5 TIPS FOR FOREIGNERS CONSIDERING PURCHASING REAL ESTATE IN THE UNITED STATES
As the U.S. real estate market continues to show signs of recovery, stories of acquisitions by non-residents maintain a dominant presence in the media. But before taking the plunge into American real estate, there are a number of important factors foreign buyers should contemplate, particularly in Florida:
1) Scrutinize your goal(s). Are you seeking to diminish your exposure to political or economic uncertainty in your home nation? Are you simply trying to diversify your investment portfolio? Your answers to fundamental questions of this nature should influence the scope of your search. For example, if you intend to acquire residential property and lease it in order to derive passive income, proximity to quality schools and public education and the prospects for job growth should be afforded greater weight than if you plan on using such property solely for personal vacations, where the availability of amenities such as shopping and leisure activities would likely be paramount.
2) Analyze the costs of ownership. Inasmuch as the customary costs and expenses incurred by purchasers vary from county to county in Florida, it should come as no surprise that I strongly encourage international buyers to acquaint themselves with local standards prior to consummating their purchase. Too often, even sophisticated foreign investors will contemplate standard pre-closing due diligence expenses such as surveying, yet completely disregard costs incident to ownership such as increases in property insurance. Prudent buyers will seek to account for the foregoing and will also attempt to envisage the costs of divestiture, which will vary based upon a variety of characteristics, from how long the property is owned to the manner in which it is titled.
3) Familiarize yourself with the intangibles. Purchasing property in Santa Rosa County, where pipes may freeze and burst in the winter, comes with inherently different risks than Kissimmee, where builders need to be wary of running afoul of the permitting guidelines established to protect the dwindling local gopher tortoise population, or Miami, which Rolling Stone contributor Jeff Goodell believes will be underwater before the end of the century. Building and zoning ordinances differ from municipality to municipality, so while Bal Harbour condos with price points in excess of $10,000,000 per unit may be compelling to an out-of-state developer, it shouldn't assume similar projects can be replicated across the state in Naples or even a few blocks north in Surfside.
4) Be sensitive to cultural sensitivities. America is indeed a melting-pot of racial, ethnical and religious diversity. Accordingly, don't assume that tendering and negotiating your purchase agreement should be undertaken in a similar manner as in your home nation. Response times, the importance of relationships between parties and communication techniques vary considerably in the context of cross-cultural negotiations. Your walk-away from this suggestion – Work closely with reliable real estate agents and attorneys to assist you in this arena. Which is a good segue to my final recommendation...
5) Deploy a team of professionals. The greatest cultural divergence amongst my clients is exhibited in their viewpoints regarding professional support. Less than a year after entering private practice, I noted that parties from the west coast of the United States would frequently question my participation in negotiations or presence at closing whereas clients from the northeast would be completely bewildered when informed that the other side wasn't represented by counsel. The disparities between my international clients are even more marked. I have clients from Germany who wouldn't consider entering into a simple residential transaction without deploying a cadre of highly compensated professionals. Conversely, I've represented Brazilians that sought counsel after having participated in relatively complex commercial proceedings without any representation whatsoever. There is no "one size fits all" approach to this issue, but in addition to the aforementioned real estate agents and attorneys, property managers (of particular import for commercial ventures), accountants, and insurance agents can each play a meaningful role with respect to the acquisition and subsequent oversight of foreigners' real estate portfolios.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
