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Dale Hsu
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Foreigner Wishing to Invest in Los Angeles

Dale Hsu
Posted Mar 7 2019, 21:30

Hello BP community. 

I am a foreigner that is currently looking to invest in the Los Angeles real estate market to hold for cash flow. I would appreciate any form of information regarding the current Los Angeles market regarding recommendation, strategies, real estate agents. 

I would also like to know if bank financing is available to foreigners and how would that work? If I choose to rent my real estate or eventually sell it, how would the tax work? Who can I consult regarding this matter. 

Thank you very much! Any help is appreciated.

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Michael T.
  • Los Angeles, CA
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Michael T.
  • Los Angeles, CA
Replied Mar 7 2019, 22:50

@Dale Hsu great to have you interested in investing in Los Angeles!  There definitely are quite a few investors that are looking for cash flow opportunities in Los Angeles right now and they are difficult to find.  They're not impossible but they are more difficult.

Depending on what you're goals and needs are there are multiple people that can help you through the process.

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Replied Mar 7 2019, 23:15
Originally posted by @Dale Hsu:

Hello BP community. 

I am a foreigner that is currently looking to invest in the Los Angeles real estate market to hold for cash flow. I would appreciate any form of information regarding the current Los Angeles market regarding recommendation, strategies, real estate agents. 

I would also like to know if bank financing is available to foreigners and how would that work? If I choose to rent my real estate or eventually sell it, how would the tax work? Who can I consult regarding this matter. 

Thank you very much! Any help is appreciated.

Hi Dale,

First welcome to BP! I hope you can find answers to all your questions here.

I lived in LA for 2 years and own a SFH property there. Are you planing to live inside the property and rent out some portion of the house, aka house hacking? Or you just plan to rent the house out as a whole?

LA is big, so as its real estate market. If you are talking about greater LA, I would recommend you to look into San Bernardino area and Irvine in Orange Country. High rent increases in those areas in the recent years. 

What US visa are you currently holding? If you have a work visa and have a full time job, you could get a lone conventional loan from most of the money lender such as a bank. If you have a student visa or travel visa, that's a different story. As of property taxes, each county is different. Mine is in LA country and I pay 1.25% annual tax on single family home. You can look up local property tax on county's assessors website.

- Jack

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Aristotle Kumpis
  • Investor
  • Irvine, CA
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Aristotle Kumpis
  • Investor
  • Irvine, CA
Replied Mar 7 2019, 23:15

Unless you are paying cash, you'll need to put down at least 50% in order to cash flow in Los Angeles. If you are looking for long term cash flow, I suggest you look in other markets. It's far less expensive in the midwest and southern U.S. 

Account Closed
  • Los Angeles, CA
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Account Closed
  • Los Angeles, CA
Replied Mar 8 2019, 04:46
Originally posted by @Dale Hsu:

Hello BP community. 

I am a foreigner that is currently looking to invest in the Los Angeles real estate market to hold for cash flow. I would appreciate any form of information regarding the current Los Angeles market regarding recommendation, strategies, real estate agents. 

I would also like to know if bank financing is available to foreigners and how would that work? If I choose to rent my real estate or eventually sell it, how would the tax work? Who can I consult regarding this matter. 

Thank you very much! Any help is appreciated.

If you are not a resident i would advise against investing in the US as taxes and notably estate taxes are extremely prejudicial to foreign investors.  Many tax breaks won't be availabIe to you. If you still want to go ahead  consult with a specialized attorney and check the bilateral tax agreements with your country

you may find 50% ltv loans with high rates which will hinder you returns and defeat the purpose of real estate investing which should be about taking advantage of leverage, mortgage interest deductions, depreciation, etc. that you would probably get in your country

Also be aware that if you die while holding property in the US. the irs will levy a 50% estate tax on your assets.

There is a way to avoid that but it involves creating complex structures with trusts etc..

If you want cash flow los angeles is probably the worst place with sf and manhattan to look for. Try the south east like Florida & georgia. 

Sorry to paint such a dark picture, but these are realities you should have in mind and that many aren't aware of until they find out too late 

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Alex Kim
  • Lender
  • Irvine, CA
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Alex Kim
  • Lender
  • Irvine, CA
Replied Mar 8 2019, 10:41

@Dale Hsu

Forgive me, but I am going to assume you didn't know about all the tax benefits US citizens get from investing in real estate. While it def helps, some of the small investors I know don't always take the full advantage of tax benefits. And that's fine too. There are a lot of small-time foreign investors in SoCal.

For taxes and immigration/foreign investments, you'd definitely have to talk to a CPA and/or an attorney. They can help you with all the money questions. You will have to pay tax on money you make here like everyone else. (income/capital gains/etc)

Major banks will not lend to foreigners but some smaller banks will with down payment around 35-40% in LA/OC area. Interest rates are pretty good these days.

As Cedric mentioned, cash flow will be hard with such high price & down payment in small residential markets compared to other states. So what I have been seeing in LA is selling 1-4 unit multi-family using TIC loans. I'm not sure if you are familiar w/ BRRR method here. To me, it's similar in a way that you sell 1-2 units out of 4-5 to recover the initial investment, while keeping the rest as rentals, and find another property and repeat. Of course your debt-to-income has to work. Just saying, if you get creative, there are ways to make things happen.

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Vinay H.
  • Cambridge, MA
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Vinay H.
  • Cambridge, MA
Replied Mar 8 2019, 10:49

Depends on how much money we are talking about. People are only thinking about investing personally...

Possible via Corporation and commercial lending ....

Easiest is JV [Joint venture] with someone local -

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Vinay H.
  • Cambridge, MA
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Vinay H.
  • Cambridge, MA
Replied Mar 8 2019, 10:54

Exactly what tax breaks do US residents get for investing in Real Estate that Non-residents don't get?

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Daniel Federico
  • Lender
  • Irvine, CA
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Daniel Federico
  • Lender
  • Irvine, CA
Replied Mar 8 2019, 11:17

@Dale Hsu

Dale,

Financing is definitely available to foreign nationals. What type/how many properties are you looking to acquire?

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Jack Butala
Pro Member
  • Los Angeles, CA
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Jack Butala
Pro Member
  • Los Angeles, CA
Replied Mar 8 2019, 16:55

Hey @Dale Hsuand welcome to Bigger Pockets! BP is the place to be! Get deals done right and network with seasoned investors only on Bigger Pockets. Congrats and I wish you all the best.

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Dan Heuschele
Pro Member
  • Investor
  • Poway, CA
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Dan Heuschele
Pro Member
  • Investor
  • Poway, CA
Replied Mar 8 2019, 18:20
Originally posted by @Aristotle Kumpis:

Unless you are paying cash, you'll need to put down at least 50% in order to cash flow in Los Angeles. If you are looking for long term cash flow, I suggest you look in other markets. It's far less expensive in the midwest and southern U.S. 

I see this sentiment expressed a lot but I question if you know a single RE investor in coastal So Cal that has owned at least 5 years (probably even 3 years) who does not have positive cash flow?  I will tell you if you do know one, they likely did not know what they were doing.  Maybe a newbie???

I attempt to keep high leverage (high LTV) on my RE and my coastal So Cal RE cash flows great. In addition, every Coastal So Cal RE investor that I know who has been owning for at least 5 years has solid cash flow.

There is a significant difference between cash flow at purchase and actual cash flow for the typical coastal So Cal RE investor.

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Eric Carr
  • Real Estate Broker
  • Los Angeles, CA
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Eric Carr
  • Real Estate Broker
  • Los Angeles, CA
Replied Mar 11 2019, 15:59
Originally posted by @Dale Hsu:

Hello BP community. 

I am a foreigner that is currently looking to invest in the Los Angeles real estate market to hold for cash flow. I would appreciate any form of information regarding the current Los Angeles market regarding recommendation, strategies, real estate agents. 

I would also like to know if bank financing is available to foreigners and how would that work? If I choose to rent my real estate or eventually sell it, how would the tax work? Who can I consult regarding this matter. 

Thank you very much! Any help is appreciated.

What's up Dale? I'm an investor and broker in LA - also an LA native! There are many people who can help you here. I help foreign buyers and can connect you to the right lenders - we can also discuss your tax situation. I have a feeling it will be more simple than you think.

你是中国人吗???