| Foreign
Investors: Questions and Answers
I am Canadian (European, Russian, etc.) citizen. Can I purchase
real estate in the US?
Yes, anybody can own a property in the US.
Are there any special steps that need to be followed or anything
done differently for non-US citizens?
None. When you purchase a property in the US, your process
is no different from an American citizen and you can read
more about it here:
http://www.tampa-mls.com/buyers.html
AND http://invest.tampa4u.com/
When
you sell real estate, by default, the US government will withhold
10% for taxes, but from what I’ve heard from title companies,
you might get most of it back, after the taxes are reassessed.
You can read more about it here:
http://www.irs.gov/businesses/small/international/article/0,,id=105000,00.html
Can I get a loan in the US?
Yes, you can, but US banks are very strict right now so
they might require more downpayment and/or offer higher interest
rates. We can give you phone numbers of local mortgage professionals
who can answer all your questions about mortgages in the US.
How much are the closing costs?
It depends on the property, purchase price, and whether
or not you have a loan. If you pay cash – your closing
costs would be around 1% of purchase price, more or less;
if you have mortgage – it would be around 3-7% more
or less depending on the loan.
What are the most common expenses of ownership?
Utilities (water, electric, cable TV, etc.) – costs
will vary depending on usage; Community fees if any –
vary by community; Property Insurance – varies depending
on the area, property and insurance company; Property Taxes
– calculated by the county based on assessed value and
county tax rate.
Are these costs higher for me because I am not a US citizen?
No, but government offers certain tax breaks for property
taxes to primary residence owners so none of the investors
or second home owners qualify, regardless of nationality.
According to my information the housing market is on the rise,
slowly but rising nonetheless. I hear of all these great deals
on real estate but how great are they really in your area?
From
what I noticed, our prices went up a lot from 2002 –
2006, and then they went down as fast, so now we are back
to 2002-2003 pricing, but it seems to be much more stable
now. Of course I cannot predict the future, but the fact that
some properties get multiple offers and that there are bidding
wars means there’s great demand.
Another fact is that right now you can purchase a rental property
with good cash flow. Rental market is pretty strong right
now, so you can rent it out and cover your expenses. In 2005,
it was hard to even break even, as the rents then were much
below mortgage payments and owners would just have to hope
for rent appreciation. But now, the prospects for rentals
have gotten better.
Here are some market stats: http://www.tampa4u.com/market.html
I want a good deal, send me properties.
So far I didn’t have any clients asking for “bad”
deal ? It’s a Buyer’s market which means the market
is good for buyers right now. Is getting a $1M property for
$800K a good deal? Or is it better deal to get a property
for $200K that was worth $250K before? In other words, there
are opportunities in all price ranges, and since we have access
to all properties around the area, we need to start the search
by knowing your personal preferences, expectations and what
you are trying to achieve.
How much less than the asking price we can offer?
There are no rules – you can offer whatever you
wish – but we advise to make reasonable and educated
offers. What does really matter: how much discount you can
get from the asking price OR get a good deal? If there are
two similar properties for sale and one is listed at $200K,
and another listed for $250K, would it be a better deal if
you get first property at full asking price 200k (zero discount)
OR get a $20K discount on second one which will make purchase
price $230k?
We can help you study the market in that area and figure out
the best offer price accordingly.
In most of the areas here, statistically homes are selling
for 93-97% of the asking price. If deal is very good and there
are multiple offers – it could sell for more than the
asking price. We rarely see overpriced homes right now though,
since the time of testing the market has passed and prospective
sellers already realized that they cannot get what they want
so they either wait for the prices to go up before they sell,
or for those who cannot wait – have to list it at a
competitive price.
If I pay cash, how much will it influence the asking price
(versus having mortgage)?
Each case is different and depends on the seller. Sellers
do like cash buyers, but in my experience, cash doesn’t
really get you a better price – in the end it doesn’t
matter much for the seller where the money are coming from
– from the individual or from the bank. But cash does
make your offer stronger and more attractive, especially if
there are multiple offers.
Best deals right now are bank-owned properties and a lot of
times they get multiple offers so banks choose the “highest
and best,” or just best in their opinion. Let’s
say there are two offers: one higher but with financing, and
another one is just a little bit lower but cash – banks
will tend to go with cash offers since there will be less
contingencies.
What
is the tax rate on rental income?
It depends on your tax bracket. For more specific computations,
we can give you the phone numbers of some local accountants.
What’s the downpayment LTV we can get for financing
the deals?
It’s depends on the loan you qualify for. You would
need to speak to a mortgage professional to see what kind
of loan and terms you can get. We can give you the phone numbers
of some local mortgage brokers.
RENTAL and INVESTMENT properties in US:
If you seriously want to invest in real estate in the
US, you should seek professional advice from a real estate
attorney and accountant who can help you set up your business
and accounting/taxes in order. Let me know if you wish me
to connect you with some professionals in our area.
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