The allure of investing in US real estate is strong, but it may be tough to find someone who would or could walk a foreign investor through the process from start to finish… until now.
Taxes and other potentially confusing details can make or break the investment decision when considered for cross-border investments. So, having gone through being a limited partner, to taking a lead role in due diligence, to underwriting, and to running deals myself, I want to share what I’ve learned as a foreign investor.
7 Reasons Foreign Investors Love US Real Estate
Active and passive real estate investors from all over the world are attracted to the robust US market. Among many reasons, prestige, stability, diversity, market size, and more. Let’s run through the top seven reasons foreign investors love US Real Estate.
#1 - USA, USA, USA!
Many international investors hold US real estate in high regard and, often have a deeper knowledge of the US economy than their own country. There is much prestige associated with investing in US markets.
#2 - Stable and Regulated Markets
The US economy is viewed as a safe haven, as a gold standard for global real-estate investing, and a well-oiled machine providing long-term asset growth, often in opposition to commodity-driven economies around the world. In addition, laws in the US are of utmost importance since many foreign investors have roots in countries where law enforcement is lacking.
#3 - Market Size
The US is the biggest economy in the world. In addition to that, individual states like Texas and California are vibrant, strong, large markets, and listed within the top 10 on the list of global economies.
#4 - Opportunity Diversity
In a country where individual states are listed among the top economies in the world, the size of the market available ensures a diversified portfolio like none other. Every niche is well represented and the associated market depth ensures that all stages, sizes, and types are accessible.
#5 - Global Diversification
The US economy allows investors to face minimal capital restrictions. Foreign capital is welcome, and a business-friendly regulation structure allows foreign investors to diversify while sheltering assets in a stable economy.
#6 - Asset Class Performance
Foreign investors understand that multifamily investing is one of the proven ways of building long-term wealth. US Real Estate is a high-performing asset class that has generated cash returns throughout the various stages of the business cycle throughout history.
#7 - Family Reasons
Many foreign investors have family living in or working in the US and/or travel to the US often. Since they also desire positive cash-flowing assets, it makes sense for them to invest in US-based real estate syndications.
Considerations for Foreign Investor
How to Participate in US-Based Real Estate Syndications as a Foreign Investor
It’s important to seek out a CPA who’s experienced in helping foreign investors invest and run businesses in the US. Here are 7 basic guidelines for participating in US-based real estate private equity investments for foreign investors:
US-based commercial real estate has proven its resilience and has created a reputation for being one of the top-performing asset classes in the world. Nonetheless, foreign investors should understand the “red-tape” and seek professional advice in navigating through it. Finding a preferred advisor with experience in this area can make the process smooth and efficient.
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