As the Great Recessions is gradually but as a matter of fact fading away with the hopes of eventual salvage showing up on the horizon, foreign buyers and investors starting to pursue opportunities in the Us real estate store again. Even though garage salvage of the housing store is still "work in progress", many foreigners identify that American real estate is "On Sale", plus the dollar is historically weak, so many buyers are trying to snatch the bargains in residential and commercial properties here. However, a foreign buyer investing in the Us must take extra diligence to plan the acquisitions due to nuances in taxation laws, title retention rules, money exchange rules and many other factors. There are many aspects to consider, I'll integrate on some key points:
(1) Document Everything: Before you exchange even a dollar here, make sure you can verify where the money came from. Any transfers over ,000 into the Us, including your all cash real estate buys, will be reported to the federal authorities, and when the Feds come asking questions, you need to make sure that you can prove legal sources of your cash. Agreeing to 2001 Patriot Act and the Money Laundering control Act of 1986, escrow and title companies, brokers, banks must report to the federal authorities any large deposits and money transfers over ,000. Make sure you have documentation backing up your sources of income, taxes paid overseas, bank catalogue statements, speculation catalogue statements, in other words - the paper trail.
Usa
(2) Finance Or All-Cash? If you are planning to buy with all cash, it will give you many advantages as the "all cash" buyers might enjoy deeper discounts from motivated sellers in many areas. All cash buyers can close deals very fast, and some sellers prefer to deal with buyers like this. However, I propose that you plan the acquisitions with a real estate speculation adviser to see if buying with some type of financing will be financially more useful for your speculation strategy because of leverage-enhanced Roi and distribution of risk among some properties.
If you're looking to finance your real estate acquisition in the Us, be ready to encounter some tough times. Real Estate Financing is pretty tough for even Americans these days, but for foreigners it's even tougher. There are only a handful of institutional lenders who will reconsider loans for foreign nationals, but they will all want a large downpayment (at least 30% or more) and verification of wage from your country. If you have a work visa in the Us, such as H or L, and have an established credit history in the Us, you may be able to qualify for regular financing with as little as 3.5% down even though you are still thought about a "foreign national".
If you have established connection with your bank in your own country or another foreign bank, you may reconsider obtaining financing from them and then bringing the loan proceeds into the Us as "all cash" purchase, again just make sure to have documentation as to where the money came from.
Alternatively, there a many underground lenders who will lend up to 65% of the asset value at 9-12% annually regardless of your immigration status, and if you are looking for a commercial property, you might be able to finance it easier too, because commercial lenders underwrite loans primarily on the merits and wage of the asset itself, rather than the borrower.
(3) Control Your Assets: In the Us you can hold title to the asset in many separate ways: as an individual, corporation (either domestic or foreign), little Liability Company, partnership, living trust, pension fund, or many other form of entity. Each of these forms has advantages and disadvantages, especially when it comes to taxation of the rental wage received from your speculation property, exchange of the asset to linked or unrelated parties, estate planning and many other situations. You need to conclude Before you buy a asset in the Us how you will own the property, spend some time with a knowledgeable international tax counselor to learn about your options.
Investing in real estate is a very hands-on enterprise. You must think through the details before you buy the first property. It's very hard to control a rental business when you don't see what's happening yourself. I'm working with many investors and have owned many rental properties, and can tell many bad dream stories about asset administration fellowships embezzling money from out of town investors, renting units for cash but reporting them vacant, overinflating repair bills, etc. How are you planning to control your speculation physically while living in India or Russia and owning properties in the Us?
(4) Before You Enter, Plan Your Exit. Are you planning to sell for profit? How long before you sell? Did you catalogue for the future capital gain tax? Will you take the money out of the country? If you are planning to sell for behalf but re-invest proceeds into another property, you need to become well-known with 1031 tax-deferred exchanges that allow you to trade and integrate properties for years and decades without paying a dime of taxes until their final disposition. It's a great tool for smart investors that can make you very rich, but again, you have to plan for this strategy in improve and consult with a knowledgeable person. Besides, when you are selling a asset here as a foreign individual, you are field to all kinds of withholdings regardless if you made any behalf or not, including 10% withholding under Firpta just because you are a foreigner, 3 1/3% withholding in California because the asset is non-owner occupied, etc. But, you can avoid some of these withholdings if you learn the rules and plan your title retention strategy in advance!
(5) Visa Considerations: leading misconception I see among many foreign buyers that I'd like to address here: don't assume that owning real estate in the Us will automatically entitle you to a Us visa. You can own million of properties in the Us, but still be denied an entry visa. So, make sure to get your visa status cleared first and then come to the Us to look at areas of interest and definite properties. Do Not Ever Buy Properties Sight Unseen!!!
(6) Why Real Estate? Finally, ask yourself honestly: why are you investing in real estate in the Us? Because of visa, passive income, future store appreciation, or because you are thinking of development it your future home? If visa and speculation inherent are your main decision factors, reconsider some alternatives that can furnish you with similar Roi (return on Investment) and visa opportunities, such as Eb-5 visas ( million dollar minimum), "Regional Centers" (0,000 minimum), E-2 small investor visas (0,000 investment), etc. Or you can integrate some strategies, depending on your preferences and passage to capital.
Bottom line: your investing in real estate here should be a corollary and the Final Step of some serious planning path. Portion seven times, cut once, as we say in Russian. It's much easier to avoid high-priced mistakes before you step into this store than waste time and money undoing mistakes made in the policy of a rushed poorly planned real estate venture. Happy Investing!
Basic Guide For Foreign Buyers of Real Estate in the Usa
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