Real Estate fundamentals
April 25, 2024

Beyond the Purchase: The Next Steps for Your Investment Property

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U.S. properties can be very lucrative for foreign nationals. The average rental home earns around an 8% return on investment. For example, a $500,000 property could bring in $40,000 in gross rental income annually. No doubt about it – shopping for U.S. real estate is a fun and thrilling part of the process! But you may have questions about what comes after you’ve found your dream asset. 

This blog focuses on the crucial steps after you've identified a property with potential. We'll explore how to secure the deal, maximize your returns, and ensure a smooth transition into becoming a landlord.

The Basic Steps of Purchasing a U.S. Investment Property

Step 1: Analyze Potential Returns

Before you commit to buying the property, crunch the numbers. Research average rental rates for similar properties in the area to estimate your income potential. Then, factor in expenses like property taxes, utilities, maintenance, and potential vacancy periods – or periods of time when the home may be unoccupied. 

Step 2: Research Financing and Get Pre-Approved

As a foreign national, financing your investment property might seem confusing or complex. To make things easier, learn and understand the periods, rates, and terms relevant to mortgages. These include: 

  • Loan-to-value ratio (LTV): This ratio shows how much of the property's value the loan covers. Lower LTV (more down payment) means lower risk for the lender (and potentially better rates for you).
  • Interest rates: ​​This is the percentage you pay to borrow the money for the mortgage. It's like a rental fee for the loan. There are two main types: fixed (stays the same) and adjustable (can change over time).
  • Repayment terms: The length of time you have to pay back the loan and the frequency and amount of your payments.
  • Prepayment penalties: A fee a lender charges if you pay off your mortgage early (usually within the first few years).

This step is a lot easier if you work with a specialized lender experienced in foreign national loans. They'll understand your situation and help you find the best financing options for your needs.

Waltz offers a guaranteed loan of up to 70%, giving you the upper hand in securing your dream property. A 70% LTV (Loan-to-Value) means you'll need a down payment of 30%. In simpler terms, for every dollar you put down, Waltz finances three, maximizing your buying power. You essentially get 3X leverage on your down payment. 

Step 3: Craft a Competitive Offer

After carefully considering the financial side of things, you're ready for the next exciting step: making a competitive offer on your dream property. Remember, you're not buying a home to live in – you're investing in an income stream. Take into account the property's potential for rental income and any necessary repairs or renovations when coming up with your offer. 

Step 4: Negotiate Price and Terms

You’ve made your offer – now what? In the U.S., buying property often involves negotiation. Your initial offer might not be accepted right away, so some back-and-forth is to be expected. Negotiating can be stressful, especially for first-time U.S. buyers, so lean on your local realtor or real estate professional for help. These people can provide expert guidance on negotiating the price and terms of your purchase. 

Step 5: Conduct Due Diligence

Your offer is accepted! But before officially becoming the owner, there's a crucial step: due diligence. This is your chance to uncover any potential issues that could impact your investment. Waltz helps with inspections, rental history (if applicable), and financials, ensuring a smooth and informed investment decision for you. Finally, don’t forget to review existing lease agreements with tenants (if any) and factor them into your plans.

Step 7: Close the Deal

You've made it to the closing table – the final step before officially owning your investment property. Don't worry, Waltz makes closing a breeze. We’ll coordinate a closing call and provide an e-sign closing package. Then, you’ll get the recorded warranty deed, which formally recognizes the transfer of property ownership. You can relax knowing you have professional support every step of the way.

Additional Considerations for Foreign Nationals

Prepare the Property for Renters

You're almost a landlord! All you need to do now is make your property tenant-ready. Address any repairs identified during inspections to ensure a smooth move-in for your future renters. You can also consider renovations that enhance the property's appeal and potentially increase your rental income. By taking these steps, you'll be well on your way to maximizing your investment's potential.

Determine Your Property Management Needs 

Managing a rental property from abroad requires dedication and expertise. Waltz makes it easy and hassle-free. We help you secure an experienced property management service that will help you with everything from tenant screening and rent collection to maintenance and repairs. Of course, you can also choose to self-manage, but be prepared to invest time and effort.

Navigate U.S. Tax Law

Tax implications can vary depending on your residency status and the property's location. Waltz will connect you to experts who can help you navigate the intricacies of U.S. tax laws related to rental income and property ownership. You should also talk to your home country tax advisor for a complete picture of your tax responsibilities. This will help you maximize profits and avoid surprises.

Invest in U.S. Real Estate with Confidence

Waltz isn’t like other lenders – we specialize in making U.S. property buying easy for people from other countries. We know the challenges you face, and we've created a solution to streamline the process.

Waltz turns the confusing world of foreign national mortgages into a smooth and relaxing experience. Fill out our interest form and we’ll contact you to discuss how Waltz can help you achieve your dream of owning property in the U.S..

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