Investing in US Real Estate

As a first step, we recommend investing in real estate education. How? Read as much as you can, talk to people in the industry, and talk to people in the neighborhood where you aspire to buy, among other options.

Many wealthy people invest in real estate and have grown their wealth because of their investments. Any investment has an associated risk, and real estate investment is no exception. You can make money in real estate by generating rental income or capturing some of the property appreciation.

Real estate can be a smart way to build wealth through rental income and capital gains. Buying a property and renting it out can generate more income than your expenses, leaving you with a steady monthly rental income.

When the value of the asset you own increases during the time that you own it, it's called capital gains. For example, if you buy land for $500,000 and sell it for $750,000 several years later, you'll have a capital gain of $250,000.

Some investors make money through renting out properties, while others buy and sell properties for profit. Regardless of your approach, the key is always to buy low and sell high.

?Should you buy cash or finance the property??

If you are or know foreign investors, buying properties in the United States by paying cash, instead of using financing would be more beneficial. Real estate sellers love all-cash deals because they eliminate the need to work with a bank and include a variety of other benefits. The advantages of a cash offer include:

By financing, you can acquire loftier properties without being constrained by the amount of available cash for investment. However, it's important to note that leveraging can also carry risks, as you may end up losing the property in case of a market downturn. To minimize such risks, we suggest making a 50% deposit and obtaining a loan with a maximum value of 50% to 60% maximum.

Another recurring doubt is whether a foreign investor can access a mortgage to buy in the United States. The answer is yes. Many banks offer financing to foreign investors. Keep in mind there is a lot of scrutiny and documentation involved, which means the process is more complicated than when a U.S. resident applies for the same loan.

Many banks do not lend to foreigners who have never paid U.S. taxes, reducing the number of banking options. The few banks that offer loans to foreign investors will need proof of credit, proof of income, and proof of source of funds. You will also need to demonstrate your ability to repay the loan.

At H&CO we assist in Real Estate Accounting

Our experienced team of CPAs has extensive experience in the latest tax laws and regulations in the United States real estate sector, especially in South Florida. This involves strategic planning to maximize tax benefits, evaluate efficient investment structures, manage complex transactions such as 1031 exchanges, and comply with tax and accounting regulations, allowing foreign investors to make informed and profitable decisions in the competitive United States real estate market.

For more information, you can visit our Real Estate Accounting Services