Personal StoryJan 9, 2023

5 Mistakes I Made When I First Started Investing in US Real Estate as a Foreigner

Before I built the NRI brand and got into real estate investing, I started as a nonresident investor. I had no prior knowledge about investing in US real estate as a foreigner, so I was expecting a rocky road ahead. In this article, I’ll share the five US real estate investing mistakes I made as a foreigner so that you can (hopefully) avoid them yourself. 

My previous experience as a digital entrepreneur taught me to prepare thoroughly before entering any business venture. So I did. And I took it very seriously.

I spent hundreds of hours researching US laws, regulations, and the American real estate market before I even dared to start looking for my first deal. After I finally felt ready, I pulled the trigger and began looking for my first deal.

Despite being confident in my skills, I knew making mistakes was inevitable. It’s a natural part of the learning process, as I have learned over the years. That’s why I didn’t let that discourage me. No — I welcomed all my mistakes and learned from them. After all, that’s what separates investors and entrepreneurs from the crowd.

But if you’re considering becoming a nonresident investor, you don’t have to make so many mistakes yourself. You can learn from mine.

mistakes that I made as a first time nonresident investor

The 5 Biggest Mistakes I Made When I First Started as a Nonresident Investor

Some of my mistakes meant it took me longer to close my first deal than necessary. However, some were so detrimental that they affected my ROI. Here are the five I wish I could have avoided the most:

1. I Regret Not Starting Sooner

After several years in the business and over a dozen successful purchases, one of my biggest regrets is that I didn’t start sooner.

The reason is simple — investing in real estate is a numbers game through and through. It’s all about passive income. And achieving positive ROI through passive income takes time.

The reality is that very few people get into real estate investing in their 20s. I was lucky enough to be one of them. However, I realize I could have started even a few years sooner. I had the means to begin earlier; it just so happens I learned about real estate investing a bit late.

Had I done that, I would have already been several steps ahead in experience and ROI. After all, it’s important to start as early as possible when investing. The earlier you start, the more you can earn. 

However, that doesn’t mean you need to be in your 20s to get into real estate investing. Quite the contrary — it’s never too late to start. After all, investing in real estate is the best and most reliable way to create generational wealth and safeguard your capital from inflation. So whether you’re in your 40s, 50s, or even 70s, you can still make a profitable real estate business that will generate income for your loved ones for decades to come.

Indeed, one of the mistakes you can make is not starting early enough. But the biggest mistake you can make is never start at all. 

After all, you can’t change the past, but you can influence the future.

The earlier you start investing in real estate, the more you can earn

2. I Wasn’t Sure How to Identify the Right Property

Since It was my first time investing in real estate, I wasn’t sure how to properly assess a property’s condition.

So shortly after I bought my first two duplexes in Milwaukee, I realized they were in much worse condition than the owner had presented. That meant I had to renovate them before renting.

Although investing in renovations doesn’t necessarily make you lose money (since you’ll get more out of the property in equity), it will take longer to achieve positive ROI. At the same time, handling property renovations from half the world away was incredibly hard but doable

This experience taught me the importance of hiring a property inspector the hard way. The reality is — only a professional can accurately estimate the actual condition of a property. And that matters a lot when hunting for the best deal.

So regardless of the type of real estate you’re looking to buy, always hire a property inspector before accepting a deal. The extra funds you’ll spend to hire them will pay off manifold.

3. Not Finding a Mentor Early Enough

Here’s the thing — like most things in life, real estate investing requires a lot of knowledge and experience to pull off optimally. As a first-time investor, you have neither.

Yes, you can follow in my footsteps and spend hundreds of hours learning about the trade. However, no amount of knowledge will ever beat raw experience. And that’s likely the most important thing I learned throughout my journey.

If I had to start from scratch again, I’d hire a mentor this time around. Having someone to help you find the best deal and guide you through the entire process is invaluable. That is especially true for your first purchase.

Your first investment can make or break your real estate investing business. That’s why it’s crucial to find the right deal. If you choose correctly, you’re going to have a good time. If you choose poorly, you’ll go through hell. And that’s where a mentor can be most valuable.

If you want to enter real estate investing in the US as a foreigner and need mentorship, I’d be glad to help you. Why not hop on a short discovery call and tell me more about your real estate investing goals?

4. Underestimating the Importance of Property Management

After you close your deal, your job’s not over. Here’s what you need to do to start making money:

  • Find Good Tenants
  • Keep Tenants Happy
  • Regularly Maintain the Property and Solve Tenants’ Problems

All of these tasks fall under the property management umbrella and are crucial to making money from your investment.

You are running a real business here, and tenants are your customers. This mindset is the foundation of the buy-and-hold strategy that many investors (including me) use to build and sustain a real estate investing business. That’s why you can’t simply call it a day after finding them — you also need to keep them happy so that they keep paying.

But here’s the thing — all these things are easier said than done. For instance, finding a trustworthy tenant is more complicated than you may think. And the worst part is that choosing wrong can harm you (and your profit) a lot.

And let’s not even talk about being timely at solving their problems and complaints (especially when you’re half the world away).

That’s why I learned that nonresident investors are best off hiring a property management agency to handle these tasks. However, you must choose carefully — not all property management agencies are reliable, and many will drain you of most of your ROI.

That happened to me with several partners before I finally found the right one. So do thorough research! 

Alternatively, you can contact me, and I’ll be glad to help you find a reputable property management agency with no hidden costs.

how to optimize taxes for maximum ROI

5. Not Optimizing My Taxes

When I first got into real estate investing, I was young and green and knew little about American tax law. That resulted in my paying significantly higher taxes than I needed to.

But after a few investments and talking to several professional CPAs, I realized how much time, effort, and money I could have saved. 

You see, there’s a way to optimize your taxes for maximum ROI. And the process is entirely legal at that. However, the key to achieving that is planning taxes before making a purchase. That’s how I learned the golden rule of real estate investing the hard way — always consult a CPA before any important transaction.

So if you decide to get into US real estate investing, don’t make the same mistake I did. Instead, hire a CPA who specializes in working with foreigners to handle your taxes. They will make the entire process stress-free and create a personalized strategy for your business to maximize ROI. 

What’s the Best Way to Avoid These Mistakes?

As I mentioned above, I could have avoided all of these mistakes (except the first) by getting professional help. That’s why I made sure not to make the same mistake again.

As early as my second investment, I already had an entire team of professionals to help me with each new investment. My team currently consists of the following:

  • LLC Formation Specialist
  • Accountant (CPA)
  • Real Estate Lawyer
  • Senior real estate investor 
  • Property Inspector
  • Closing Company
  • Property Management Company

Most of these partners are now members of the NRI brand alongside me. And together, we help nonresident investors buy real estate in the States and achieve positive cash flow.

So if you need help building a steady flow of passive income through 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.

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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