Who can buy property in the United States?
Foreigners can buy real estate in the United States. The U.S. has no restrictions on foreign ownership of property, making it one of the most open real estate markets in the world. Whether for residential, commercial, or investment purposes, foreign buyers can purchase properties in their own name, through a corporation, or via other legal entities.
Although there are no federal limitations on property ownership for non-citizens, some states may impose specific regulations or taxes.
Do the research
Investing in the United States real estate market offers a range of benefits that make it an attractive option for both domestic and international investors. The U.S. economy is one of the largest and most stable in the world, providing a strong foundation for the real estate market. Properties in the U.S. tend to appreciate in value over time due to steady economic growth, population increases, and ongoing urban development.
The U.S. real estate market also offers diverse opportunities, from residential properties and commercial buildings to vacation rentals and industrial spaces, allowing investors to choose assets that align with their goals. Additionally, the market benefits from clear legal frameworks and property ownership rights, which offer security to investors. The availability of financing options, such as low-interest mortgages, further facilitates investment.
Another advantage is the potential for generating passive income through rental properties, particularly in areas with high demand for housing. Tax benefits, such as depreciation deductions and the ability to defer capital gains taxes through 1031 exchanges, enhance the financial attractiveness of investing in U.S. real estate. Moreover, the market is supported by a robust infrastructure and access to advanced tools and technology that provide investors with valuable insights and management capabilities.
Some of the most desirable areas include:
- New York City – As a global financial and cultural hub, New York City is a premier location for both residential and commercial real estate. Neighborhoods like Manhattan, Brooklyn, and Queens are especially popular for their vibrant lifestyle, world-class amenities, and connectivity. The city offers a diverse range of properties, from luxury apartments and townhouses to commercial spaces, making it an ideal choice for investors seeking strong rental demand and long-term appreciation.
- Los Angeles – Known for its thriving entertainment industry and sunny climate, Los Angeles is a hotspot for real estate investment. Areas such as Beverly Hills, Santa Monica, and Downtown LA attract both high-net-worth individuals and middle-class investors. With its mix of luxury estates, multi-family homes, and commercial properties, the city offers opportunities for steady rental income and high-end market growth.
- Miami – Miami is renowned for its tropical lifestyle, international appeal, and robust tourism sector. Popular neighborhoods like South Beach, Brickell, and Coral Gables offer a range of investment opportunities, from oceanfront condos to commercial real estate. Miami’s strategic location as a gateway to Latin America and its favorable tax environment make it a magnet for global investors.
- Austin – This rapidly growing city in Texas has become a tech and innovation hub, attracting professionals and businesses alike. Austin’s neighborhoods, such as Downtown, South Congress, and East Austin, are ideal for residential and mixed-use developments. The city’s strong job market, cultural scene, and relatively affordable property prices drive demand, making it a top choice for long-term investments.
- San Francisco – As the heart of Silicon Valley, San Francisco is a leading market for technology-driven growth. Areas like SoMa, Mission District, and Pacific Heights offer premium real estate opportunities, particularly in the luxury and high-tech office sectors. Despite higher property prices, the city’s steady demand and economic significance ensure its appeal to investors seeking high-value returns.
- Seattle – Seattle is a thriving hub for technology and innovation, hosting companies like Amazon and Microsoft. Neighborhoods such as Capitol Hill, Ballard, and Queen Anne offer excellent residential and commercial investment opportunities. Its strong economy, waterfront location, and high quality of life continue to drive real estate demand.
- Chicago – Known for its architectural significance and vibrant urban lifestyle, Chicago is a major market for both residential and commercial real estate. Popular neighborhoods like Lincoln Park, The Loop, and West Loop attract investors seeking affordable prices compared to coastal cities, combined with strong rental yields.
- Las Vegas – Las Vegas offers unique opportunities in the hospitality and rental property markets. With a strong tourism industry, neighborhoods like Summerlin and Henderson are attractive for short-term rental investments. The city also has a growing population, making it an emerging market for residential real estate.
- Denver – The Mile High City combines natural beauty with economic growth, making it an appealing destination for investors. Neighborhoods like LoDo, Cherry Creek, and Highlands are known for their residential and commercial opportunities. Denver’s thriving tech and energy sectors support its robust real estate market.
- Orlando – Orlando is a key market for vacation rentals and investment properties, driven by its world-renowned theme parks and tourism industry. Neighborhoods like Lake Nona, Kissimmee, and Winter Park are especially popular among investors seeking short-term rental properties and second homes.
- Nashville – As a music and entertainment hub, Nashville is experiencing rapid population and economic growth. Areas like East Nashville, The Gulch, and Germantown offer excellent opportunities for residential, mixed-use, and commercial real estate investments.
- Phoenix – Phoenix offers affordable real estate options and a rapidly growing population, making it a hotspot for both residential and commercial investments. Neighborhoods such as Scottsdale, Tempe, and Chandler are particularly sought after for their quality of life and economic opportunities.
- Dallas-Fort Worth – The Dallas-Fort Worth metroplex is a business-friendly region with a strong economy and population growth. Areas like Uptown Dallas, Plano, and Frisco provide diverse investment opportunities, from single-family homes to large commercial properties.
Where to find properties online:
Financing
Foreigners can obtain mortgage loans in the United States, but the process differs depending on their residency status and financial background. U.S. banks and financial institutions offer various mortgage products tailored to foreign buyers, including conventional loans for residents and specialized loans for non-residents.
Non-residents without a U.S. visa or green card often need to apply for foreign national loans, which typically require higher down payments (20%-30%) and carry higher interest rates. These loans are usually limited to investment properties, not primary residences.
To navigate the complexities of obtaining a mortgage, it is advisable to work with a mortgage broker experienced in assisting international buyers and consult a real estate attorney familiar with U.S. property laws.
Due Diligence and Sales Contract
Due diligence is an essential part of real estate transactions in the United States, ensuring buyers thoroughly investigate a property’s condition, legal standing, and financial implications before purchase. This process typically involves verifying the title to ensure it is free of liens or encumbrances, confirming that the seller has the legal authority to transfer ownership, and assessing any potential zoning restrictions, environmental concerns, or land-use regulations that might affect the property’s value or future use.
The closing process in the U.S. commonly includes a title search conducted by a title company or attorney to identify any legal claims or defects in the property’s ownership history. Buyers often secure title insurance, which provides protection against undiscovered title issues. Additionally, property inspections are crucial, covering structural integrity, potential environmental hazards, and compliance with building codes. Buyers may also engage specialists for inspections like radon testing, lead paint assessments, or termite evaluations.
Working with qualified professionals, such as real estate attorneys and licensed inspectors, helps buyers navigate the due diligence process. Attorneys ensure compliance with local and state laws, while inspectors provide insights into the property’s condition. Buyers should also consider the costs associated with the transaction, such as appraisal fees, property surveys, and legal services. These measures help to mitigate risks and ensure the transaction proceeds smoothly.
Property Buying Costs and Taxes in the United States
| Transaction Costs | ||
| Who Pays? | ||
| Property Transfer Tax | 0.05% – 3.00% | buyer |
| Legal Fees | 0.10% | buyer |
| Notary Fees | 0.50% – 1.00% | buyer |
| Real Estate Agent Fee | 3.00% – 6.00% | seller |
| Costs Paid by Buyer | 0.65% – 4.10% | |
| Costs Paid by Seller | 3.00% – 6.00% | |
| ROUNDTRIP TRANSACTION COSTS | 3.65% – 10.10% | |
| Note: Varies heavily from state to state. | ||
| Source: Global Property Guide, PWC, AltusGroup. | ||
Footnotes to Transaction Costs Table
The round trip transaction costs include all costs of buying and then re-selling a property – lawyers’ fees, notaries’ fees, registration fees, taxes, agents’ fees, etc.
Title Search and Insurance:
Title insurance fees vary depending on the location of the property. It is common practice to obtain title insurance from one of the competing title insurance companies. The title insurance can only be acquired after the transaction has been completed between buyer and seller and the price has been paid.
A title report, although not mandatory, is an essential prerequisite to secure title insurance. Title companies do not provide title insurance without a title report tracing the deed history and clearly articulating the liens, covenants, and other limitations on title.
The total cost of title insurance and search differs widely based on the size and value of the property, the location,n and the coverage and complexity of the search and insurance. It is beneficial to shop around to look for the best value, as a general guide it should be around 0.5% of the property value.
Legal Fee:
Attorney’s fees may vary depending on location and the complexity of the transaction. Most lawyers charge a percentage of the selling price, about 0.5% to 1%, while some lawyers charge a fixed fee or on an hourly basis.
Real Estate Agent’s Fee:
The real estate agent or broker’s fee is typically negotiable. Although the standard rate is 6% some agents are willing to reduce their rate just to close a deal. Some agents impose a higher fee but include other functions such as title search. It is usually paid by the seller.