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A Foreign Guide to Buying in America

Purchasing an investment property or residential home in America can be a different process for many foreign buyers. During the past several years, I have sold to many foreign investors that have purchased property in New York City and other parts of the United States.

Different Types of Purchases

  1. Individual Apartment or Home Purchase
  • An investor can purchase an Apartment or Home for rental purposes.
  • If you are purchasing in a Metropolitan City, the type of property will most likely be a Condominium Unit. This is a type of building structure that allows for investment. The price of an Apartment can be $500,000 to $10 Million (Or more). It depends on the size of the Apartment, location etc. The investor can rent this out.
  • The return can be anywhere from 3% – 6% on average depending on the City and location.
  • The true value might be in the appreciation if the property is purchased at a good price
  • Apartments have taxes and monthly common charges or HOA fees. This is factored into the rate of return

2. Multi-Family Building Purchase

  • This is the purchase of a building with multiple units. Perhaps an investor buys a building with 10 rental Apartments. The investor than hires a property manager to manage the building, fix maintenance problems and rent the Apartments when they become vacant
  • The return on a building can be anywhere from 3% – 8%. This is a net return. This depends on the location of the property and City
  • Apartment buildings can have taxes as high as $100,000 or $1 Million per year. There are also building and maintenance expenses.
  • Typically, the better the location, the lower the return. However, this means the property might be a safer investment

3. Development Deal & Conversion Project

  • This is the biggest return but most risky
  • It can be building a new construction project from beginning. It can be a new Apartment building, Hotel or Other
  • Returns can be 15%-30%. Net Returns
  • It’s important to have the right team in place. You will need to work with a good builder and group of people that can help with your investment
  • It’s important to understand if there will be tax incentives or abatements on the property.

4. Triple Net Retal or Mall

  • This is another type of property typically found in the suburbs or outside of major Cities
  • This is a retail or commercial store that has a long-term lease
  • For example, Mcdonalds might lease a property for 15 years. It’s a good tenant and long-term
  • The tenant usually pays the taxes and maintenance
  • Returns are usually 5% – 8%
  • These are excellent investment type properties

Steps of the Deal

  1. Make an offer or Submit LOI (Letter of Intent)
  2. If offer is accepted a contract is signed
  3. 10% deposit or other amount is usually required at contract signing
  4. Contracts can include a Due Diligence period or Review period of 30-45 days. If buyer find a reason not to purchase, they receive deposit back. However, if the contract has no Due Diligence period, than the deposit might be non-refundable
  5. A purchase can be all cash or contingent upon a mortgage. This is discussed in the terms of the contract
  6. Closing date is set in the contract. After due diligence period or certain period of time, buyer has to close and take title to the property

Contact Us

To learn more information about investing in property in the United States please contact us @garayrealestate.com

By |2022-01-21T14:08:51-05:00September 1st, 2021|Real Estate News|