Out of State vs. Out of Country Investing

[Hillel Mansfield]

I grew up in the US until the age of 20, and have been living abroad for the past 15 years.  Now I want to start investing in U.S. real estate (real estate opportunities in my current location are not so attractive).  However, it would take me a 12 hour flight to reach any given destination in America.

As there are many resources on out of state investing, I was wondering: do all the same rules apply if one is living outside the country?  Does this change the calculus in terms of how desirable it is to be a long distance investor?  

[Charles Carillo]

@Hillel Mansfield

We have partners who are foreign investors. DM me and I will send you contacts for; attorneys, lenders, and accountants that they have previously used. It is important that you hire professionals that have experience working with foreign investors.

[Eric Fernwood]

Hello @Hillel Mansfield,

Of the 470+ investment properties we’ve delivered, only about 10 clients were local to Las Vegas. All the rest lived in other states or countries.

There are no limitations on US citizens buying US properties. And, only a few limitations for non-citizens. Non-citizens generally can not buy “strategic” assets, like most power generation facilities, major docks, airports, etc.

We have many international clients, and the additional steps they need to take include:

• For tax filings, you need either a US social security number or a tax identification number (TIN). There are many services that will handle setting up a TIN for you, or you can do it yourself.
• You need a US bank account for property managers to deposit rents. Most of our international clients use HSBC or Chase.
• There is no need to ever come to Las Vegas. If you are buying in cash, the closing documents are sent to you electronically for e-signing. If you are financing, you can sign the closing documents at a US Embassy or a US Consulate.

What is critical for international buyers is to have a local investment team that provides a full service. In our case, we’ve never met 60% of our clients and many have never been to Las Vegas.

Another concern is learning how to invest. Everything you learn in podcasts, seminars, books, and on websites is general in nature. You will not buy a general property in a general location. Real estate is local. You will buy a specific property, in a specific location, subject to local rules and regulations. This is why part of our new client onboarding process is to teach clients how to invest. 

The more difficult task is knowing what and where to invest. Fortunately, there is a straightforward process that eliminates the need for personal opinions, chances, or emotions.

• Location - The location of a property determines all long-term income characteristics, such as its potential for appreciation, rent growth, and how long the property is likely to generate income. Critical selection criteria include a metro population greater than one million, an increasing state and metropolitan area population, rent increases that keep pace with inflation, low operating costs, and landlord-friendly laws and regulations.
• Tenant pool - The tenant pool segment defines income reliability. The most important tenant characteristics are: paying all rent on time, even in difficult economic times; staying for many years; and taking care of the property. Once you identify a tenant segment with these characteristics, you can target that segment through the properties you buy. Simplistically, determine what and where the target segment rents today and buy similar properties.
• Property - The property defines the tenant pool, initial return, time to rent, maintenance costs, and renovation costs. You know exactly what and where to buy because the target segment defines all property characteristics.

If you want any specifics of the above, DM me.

If you choose the right location, tenant pool, and property, the odds of achieving a reliable passive income that keeps pace with inflation and lasts a lifetime are very high.

Hillel, I hope this helps.