3 lessons U.S. real estate investors can learn from foreigners

By on July 1, 2015

As I work with real estate investors from all over the world, I field a lot of questions.

The most interesting question that astounded foreign-investor friends ask is: “Why aren’t more Americans doing real estate investing in the U.S.?“
From their vantage point, they see that we have virtually all the great attributes making up a “perfect storm” for investing. These foreign investors say that they would love to have the great real estate investing opportunities that we in the U.S. do.
From outside the box looking in, this is what they clearly see and they are envious:

1. They see our low prices and wonder why Americans are not capitalizing on them more

The U.S. is recognized as being the most affordable country in the world for investing. Our foreign friends study real estate locations and understand that.

3 lessons American real estate investors can learn from foreign investors about housing prices and costsGenerally speaking, in the U.S. you can purchase a home for the equivalent of three years’ income, which is cheap in comparison to most countries around the globe.

Here are some very interesting facts that they understand that they feel we are missing. For example, did you know that you would have to spend 10 years’ of income to purchase a comparable home in Canada?

In Brazil you would be looking at 20 years’ of income to buy a home and a jaw-dropping 35 years’ income in China.

Knowing how expensive housing is in their country and the affordability ratios of other countries, it looks to them that the U.S. is the most affordable country in the world in which to purchase real estate.

2. They see the U.S as a safe haven for one’s investing dollar and wonder why Americans are not taking full advantage of this

They see that U.S. tax law provides for many benefits including tax deductions, depreciations and shelter from capital gains with things like 1031 tax-deferred exchanges. It is interesting to see how ecstatic certain foreign investors become when they learn this for the first time. Their first thought is that it is too good to be true.
They do believe that compared to many countries, our economy is strong. They know that when they buy in the correct emerging markets, security of the investment is as strong as anywhere else in the world and with the lowest entry point for investing.

3. They see ease of purchase and cannot believe Americans have not gobbled up all the inventory

Foreign investors are intrigued that anyone who has money or access to credit can buy a property in the United States.
Many countries have rules governing who can buy and what they can buy. Often they must have a certain net worth and even prove to be a producer of income in their countries.

Do you know, for example, that no one from outside the country of Mexico is allowed to purchase property within 50 miles of Mexico’s oceans?
I often get phone or Skype calls in which these foreign investors lead the conversation with the question, “What are the qualifiers to be able to invest in the U.S.?” The first time I was asked this, I thought the gentlemen were joking, but they are so accustomed to restrictions that they are amazed anyone can simply buy any property.

I am always impressed with how much our foreign friends know and understand about the U.S. They search across the waters looking for the best location to buy real estate because they truly understand the concept of real estate being all about location. They recognize the U.S. as being the top country for equity growth and know that appreciation in the U.S. surpasses almost every country.

They admire our ability to acquire such low finance rates and with 30-year amortization loans that are fixed rates. Foreign countries do not have 30-year fixed rate products at all. Foreign investors pay about 2 to 3 percent higher rates than we do.

Investors, both foreign and domestic, can indeed find incredible investments in the U.S. With pending inflation, U.S. investments are poised to provide a great hedge.

When I hear foreign investors’ envy and excitement about the opportunities they see here, I can certainly understand why they are amazed that more people in the U.S. are not investing in real estate.

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