experienced loan officers, and stands as the ethical standard for hard money lending.
Marquee will help any foreign buyer searching for a primary residence or vacation home in California as well as foreign buyers looking to acquire investment properties valued at over $1.5 million outside of California.
You can expect a respectful, honest, and transparent experience with people who want to build a relationship with you for many future investment deals to come.
Marquee also offers:
- 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)