Have you been wondering if foreign buyers of US real estate could be a niche that you tap into in your local real estate market? Our recent guest, Reed Goossens, did just that after immigrating to the United States from Australia by focusing on closing deals for international buyers. One of the reasons Reed has been so successful working with foreign buyers looking for real estate investments is that he personally went through the process of purchasing property in the United States as an Australian citizen.
Below, we’ve included a few of the many useful snippets of information Reed shared in his podcast interview with Pat, including information on how to guide international buyers through the purchasing process and some potential financing options available to them. For a complete breakdown on how to work with foreign buyers of US real estate to expand your real estate business, be sure to listen to the complete interview.
Helping Prepare Foreign Buyers of US Real Estate to Make an Investment Property Purchase
Purchasing property in the United States isn’t as easy for an international investor as it is for an American citizen. Fortunately, if you’re familiar with the regulations concerning foreign investors purchasing property, you can help these clients make the necessary preparations and improve your chances of closing on sales.
First, contacting a good CPA is the best way to get the ball rolling for a foreign buyer of US real estate. A CPA can apply for an Individual Taxpayer Identification Number (ITIN) on behalf of your client and can also set up a Limited Liability Company (LLC). Your client can then use the Employer Identification Number (EIN) associated with their LLC to open a bank account in the United States.
Even once your client has an ITIN, an LLC, and an US-based bank account, there’s still an additional hurdle to overcome: transferring money from an international account to fund the purchase of a property. For this, Reed recommends using a company that handles foreign-exchange transactions. However, keep in mind that these companies are required by law to scrutinize large foreign transfers into U.S. accounts. If your client already has an established LLC, they’ll have much easier time getting their transactions approved in a timely fashion.
4 Financing Options for Foreign Buyers of US Real Estate
In the event that your international buyer client doesn’t intend to pay cash for their investment property, there are 4 potential financing options that may be available as options.
1. Portfolio-Based Lending
If your client has a large portfolio ($1,000,000+), some international banks may be willing to finance a portion of their purchase. However, these financing options typically require down payments in excess of $300,000, so this obviously isn’t a viable option for all international investors.
2. American Bank Loans
Some American banks do have lending programs in place for international investors. Unfortunately, these programs require higher down payments than loans for residents and they also tend to have higher interest rates.
3. Housing and Urban Development (HUD) Loans
A less common, though still viable, option for financing property as a foreign buyer of US real estate is to utilize a private lender through the Department of Housing and Urban Development. Again, higher interest rates are one of the downsides associated with this option.
Partnering with an American-based investor is one way to get better rates when financing properties. When possible, this is often the most appealing option for an international client as it will improve their rates and lower their down-payment requirements.
If you want more in-depth information about how to work successfully with foreign buyers of US real estate, be sure to listen to Pat’s complete podcast interview with Reed Goossens.
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