Can Foreigners Buy Real Estate in the U.S.?
Foreign property investment refers to real estate investment on American soil by foreign nationals. The United States is considered a very favorable real estate investment market; in fact, one of the best in the world! As such, foreign buyers accounted for over $78 billion in real estate sales in 2019 alone. The majority of foreign investors live in China and Canada, respectively, with Mexico running a close third. There’s little doubt that many more foreign investors would buy real estate in the U.S. if they knew how.
Why is the U.S. Such a Popular Place to Invest in Real Estate?
The United States is a popular place to invest in real estate for residents, but especially for foreign nationals. First of all, compared to many countries, the laws of ownership in the U.S. are very clear. A clear title is typically all that’s needed to prove ownership. In other countries, the question of property ownership and who owns what can be quite messy.
Purchasing property in the U.S. is also a breeze compared to some other nations. Many countries have permanent auction systems, where prospective buyers bid against other prospective buyers, driving the price higher and higher. Here of course, you may get into a bidding situation with another eager buyer, but it’s not the norm unless you’re in a highly competitive market such as California’s Bay Area. Even then, when the market cools, the situation goes back to a standard “make an offer, get it accepted” scenario.
Another benefit is that prices for investment properties are fairly cheap compared to many countries. And, since the U.S. is so big and local markets vary from state to state and even city to city, there is always a place to find a bargain, no matter what the overall economic climate is.
In addition, the U.S. has some very attractive financing options, even for foreign nationals. Few countries other than the U.S. have 30-year mortgage options. Even 25-year mortgages are not commonly available outside the states.
The rent-to-value ratio on investment properties is attractive to foreign investors, too. A 15% cash-on-cash return is not hard to find if you know where to look or if you work with a good turnkey provider. In countries like Canada, France, England and China, you simply won’t find that kind of return on your investment.
Finally, in the U.S., governments are friendly toward foreign investors. There is no law in existence that prohibits the sale of raw land or property to foreign nationals. These are some of the many reasons why the U.S. represents such a fertile investment opportunity for foreigners.
Can Foreign Nationals Get a Loan to Buy American Investment Properties?
Although there are no laws prohibiting foreigners from buying real estate in the U.S. or getting a loan to buy that property, the process can be daunting in practicality. This is especially true since the foreigner is most likely resident in their native land while trying to navigate another country’s (the U.S.’s) loan process. If the foreigner doesn’t speak English, this presents yet another barrier to entry.
The fact is, not all U.S. banks are eager to lend to foreign nationals; not out of prejudice but partially due to challenges with matching the qualification criteria against the various credit systems in other countries. For instance, England doesn’t have a national identifier number that would be the equivalent of our social security number. Other countries pose similar complications. For this reason, only certain banks in the U.S. make a practice of lending to foreign investors.
If you are interested in purchasing an investment property in the U.S., your best bet is work with a turnkey rental company that works with overseas buyers like yourself. At MartelTurnkey, we have several lenders that we work with on a regular basis, that are set up to lend to foreign nationals. And, if you are more comfortable speaking French or Spanish, we have people on our team to communicate with you in your native language about your real estate investment options. This makes the process of buying an investment property on American soil much easier and more comfortable for you, the investor. Please contact us today for more information about buying an investment property in the U.S..