Investing In U.S. Real Estate As A Foreigner or Immigrant

1. U.S. Real Estate Investment: An Incredible Opportunity

Investments come in many different shapes and sizes. Stocks and bonds by the investment of choice for many people because of the low cost of entry. But U.S. real estate has some incredible benefits that are worth considering, even for those who may not be native citizens of the United States.

One of the benefits to investing in real estate is leverage. In order to buy a stock or bond, you have to pay full price for it. This isn't true of real estate. Traditional mortgages require a 20% to 25% down payment. But some mortgages can require as little as 5% down. This means that you can spend as little as 5% up front on the asset and yet have complete control and access to it. It's obvious that you will have to pay more as time goes on. But you control the property the moment that the papers are signed.

Couple this with the fact that real estate is something that will always be in demand - though that demand can fluctuate over the years - and it doesn't take a genius to see why real estate is an incredible opportunity for those hoping to receive a good return on their investment.

The main problem with investing in real estate is the amount of paperwork and red tape that you have to deal with. And these things are only magnified when you attempt to invest as an immigrant. This doesn't mean that it's impossible, but you do need to approach it with an awareness of the challenges that go along with investing in real estate as an immigrant.

2. The Challenges of Investing as an Immigrant

The Language Barrier

Depending on what country you're from, the language barrier can pose quite a problem for your real estate investment strategy. Having an in-depth conversation about mortgages and the finer points of real estate law can test native English speakers. This is only compounded when you, as a potential investor, don't speak English natively. This also opens the door for possibly being taken advantage of.

Unfortunately, there are people out there who look for opportunities to mislead and misdirect. This is why it's absolutely vital to have a native speaker you can completely trust as a go-between. This could be a family friend, a family member, or a trusted advisor. But don't begin negotiations before you have someone who natively speaks the language and knows enough about the business to represent you and your needs well.

In addition to these challenges, the language barrier can also become a challenge when dealing with renters. This is why having someone with you who speaks English is vital. It's not just about purchasing the real estate, it's about all of the things that go along with owning, maintaining, and potentially renting it.

Qualifying as an Immigrant

As an immigrant, qualifying for a mortgage can be a challenge. Most lenders look at US credit histories in order to determine a person's fitness to receive a loan. If you haven't been in the United States for long, you may not have much of a credit history. This can hinder you from receiving a traditional loan.

Government-backed loans, on the other hand, require documentation that you may not have, including two years' worth of tax returns. If you are a recent immigrant, this may not be possible for you to provide.

On the other hand, you may be able to get a loan from a portfolio lender, a business that holds a portfolio of different loans. Unfortunately, these loans generally have a higher interest rate and rarely is that interest rate fixed. As a result, you'll have to deal with a variable rate that could go up or down in the future.

All of these issues make qualifying for a mortgage as an immigrant a more challenging endeavor than it would otherwise be. But you shouldn't let this challenge deter you. All of these issues can be overcome if you are determined enough and willing to persevere in spite of potential pitfalls.

3. The Benefits of Real Estate Investment

As we've already mentioned, there are innumerable benefits to investing in real estate. The leverage with real estate is unlike any other investment. Likewise, there is a more consistent demand with it than with some other investments. Some of the wealthiest people in the world made their fortunes through real estate investment. And what makes it such a powerful tool is that it not only can help you create wealth, it can also give you a fantastic source of passive income.

Wealth Creation

There are number of ways that real estate can help you create wealth. The most basic level, inflation is one of your best friends because it increases the value of property at a fairly consistent level. And this is true even if you make no improvements to the home or property. In addition to this, a property that's in a good location will also appreciate as time goes by and homes or businesses are built around it. All of these things and many others can be used to build wealth through the purchase, maintenance, and sale of real estate.

Passive Income

In addition to wealth building strategies like the ones mentioned above, real estate can also provide a solid passive income. If you purchase a home and rent it out, you can maintain the difference between your monthly mortgage and the rent as a regular income. If you build up enough of these sources of passive income, you can end up with a very strong base for your larger investment strategy.

Portfolio Diversification

Everyone knows that you shouldn't put all of your eggs in one basket. Real estate is a great investment for diversifying your portfolio. Real estate values don't fluctuate wildly like many stocks do and they have the advantage of being monetized through rent. Because of this, real estate can serve as a great foundation to a larger, highly-diversified portfolio.

It's a Hedge Against Loss

One of the major benefits of property is that it's never going to be worthless. Business may go out of businesses. Even governments collapse. But property will always be worth something. And since property normally increases in value faster than inflation, it's a great way to hedge against loss.

It's Benevolent

Finally, investing in real estate is not only good for you - it's good for others. Many people who can't afford to purchase a new home are able to afford the rent for a similar home. As a result, you're able to help others who are disadvantaged. Similarly, investing in real estate directly helps the local economy. Local property means local benefits. So, if you buy an old eye-sore of a home and fix it up, you not only make some money for yourself. You fix something that's broken in your community and provide a home for a local family to live in. That's a win-win-win!

4. Visa Options

If you're interested in getting started with a real estate investment as an immigrant, your first step is going to be looking at your visa options. A number of different options are available to you and should be considered when pursuing a real estate investment strategy.

E-2

The E2 visa is called a 'treaty investor visa' because it allows immigrants from countries that have treaties with the U.S. to enter the country in order to work with a U.S. enterprise they have invested in. They are able to direct operations from their home country or entered the United States to conduct business. They're also able to send important personnel in order to manage the U.S. branch or even set up a U.S. company.

This visa allows you to work legally in the U.S. and to travel freely in and out of the U.S. In addition, you can remain here on a prolonged basis and may even bring in dependents. Beyond that, your spouse may not only come but may also seek employment in the United States.

In order to obtain an E2 visa, you'll need to be an immigrant from a treaty country, have a substantial investment in a U.S. business, and you must control the funds and bear the risk of the investment. If you're looking to begin a long-term strategy of real estate investment in the United States, and E2 visa may be just the thing you need.

L-1

An L-1 visa is a non-immigrant visa that allows foreign nationals to enter the United States in order to work for a U.S. business that is a branch or subsidiary of a foreign company. If you already have a real estate investment company in your home country and would like to open a branch in the United States, the L-1 visa may be exactly what you're looking for. In addition, one kind of L-1 visa, the New Office L-1, will allow you to start an entirely new venture. As a result, the L-1 is a great option to consider, no matter where you or your business currently stands.

However, if you qualify, you will have a visa that is issued quickly, allows you to travel in and out of the United States as long as it's active, and will give you the opportunity to apply for a Green Card more quickly than normal.

EB-5

The EB-5 is an investment-based Green Card that immigrants can file to seek status as an 'immigrant investor.' This allows them to be considered a conditional resident and opens the door for eventual citizen status. In order to apply for an EB-5, you'll need to demonstrate that you are in the process of establishing a commercial enterprise, that you have the needed capital to do so, that your capital comes from lawful sources, that you are creating jobs, and that you are actively participating in the enterprise. If you can do this, then you may be able to receive an EB-5 Green Card that will set you on the path to becoming a U.S. citizen and a successful investor.

Conclusion

You may think that investing as an immigrant is out of reach. The challenges of language, culture, and other qualifications may seem like too much of a hurdle to try and overcome. And then, your mind may whirl at the thought of having to find the right visa option in order to even begin the process. And yet, if you'll look just past those challenges, you'll see that there is a pot of gold waiting for you at the end of the rainbow. Real estate investment in the U.S. is a tremendous opportunity for native residents and immigrants alike. If you have the will and tenacity, you can overcome the challenges and find genuine success!

Contact us today to find out how we can get you started on the road to real estate investment!

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