Personal StoryDec 26, 2022

The Philosophy of Being a Nonresident Investor

Before I started the Nonresident Investor brand, I spent around ten years building and growing several successful businesses.

The experience I gained as a digital entrepreneur came with one crucial lesson — having all your income come from a single stream is not a good idea.

Over my ten-year career, I’ve spent most of my working days glued to the computer, managing my two online businesses. I often had 10–15-hour workdays and eventually realized that such a lifestyle was unsustainable.

I felt as if my life was slipping through my fingers. So I knew I had to make a change.

That’s when I started searching for ways to invest my active income and turn it into passive income. 

So when the time finally came for me to put my money where my mouth was, this lesson proved invaluable. In fact, it was one of the primary reasons I decided to invest in US Real Estate as a foreigner.

Eventually, I realized that being a nonresident investor had many more benefits than I ever thought. It took me a while to process that — much longer than I’d like to admit. But buying my first property in the States helped me change my foreign mindset, understand the true value of investing abroad and overcome many investment mistakes.

But what does being a nonresident investor even mean?

Well, it’s just a phrase to most people. But not for me.

You see — the term nonresident investor became the foundation of the NRI brand. A philosophy — you could even say.

It’s an integral part of who I am and what the NRI brand represents.

But above all, being a nonresident investor is all about one thing…

three nonresident investors who put their money into US Real Estate a while ago are expressing how important is to have a good mindset

It’s All About the Mindset

The mindset I’m referring to is that of a modern investor.

And when I say modern, I mean an investor who is:

  • Always up to date with contemporary trends;
  • Not bound by geographical borders;
  • And who knows how to think outside the box.

From my experience, these characteristics are what it takes to succeed in the 21st century. 

Here’s the thing — most old-school investors are too narrow-minded. They once found something that works, and they stick to it… zealously. Very few have managed to adapt to the rise of the internet and global digitalization.

Most old-school investors also like to play it safe and only operate in the markets they know. They do business within the borders of their one country, which leaves them vulnerable to geo-political factors they cannot control.

A modern investor has the advantage in all of these aspects.

They are adaptable and have no constraints.

In other words, they are free.

A Nonresident Investor Is a Global Citizen

What does freedom mean for an investor? 

It means they aren’t bound to a single country. They invest abroad and have funds in various assets. And that’s what makes them stable.

Being a global citizen also means that the modern, nonresident investor has nearly unlimited opportunities. After all, the world is their oyster!

These characteristics are why I chose to make this mindset of a modern investor one of the core values of the NRI brand. And that’s even reflected in the name itself.

Nonresident Investor comprises two words, which, when combined, symbolize the core of a modern investor.

The Nonresident part of the name denotes the freedom and privilege that comes with it (lower taxes when investing in the U.S.).

The Investor part of the brand symbolizes an investor who constantly searches for new opportunities and higher numbers anywhere in the world.

These two terms are inseparable and perfectly capture the essence of a modern investor operating in the contemporary digital age.

A Nonresident Investor Is a Global Citizen who travels the world

America as the Symbol of Globalization

Although the core value of the NRI brand is the freedom to invest anywhere in the world, I still chose America for my first purchase. I also always encourage my clients to invest in US real estate when starting their journey. 

Why? It’s quite simple.

America has always been known as the land of indiscriminate opportunity. And it is the country synonymous with globalization. From famous fast-food restaurants and blockbuster films to language, US culture is everywhere around us. It has become such an integral part of our everyday lives that we don’t even notice it. And there’s no escaping it.

So, as a modern investor living the life of a global citizen, it’s only natural to start at the root of most global trends — America. 

But besides being the cradle of globalization, America is incredibly kind to nonresident investors. 

  • Foreign real estate buyers pay lower taxes on active income than US residents;
  • Rents in the States have been steadily rising over the last few decades;
  • The American real estate market is highly developed;
  • You can find almost all the information you need on the US real estate market online;
  • And there are many opportunities to profit.

In my head, these factors align perfectly with the goals of a modern investor. And they pursue them unrelentingly to achieve their ideals.

Well, at least that’s how I envision a nonresident investor.

But what about US law? What does it mean to be a nonresident investor on paper?

What It Means to Be a Nonresident Investor (According to US Law)

A nonresident investor is any individual who meets all of the following criteria:

  • They aren’t a US citizen or US national — These essentially mean they don’t have US or dual citizenship.
  • They haven’t passed the green card test — Which means they haven’t legally immigrated to the US and aren’t married to a US citizen.
  • They haven’t passed the substantial presence test — Not passing this test is crucial to remaining a nonresident investor and continuing to file taxes as one. 

The substantial presence test is the easiest to pass and hardest to calculate, so I’ll try my best to explain it. If you want to keep your nonresident investor status, you must not spend more than 183 days in the US during a 3-year period (including the current calendar year). However, the way this number is actually calculated is a bit tricky. The total time spent toward passing this test is calculated as the sum of the following:

  • The days you spent in the States during the current calendar year;
  • One-third of the days spent in the US throughout the previous calendar year;
  • One-sixth of the days spent in the US throughout the second calendar year before the current.

You can find more information on the substantial presence test (and an example of its calculation) on the IRS website.

Now, legally earning nonresident investor status gives you many benefits. But likely, the biggest one is the way your income is taxed.

Nonresidents who engage in business in the States are taxed the same way as US residents. But there’s a catch.

Nonresidents are taxed only for their active income from their businesses in the States.

In most cases, the sources of nonresident investors’ active incomes will be outside of the U.S. That means they won’t be taxed in America!

The only taxes you’ll need to pay the U.S. government will be on your real estate LLC’s passive income (rents from real estate are considered passive income).

Because of the above, you have two things going for you:

  • The tax rates for passive income are one of the lowest in America
  • And you can easily optimize it (entirely legally) by increasing your business expenses for your U.S. real state LLC.

This perk gives you the edge over any professional investor with U.S. citizenship.

an asian successful businesswoman is planning her nonresident investment on a flight to the US

Almost Anyone Can Become a Nonresident Investor (And Profit)

If you have the capital to invest, then yes — anyone can become a nonresident investor and succeed. 

That’s why when people come to consult with my team, I always open with one piece of advice — think outside of the box and invest where it’s most profitable.

And that place is America. And not just because of lower taxes.

  • You get access to one of the most profitable real estate markets in the world;
  • Becoming a nonresident investor in the U.S. gives you a free ticket into the American financial system, helping you in any future business endeavors;
  • You can invest in one of the world’s most stable economies and currencies.

Now, I’ll be frank — becoming a nonresident investor alone will be difficult and exhausting.

Trust me — I’ve been through the entire process myself.

I’ve spent hundreds of hours reading books on real estate investment, consulting various professionals (U.S. accountants and tax lawyers), reading up on U.S. law, and finding the right people to help me with the bureaucracy.

And you will too… Unless you find someone like the NRI brand to help you.

If you’d like to invest in U.S. real estate and become a nonresident investor while saving time and money, my team can help you.

With a nonresident investor, you can find everything you need in a single place — from reliable contacts to help you locate the best deals to a seasoned legal and accounting team who’ll take care of all the legal stuff and paperwork.

If you’re seriously considering investing in U.S. real estate, why not jump on a discovery call with me to find out how much my team can help you?

Book a free discovery call with me and find out how much time and money my team can save you on your first real estate purchase.

Luka
Founder & CEO
Luka Malkovich is a serial entrepreneur with years of experience in international real estate investing. As the CEO of Nonresident Investor, Luka’s mission is to educate foreign nationals about the US real estate market and help them secure funding and buy property in America. That’s why he’s using his expertise to turn the NRI blog into a knowledge hub for anyone interested in learning about US real estate. This article was written by a professional content writer in conjunction with Luka Malkovich. Luka has thoroughly reviewed this article and has given his final approval before publishing.

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