Foreign Investors, How Much Do You Know or Not Know?

Written by Posted On Friday, 31 July 2020 05:00

I hear so much about foreign investors in the real estate industry; some agents run scared, some agents embrace the foreign investors and most just don’t have a clue and don’t understand that part of the business. I am one of those who had no clue about foreign investors; Visas, IRS and many other questions. Where I live in Central Florida is apparently a hot bed for foreign investors, so I decided to look around for help so all of us can understand more about the foreign investors and what opportunities a REALTOR® might have.

My research started with finding an expert in the business to see if we could have a teleconference to help me understand and, in turn, share what I learned in this article. Turns out one of my LinkedIn connections was the perfect choice. Lauren Cohen is an International Lawyer and Cross-Border Expert. Lauren is a global REALTOR®, best-selling author and sought-after speaker, and is the only globally-acclaimed legal and business advisor who goes “above and beyond borders” to help clients invest, live, work and play globally. We started exchanging messages and when she shared some estimated numbers and she got my attention, $78 billion invested in U.S. real estate by foreign investors in 2019 from Canada, Mexico and investors globally, $402,010 average residential property price paid by foreign investors in 2019 and in the wake of Covid-19 foreign investor interest has increased an average of 250%.  I think you see why she got my attention. 

I must admit the 55-minute teleconference went by way too quickly and Lauren has agreed to more time to help me understand so I can write more articles helping all real estate professionals comprehend how to do business with foreign investors. Before we get into an argument about the amount of investing done by foreign investors, $78 billion, let’s remember to add residential and commercial together. Here in the United States in 2019 we are talking approximately $2.2 trillion in sales, so as you can see a very small fraction is bought by foreign investors, plus they do buy and sell so nothing is leaving the country!

The biggest part of my conversation with Lauren was setting the stage for more articles and doing my best to understand it so I can write about it. One thing I did understand somewhat was currency fluctuations. When computing international return on investments there are two parts: equity return and currency return. For example, a foreign investor owns a property for a few years and sells the property at a 20% equity return on the investment but at the time they sell the currency rate between the two countries is down by 20% meaning net zero return on the investment.  When you start thinking about selling an investment property as a foreign investor even a loss or 0% equity return could still mean an overall profit based on currency return.

Many of us have looked at investment properties through one lens, equity return on the investment based on buying, improvements, cash flow and maintaining and eventually selling.  When you add currency speculation between different countries into the formula you have successfully gone above most of our comfort zones!

This is why this article is number one on foreign investors, I just hope Lauren Cohen, who is an expert in this field, has patience as I try to share some of her knowledge in the articles.  Want more information on Lauren – connect with her on LinkedIn or visit ecouncilinc.com/goglobal

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Dick Betts

Dick Betts, REALTOR® The Villages, FL with Touchstone Real Estate, Addie Owens, Broker, Mount Dora FL.  Dick has been working in the real estate industry for more than 20 years and brings his experience and expertise to help you find the best solution for your real estate needs.  Moving to Florida in 2008 he started in Ocala and began searching where in the state of Florida he wanted to call home, Florida has so many options, Beaches, Southeast, Southwest, the Panhandle.  After weighing his options, he found where he wanted to call home just 20 miles south of Ocala, The Villages!  Living fulltime in The Villages since 2011 his only regret was not moving there sooner.

Dick has traveled across North America since 2000 speaking, training and helping REALTORS® in 47 states and 5 Canadian Provinces hone their skills to better serve the public.  He now brings those years of experience to The Villages to help folks who also want to call The Villages home.  People looking to buy in The Villages are from around the world and need a tech savvy REALTOR® to serve their needs.  Selling in The Villages you want to list your home with somebody who knows how to market your home to the Facebook Generation and bring the most exposure possible to attract a buyer.

Want to really learn about The Villages Lifestyle?  Want to see what The Villages has to offer?  Let Dick Betts be your guide and help you call The Villages your NEW HOME TOWN!

www.dickbetts.com

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