Investing in the US market being a foreigner

Tax, SDIRAs & Cost Segregation
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Investing in the US market being a foreigner

Franz Isak Bergmann Ingolfsson
Member since 2019 · 4 posts · 1 vote

I have been following BiggerPockets for a year now as well as my real estate in my whole country, Iceland which contains only 360.000 people and I can't see any deals that give a good cashflow, the best thing you can do when investing here is flipping and holding apartments and hoping they will appreciate. That got me thinking if it's allowed for a foreigner with hard cash like me to invest in the US market without actually living there or having any kind of permit like the green card? 

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Asif Karmally
New to Real Estate · International · Member since 2018 · 15 posts · 10 votes
5y

Hi there @Franz Isak Bergmann Ingolfsson I am an international investor like you and have been following these forums as well as some RE markets for some about a year. What I've found : 

1. You can buy as an international investor, but its not a good idea to buy in your personal name. You must use a corporate vehicle to minimize legal liability as well as potential taxes.

2. You need to consult a local tax consultant who can advise you properly on this. I've been speaking with a Florida based CPA and found them to be quite good - happy to connect you if you can private message me. 

3. Finding financing is harder, especially for lower valued deals. You'll need a higher downpayment, find fewer lenders, and potentially pay a higher interest rate. However, it may still be all worth the returns depending on your strategy. 

4. I have been doing "desktop underwriting" on many deals and can find deals which on paper would yield 7-8% CoC and total IRR of >12%

5. I have not done any investments yet as my plan is to visit the markets I'm following (Chicago area, Miami area) and drive the streets to get a feel for the places, before I part with significant cash. 

I'd encourage you to listen to @Charles Carillo's podcasts which focus on international investors, these really helped to shape my thinking. 

Note, none of this is formal advice, just my personal thoughts as a colleague which might be helpful to you. 

Good luck ! 

- Asif 

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  • Asif Karmally
    New to Real Estate · International · Member since 2018 · 15 posts · 10 votes
    5y

    Hi there @Franz Isak Bergmann Ingolfsson I am an international investor like you and have been following these forums as well as some RE markets for some about a year. What I've found : 

    1. You can buy as an international investor, but its not a good idea to buy in your personal name. You must use a corporate vehicle to minimize legal liability as well as potential taxes.

    2. You need to consult a local tax consultant who can advise you properly on this. I've been speaking with a Florida based CPA and found them to be quite good - happy to connect you if you can private message me. 

    3. Finding financing is harder, especially for lower valued deals. You'll need a higher downpayment, find fewer lenders, and potentially pay a higher interest rate. However, it may still be all worth the returns depending on your strategy. 

    4. I have been doing "desktop underwriting" on many deals and can find deals which on paper would yield 7-8% CoC and total IRR of >12%

    5. I have not done any investments yet as my plan is to visit the markets I'm following (Chicago area, Miami area) and drive the streets to get a feel for the places, before I part with significant cash. 

    I'd encourage you to listen to @Charles Carillo's podcasts which focus on international investors, these really helped to shape my thinking. 

    Note, none of this is formal advice, just my personal thoughts as a colleague which might be helpful to you. 

    Good luck ! 

    - Asif 

    4Reply
  • Lance LvovskyPro Member
    Accountant · Fort Lauderdale, FL · Member since 2013 · 1k+ posts · 753 votes
    5y
    Originally posted by @Franz Isak Bergmann Ingolfsson:

    I have been following BiggerPockets for a year now as well as my real estate in my whole country, Iceland which contains only 360.000 people and I can't see any deals that give a good cashflow, the best thing you can do when investing here is flipping and holding apartments and hoping they will appreciate. That got me thinking if it's allowed for a foreigner with hard cash like me to invest in the US market without actually living there or having any kind of permit like the green card? 

     Yes it most certainly is possible. Asif gave you some great advice above. There are numerous business and tax nuances to consider which you and your US tax advisor should discuss further. Good luck.

    1Reply
  • Bradley Sriro
    Licensed Realtor & Investor · Miami, FL · Member since 2015 · 164 posts · 124 votes
    5y

    @Franz Isak Bergmann Ingolfsson You may find this report created by the National Association of Realtors useful:

    International Transactions in U.S. Residential Real Estate

    This report is specific to Miami Florida:

    Profile of International Homebuyers - Miami, Fl.

    Florida ranks #1 out of the top 5 destinations for foreign buyers. The Miami Florida real estate marked in particular is actually one of the top destinations for foreign buyers. 72% Miami foreign buyers primarily reside abroad (compared to 39% nationally). 

    What type of properties would you be interested in investing in? Single Family, Small Multi-Family, Condos, Apartments/Commercial? Your budget will ultimately determine which market may work best for you. I hope you find this information useful. If I can ever be of assistance, feel free to reach out. Good luck!

    1Reply
  • Crystal SmithPro Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
    5y
    Originally posted by @Franz Isak Bergmann Ingolfsson:

    I have been following BiggerPockets for a year now as well as my real estate in my whole country, Iceland which contains only 360.000 people and I can't see any deals that give a good cashflow, the best thing you can do when investing here is flipping and holding apartments and hoping they will appreciate. That got me thinking if it's allowed for a foreigner with hard cash like me to invest in the US market without actually living there or having any kind of permit like the green card? 

    Short answer- Yes. You should explore establishing a US-based company or LLC to hold your assets. You also need to hire an accountant familiar with tax implications as a foreigner.

    312-681-7487
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  • Asif Karmally
    New to Real Estate · International · Member since 2018 · 15 posts · 10 votes
    5y

    Thanks for replying @Lance Lvovsky, I tried linking you previously but it did not work ! I receommended to @Franz Isak Bergmann Ingolfsson that he get in touch with you directly. Best, Asif 

    2Reply
  • Brandon GoldsmithBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2020 · 1k+ posts · 1k+ votes
    5y

    I would talk to a local attorney about what the best options would be. It is definitely possible to invest out of country, but you would need to establish your core team first and develop the relationships. Good Luck! @Franz Isak Bergmann Ingolfsson

    [email protected]614-963-3340
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  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    5y

    @Franz Isak Bergmann Ingolfsson

    Yes, you can invest in the United States but there are many rules that you need to follow and items to research.

    Is there a treaty between the US and your country? If yes, how does that impact me
    Do you need to apply for an ITIN to invest in the United States
    Do you need to file a tax return with the United States and the various states?
    What happens if I pass away while I own the property, is the property subjected to some type of estate tax?
    Do you need to report the income earned in the United states to Iceland?

    Some good questions to ask your accountant.

    [email protected]917-280-8544
    Basit Siddiqi CPA4.979 Reviews
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    1Reply
  • Tess L.
    Investor · Dubai, United Arab Emirates · Member since 2020 · 45 posts · 73 votes
    5y

    Hi Franz, 

    I've just written a Blueprint for Investing from Overseas here - https://www.biggerpockets.com/...

    You may find it helpful! 

    0Reply
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