FREE DOWNLOAD: 10 Costly Mistakes Foreigners Make Buying U.S. Real Estate

The Best US Property Investment Markets for International Investors

Most foreign investors chase coastal glamour while missing America’s best cash flow opportunities.

I’ve been investing in U.S. real estate as a foreigner since 2016, purchasing over 120 investment properties across various markets. To me, the data is clear – there’s a widening affordability gap between coastal and Midwest housing markets that is creating a significant opportunity for investors.

For me, housing affordability is my primary indicator of market health. When locals can afford to rent and buy homes, it signals a healthy market with reasonable prospects for future appreciation.

The inverse proves equally true. When housing becomes unaffordable, inventory rises while prices stagnate and eventually fall. This pattern is currently playing out in California markets where home prices are retreating sharply.

California home prices now stand more than twice as expensive as typical mid-tier U.S. homes, and the state now hosts almost all of the least affordable local real estate markets in the entire USA.

Meanwhile, Midwest markets tell a different story…

Cleveland offers some of the most affordable housing in America relative to household income. This fundamental economic reality drives both steady price appreciation and strong cash flow for investors.

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Following Population Shifts

Recent U.S. census data reveals a significant internal population shift. Low and middle-income families are moving out of increasingly gentrified and expensive urban centers into the suburbs seeking affordable housing.

This suburban expansion, particularly in neighborhoods with good access to major employment centers, drives housing demand. For investors, this translates directly to price appreciation and consistent cash flow.

So why do foreign investors typically overlook these opportunities?

They’re not glamorous like coastal markets in Florida or California. These are working-class neighborhoods, often B or C-class properties in suburban areas.

It’s not sexy. It’s boring. But it’s stable and profitable.

The Midwest offers superior returns with an average cap rates approaching 8% even for good quality housing.

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The Triple Whammy Returns

Properties I purchased in 2016 in the Midwest have quietly generated cashflow while paying down their mortgages. Simultaneously, they’ve appreciated more than +10% annually.

This “triple whammy” is the key: price appreciation, cash flow, and debt paydown. Add patience to this and you have the foundation for stable, long-term returns without a ton of management headaches.

Many investors chase magic formulas: no-money-down deals or major value-add renovation projects. These strategies can work out great – I’ve done plenty myself – but the reality is that they’re often risky, and definitely difficult to execute, especially from overseas.

The most effective strategy for foreign investors is straightforward: buy quality housing in the right location, put down a 30% deposit, lease to a good tenant, and then… just wait.

Real estate values rise over time regardless of short-term market cycles. The market rewards time in, not timing. In the meantime, you’re accumulating cashflow and paying down the mortgage.

If you really want to add some juice, use your cashflow to make extra payments on your mortgage, or for value-add improvements. Treat your property like and asset, not an ATM.

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Focus on Fundamentals

When evaluating properties, I concentrate on fundamentals: roof, sewer lines, wiring, plumbing, furnace, and HVAC systems. These components must have substantial remaining useful life when I purchase the home. If not, I’ll need to budget replacements right away which heavily influences my offer price.

For financing, DSCR loans work exceptionally well for foreign investors. These loans focus on the property’s income potential rather than personal income or credit history, making them ideal for non-U.S. citizens.

Ensure the property generates positive cash flow, then partner with quality local property management. This approach maximizes returns while minimizing time and cost.

Related: Unlocking Value in the US Housing Market

Remote Management Essentials

Buying and managing properties from thousands of miles away requires a strong local team. You’ll need realtors, home inspectors, appraisers, contractors, property managers, title companies, and attorneys.

I’ve spent nearly ten years building my personal network of high-quality operators across multiple markets. These relationships have been essential for successful remote investing.

Owning property costs money regardless of location. Vacancies, repairs, turnover costs, and capital expenditures affect all investments.

This reality underscores why property condition matters so much. A well-renovated house saves money on repairs, reduces vacancies, and minimizes capital expenditures. These savings improve net cash flow while reducing management headaches. Bad management or a poorly renovated home will definitely end up costing you money!

Related: The Market Advantage for Foreign Property Investors in the USA

Evolution of Strategy

My approach has evolved significantly since 2016. I no longer chase high cash flow/low value properties that look great on paper due to high rent-to-price ratios.

These properties typically disappoint. Located in rougher neighborhoods, they attract lower-quality tenants, leading to delinquencies, property damage, and various social and other management issues.

Those kind of houses have also often been chronically undermaintained for decades, requiring constant major repairs. All that combined ultimately manifests in negative cashflow. If you buy that kind of house, you’ll probably end up spending money instead of making money!

Today, I focus on better neighborhoods and properties renovated to high standards. They attract quality tenants who stay longer, require fewer repairs, and they appreciate better.

Related: Hidden Costs of Buying Cheap Investment Property in the USA

Long-Term Outlook

Several indicators suggest this Midwest opportunity window will remain open for at least a decade.

House prices in these regions remain significantly below the national average, leaving substantial room for growth. All of the key metrics like population growth, household income, and job market growth indicate a sustainable long-term growth pattern.

For foreign investors seeking stable cash flow assets in the U.S. market, America’s heartland represents an often-overlooked opportunity with compelling fundamentals. The growing coastal-heartland affordability gap creates a strategic window that rewards patient capital with the triple benefits of appreciation, cash flow, and equity building.

It may not be glamorous, but the returns speak for themselves.

FREE DOWNLOAD: 10 Costly Mistakes Foreigners Make Buying U.S. Real Estate