Seasoned entrepreneurs know that the key to growing wealth lies in investing. However, you cannot just throw your money at the first opportunity and pray that it generates positive ROI. You have to invest smartly. If you invest in US Real Estate, you are investing in US dollar too.
But how do you identify a smart investment? Well, that is quite subjective. However, we believe a smart investment meets the following criteria:
- It follows an investment model that’s in it for the long haul;
- The investment is low risk;
- It includes investing in a stable currency that’s unlikely to get devalued.
And one particular asset fits perfectly in the above three categories — US real estate.
In this article, we will explain how investing in US dollar through real estate works, why we believe it’s one of the most reliable long-term investing strategies, and how investing in it also gives you the stability of investing in US dollar through real estate. See our statistics for foreign investors in US real estate.
But before we get to that, we first need to introduce you to a few basic concepts of investing in US dollar through real estate…
How Does Investing in US Dollar Through Real Estate Work?
The entire point of investing in US dollar through real estate is to increase your wealth. However, the way you do that isn’t so simple.
The most common form of investing is buying an asset and hoping it will grow in value so that you can sell it for more later. However, there is no guarantee that will happen — instead, an asset may lose value, resulting in your losing money.
That’s why choosing an asset class is one of the most important aspects of investing. Each asset class has pros and cons and comes with a different level of risk. For instance, investing in cryptocurrency, stocks, a business, or real estate are three entirely different things.
Cryptocurrency is incredibly volatile and has substantial value swings you cannot control. Investing in your own business is one of the riskiest investments you can make, but you have direct influence over its return. Finally, real estate is one of the lowest-risk investments out there but is pretty slow regarding ROI.
How Do You Measure the Success of an Investment?
The success of an investment is measured in yearly ROI (depicted in percentages). For instance, if you have a 6% ROI on an investment, you earn 6% of your total investment each year. If this number is negative, you are losing money each year.
When investing in low-risk assets, the average ROI can be between 2% and 20%, depending on the asset. However, you can also go into the negative or past 20% for some high-risk investments.
What Investing Options Are There?
Before investing in anything, you should always decide which investing model you’d like to stick to. All investment types can be divided into one of two categories:
- Capital Gain
Here’s a short overview of each of them…
Capital Gain Investment in a Nutshell
The capital gain investment model entails buying an asset class and hoping that it grows in value so that you can sell it in the future. This model is the most common investment model and may result in significant gains in a short amount of time. However, it also carries a decent amount of risk, which can vary from asset type to asset type. The most notable example of this model is investing in cryptocurrencies or stocks.
As potentially lucrative as this model may be, it has several disadvantages:
- It is a high-risk investment model;
- It has no long-term strategy;
- Capital gain investments are sometimes susceptible to inflation;
- This model is effective in the bull market (when the market is going up) but completely breaks down in the bear market (when the market is declining).
If you enjoy high-risk, high-reward strategies, capital gain investment is a good choice. But if you’re more like us and prefer a long-term investment strategy with minimal risk, there’s a much better option.
Cashflow Investment in a Nutshell
The cashflow investment model entails buying into an asset class and getting monthly returns. This model is slower than capital gain investment but comes at a lower risk. The most notable examples of this model are state-issued bonds and real estate.
This investment strategy is most popular with investors looking to minimize risks and prefer a long-term investment strategy.
Why Cashflow Is King
Both capital gain and cashflow investment models work — we’re not here to debate that. However, we believe that the cashflow model is superior for a few reasons:
- It offers long-term financial stability;
- It’s an investment that pays for itself (over time);
- Cashflow investment doesn’t feel like gambling;
- Cashflow-based income comes with various tax benefits (if optimized correctly).
We understand that slow-paced, long-term investing is not for everyone — and that’s OK. But if you value financial stability over short-term profit, going with one of the cashflow investment strategies is your best option. And one of the best ones is investing in real estate. Or, more precisely, US real estate.
How Investing in US Real Estate Fits Into the Equation
International real estate investing offers the best of both worlds — the initial purchase of a property is like a capital gain investment but with less volatility (real estate prices are generally stable and growing). On the other hand, the rent you generate from tenants creates positive cashflow that offers a steady return (on top of your property’s initial value).
But besides offering returns on two ends, investing in US dollar through real estate also comes with many other benefits:
- It allows you to safeguard your wealth from inflation by turning it into assets (real estate) that have a history of keeping up with it reliably;
- You can turn it into a self-sustainable business that generates steady cashflow (rents) on top of your initial investment’s growing value;
- Foreign investors enjoy various tax benefits when buying US real estate because it falls under the passive income umbrella.
- Real estate is one of the rare assets that have tangible value even in the bear market (since there’s always a need for housing), making it nearly recession-proof.
The above makes investing in US dollar through real estate one of the safest long-term investment strategies that thousands of investors worldwide use, both foreign and domestic.
Why the Currency You Invest in Matters
Another essential part of investing that we haven’t touched upon yet is the matter of currency. Here’s the thing — currency can be incredibly volatile (some more than others). On top of that, the currency is susceptible to inflation, which is one of the primary reasons people invest in tangible assets like real estate to preserve the value of their money.
However, choosing which currency to invest in is essential. The reason is simple — not all currencies follow the same inflation rate. Various economic and socio-political factors may influence the stability and value of a specific currency or even cause it to crash completely.
And if your property’s value is tied to a specific currency, you’d lose most of your investment’s value if that currency were to crash.
That is why investing in stable markets and currencies is essential to minimize risks (even with real estate investing). And that is precisely why so many foreigners turn to the US real estate market as their go-to choice.
Investing in US Dollar Through Real Estate
Most investors believe the USD to be one of the most stable currencies in the global world. And that is evident from how the global market treats it. In fact, the world has so much trust in the USD that 79% of all invoicing happens in the American Dollar. That shouldn’t be surprising since the US economy has been booming for over 100 years, and the Dollar has never crashed before.
In fact, the world has so much confidence in the American economy that most world’s governments stockpile their financial reserves in USD. That means the odds of the US Dollar ever losing value are next to none.
That is why most foreign real estate investors choose to build their real estate empires in America, and it’s also why you should, too.
When investing in US real estate, your property is valued in USD, and you also accept rents in USD. That practically means you are investing in the American Dollar.
That’s why investing in US dollar through real estate is not only a low-risk investment that will generate positive cashflow for years to come but offers stability by keeping your assets in one of the most stable currencies in the world.
Start Investing in US Dollar Through Real Estate Today
If you value stability and prefer long-term investment strategies over short-term gain, investing in US dollar through real estate is perfect for you. And no — it doesn’t matter where you’re from. You can invest in US real estate from anywhere in the world.
Being a nonresident investor is not easy, but with a strategy like the one we use at NRI, you can easily buy and manage properties even if you live across the ocean. The strategy we teach all our clients entails opening a US LLC and using it to optimize taxes and ROI in an entirely legal way. That way, nonresident investors can reap all the benefits of investing in US real estate while paying minimal taxes on their passive income.
If you’re interested in investing in real estate, we have many free resources on the NRI blog that can help you get started.
But if you don’t want to spend hundreds of hours learning about real estate investment by yourself, why not let professionals handle everything for you?
Here at NRI, we’ve helped hundreds of foreign investors build a steady flow of passive income and achieve financial freedom through investing in US real estate. Our team of experts can guide you through every step of the investment process, including finding and closing the best deal, filing taxes, legal counseling, optimizing ROI, and handling property management.
Our CEO, Luka Malkovich, is a nonresident investor himself and would be glad to help you on your journey. Why not jump on a short discovery call and tell him more about your investment goals?
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