According to Greek philosopher Heraclitus, “Change is the only constant in life.” It’s also the only constant in real estate.
Real estate laws are always changing, and if you’re buying from across the globe, it’s easy to get held up for something you didn’t realize was wrong.
If you plan to invest in property in the United States, you’ll need to consult an experienced real estate agent (preferably someone who specializes in investment properties) and an expert tax accountant. But it’s also smart to know a few basics before you get started.
Know the Tax Implications
Taxes are a harsh reality of real estate. So understand how you will be taxed locally and in the US. When you a buy a property, you’ll likely deal with taxes in your home country in addition to the taxes you’ll owe in the United States. How much depends on the state where you purchase. Each state has their own system for property taxes, and some rates are higher if you’re not a permanent resident.
Tax rates also change depending on how much time you spend in the US during a three-year period and the purpose of your property. So, before you settle on a property, consult a tax expert about the implications for your situation.
Plan The Financial Details
Where will you borrow and how much? It may be tough to find a bank in your country that will authorize a loan for a property overseas. So contact a lender in the United States. Some banks have branches in the US (like Bank of Brazil and Bank of Spain), making it easier if you work with them. Regardless, make sure you choose a bank in the location where you plan to buy. They’ll know the property value and understand risk potential in case of default.
Banks will also shed light on the best mortgage for you. Sometimes, the lowest interest rates offered by traditional mortgages are only available to US citizens. So you’ll want to work with someone who knows the best option for your individual situation.
Know The Best Structure For Buying A Property
Whether in the US or overseas, you need to decide if you want to buy a property in your name or through an entity’s name. Consider taxes, financing, asset protection, and cost as you research the best structure for purchasing your property.
Understand Local Real Estate Laws
Local real estate laws vary drastically state to state. For example, in California someone can stay in your house for 90–120 days after you start the eviction process depending on the time of year. In the winter (because of holidays and cold weather), the timeline is far more lenient. In Texas, however, we have strict policies resulting in a 34-day eviction process year around.
You’ll also need to navigate Home Owner’s Association (HOAs) rules and regulations. Some HOAs will try to prevent you from renting out your property, but usually they don’t have a legal basis for doing so.
When we help investors acquire property, we help them work through the local laws so they end up with the best investment situation.
Find Someone You Trust To Visit The Property (Or See It In Person)
Buying a property sight unseen rarely works. So, if you’re buying internationally, take precautions. If you can, visit for a week and check out the properties. If that’s not an option, look at comparables, recently sold and rented properties, and demographics of the neighborhood. Use Google Earth to see pictures of the surrounding area. You can even hire a service like WeGoLook to investigate your property. Just don’t rely on listing photos alone.
Also, never assume you can get more than someone else in a neighborhood. Some agents will sell you on a house, claiming you’ll get more in rent because you have granite countertops or wood floors. Don’t count on it. Instead, look at rental rates for surrounding properties and assume you’ll get the same.
Buying in the United States may be easier than other countries, but it comes with a roll of red tape and requires extensive legal knowledge. So keep researching (here’s another great article with more tips for buying abroad) and use experienced real estate professionals like Leap Property Management to walk you through the process.