10 Top Tips for Non US Residents Buying a Vacation Home in the USA
By: Justine Assal •
If you are considering purchasing a vacation home in a resort area of the USA, you are certainly not alone, in fact ownership of US vacation homes has never been more popular with investors from around the world. Many times, investors will look to purchase a residential home in a sunny beach, ski, mountain, or other resort area to use when on holiday. It is common practice to then rent the property out to other vacationers or holiday makers when not in use by the owners, it's kind of the best of both worlds really, enjoy your own home and then rent it to help support the cost. There are certainly many factors to consider when looking at this kind of arrangement so here are just a few to help you begin.
1. Find a local Realtor who specializes in working with International clients and resort properties - not all local Realtors do and you need the expertise of a seasoned pro.
"Foreign real estate buyers have a variety of questions and concerns that require specific expertise and knowledge. A well versed International Realtor will connect international clients with an entire network of locally esteemed and highly specialized professionals to ensure that they are well guided through the buying process." - Pippa Murray, Florida Property Agent
2. Type of Property - Identify your needs and intention with this purchase. There are no rights and wrongs but be clear and realistic with yourself and your Realtor about your expectations. If you intend to use the home to holiday or vacation in, it is unlikely that you will get rich on the rentals but you should look at this potential income to offset your expenses instead. If you are simply looking for an income producing property, then be clear and understand that it maybe a different type of property. Commercial buildings can also be considered.
3. Mortgages - Consider if you will need financing in advance as non US resident mortgages are not always easy to obtain - again, this is about expertise as most mortgage brokers, lenders and banks will not offer these mortgages as they are considered a niche within the market - Let your local, seasoned Realtor guide you here as they will know who does them and help you connect early to get pre-qualified.
4. Property Rental - It all goes back to the Realtor - You need to understand the rules regarding rental of the home - many areas have specific rules about how short a term you can rent your home for while some allow it almost as a hotel would. You need a Management Company that specializes in short term rental.
5. Currency Exchange - How do you bring your money over? They say cash is king but not in this scenario, all funds must be in the bank and adequately sourced in their journey to the US. You can choose your bank to do the exchange or alternatively work with a specialised currency exchange company.
“Billions of dollars of currency per day moves around the globe and although the majority of that is still directed through banks, increasingly foreign exchange companies are becoming a very popular alternative. A currency exchange company offers numerous options for the clients making the process cheaper, faster and just as secure as bank. It’s not unusual for a client to save up to 5% over using a bank when it comes to transferring money internationally” says Simon Plumb, Head of US at Currencies Direct.
6. Bank Accounts - Yes you should have one and by now, hopefully you are beginning to see why you need a very strong and experienced local team. Some banks are more accustomed to working with International clients than others and these are issues that you don't want to deal with from thousand's of miles away.
7. Consider pros and cons about buying a resale home and one that is new construction - sometimes you can get a price break on an older home but make sure that you are aware of any pending upkeep or replacement items that might be coming of age. A new air conditioner or a leaky roof in the middle of summer is a big pill to swallow and a costly one at that. New homes come with warranties and can often be designed according to your taste.
8. Tax considerations - Remember the old adage 'An ounce of prevention is worth a pound of cure' - Again you need to consult a local professional who specializes in taxation for Non US Residents - It is not expensive nor should it be a reason not to proceed and the best ways to manage your situation will depend on the amount of money you are investing. It is wise to meet a tax accountant / CPA and if you are making considerable investments, a tax attorney to help structure the purchases may be a good idea - Your Realtor should be able to make introductions to these professionals as well.
9. Immigration - Many Non US resident real estate investors have questions about immigration. It is worthwhile consulting a very good immigration attorney especially in the current environment with many changes afoot. This does not affect your real estate purchase however and also worth noting that you cannot get an immigration status just by purchasing real estate. If this is a consideration in your mind, I would suggest seeing an attorney early in the process even if you don't plan to make a move yet. Allow them to help guide you appropriately and you may save money, time and frustration in the future.
10. Enjoy - Don't get so caught up that you make this stressful. Your initial research goes into choosing a Realtor and a team of professionals, let them do their work to make this an enriching experience and then enjoy the process. After all, this is a home that you intend to escape to!
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