what made me get into us real estate an invest in it as a foreigner

Why I Chose to Make My First Real Estate Investment in the US

Dec 19, 2022

If you read my previous article on how I decided to start the NRI brand, you probably remember some of the main reasons I chose to invest in real estate:

  • My dad used to do it, so I knew it was profitable (you could easily earn your investment back within ten years or so);
  • I had experience with it since I used to help my dad a lot (e.g., finding tenants);
  • I knew the industry was stable and reliable, unlike the popular alternatives (e.g., stocks, crypto).

So choosing to invest in the real estate market was a no-brainer.

But why didn’t I buy a property back home in Montenegro? Why decide to invest overseas instead? And why America?

Well, there’s a good reason. Eight — to be more precise.

So if you are also considering investing in real estate and are unsure where to start, I’ll share my eight reasons for choosing the US for my first real estate investment.

8 Reasons I Decided to Invest in US Real Estate as a Foreigner

I didn’t decide to invest in US Real Estate overnight. Quite the opposite — I spent many long hours doing market research and consulting with dozens of experts in the field before I set off on this journey.

Here are the eight reasons I decided to become a nonresident investor and chose America as the place to invest:

1. The US Real Estate Market Is the Most Profitable

The US Real Estate market is massive. And even that would be an understatement.

The American real estate market is valued at around $700 billion in 2022. That number comprises 20% of the entire global real estate market.

By using the right strategy, I managed to use this market potential to get a return on my first US investment back in just four years. If I had chosen to invest the same amount back home, it would have taken me at least three times as long.

a nonresident investor from india signing a contract for his first real estate investment in the us

Just to put things into perspective, there are two primary ways an investor earns a profit from buying property in the States:

  1. Rent — Most of your income from investing in US Real Rstate will come from rent. And rent prices have been growing at a rate of 5%–15% in most U.S. states over the last few years. That makes this the most surefire way of earning a profit in the long run.
  2. Passive Real Estate Price Growth — The US market is gaining value at around a 5% compound annual growth rate (CAGR). And it has been like that for over a decade. That means the value of your property will grow each year just by holding it.

And the best part is that you can even profit when buying real estate with other people’s money (OPM). 

In those cases, all your rent money will be funneled into paying off your debt. That essentially means your tenants will be paying off your loan. And once your debt is finally settled, the property itself will be your profit.

These are the primary reasons the US Real Estate market is one of the easiest to profit from and why it was the obvious choice for me. 

2. Investing in Real Estate Overseas Means You Never Have All Your Eggs in One Basket

This reason is not related to America specifically but choosing to invest in a foreign country in general. And it answers why I didn’t want to buy my first property in my home country.

If my ten-year-long career as an entrepreneur taught me anything, it’s that you must always have a plan B. And I’m not only talking about money.

The world has been quite unstable lately, thanks to the COVID pandemic, raging inflation, and ongoing global conflicts. Unfortunately, few people have the luxury of having a backup plan should the worst come to worst.

But a modern investor shouldn’t be one of them.

Investing in real estate abroad gives you something to fall back to in the worst-case scenario (e.g., having to flee your country due to geopolitical reasons).

That’s why investing in a stable country like America is a much better option, regardless of where you live.

3. Nonresident Investors Pay Lower Taxes Than American Residents

Yes — you’ve heard that right. Having a foreign investor status in the States gives you an advantage over American residents.

The thing is, the American taxation system is incredibly unfavorable to its residents. Not only is the US one of the countries with the highest tax rates in the world, but its citizens also need to pay taxes for the income they earn abroad. 

That’s not the case for 99% of other countries worldwide. 

In fact, you’re likely living in a country with lower active income tax rates than in the US and no or lower taxation on passive income earned abroad.

Note: Income from real estate is classified as passive income.

Since your primary source of income is outside of the US (your home country), you already pay lower taxes than fellow Americans. And if you also live in a country that doesn’t tax passive income earned abroad, that’s an even bigger benefit.

Of course, you will still pay taxes on your real estate income in America, but that kind of passive income will be easy to optimize.

Either way, nonresident investors are always one step ahead of American citizens regarding taxes.

nonresident investors are networking

4. I Had a Lot of Experience Doing Business in America (and Contacts)

Networking is everything in the business world, and the same applies to investing.

Thanks to my previous work with my IT software company, Addria, I already had many connections in America. 

Since 2015, I’ve finalized over 50 IT projects in the American market and have been a regular at many conferences and networking events throughout the States. So getting in touch with the right people was only a matter of making a few phone calls and calling in some favors.

At the same time, I was already loosely familiar with some parts of American law, which helped me immensely during my research.

These things made my life a whole lot easier.

Now, I know you might not be as lucky as I was. But even if you don’t have any contacts in the States, it doesn’t mean you have to do everything yourself.

One of the reasons I started the NRI brand was to help aspiring investors like you buy their first property in the US. The team behind me can take care of everything from helping you find the best deals to handling all the paperwork and legal stuff for you.

If you need help making your first real estate investment in the US, book a free, 15-minute discovery call with me and learn how much time and effort my team can save you.

5. The Demand for Real Estate Is Higher Than the Supply

This point is especially true for America.

The U.S. has one of the highest rates of homelessness among developed countries. That means housing is always in high demand.

I don’t expect you to take my word for it — the numbers reflect that. As of June 2022, the average monthly rent in the States surpassed $2,000. This number was around $500 just forty years ago.

In fact, there were barely any years in the last few decades when the rent prices didn’t go up. 

This data surprised me at first, but after I’ve been to America a few times, I learned two things:

  • An average US home is around 100 years old;
  • Building new houses is expensive.

To make things even worse for ordinary folks (but better for us investors), the COVID pandemic increased the demand for real estate and further reduced the supply.

Thanks to the pandemic, many supply routes were destroyed, the prices of building materials skyrocketed, and the costs of labor rose.

All of these factors combined made rents jump even higher.

So if you want to get a good ROI on your real estate investment quickly, America is undoubtedly the best place to invest.

a nonresident investor is signing a home ownership contract for his first us real estate investment

6. Investing in US Real Estate Is an Easy Way to Get Access to the American Financial System

If you’ve ever thought about starting a business in America (I have), you’ve probably realized how rigorous their financial and banking systems are.

You see — credit score is everything in the States. It gets your foot in the door with banks, allowing you to take out loans, get better financial deals, and many more things.

But before you can work on your credit score, you first need the right to have it. 

As a foreigner, that is incredibly challenging… Unless you invest in real estate.

The thing is — banks LOVE real estate. There are a few reasons for that:

  • The real estate market is predictable;
  • Property value is mostly stable;
  • Real estate is always in high demand.

So buying a property in America is like getting a seal that guarantees that you’re financially liquid and reliable (in the eyes of banks). It allows you to start building a credit score, even without initially having an American TIN or salary in the country.

The reason is that your real estate acts as reliable insurance for banks. They can always mortgage it if you fail to fulfill your financial obligations.

So if you’re interested in getting yourself an easy ticket into the American financial system as a foreigner, investing in real estate would be your best bet.

7. Many of the Richest People in the States Earned Their Wealth Through Real Estate Investing

Yes — some of the wealthiest people in America earned their wealth through real estate investing.

The reason is simple — despite being so economically powerful, most of the US is underdeveloped or uninhabited. Out of its 1.9 billion acres of inhabitable land, only 3.6% is urban.

With so much room for development, it’s only natural that real estate investors are in high demand.

In fact, individual investors currently own about two-thirds of rental properties in the States. And many of them earn billions from it.

Here are just a few notable real estate investors who turned into billionaires (both domestic and foreign):

  • Donald Bren — The richest American in the real estate business. His net worth is estimated at $16.2 billion.
  • Sun Hongbin — A fellow nonresident investor. Despite living in China, he is one of the wealthiest people who built their portfolios by investing in US Real Estate. His net worth is around $6.9 billion.
  • Neil Bluhm — This American built his wealth by investing in real estate and gambling industries. His net worth is estimated to be around $6.4 billion.
  • Leonard Stern — One of the largest industrial real estate investors in the States. His net worth is around $6.2 billion.
  • Ross Perot Jr. — Another successful industrial real estate investor. His net worth is estimated at around $3.2 billion.

And these are just the most successful investors. Thousands of smaller investors easily earn tens or hundreds of millions just from US Real Estate.

These are just some of the people who inspired me to pursue my real estate investment goals, and I hope they inspire you too.

8. The US Has the Most Stable Economy and Currency in the World

This shouldn’t be surprising even if you are not well-versed in the global economy and finance.

America has by far the most powerful economy in the world. Currently, the US has a $23 trillion GDP, while the second-strongest economy, China, has around $17.3 trillion. At the same time, the American economy takes up 23.9% of the global economy, making it one of the safest and the most stable markets to invest in.

The same goes for its currency — the American Dollar (USD).

The USD is currently treated as the world’s reserve currency. As far back as 2006, 66% of the world’s foreign currency reserves were in the American Dollar. That is also one of the reasons many countries worldwide adopted it as one of their official currencies.

Another reason the American Dollar is so stable is that it has only been devalued once, and its notes have never been invalidated. So the worst thing you can expect is minor fluctuations in its value due to the state of the global economy.

This stability that the American market offers is what every investor dreams about. And it’s one of the main reasons I chose to buy my first property in the States.

a man calculating his ROI after making his first real estate investment  in america

So Did My First Investment Pay Off?

I wouldn’t be telling you my story if it didn’t.

Financial experts say that one achieves financial freedom only when their passive income exceeds their monthly costs. I’m happy that I reached that point in just under four years.

But this is just the beginning for me.

Now, I’m looking forward to helping other nonresident investors build their investment portfolios and put their money where the numbers are the highest.

I started the NRI brand to help aspiring investors like you avoid the many mistakes I made when I bought my first house in Milwaukee and save you tons of time and money.

With NRI, you can take care of everything in a single place — from finding reliable contacts to help you locate the best deals to finalizing all the legal stuff and paperwork.

If you’re seriously considering investing in US Real Estate, why not jump on a discovery call with me to find out just 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.

 

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