Foreign investors are free to purchase real estate in the United States. It is essential to understand that buying a property in the country does not automatically grant any visa or change the legal status of foreign real estate investors.
In this article, you will find out the essential aspects involved in US real estate investment for foreign nationals.
Can Foreigners Invest in US Real Estate? – The Basics
In most cases, it is relatively easy for foreign nationals to purchase and invest in real estate properties in the United States.
If a foreign investor decides to stay in the United States for longer than allowed by a standard visitor’s visa, it is necessary to apply for a proper visa with US Citizenship and Immigration Services (USCIS).
The most common difficulties for foreign real estate investors include the complexity of the US tax system and the hardship to get a loan to fund the investment.
The situation can get even more complicated if the foreign investor decides not to work with an experienced business attorney to understand the legal and tax implications of US real estate investments.
Foreign Investment in US Real Estate – Should Foreign Investors Buy All-Cash or Pursue Financing?
Many real estate transactions involving foreign buyers are usually closed using cash only. Generally, it is harder for foreign buyers purchasing US properties to convince lenders to approve mortgage financing due to the non-existence of US credit history.
Please note that US federal law requires property buyers to report all cash transactions over $10,000 to the US government. In Florida, some counties have additional rules to govern all-cash transactions.
For instance, Miami-Dade County requires buyers to issue an official declaration for all-cash transactions over $1 million involving real property to prevent money laundering.
Banks and lenders view foreign investors as riskier options than US borrowers. This scenario results in lenders charging significantly higher interest rates or requiring a substantial down payment before approving a loan.
For US citizens or permanent residents, the approval process for a mortgage involves a financial assessment focused on the borrower’s total expenses, monthly and annual income, and credit history as a whole.
Considering the detailed aspects involved in the financial assessment, it is more difficult for lenders to ascertain whether a foreign investor is wholly qualified for a mortgage loan.
If a foreign buyer decides to pursue financing, the approval process for the loan may involve heavier scrutiny and longer processing timeframes. Banks and other entities may require more supporting documentation than normal, including bank statements and tax returns.
Can Foreigners Invest in US Real Estate? – A Brief Look at the Buyer’s Costs and Fees in the Purchase Process
Real estate transactions in Florida usually place a heavier burden on the buyer’s shoulders. Besides the property’s purchasing price, there are additional expenses that usually fall under the buyer’s responsibility, such as title search, escrow services, insurance, and other legal aspects.
Depending on how the agreement is negotiated, the registration fees may also fall under the buyer’s responsibility.
Florida law does not require buyers to be physically present to close the transaction; it is possible to use a Power of Attorney (POA) to authorize a legal advisor to represent them at closing.
Do You Want to Invest in US Real Estate as a Foreigner? – Immediately Contact Attorney Romy B. Jurado
Waste no time with uncertainty – call Attorney Romy B. Jurado today at (305) 921-0976 or email Romy@juradolawfirm.com to schedule a consultation.