There are a number of reasons why non-citizens should consider investing in property in the United States. These include the prospect of rental income, investment capital that might not be as lucrative in their home country, and even the desire to purchase a vacation home.
Many foreign investors are able to obtain mortgages in the USA with little or no US credit history through government financing programs. These programs are designed to support international buyers and U.S. exporters with limited access to conventional financing visit lendai.us
Long-Term Fixed-Rate Mortgages
The United States offers foreign investors a wide range of mortgage products including long-term fixed-rate mortgages. This is one of the most popular mortgage types and can be a great way to lock in low interest rates for years to come.
This is particularly true in the current market where interest rates are hovering around historic lows. This is due to a number of factors including the fact that the U.S economy is booming and the dollar is still strong.
Long-term fixed-rate mortgages can come in the form of 15-, 30- or even 40-year loans. Some lenders also offer interest-only mortgages, whereby your monthly payments only cover the interest on the loan and you make a balloon payment at the end of the term. Getting a mortgage with a longer term is a smart move, especially if you plan to sell the property in the future. It also shows a lender that you are a serious buyer and you are committed to the property in the long run.
Low Interest Rates
The United States is one of the few countries that offer foreign investors the opportunity to invest in real estate using long-term, fixed-rate mortgages. These mortgages can be used to acquire income-producing properties such as apartments, industrial, hotels and other buildings that allow for rent adjustments.
Typically, foreign investors borrow in other countries such as Japan or Europe on short-term, adjustable-rate mortgages. These loans often require higher down payments, processing fees and interest rates.
However, in the United States we are able to offer these same foreign investors long-term, fixed-rate mortgages which can be amortized up to 40 years. This gives them the ability to lock in low interest rates for an extended period of time, which can provide significant leverage for their investments.
While rising interest rates may spook U.S. investors, we continue to see an increasing amount of foreign investment in our country. This includes real estate, especially in the residential space.
Tax-Free Income
Tax increases probably are coming, and you may be looking for ways to make your assets and income tax-free. Fortunately, there are several strategies that can help you reduce your taxes.
One way to do this is through the purchase of municipal bonds, which are free from federal taxes but still must be reported when you file your tax returns.
Another way to achieve tax-free income is through the purchase of distressed debt. These debt instruments typically include mortgages on real property, and their interest can be treated as passive income under certain rules.
However, it is critical that your foreign clients’ income from these loans does not become effectively connected with a trade or business in the United States. This requires advance tax planning for both the foreign investor and the funds in which they invest.
Security
Foreign investors often need to make a substantial down payment on a property purchase. In some cases, this can be a substantial amount of money – as much as 30 percent to 50 percent of the value of the property.
As a result, many international investors choose to pay cash for their property instead of borrowing against it. This can be an effective way to lower your risk and reduce the overall cost of the transaction.
CFIUS is an interagency committee that can review certain transactions involving foreign investment in the United States and real estate transactions by foreign persons, to determine whether they could affect national security. It operates under a number of laws and regulations, including Executive Order 14083 (regarding the evolving national security threat landscape).
Parties must notify CFIUS of any transactions they believe may be subject to its jurisdiction by filing either a declaration or a voluntary notice. Both types of notices require specific information about the investor and its owners, the US business subject to the transaction and the transaction itself.
