Purchasing a property with cash or a mortgage in the United States is easy when you know what to expect. HIC aims to provide solid, helpful information through tried and true vendors. In addition to connecting you with reliable and trustworthy companies, here are a few important tips:
It is highly recommended to make your transactions considerably easier if you have a United States bank account.
When wiring money for real estate transactions, wire directly and ONLY to the Title Company.
A lot of money has been lost due to false emails being sent at the last minute stating the wiring instructions have been changed. Do NOT believe this and personally confirm by phone the wiring instructions directly with the Title Company.
FIRPTA (Foreign Investment in Real Property Tax Act)
It’s important to be informed about the United States laws that may affect you, especially if you are living outside the United States. Therefore, we are providing a link to the IRS information page on FIRPTA. FIRPTA will affect most foreign investors when a USA property is sold. As always, with any financial transaction, it is best to consult with your accountant.
Foreign Investor Loan Programs
You can use a mortgage to leverage your money. Here’s how:
There are multiple benefits to financing properties versus paying cash. Primarily, it is the ability to leverage your assets and multiply your return more quickly.
An example would be if you have US $200,000 to invest in property in the US. Instead of purchasing one property at $200,000, you purchase four (4) properties for $200,000 putting down $50,000 on each property and taking a loan for the remaining amount. The profits you will receive on your rent income can then be focused on paying off the loan for one of the properties much, much faster. Once the first mortgage (loan) is paid off, you then apply the money you saved from the first mortgage to the next mortgage, and so forth.
In theory, you could pay off the four (4) homes within a decade and have homes in the ballpark worth about $1.5 million all paid off. Even though you are borrowing the loan at an (unknown) interest rate, an interest rate is only collected in its’ entirety if you keep the loan for the full term. If you pay off a loan 20 years sooner than you are supposed to, then you save approximately 20 years of interest payments.