Investing in U.S., particular in the real estate market can be a good investment for both the local civilians as well as people from abroad. Considering the fact that the law for each state in America is differing and that there could be advantageous in investing in tax friendly states, one must also take into consideration the disadvantages elsewhere. For e.g. you might find a region where you might be paying lower tax possible but the region might not have certain other benefits which may include higher crime ratio, isolated place, lack of recreational opportunities, lack of employment in the city, low scope of growth etc.
But before going through all that, here are some simple options, let’s start with the cheapest:
REITs are some of the cheapest as well as the easiest options for adding real estate property to your assets. REITs (real estate investment trusts) which was established by Congress in 1960 as an amendment to the Cigar Excise Tax Extension of 1960. Allowing individual investors to buy shares in commercial real estate portfolios that receive income from a variety of properties, including apartment complexes, data centers, healthcare facilities, hotels, infrastructure, office buildings, retail centers, self-storage, timberland and warehouses. However REITs has many requirements to be met before being eligible for the same including Investing at least 75% of its total assets in real estate, cash or U.S. Treasuries, Paying a minimum of 90% percent of its taxable income in the form of shareholder dividends each year and much more. Also worth noting is that REITs are also available in various types such Equity REITs, Mortgage REITs and Hybrid REITs as well as further clarification includes whether it is Publicly Traded or Non-traded as well as Private REITs. REITs general have low growth ratio however they do offer risk adjusted returns which is one of its advantages.
But for a foreign investor investing in U.S., the easiest option is to become a landlord. Although that Is also a rather costlier option, it is worth considering the same and real estate agents can not only lend you the money to own a property in United States, but also manage the same for you for long or short term regardless of that property being utilized as a rental unit or institution or any possible means to generate income from that solid asset. Lenders generally offer around 65% to 70% LTV max, that means $30K – $35K down payment for a property value $100,000. There are other costs which could end costing more than a would-be real estate investor realizes in the long run. But there are few major advantages investing in real estate properties in U.S. including having a place to live abroad, international asset and business opportunity meaning your property abroad can be used as rental service, can be given on lease to business and institutions depending on its size, and lastly, higher profit returns overall when compared to investing in your local real estate market. Dollar is a fast moving currency and having a property in a developed nation is far more safe investment asset as opposed to investing in third world countries. Someone from India can find advantage in investing abroad as the price for a house in India can be far more expensive as oppose to investing the same amount for an American house.
INVESTMENT IN PROPERTY
Investing in a property, let’s say rental home can be tricky as you will need to find the right property, maintain the same and deal with various tenants and the whole process requires research and hard work along with patience. First you would have to make sure that you have enough savings to meet miscellaneous costs that may occur suddenly such as repairing costs. You may need to add amenities as needed in future as tenants grow in numbers.
- In case one buys a large land, it can be utilized in many ways including setting up a farm, an institution type infrastructure to give it on lease to others, a business type complex or any possible combination where the land or the building on the land can be used for business and as a means to generate income, but doing any of that will also require understanding law as per the respective state and as per the respective business laws it would be associated with and furthermore you would require someone to manage the same when you the owner or co owner is not present at the place. There are many such circumstances to look for before finalizing your decision. A lawyer and real estate agent/agency is always a must in case of investing abroad, they will help you get informed, do research for you and save a lot of time
WHAT TO RESEARCH FIRST?
- Assuming that you are well prepared with the budget, first you would want to see which place in the U.S. is more tax friendly and that laws are easy to both purchase and manage a real estate property there.
- Secondly, if you are considering buying a home in your selected city, you would further have to research for nearby recreational opportunities if and as needed, crime ratio around the region, employment growth aspects etc. and more, also depending on how you would like to utilize the property in case you are not going to go abroad in the near future
- If you are moving abroad and plan to stay in the property you bought, you would do well to research nearby work and business opportunities for yourself and suppose you are sending your child to study in America, you would do well to research on various universities and how far it would be for your child to travel there and how she/he should travel there and what not, there is a lot of pre-planning and research required and some of aspects are not about the actual real estate property directly
- In case you are not moving to U.S. and plan to use the property for rental business or any other business, you would do well to get informed about laws and regulations as well as potential of the purpose you are planning in the respective city, for e.g. rental business may not be suitable in the place you have finalized to own a property and thus a prior research as well as planning is essential, same is also applicable in any type of revenue generation business
- It would not be a bad idea to travel abroad and personally check the property as well as finalize the deal and also doing a little tour of the city can be handy while you are there
- There are also ready for business type real estate properties such as tenants occupied properties etc. so one needs to research about that as well in case using the property for self is not the purpose
WHY INVEST IN INTERNATIONAL REAL ESTATE?
Every country has distinctive financial flows that go all over at various occasions. While it might be a retreat in the neighborhood/home economy, the equivalent may not be the situation in another nation, except if the world is confronting a worldwide subsidence, which is exceptionally improbable to happen precisely in the meantime. As you may not anticipate that any business should shoot to its top immediately, so you should be set up to look out for it to come around. With regards to universal land, you will experiment with a totally new land business condition and it might require some investment to habituate yourself with the new neighborhood rehearses.
It might be a smart thought to consider nations that have seen critical drops as of late in the property estimation. The truth of the matter is that the world is for sure getting to be littler. Monetary trades and speculations are less demanding and even the private financial specialist can hop ready for the global economy and benefit incredibly from vacillations in the business sectors.
Contact a land proficient real estate agent working inside the business sectors you are focusing to investigate. You will understand that the expense, property and title laws of every nation are exceptionally unique. The equivalent goes for the movement foundation, average cost for basic items, well-being and security. Every one of these contemplation will affect your decision of property speculation goal. Neighborhood land experts are knowledgeable with these snippets of data as they are always interfacing with them in their profession.
KEY ADVANTAGES OF REAL ESTATE ASSETS
- Real estate properties can generate steady income
- Long term financial security as opposed to investment in shares etc.
- Certain Tax benefits
- Mortgage payments can be paid for via rental income, thus your tenants or institutions utilizing your property would be paying your mortgage for you in the long run
- Real estate investment can be handy once there is rise in property prices and thus you can sell yours for higher profit returns
Overall investment in real estate property is a profitable investment but requires a lot of prior research and eventual help from real estate money lenders when you would not be staying abroad, here is a guide from BiggerPockets worth reading.