Hi there fellow members.
I rarely ask questions, but here is one of these times.

I have heard about crazy good returns on real estate in US. Lets say above 20% of annual returns. To compare to EU this is madness.
This makes me really interested in going to US and acquiring some real estate and rent it out via agency.
Problem is that my US experience is about a months of combined time, doing nothing but going to 6 flags magic mountains, drinking beer and partying. Meaning I know nothing about taxes, laws, rules, underwater stones.
Any information on that subject would be highly appreciated.

So my main questions are:
Can a foreigner own real estate in USA?
Can I foreigner rent a real estate in USA and if yes is there some sort of exorbitant tax?
Do you know a foreigner owning a real estate in US?
Is he on this forum?
What is his forum name?

Quote: (07-25-2016 12:46 PM)Vinny Wrote:  

Hi there fellow members.
I rarely ask questions, but here is one of these times.

I have heard about crazy good returns on real estate in US. Lets say above 20% of annual returns. To compare to EU this is madness.
This makes me really interested in going to US and acquiring some real estate and rent it out via agency.
Problem is that my US experience is about a months of combined time, doing nothing but going to 6 flags magic mountains, drinking beer and partying. Meaning I know nothing about taxes, laws, rules, underwater stones.
Any information on that subject would be highly appreciated.

So my main questions are:
Can a foreigner own real estate in USA?
Can I foreigner rent a real estate in USA and if yes is there some sort of exorbitant tax?
Do you know a foreigner owning a real estate in US?
Is he on this forum?
What is his forum name?

I think that all of this is doable in terms of legal limits, but your main questions would seem to be more in figuring if the property could have a positive cash flow... some parts of the usa have better chances of positive cash flow than other areas, but the areas that easily positive cashflow may not likely be the areas in which you want to hang out (or visit frequently).

Certainly most of the more desireable areas of California does not positive cashflow very easily, but there are likely more areas in Texas that would positive cashflow (from my research several years ago). I think that ultimately, you also have to do quite a bit of research to find the gems that are underpriced and more easily to positive cashflow... and to put all your ducks in a row in terms of making sure that you are able to manage the property (even if that is using a management agent). Did you have any specific areas in mind, because property taxes tend to be state to state, too.

I know someone who would buy 4 family homes in Buffalo CHEAPLY. He would then fix them up and rent them. Each one only had a little positive cash flow but combined( he owned like 12 rentals) he had a larger profit.

@JayJuanGee: I am looking to buy real estate in US for investment and rental only, in no way I am planning to relocate. So in that case Texas is more Desireable due to higher returns.
Here is a nice list: https://www.entrepreneur.com/article/251871

@jimukr104: Is this person a foreigner owner of RE in US? Can I have a chat with him?

People do this all the time. The issue will be whether you need a loan, and qualify for one.

http://www.bankrate.com/finance/real-est...es-us.aspx

After that, it's the normal landlord headaches.

Assuming profitability of course

WIA

My dad (Canadian) scooped a mobile home in a trailer court for snow birds in Florida when the market crashed in 2009 for $30,000. Him and his missus stay in it most of the winter but they rent it iut in April for $1200, basically they could get that amount from November until May, so 7200/year, not bad considering the initial cost. Apparently a lot of Canadian retirees are selling their mobile homes and condos these days due to our low dollar.

Are 20% returns possible on single families? Multi families? People on here purchased housing portfolios or are we talking the buying of a single distressed unit, fixing it and renting it out?

Quote: (07-25-2016 03:07 PM)Vinny Wrote:  

@JayJuanGee: I am looking to buy real estate in US for investment and rental only, in no way I am planning to relocate. So in that case Texas is more Desireable due to higher returns.
Here is a nice list: https://www.entrepreneur.com/article/251871

Yes, that article helps for us to understand your numbers and maybe even some of your thinking about the real estate matter.

I don't doubt that it is possible for guys to achieve 20% unleveraged returns on real estate in some locations, but I really doubt that any guy is going to even come close to those kinds of returns on average if he does not build a team and some in-person relationships in the geographical areas in which you invest your money.

The guys achieving those kinds of returns are likely experienced in the industry whether they are buying fixer-uppers or other depressed properties or "motivated" sellers, and then they have a system in place in which they are able to cause an under appreciated asset to deliver considerable returns.

If you don't visit the USA and build this kind of team for yourself, then you are dependent on the good faith of others on your team... managers, developers etc, and no one gives away free money or profits without oversight (that is your own oversight).

Probably, real estate is one of the areas with the highest levels of get rich quick scheming by "hooking up" with us, and yeah right, you are not going to get your fair share from abroad. They will tell you x, y and z, but they will certainly accept your initial investment money.

This isn't what you asked but might be relevant ... Not sure where you are based but here in the UK 10+% returns on student houses or HMOs are definitely doable. Maybe not as good of a return as the US but it might be worthwhile having something closer to home.

Look for a house in any city with a university (location is key), the further North in England usually the cheaper. You will rent by the room, per week, so total rent will be 2-3 times what you'd get renting as a house to a family. (A 3 bed house with a separate front living room becomes a 4 bed student let - 4 beds x £80/week x 48 weeks = £15360, rent for the same 3 bed house to a family would be £650-750). You need a good letting agent to deal with finding the tenants, rent collection, problems etc. for around 8-10% of the rent.

I've also been looking into other RE options including Airbnb - places like Budapest have flats available in district 6/7, right in the middle of the city that go for £50-80/night in peak season. Obviously you wouldn't achieve such short term holiday lets all year round, but at that rate you'd only need 5-6 months fully let to clear 10% on a £100k flat.

I'd even be interested if a 10% return was possible. Just to get a passive dollar income. I am already a landlord in the UK but probably don't break 5%. However this is going for the higher end market cos I don't want students destroying my shit.

I think higher yields must be possible because most houses are cheaper to buy than their equivalent in the UK. But they don't seem to be built to last as long. Also, it would be hard to avoid paying tax, even as a non resident.

A lot of valuable advice. But still no answer to the main question.

I have found online that it is indeed possible to buy, own and rent housing in USA, but there are restrictions in some states, for owning land for example. What I would really like is to find someone on this forum also from EU and who has been through this process.

The rates of returns drive a lot of foreigners into buying RE in USA and I might be one of them.

Where I live we have a foreign company (Australia) buying up apartment buildings, renovating them, and renting them out (Dixon Leasing). So you can definitely do it in NJ

However, IMHO the real estate market is seriously over-valued. When the Fed bought up mortgage debt, it lowered rates to an artificially low level and re-inflated the housing bubble.

I have nearly two decades experience renovating and renting properties. Right now, I can't buy, renovate, and have an acceptable (if any) positive cash flow after the work is done. The people I see buying now are doing Chinese investing... buying up properties, trying to not lose too much money in the short term, and then selling the (cash flow negative) property to someone else at a huge profit.

Question: How would you finance the property? Going to a bank in the USA or are you going to purchase with cash?

Yep, that ship has sailed. U.S. real estate is in another huge bubble. Personally, I'm on the sidelines until another crash. Any money you are going to make right now is either from speculation or airbnbs. I view these as risky, because local governments can make airbnb owner's lives miserable at any time and when a recession hits, vacation rental demand will slow down dramatically.

One option is to spam real estate agents and lawyers in the area your looking to buy with questions you need answered. They are used to those type questions and will copy paste the answers to you without any cost. Lawyers also. But the last ones tell them upfront you will only pay if you go ahead with the purchase.

Also in terms of bank account openings, etc. They generally have good relationships to make the process faster.

@ Vinny
Checkout my thread on living the dream and moving abroad.

You can definitely yield some nice gains in the right areas. If your interested in my location just send me a pm. But, the problem for you is you want to find the places that need alot of work. So basically you would need to spend some time here doing the work yourself.

Two of my apartment units are located in the center of a smaller city with a very popular nursing university nearby.

Just put the properties under LLC(s) and keep following frame in front of tenants:

- you are not the owner -- you just are (or work for) the property manager -- aka "yeah, the owner is tough -- I'll see if I can get him to help you with that".

- the owner is not foreign


Tenants in certain parts of the US have lots of rights, and "professional tenants", if they suss out an absentee or naive landlord, will pull all kinds of crap. Here in NYC, one can simply stop paying rent and landlords generally have to eat 6 months + legal costs just to get an eviction. Knowing the owner is overseas will embolden any scammers.

Long story short -- prepare for the worst, have your "cover", be weary of professional tenants.

You do realize the reason people are getting 20%+ returns is because of leverage. This is probably doable in your own country if you can get enough leverage. 20% on a rental which is 100% paid for is not going to be anywhere near common. 20% on a rental where you only have 30% of your own money in will open the door to 20% returns.

Quote: (07-27-2016 11:51 AM)lavidaloca Wrote:  

You do realize the reason people are getting 20%+ returns is because of leverage. This is probably doable in your own country if you can get enough leverage. 20% on a rental which is 100% paid for is not going to be anywhere near common. 20% on a rental where you only have 30% of your own money in will open the door to 20% returns.

If you specifically look at the link provided by OP in his subsequent post, you will see that they are NOT relying on leverage in order to make the 20% return claims.

As I already stated, I have my own concerns about the representation in the claims and the likely need for any investors to be actively involved in setting up and following up with their real estate teams and strategies, but leverage is supposedly not one of the issues in this particular claim to 20% returns.

@Hell_Is_Like_Newark: I am planning to sell what I own in Europe and buy using the cash. What I am seeking is higher returns, which are not possible in my country... If I find a sweet spot I might take a mortgage for another apartment but only to pay it off within few years.
@Schlep: great thread. Writing a PM already.
@Robert Plant: If there is a bubble when it crashes, all the world gets in recession. US is great for exporting inflation. So no place is safe to invest these days...
@chakalaka: great advice!

So far I am just realizing how hard it is going to pull something like this. But I am no longer planning to sit on my ass and work till I am 60.
If not US I will probably invest in Asia, as returns there are pretty decent. Anywhere but not Europe for sure, cause it seems like it is in decline, economically and morally. Less people means less tenants. In Asia there seems to be this never ending flow of new young people to pay rent to you While in US it seems immigration solves the population issues.
I shall get ready for the big move by reading more on this subject and consulting with smart RVFers who have already achieved financial independence.

Quote: (07-27-2016 01:05 PM)JayJuanGee Wrote:  

Quote: (07-27-2016 11:51 AM)lavidaloca Wrote:  

You do realize the reason people are getting 20%+ returns is because of leverage. This is probably doable in your own country if you can get enough leverage. 20% on a rental which is 100% paid for is not going to be anywhere near common. 20% on a rental where you only have 30% of your own money in will open the door to 20% returns.

If you specifically look at the link provided by OP in his subsequent post, you will see that they are NOT relying on leverage in order to make the 20% return claims.

As I already stated, I have my own concerns about the representation in the claims and the likely need for any investors to be actively involved in setting up and following up with their real estate teams and strategies, but leverage is supposedly not one of the issues in this particular claim to 20% returns.

"Dallas tops the list of real-estate markets over the period studied, exhibiting strong price appreciation, while remaining a market in which investors saw strong rents relative to property values. Investors in Dallas stood to earn an almost 20 percent unleveraged return for residential real-estate investments before expenses."

Expenses are going to wipe a large portion of that "20 percent out." Just the way thats written suggests to me that is a pretty lousy article to go by.

OP its pretty unlikely unless you buy a property that needs work done on it or you see an angle other buyers aren't that you will get 20% unleveraged per year.

20% leveraged while renting it out you'll find depending on the rates available to you for lending.

Whatever location you choose, if you do not have extensive and ongoing knowledge of the local market and also frequently spend time there you are setting yourself up for failure.

Quote: (07-27-2016 03:44 PM)lavidaloca Wrote:  

Quote: (07-27-2016 01:05 PM)JayJuanGee Wrote:  

Quote: (07-27-2016 11:51 AM)lavidaloca Wrote:  

You do realize the reason people are getting 20%+ returns is because of leverage. This is probably doable in your own country if you can get enough leverage. 20% on a rental which is 100% paid for is not going to be anywhere near common. 20% on a rental where you only have 30% of your own money in will open the door to 20% returns.

If you specifically look at the link provided by OP in his subsequent post, you will see that they are NOT relying on leverage in order to make the 20% return claims.

As I already stated, I have my own concerns about the representation in the claims and the likely need for any investors to be actively involved in setting up and following up with their real estate teams and strategies, but leverage is supposedly not one of the issues in this particular claim to 20% returns.

"Dallas tops the list of real-estate markets over the period studied, exhibiting strong price appreciation, while remaining a market in which investors saw strong rents relative to property values. Investors in Dallas stood to earn an almost 20 percent unleveraged return for residential real-estate investments before expenses."

Expenses are going to wipe a large portion of that "20 percent out." Just the way thats written suggests to me that is a pretty lousy article to go by.

OP its pretty unlikely unless you buy a property that needs work done on it or you see an angle other buyers aren't that you will get 20% unleveraged per year.

20% leveraged while renting it out you'll find depending on the rates available to you for lending.

Thanks for catching that additional point. In the end, we know that there are not too many get rich quick schemes and passive income generators that are going to come, especially from something like real estate.

Like you said lavidaloca, guys have to find some kind of niche in the market that they want to enter, and then they likely have to do quite a bit of hard work in getting their systems in place and then probably also they need to have some luck, too, in order for a quasi-active investment to be transformed into a passive income generator.

I think that the article that OP pointed out is good in order for us to better understand the kind of framework and goals that he was seeking, and yeah if they are talking about profits and profitability prior to considering expenses, then that is pure pie in the sky because we cannot really talk about one side of the ledger without talking about the other before we even conclude that an investment is "profitable" and by how much.

Quote: (07-27-2016 04:19 PM)GlobalMan Wrote:  

Whatever location you choose, if you do not have extensive and ongoing knowledge of the local market and also frequently spend time there you are setting yourself up for failure.

Setting yourself up for failure and increased likelihood of being scammed.. .

Quote: (07-25-2016 12:46 PM)Vinny Wrote:  

Hi there fellow members.
I rarely ask questions, but here is one of these times.

I have heard about crazy good returns on real estate in US. Lets say above 20% of annual returns. To compare to EU this is madness.
This makes me really interested in going to US and acquiring some real estate and rent it out via agency.
Problem is that my US experience is about a months of combined time, doing nothing but going to 6 flags magic mountains, drinking beer and partying. Meaning I know nothing about taxes, laws, rules, underwater stones.
Any information on that subject would be highly appreciated.

So my main questions are:
Can a foreigner own real estate in USA?
Can I foreigner rent a real estate in USA and if yes is there some sort of exorbitant tax?
Do you know a foreigner owning a real estate in US?
Is he on this forum?
What is his forum name?

I'm an American who also has EU citizenship who is interested in looking into real estate in Europe in the future, can you elaborate a bit on why returns are so poor here on the continent? I know there is more of a incentive towards ownership in the states. However,student housing and holiday rentals ,rental property can be lucrative