International real estate investors have set a new record in the US property market. How much are they investing? What are they buying? What’s next?
Foreign Buyers Make Record Purchases in 2017
According to the National Association of Realtors and Inman News, foreign buyers snapped up record amount of American real estate during the twelve months to March 2017. Total investment in existing US homes topped $150B. That is almost 50% more than the year before. These transactions made up 10% of all purchases of existing homes, at almost 285k units. This doesn’t appear to include investment through corporate partnerships, funds, or new construction. As many as 72% of these buyers have purchased with cash, and have paid an average of $40k more than the national median home price.
The bulk of these international buyers appear to have come from Canada, China, Mexico, India, and the United Kingdom. The most popular states for buying homes have been FL, TX, CA, NJ, and AZ.
Why and What’s Next?
The main driver behind this trend has simply been that American real estate stands out on the map as a great investment. It’s dirt cheap compared to many international property markets. The yields and cash flow are far better. It offers a lot of safety and security to investors. Some have done it to diversify their investments internationally, others because they just believe that America currently offers the strongest growth prospects.
These trends are unlikely to change very fast. In contrast, there appears to be very little outgoing investment. Perhaps with the exception of big funds looking to distressed markets in Spain and Italy, and individuals hedging their bets, and diversifying into more affordable property in Mexico and the Dominican Republic. Those dynamics may change if there is another crash. Yet, most global investors still view American real estate as being on sale.
Ways to International Investors to Engaged in the US Market
There are a variety of ways for international investors to participate in the profits and safety American real estate offers. More accessibility and eLearning is certainly helping more individuals from overseas to enjoy this. Here are four of the options to consider.
Real Estate Wholesaling
Real estate wholesaling continues to grow as a popular business and investment model for both those with little in resources to start out with, as well as those desiring a scalable business that offers great flexibility. It has become far easier to do virtually, and may offer some of the lowest risk for those living abroad, and who won’t be on-site to manage properties themselves.
Fixing & Flipping Properties
Fixing and flipping houses has become very trendy, and is still highly profitable. Even celebrities have jumped into the game to augment and diversify their incomes. It may take more work than wholesaling, but can be an enjoyable process. This doesn’t have to be limited to single family homes either. It can be used on condos, retail properties, and offices too.
Rental Property Investing
Many international buyers are specifically looking for income producing properties with good yields, and the benefits of a solid tangible asset. Actively managing rentals from overseas may not be that easy. It is possible if you have a local team. Though many may find the best solution is simply to acquire turnkey rentals which have already been renovated, and have tenants and management in place. This can be an easy, hands-free, passive play that works well from around the world.
Private Lending
Those seeking simplicity, and how just want good yields, with the least amount of work or risk in trying to evaluate deals may find private lending is the perfect fit. They can simply fund front line US investors to do all the work of finding, renovating, and leasing or flipping the deals, while enjoy completely passive returns.
Summary
International buyers have set a fresh record in buying up US property. That has been great for the market, and doesn’t appear to be slowing down. For those still looking to get involved or who want to scale their US investments there are a variety of options including; wholesaling, flipping, turnkey rentals, and lending.
