Why Are Foreigners Investing In The US?

Question

Why are foreigners investing their money in the US vs their respective countries? Do they not get as good of returns, tax incentives, or what is motivating this?

Russell Brazil · Answer

American real estate is a hard safe low risk asset.  Much of the foreign investment comes from places like China where there is fear of stock market manipulation or fear of government interference in their investments.  For many of them it isnt about best return as they purchase all cash as opposed to a leveraged position, and prefer the low risk nature of american real estate.

Jay Hinrichs · Answer

depending on the country our mid west rentals are the same cost as they pay in transfer tax..

they see our real estate as next to free.

also they are keen on cash flow

security.. US for all those that want to beotch about us.. is the most secure place to invest in the world... although I am fine investing in Canada

Christopher Phillips · Answer

@Kyle Doney

Could be several reasons.

One. It's easier to buy real estate in the US than in other countries. Other countries have a lot of hurdles to go through.

Two. Currency foreign exchange. As currencies fluctuate in their favor, a foreign investor's purchasing power rises and they look to take advantage of that.

Three. From a pure investing stand point, many foreigners pay less taxes in the US on their investments as long as they leave the money here, versus investing in their own country.

Four. Many foreigners buy property here so their kids can go to college ( I see this a lot in NY).

Five. Buying and owning property in the US is fashionable.

Six. Sometimes people have a lot of money but they live in a country that isn't very stable, so they want to park their money in a country with stability.

I can keep going...

Sam Van Horebeek · Answer

Chinese are investing in the US for the following three major reasons:

1) Diversification: Chinese are eager to get their money out of their own country and into a more stable/mature real estate market.  China has limited investment options and both the domestic real estate market and domestic stock market have been chaotic.  US real estate is much more stable in comparison. And yes, relatively speaking, the US houses are less expensive in many cases compared to China.

2) Education: Chinese love to invest in countries that offer great education. The US education is well known so many Chinese families are sending their kids to the US for studies (every year more than 300,000 Chinese students arrive in the US)

3) Immigration: Chinese love to get another passport and the US is top on the list.  This immigration trend consists of thousands of Chinese families arriving in the US every year.

Mike Hanneman · Answer

Another reason is the U.S. is one of few countries where you are actually buying "real property" whereas, other countries you bought the property yes, but you really don't own it. But the number one reason is the returns that the U.S. generates.

Sebastien Hitier · Answer

For some places (Miami, NY) lifestyle reasons, and for other states, US is currently the highest yielding developed market, and it has a very well developed real estate service industry.

Toronto, Montreal and Vancouver are very nice too, but they are relatively low yield compared to many places in US.

Joe Splitrock · Answer

I don't follow what you are claiming with one of your points, "Most secure place in the world, really. How many people lost their homes between 2007-2014 in the states compared to Canada".

Are you saying that the US or CA is the most secure place in the world and are you claiming higher foreclosure rate in the US or CA?

Keep in mind foreclosures doesn't mean someone lost their primary home. Some people lost two or three homes that they were buying on speculation, not living in. Lending here was completely reckless prior to the crash. Canada has stricter underwriting standards and no secondary mortgage market. Here in the US they wrote loans to people with imaginary income and then pushed them off on the secondary market. Banks were stuck with junk loans and that is what forced them into default. That is what lead to the crash. Canada didn't do that, so there was nothing to collapse and therefore your banks survived.

Appreciation between US and CA tracked really closely on real estate up until 2006. The effects of reckless lending then caused a leveling followed by crash. CA didn't see the same drop, but I expect long term appreciation levels to be similar. We just had a big drop and big recovery versus your steady market.

Thomas S. · Answer

Following the U.S. real estate melt down in 2008 the US has been a investors dream. Other parts of the world were not as hard hit, recovered more quickly, or have not recovered to a point of stability.

Your economy makes investing in real estate dirt cheep when considering cash flow and the possible upside of future appreciation. All if this depending on area.

Christopher Phillips · Answer

@Allan Snow

Don't recall mentioning specific countries...

The reasons were general ones.

Jay Hinrichs · Answer

@Allan Snow  don't take my comment wrong I love CA I bought 2 homes in BC personally and lent money there.

the reasons you have foreclosures like you have in the US is simply the govmit commitment to put folks that really should be renters into home ownership..

in CA you have to actually qualify .. plus your a much smaller country population less than the state of California.. I love it in CA..  just don't like the tax burden or the health care system.