Interested in finding out if any BP members deal with this

Foreigners Buying in the USA
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Interested in finding out if any BP members deal with this

Jacquelyn Ceasor
Investor · Cleveland, OH · Member since 2016 · 13 posts · 1 vote

Hi All,

I have heard about foreign investors, investing in real estate here in the states.

Does anyone have any experience with this?

Thank you,

Jackie

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Chris MasonPro Member
Moderator
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
10y

My experience with truly foreign investors is...

  • I give them the giant list of paperwork we'd need to get them a mortgage without being a US person.
  • They balk and I never hear from them again.

*shrug*

By contrast folks actually residing here, that are here lawfully...

  1. Teach them how to hack FICO, they do exactly what they are told.
  2. Teach them to season funds, they do exactly what they are told.
  3. Teach them (or their CPA rather) what stuff we look for on Schedule E, make sure the rent and fair rental days are accurate, get aggressive with depreciation so no one is paying extra taxes for no reason, et cetera. 
  4. Every three or six months there's magically a seasoned 25% down plus needed PITI reserves, ready for the next purchase, sitting in a plain old boring Wells Fargo checking account without a lot of activity on those two months of bank statements I ask for.
  5. They write offers that end in 888, or want me to tweak their loan amount down so the base loan amount is $XXX,888. I do it automatically now, preapprovals and loan amounts, or anything else possible really, with lots of the number 8 three times in a row. 
  6. All they want to know is what I need from them to fund reliably and on time.
  7. Loan funds, they get the property.
  8. They go quiet on me. 
  9. X months pass, they call, and look at that! Another seasoned 25% down plus PITI reserves. Such thrifty savers. 
  10. Properties are always cash flow positive and foreigners aren't as addicted to pointless consumer debt as Americans, so they don't really need a lot of qualifying income from a day job... or in theory any day job.
  11. 10/10 would recommend as clients. 
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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    tons... GB AU  ISreal  Danish  German  Spanish... in FLA  many from south America.

    in AZ  many investors from MX...

    and of course Japan and China for west coast and Hawaii

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    10y

    Ive had a number of clients who were foreign, but I think in my market, the DC metro area that is fairly common. With all the embassies here we have a large foreign population. They come and work at the embassy for a couple years and leave....but many of them want their capital left behind in this country.

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  • Sam Van Horebeek
    Hong Kong, Hong Kong · Member since 2015 · 140 posts · 89 votes
    10y

    We are based in China and have been dealing with a few thousand Chinese investors looking at the US real estate market. Favorite places remain SF, LA and NYC but we see much more interest for other cities now. For example, 3 years ago, nobody was interested in Chicago, Orlando, Memphis, Cleveland, Austin, Philadelphia and other 2nd tier cities and now we have been closing multiple deals in those cities. West coast and East coast continue to see a large influx of Chinese investors driven by immigration and education reasons.  Other cities often see interest from investors looking for a better return.

    I believe that this trend will continue and probably spread to many more cities across the US. We see that Chinese are much more comfortable now in looking at more options - this is a normal process of a maturing investment community.  

    3Reply
  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    10y

    My experience with truly foreign investors is...

    • I give them the giant list of paperwork we'd need to get them a mortgage without being a US person.
    • They balk and I never hear from them again.

    *shrug*

    By contrast folks actually residing here, that are here lawfully...

    1. Teach them how to hack FICO, they do exactly what they are told.
    2. Teach them to season funds, they do exactly what they are told.
    3. Teach them (or their CPA rather) what stuff we look for on Schedule E, make sure the rent and fair rental days are accurate, get aggressive with depreciation so no one is paying extra taxes for no reason, et cetera. 
    4. Every three or six months there's magically a seasoned 25% down plus needed PITI reserves, ready for the next purchase, sitting in a plain old boring Wells Fargo checking account without a lot of activity on those two months of bank statements I ask for.
    5. They write offers that end in 888, or want me to tweak their loan amount down so the base loan amount is $XXX,888. I do it automatically now, preapprovals and loan amounts, or anything else possible really, with lots of the number 8 three times in a row. 
    6. All they want to know is what I need from them to fund reliably and on time.
    7. Loan funds, they get the property.
    8. They go quiet on me. 
    9. X months pass, they call, and look at that! Another seasoned 25% down plus PITI reserves. Such thrifty savers. 
    10. Properties are always cash flow positive and foreigners aren't as addicted to pointless consumer debt as Americans, so they don't really need a lot of qualifying income from a day job... or in theory any day job.
    11. 10/10 would recommend as clients. 
    6Reply
  • Mark Oriold
    Real Estate Agent · North Olmsted, OH · Member since 2016 · 36 posts · 4 votes
    10y
    I deal with a group from China and all over the world. Israel, India, UAE to name a few others. There solid investors. Financing can be difficult but most are cash buyers or have financing lined up in their country.
    1Reply
  • Matthew King
    Apartment / Investment Broker · Cleveland, OH · Member since 2016 · 107 posts · 68 votes
    10y

    @Jacquelyn Ceasor I have run into Israeli, Argentinian, Canadian, Brazilian, Australian, Chinese, Indian, Maltese, Greek, French and English Investors buy / own Apartment Complexes in the Cleveland market. In my experience, all cash purchases, no financing, except for some Canadians who are able to secure lending in Canada for U.S. property. Yield buyers, generally turn key investments in A-B areas, budget normally not an issue, roi is. C areas for the risky with a good, experienced local management team. 

    2Reply
  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    10y
    Chris M. 888 hilarious
    1Reply
  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    10y
    Originally posted by @Lane Kawaoka:

    Chris M. 888 hilarious

     Just giving the people what they want. :)

    0Reply
  • David Thompson
    Investor · Austin, TX · Member since 2013 · 933 posts · 1k+ votes
    10y

    Foreign investors can invest in our syndicated deals here in the U.S.  There is a tax form (W7) they need to complete to get them a ITIN (Individual Taxpayer Identification Number) for tax purposes since they don't have a SS #.......but that can be done after they invest and before tax returns are filed by the partnership.  

    Each foreign investor will need to complete a W-7. See the IRS website for the latest form. The IRS will only issue ITINs to those taxpayers who include original documentation (meaning passports, birth certificates or certified copies of these documents from the issuing agency) with their federal form W-7, Application for IRS Individual Taxpayer Identification Number. Notarized copies of birth and other records will no longer be sufficient. THIS IS A VERY TRICKLY PROCESS AND THEY REJECT MORE THAN 50% OF W-7 AND THEY HAVE TO BE REFILED....according to my CPA.

    The tax preparer will need to do a paper filing of the PARTNERSHIP INCOME tax return and it will also be sent to a special unit at the IRS with the investors completed W-7. They will assign the investor a TIN and then complete the filing for the Partnership Tax Return.

    See legal and tax guidance on this but this is what we are seeing from our experts.

    0Reply
  • Paul Sundin
    Accountant · Chandler, AZ · Member since 2014 · 72 posts · 36 votes
    10y

    @David Thompson . You are correct that getting an ITIN can be cumbersome.  Investors may want to see if their tax professional is an IRS acceptance agent which can greatly expedite the ITIN process. An acceptance Aaent is a person or an entity (business or organization) who has a written agreement with the IRS and is authorized to assist foreigners who do not qualify for a Social Security Number but who still need an ITIN. The agent facilitates the application process by reviewing the necessary documents and forwarding the completed forms to IRS.

    1Reply
  • David Thompson
    Investor · Austin, TX · Member since 2013 · 933 posts · 1k+ votes
    10y

    Paul,

    That is a great idea and thanks for sharing.  We are just starting to go down this road and expect more foreigners to participate in our deals so anyway we can make this easier is a good idea.

    Dave

    0Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    10y

    Yes I have worked with foreign nationals.

    The problem is often currency conversion, extra with holding of taxes, financing programs they do not find appealing etc.

    Mid deal it falls apart. Some shelter a lot of income where if they bought U.S property the filings would be reported back to the country where they live etc.  

    Especially people buying smaller properties the financing isn't that great. On the commercial side if they have tax returns then we can usually go the non-bank route to get great terms. Loan generally has to be 2 million or higher with some lenders requiring 5 million loan or higher.

    Lenders typically do not want to lend to foreigners with no tax returns or a way to source and verify their money to make sure it is not money laundering or tied to terrorist activities etc. 

    Some already have the money over here and get a sponsor to head up the project or investment.

    There is so much money in the U.S. right now that I won't spend any time with out of the country investors unless I can validate everything in advance and they follow all the steps.

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  • Mark Bailey
    Rental Property Investor · Mobile, AL · Member since 2014 · 13 posts · 1 vote
    10y

    @Chris Mason Haha   I wonder how they save so much so fast?

    1Reply
  • Andrew Ware
    Gardiner, ME · Member since 2015 · 190 posts · 177 votes
    10y
    Originally posted by @Chris Mason:

    My experience with truly foreign investors is...

    • I give them the giant list of paperwork we'd need to get them a mortgage without being a US person.
    • They balk and I never hear from them again.

    *shrug*

    This probably is pretty accurate, but when I hear that some category of potential customer is not following through it probably means I am not addressing their needs.  There may be very simple things you can do to walk them through the process and get a lot better conversion.  Or you may not care about getting them as customers which is fine too.

    As for the number 8.  It's lucky in a lot of asian cultures.  In Chinese at least it's very close to the word fortune.  You can actually charge a premium for apartment 8, 88, 888 etc. in highly ethnic areas.  If I had a chance to make more apartments in those areas with the number 8 I would.  It's free.  Likewise, the number 4 is close to the word death.  So those can be diffcult.  Some people think it's silly but there's not a lot of 13th floors in the US.

    0Reply
  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    10y
    Originally posted by @Andrew Ware:
    Originally posted by @Chris Mason:

    My experience with truly foreign investors is...

    • I give them the giant list of paperwork we'd need to get them a mortgage without being a US person.
    • They balk and I never hear from them again.

    *shrug*

    This probably is pretty accurate, but when I hear that some category of potential customer is not following through it probably means I am not addressing their needs.  There may be very simple things you can do to walk them through the process and get a lot better conversion.  Or you may not care about getting them as customers which is fine too.

    As for the number 8.  It's lucky in a lot of asian cultures.  In Chinese at least it's very close to the word fortune.  You can actually charge a premium for apartment 8, 88, 888 etc. in highly ethnic areas.  If I had a chance to make more apartments in those areas with the number 8 I would.  It's free.  Likewise, the number 4 is close to the word death.  So those can be diffcult.  Some people think it's silly but there's not a lot of 13th floors in the US.

     For the first one, that is probably true. Or there might be some smashingly better deal available to non-US persons that I just can't touch. When I look at the interest rate pricing on our non-US person products, it's all ARMs at horrible rates.

    For the latter one, I did not know that about the number 4. So no $400k preapprovals, I will preapprove for $399,888. Check. :)

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @David Thompson  on your syndicated deals do check into withholdings and tax treaties along with many countries the currency has been hammered and the US is just not hot right this moment

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  • Larry Smet
    Flipper / Rehabber / Real Estate Investor · Toronto, Ontario · Member since 2012 · 392 posts · 77 votes
    10y
    Originally posted by @Jay Hinrichs:

    tons... GB AU  ISreal  Danish  German  Spanish... in FLA  many from south America.

    in AZ  many investors from MX...

    and of course Japan and China for west coast and Hawaii

    Hey Jay - you forgot us Canadians (the #1 foreign buyer of US real estate)! 

    I'm trying to do my fair share.  :)

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Larry Smet    I know I did I was going to make another post and mention that but forgot to

    I owned a couple place's in Kelowna BC and love it up there and when I am in the desert I see many BC and especially Alberta plates I almost bought development in fort MacMurray about 12 years ago.   so know something about western Canada  .. I fly my plane up to Vancouver Island often for lunch that type of thing.?

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  • Pawan J.
    Developer · Vancouver, British Columbia · Member since 2014 · 122 posts · 26 votes
    10y

    With the exchange rate so low between Canada and USA, I hope Americans are buying up property here.

    1Reply
  • Nir Babajani
    Tel Aviv, Israel · Member since 2014 · 53 posts · 10 votes
    10y

    We are foreign nationals who invest in US RE. we also 

    helped educate other foreigners about investing, and even helped walk through

    some of them with a US based RE investment.

    if you have a question feel free to send it via PM

    @Jacquelyn Ceasor

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