Real Estate Investing in New York as a Foreigner: A Complete Guide
Have you ever considered investing in New York as a foreigner but needed to figure out how? New York is widely considered a safe haven for foreign real estate investors, with thousands of investors from China, Oceania, and Europe owning property there. And there are multiple reasons for its popularity:
- It’s the largest cultural center on the East Coast;
- It is one of America’s biggest metropolises;
- New York real estate is a popular choice for foreigners looking to save their wealth due to its high market value ($2.8 trillion) and appreciation rates;
- It has one of the highest-growing property values in the US.
However, such popularity also makes it one of the most competitive real estate markets in the US. And that makes it particularly challenging for foreign investors to get into.
Since nonresidents are unfamiliar with the local market and live abroad (sometimes even across the ocean), learning how to find the best real estate deals in New York can take a lot of trial and error. That is unless you have some guidance.
In this article, we will cover everything foreign investors need to know about buying real estate in New York. You will learn why New York is an excellent place for nonresident investors, how to invest in the city, and how to find a good deal there.
Investing in New York as a Foreigner | Where in the World Is NYC?
New York is the largest city in America, located in the State of New York on the East Coast. The city is home to more than 8 million people and is often called the capital of the world. The city is divided into five separate counties: Manhattan, Brooklyn, Staten Island, Queens, and the Bronx. These counties occupy a large coastal area and several massive islands on the US East Coast.
Besides being the most populous city in the US, New York is its educational and cultural center. The city is home to over 30 universities and is one of the most popular destinations for both foreign and domestic students. Some of the most popular universities in the city are:
- CUNY School of Law
- CUNY School of Medicine
- CUNY Graduate School of Journalism
- New York City College of Technology
- Hunter College
- Borough of Manhattan Community College
- SUNY Empire State College
- And more…
“Many parents craft a 4-year condo plan when they send their kids to uni. They usually buy a condominium their children use during their studies and sell it afterward. High property appreciation rates in NY make this strategy viable.” — Elvis Tominovic (East Coast REALTORS Inc.)
The New York metropolitan area has the strongest metropolitan economy in the world, thanks to its massive harbor on the Atlantic Ocean. This favorable location also makes NY one of America’s largest trading hubs.
Why Should Real Estate Investors Care?
New York is also one of the world’s largest business hubs. It’s home to the Wall Street stock exchange and headquarters of some of the largest brands in the world, like:
- IBM
- Deloitte
- Ernst & Young
- ABC
- American Express
- Bloomberg
- HarperCollins
- McKinsey & Company
- Universal Music Group
- And more…
That means the demand for commercial real estate, particularly large office complexes, is incredibly high in New York.
But the situation is similar for residential real estate too. Since New York is largely situated on islands, there is no room for expansion except into the suburbs. That’s why it’s common to demolish smaller, old buildings to construct larger ones. This method of always building upward is prevalent among New York real estate investors and is how the city has continued growing to this day.
Investing in New York as a Foreigner | Real Estate Market Statistics
Real estate has played an essential role in New York City’s economy for decades, and that trend continues to this day. Real estate is one of the fastest-growing industries in the city, with property values increasing by nearly 10% each year. In fact, New York (particularly Manhattan) is one of the most expensive cities in the world.
However, New York’s high price ceilings are an upside for foreign investors using the right strategy. Investors with significant budgets can buy high-end property in the city, hold it for a few years, and then either sell it for substantial profit (post-appreciation) or keep holding it to safeguard their wealth from inflation.
But even though this strategy is superior in New York, you can still achieve positive ROI even with a cash flow strategy (though you’ll need to find better deals to achieve profit).
Overall, here are several market factors that work in favor of these investment methods:
- 76.5% of New York dwellings are rentals;
- Rent prices are growing each year all across the city, with West New York seeing the highest rise (26.7%) since 2022;
- Marble Hill, Inwood North, and Roosevelt Island have had the highest property appreciation rates since 2000 (over 5% a year);
- The current median rent price in NY is over $3000 and is growing by around 10% each year;
- The median real estate price in New York in 2022 was around $650,000.
What Makes New York Suitable for Foreign Real Estate Investors?
There are many reasons New York is an excellent place for foreign real estate investors, but some of the main ones are the following:
- Properties in New York Nearly Always Appreciate Well — Investing in New York as a Foreigner is an appreciation game. Due to the city’s rapid growth and popularity among high-class society, many properties (particularly luxurious ones) appreciate incredibly well (95% of the time). This kind of buy-and-hold strategy is particularly popular in Manhattan.
- Buying Real Estate in New York Is a Safe Investment — The New York real estate market has been struggling to meet the available demand for years now. And when something is in high demand, it will be easy to sell or rent, making New York a decent choice even for the cash flow game.
- The Tax Benefits of Owning Real Estate in the US Are Excellent — One of the primary ways the US attracts so many nonresident investors is by giving them various tax benefits. And that is particularly true if you follow the cash flow strategy.
The above reasons make New York a particularly versatile market to invest in, as it is suitable for both large and small investors.
If you have a higher budget, buying high-end properties and selling them later, after appreciation, is one of the most effective strategies you can follow. However, even if your budget is more modest, you can still generate passive income with a cash flow-based strategy by buying residential properties in lower-end boroughs (e.g., Queens, Bronx).
But What Are Some of the Bad Sides of Investing in New York as a Foreigner?
Despite being a popular market for foreign real estate investors, there are a few downsides to buying property in a metropolis as big as New York:
- New York Is Heavy on Taxes (Compared to the Rest of the US) — Being one of the largest cities in America, New York has steeper tax rates than most other cities. That means investors relying on a cash flow-based strategy will have lower ROI than those focusing on cashing in on high appreciation rates. Luckily, if you do decide to go the cash flow route, you can significantly minimize your taxes with the right strategy.
- The City Has Very Tought Eviction Laws (Like Most Democratic States) — If you’re planning to rent your property for some passive income, you’ll need to ensure you pick the right tenant. If you choose poorly, New York’s eviction laws allow them to skip almost a year’s worth of rent before you can evict them. That’s why if you opt for this strategy, thoroughly checking a tenant before signing a contract with them becomes even more important if you opt for this strategy.
Despite these downsides, investing in New York as a Foreigner can still be incredibly profitable with the right strategy. Whether you want to create a steady cash flow or follow the buy-and-hold strategy, there are various ways to optimize taxes and minimize their impact on your ROI.
How to Find a Good Deal for Investing in New York as a Foreigner
Due to the sheer size of its real estate market, finding a good deal in New York is significantly harder than in other places in America. With so much competition, the best deals get claimed fast. That is why you must always be up to date and act quickly.
That’s why you must be persistent and patient when investing in New York as a Foreigner. Good deals are few and far between, so it will take longer to find one than in other parts of the US. That’s just something you’ll need to come to terms with.
However, that doesn’t mean you should sit and twiddle your thumbs — you must act. Here are a few things you should always do to find the best deals in New York:
- Engage in lots of cold calling and door knocking;
- Connect with local banks and foreclosure attorneys;
- Join Facebook groups for New York real estate and browse online forums;
- Check in regularly with various brokeries that give real estate deals;
- Connect with local real estate agents and professionals to stay updated.
Yes, doing all of the above is challenging, especially for foreign investors who live far away. Luckily, you can always circumvent the distance issue by hiring help. For instance, partnering with a local property management agency or real estate agents can help you gain the necessary connections to find the best deals quickly.
Either way, you have options.
3 Most Important Things a Foreign Investor Should Always Do (According to a New York Real Estate Investor)
We know how daunting it can be to invest in real estate in New York as a foreigner. That is why we asked our NYC partner, a local real estate investor with over a decade of experience, to give you some advice. Here are the three things he singled out as the most important for nonresidents investing in New York to always do:
1. Sit Down With Your Lawyer, and Open an LLC
If you want to make a successful real estate business in New York as a foreigner, the best and easiest way is through a US LLC. A legal entity in the States allows you to seamlessly conduct business locally, get an EIN for tax purposes, and enjoy various tax benefits.
That’s why if you’re serious about real estate investing, you should sit down with your legal counselor and open an LLC before buying any properties. And it’s even better if that counselor specializes (or has experience) in working with foreigners.
2. Choose the Right Borough to Invest in Based on Your Budget
One of the biggest mistakes foreigners make when investing in New York real estate is going over their budget.
Yes, buying a luxurious penthouse in Manhattan and selling it after appreciation will give you massive returns. But if you can’t initially afford it, saving until you can or taking out a loan is not a good option.
Instead, it’s better to start small in one of the cheaper boroughs (e.g., Queens, Bronx), and work your way up the investing ladder. You will achieve your goals faster this way (and learn something along the way).
3. Consult a CPA About Your Taxes
If you think you can handle taxes on your own, think again. Even many American citizens let professional CPAs file their taxes, let alone foreigners unfamiliar with US laws.
Every mistake you make in your tax reports will cost you a lot. And it’s not worth the risk.
On top of that, a professional CPA who specializes in working with foreigners knows the US laws and their legal loopholes as the back of their hand. By working with one, you can optimize your taxes to minimize expenses and maximize ROI.
Just remember that you need to consult them before buying a property. It’ll be well worth it.
Pull the Trigger — Become a Nonresident Investor Today
If you want to transform your wealth into assets by investing in New York as a Foreigner but are reluctant due to your lack of experience, don’t be — all you need is a little guidance.
Here at NRI, we help foreign investors navigate the complex US real estate market, find and close the best deals, and optimize for maximum ROI. Our CEO, Luka Malkovich, is a nonresident investor himself and has been in your shoes. Before he bought his first two duplexes in the US, he spent hundreds of hours learning about US real estate laws, researching the market, and, most importantly, making mistakes and learning from them.
Since then, he has built the NRI Brand to help foreigners like you avoid the same mistakes and become nonresident investors faster while saving money. If you’d like a rockstar team to back you up on your investing journey, why not hop onto a free 15-minute discovery call with Luka and tell him more about your investing goals?
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