Pros and Cons of Buying U.S. Real Estate Under an LLC as a Foreigner

“Should I buy a rental property under an LLC?”

As a foreign national investing in U.S. real estate, you’ve likely asked yourself that question before. The short answer: it depends. If you’re using financing, especially a DSCR loan, you may not have a choice. But even for all-cash buyers, there are strategic reasons to consider holding property through a limited liability company (LLC).

In this article, we’ll break down the benefits and trade-offs of buying U.S. rental property under an LLC as a foreigner. You’ll learn why many lenders require it, what protections it offers, and how to avoid costly delays by streamlining the process through tools like the Waltz Investor Kit. 

_{This article is educational. It is not legal or tax advice. Please consult with a qualified legal professional regarding your specific situation.}

Key takeaways

• Foreign investors typically need an LLC to qualify for DSCR loans, which are based on property income, not personal U.S. credit or income.
  
  
• Holding property in an LLC provides liability protection, potential tax advantages, and privacy, but it adds paperwork.
  
  
• Waltz simplifies the setup process with an all-in-one solution for LLC formation, EIN documentation, and more.
  

Why foreign investors use LLCs to buy U.S. property

U.S. real estate can be held in your own name, but most foreign investors choose to use LLCs. In some cases, like when applying for financing, it’s required. In others, it’s a strategic choice that offers legal protection, privacy, and long-term flexibility.

Learn more: LLC Benefits for Real Estate Investment

Liability protection and privacy

When you hold property in an LLC, you create a layer of legal separation between yourself and the asset. That means if there’s a dispute, say, a tenant lawsuit or contract issue, your personal assets are potentially shielded. It also protects your privacy, since ownership can be listed under the LLC instead of your personal name.

Streamlined estate planning

LLCs make it easier to assign ownership shares to family members or future heirs. That can simplify the inheritance process and give you more control over how your investment is passed on, especially when you’re dealing with property across borders.

Passthrough taxation (with compliance note: consult tax advisor)

LLCs can provide passthrough taxation, meaning the business itself doesn’t pay U.S. income tax, only the owner(s) do, based on their share.This structure can help avoid double taxation, which can benefit foreign investors depending on their country’s tax treaty with the U.S.

Always consult a qualified tax advisor to understand your specific obligations.

Why financing often requires an LLC

If you’re planning to use a DSCR (Debt-service-coverage-ratio) loan to finance your U.S. real estate purchase, an LLC is typically required. That’s because these loans are made to business entities, not individuals.

DSCR loans are made to businesses, not individuals

Unlike traditional mortgages, DSCR loans evaluate the income potential of the property, not your personal income, credit score, or residency status. But to qualify, the borrower must be a U.S.-based legal entity, usually an LLC. This allows lenders to treat the transaction as a business investment rather than a personal loan.

Learn more: How DSCR Loans Work for Real Estate Investors

Challenges of setting up an LLC from abroad

Setting up a U.S. LLC isn’t impossible as a foreign national, but it’s not always straightforward either. The timeline, paperwork, and need for coordination across agencies can slow things down, especially if you’re doing it alone.

Long wait times for EINs

Even if you’ve already formed an LLC, you’ll still need an EIN (Employer Identification Number) to handle. Foreign-owned entities often wait weeks if not months to receive their EIN when applying through the IRS directly, and delays can derail deals— especially if you have a property under contract already.

Complexity and cost (Linna example)

Navigating the property buying process from another country can be stressful. Add on top of that lack of familiarity with local laws and best business practices and it can become overwhelming. Linna, an experienced investor from Canada, wanted to set up her LLC the right way, but the quotes she received from lawyers and agents felt overpriced and fragmented. Waltz offered a simpler alternative: one platform, one price, and a clear roadmap for what she needed to close on her Texas duplex.

Read more: Linna’s Success Story

How the Waltz Investor Kit simplifies everything

Instead of coordinating between multiple vendors, Waltz bundles everything you need into a fast, remote-friendly setup. The Waltz Investor Kit is designed specifically for foreign nationals buying U.S. real estate.

Here’s what’s included:

_{Note: Waltz is a financial technology company, not a bank. Banking services provided by Regent Bank, Member FDIC. Certain conditions apply for pass-through FDIC insurance coverage.}

Is it worth buying under an LLC?

For most foreign nationals investing in U.S. real estate, buying through an LLC isn’t just a good idea, it’s often a necessary step. Whether you’re planning to finance with a DSCR loan or build a long-term rental portfolio, an LLC offers structure, protection, and access to better tools.

It also introduces complexity: more paperwork, more steps, and the potential for costly delays if not handled properly. But with the right support, forming an LLC doesn’t have to slow you down. Waltz makes it possible to set up everything remotely, so you can stay focused on the opportunity, not the overhead.

Ready to invest in U.S. real estate the right way? Try Waltz.

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