Foriegn first time real estate investors

3 Replies

Hi everyone,

I'm from Israel and would like to start investing in US single family homes.

From what I understand, after preliminary research, is that the "lease option" strategy can be a good way to start.

Also I'm thinking about Buffalo, NY as the location to focus on (at least at the beginning) as it has a relatively low price-to-rent ratio and frequently flying there from Israel would probably be easier than to farther states.

I'd love to hear your advice on:

- what should be my first steps as a foreign investor?

- What additional considerations should I take as a foreigner?

- What is your opinion on the overall strategy I've outlined here?

- Who are some trustworthy advisors/professionals I can hire in order to do this right?

- Anything else that you believe can be of value?

Thank you in advance for all the help!

@Roma Bronstein

You will need to find a CPA and attorney that are both experienced with foreign investors. These professionals will guide you through the process of setting up the proper entity, explain your tax liabilities etc. 

There are a number of options for investing in rentals on the east coast of the USA. There are several turn-key providers that can assist you with this for single family but there are also many more options for getting involved in US rentals. Make sure you have your team in place, mainly property management, before purchasing anything. They will be one of the most important factors in the success of your investments.

@Roma Bronstein Buffalo NY seems to be a popular place for people from Israel.  Most investors are buying in cash, and focusing on doubles.  There is a lease to own market but ,you really need to have the right team in place.  There are a lot of contractual issues that have to be dealt with, and both sides of the transaction need to be protected.   There are a few more steps to lease to own, it is not as simple as a cash purchase, then renting out the units.

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@Roma Bronstein

There are unique hurdles that foreign investors must go over to invest in US real estate.

You may or may not need to apply for an EIN.
You may or may not need to file a non-resident US tax return
You may or may not be subject to 30% withhold on sale of US real estate
US real estate income may or may not be considered ECI(effectively connected income) or FDAP(Fixed, determinable, Annual, Periodic).

Foreign investors may potentially not be eligible for reduced mortgage rates that are available to US Citizens.