Many people from outside the United States find it worthwhile to invest in American real estate. This is due in part to the fact that American real estate is relatively stable and poised for continued economic growth. You do not have to hold a green card or U.S. citizenship in order to invest in American real estate. However, there are some important things you should know before doing so.
Here are three important things you should know before investing in American real estate as a non-citizen.
1. You may encounter high interest rates
There are typically higher interest rates associated with investing in American real estate as a foreigner, and this is the result of banks taking extra steps to protect themselves. In addition to having a higher interest rate, you may also find that banks want a larger down payment than they would from a U.S.-based investor. In some cases, you may wind up paying 30% or more of a property’s purchase price upfront.
2. You need to secure a tax ID number
While you do not need to have a green card or U.S. citizenship to invest in American real estate, you do need to have an Individual Tax Identification Number. You are going to need to reference this number when making federal tax reports to the government.
3. The approval process is often timely and complex
You may have to take some additional steps to prove yourself worthy of an investment property loan as a foreigner. Your income, credit score, tax returns from your country of origin, and other areas may help determine whether you receive approval for a loan.
While purchasing U.S. real estate may take time and effort, many foreign investors find that their American real estate investments lead to profitable returns.