America, the land of dreams! What better place to invest in residential property? Living in a different country shouldn’t be a deterrent. You too can own a slice of the United States! Property investment for foreigners isn’t as difficult as you may think. Keep in mind some of the following information as you pursue American property for your next investment.
REIT – A Property Investment’s Friend
REIT, or Real Estate Investment Trust, is a good means of investing if you’re not extremely wealthy. A REIT can loan you money to purchase residential rental properties. REITs are securities that sell on the major exchanges like stock, but invest directly in real estate. As financing is likely to be the biggest obstacle a non-U.S. citizen is likely to encounter in purchasing U.S. investment property, a REIT can help address and eliminate some of the issues that may otherwise occur related to financing.
Turn-Key Investment Companies
If you’d rather not use a REIT, a turn-key real estate investment approach is another option to consider. Turn-key real estate investment companies manage all aspects of property investment including: acquisition; financing, restoration when necessary and even management. Really good turn-key investment groups will even perform due diligence for you, assessing investment property values and potential ROI. Like a REIT, turn-key companies can also reduce any financing issues you may encounter.
Who Can You Trust?
You’re not going to be managing your property yourself because you live too far away. But who can you trust to manage your property in your absence? Finding a Property Manager you can trust is essential to the success of your property investment. A turn-key company can help you locate a reliable Property Manager. If you aren’t working with a turn-key company, seek out a Property Manager in much the same way you’d search for a good employee. Look for candidates with lots of good recommendations and prior experience. Your Property Manager needs to be an extension of you, so make sure you hire someone you can completely trust.
Create an LLC
An LLC, or Limited Liability Company is a great way to establish the financial management of your property investment. Once your Company is established in the state you are investing in, make your trusted Property Manager the Manager of your LLC. You provide the financing necessary to cover all costs associated with managing the investment property. The Manager has access to the finances you’ve provided through the LLC and can manage any needs which arise such as property purchases, repairs, holding costs, taxes, insurance and any other costs which may arise. Rent is deposited by the Property Manager into the account and is available to you as the investor and owner of the LLC. Keep in mind that taxes vary from state to state, so know in advance what the state taxes are in the state your investment property is in.
United States laws allow for foreign investors to purchase investment properties. There are potential issues you may have to contend with. If you align yourself with the right people, your entry into American property investment can be a smooth and rewarding transaction.