Many French people want to invest in real estate investment but rarely plan to do so abroad.
Why real estate is the best investment? However, rental investment in a country like the United States has many advantages, whether old or new. Attractive taxation, affordable prices, low purchase conditions ...
They met all the criteria to encourage foreigners to invest. This article aims to enlighten you on these different parameters to mature your thinking about real estate investment in the heart of the States.
An affordable and profitable market real estate crowdfunding
The IMF considers France to be one of the most expensive countries in the world in terms of the purchase price/rent ratio. The United States has much more affordable rates per m2 for comparable cities, even if there is also a disparity between the different agglomerations.
They estimated the average price of a square meter in the city at $ 2,600 in 2019. The rent is also profitable for the owners: it will take about fifteen years to make the purchase price profitable across the Atlantic, while it is necessary to count twice in France.
By the way, Americans often move to work. They buy less than the French and prefer to rent. It is necessary to choose well the place where you will invest in real estate in the USA because some areas have better indicators of tenant solvency and less rental vacancy than others. We'll talk about this a little later.
Legislation in favor of landlords' real estate investment
Unlike in France, American real estate law works in favor of the owner. How many times have you heard in France about tenants who did not pay their rent, but whose justice prevented the rental eviction?
It's not happening the same way on the U.S. side. It will be possible for you to evict unruly tenants there quickly and inexpensively.
This type of tenant has no interest in making his situation worse since unpaid rents are declared. It will then be very difficult for him to find a new home afterward.
The tax rate there is also favorable for foreign investors. Taxes are relatively low compared to European countries, especially France. Indeed, the USA wants to promote investments by proposing interesting modalities.
Low-binding acquisition conditions for real estate investment
We think that buying a property in the United States is necessarily complicated. Well, no, since you can gain the property you want, whether it's an apartment, a townhouse, or even a family home. Only housing cooperatives are an exception to this rule: only US citizens can gain this type of property.
You also do not need to be a permanent resident of the USA to buy real estate. Only a taxpayer identification number, or ITIN, is required. You can get it from the US tax authority (IRS), or by contacting an accountant certified by the latter.
The possibility of being accompanied
Being a foreigner is not necessarily a handicapping factor if you want to invest in the United States. Indeed, you can benefit from the same information as an American on the spot by having professionals accompany you.
For this, some agencies specialize in supporting the French in their real estate project in the USA.
By the way, 89% of real estate transactions are carried out through intermediary agencies. This is a cost, but the advantage is that they help you invest more securely.
They inform you about the different steps required to set up in the United States, the obstacles to avoid, and have a vast network (lawyer, real estate agent, accountant, bank, insurance ...).
To help you carry out your project. If you are starting on your own, you will need to educate yourself well so as not to make mistakes, the consequences of which will be heavy. You must also speak English.
Other professionals go even further and take care of finding you the properties that meet your criteria: geographical area, budget, and aim (classic rental, seasonal rental, future second or main residence).
They accompany you during the visits and assist you until the signing of the deeds of sale, issuing an offer, defining a price thanks to their knowledge of the market, etc. They can even take care of the rental management if you wish.
Borrowing opportunities for real estate investment
In France, you apply for a loan for a real estate investment, but what about the United States? Well, as a foreigner, you can also apply for a loan from American banks. They ask for a contribution of the order of 35%:
The repayment period can range from 15 to 30 years with rates around 4%. Criteria such as your income in France and your wealth are taken into account in the decision of the banks to lend you money or not.
The second solution is to borrow from French banks, which agree to lend for an important guarantee, such as the mortgage of a property example.
Many cities that are favorable for rental investment
What are the pros of investing in real estate? Some cities are clearly to be prioritized, and others to be avoided. Hence also the importance of being accompanied by a professional who knows the American real estate investment market perfectly:
- Thus, it is necessary to avoid cities where the demography is unfavorable, with a decreasing number of inhabitants.
- This is the case, for example, of Detroit, which has been recording a steady decline for the past twenty years.
- It is also necessary to turn away from cities where the unemployment rate is high, where real estate is ancient, or even with a low average income.
- It is also necessary to ignore cities where real estate is expensive with a relatively low rental profitability, such as on the west coast (California, Oregon ...).
But then, where to invest? And well in cities in Florida, for example. Orlando benefits from a good ranking.
The price/rent ratio is favorable and the demographics are constantly changing.
Miami is also attractive: even though it is a very popular tourist destination, real estate is still affordable compared to most European cities. Only the federal tax is applied there, and income tax is non-existent there.