Is Buy-to-Let in the USA a Good Investment?

I am a British investor and I have purchased more than 120 US rental properties since 2016. So you can probably guess which way I lean. But I am not going to tell you the US is better than the UK, because that isn't true, and if you're here, you've likely done well out of UK property yourself.

What's actually true is that the two markets do different jobs. US Midwest rentals deliver higher gross cash flow on modest growth, and a mortgage that pays itself off. Which one actually suits you depends on you goals more than the market, and there's no answer to that question which is right for everybody.

There's also one thing that almost every article aimed at UK investors gets wrong, including an earlier version of this one (my bad), and it's the single most important tax point for a British buyer. I'll deal with that first, because if you take nothing else from this page, take that.

The Section 24 mistake almost every guide makes

Here's the claim you'll see everywhere, and that I made myself in an earlier version of this article: UK landlords have lost their mortgage interest relief to Section 24, but in the US mortgage interest is fully deductible, so buying American gets your deduction back.

That is wrong, and it's wrong in a way that could cost you real money.

Section 24 of the Finance (No. 2) Act 2015 restricts finance cost relief for individual landlords letting residential property in the UK or overseas.

HMRC's own Property Income Manual confirms the restriction applies to a UK or an overseas property business. So if you are UK resident and you hold a US rental in your own name, your UK tax on that rental income is still calculated without deducting the mortgage interest. You get a flat 20% basic-rate tax credit on finance costs, whatever rate of tax you pay.

The US deduction is real, and I use it myself to bring my US taxable income to zero most years, but it's a US deduction. It reduces your US taxable income, as I set out in my US tax guide for foreign investors. It does nothing about your UK liability. I have followed a single rent payment all the way from a tenant in Kansas City to a UK bank account, and shown what survives both tax jurisdictions for a UK taxpayer, in UK tax on US rental income.

And there's a second-order effect that can catch you out. Between mortgage interest and depreciation, a well-structured US rental often produces zero US taxable income, so you pay no US tax. Foreign tax credit relief is what normally stops you being taxed twice, but a credit is only worth something if you actually paid foreign tax. Pay nothing in America and you have nothing to credit against your UK bill.

Put plainly: the better your US tax position, the worse your UK outcome.

The one thing to remember: Section 24 is a finance cost restriction, not a UK property restriction. It follows you overseas. Which means the lever that actually reduces its bite isn't the country you buy in, it's how much you borrow. An unleveraged US rental sidesteps the problem entirely, because there are no finance costs to restrict.

What has genuinely changed in the UK

I'm not going to overstate this, because UK landlords have been told they're finished roughly every year for a decade and plenty are still doing very well. But two changes are real, and this is echoed in the conversations I have every week with the UK clients I help build US rental property portfolios.

Section 24, phased in from 2017 and fully in force since April 2020, means you're taxed on gross rental income with relief on finance costs capped at 20%. For a higher-rate taxpayer with a mortgaged property, that materially reduced net returns. It also means the full rent counts toward your total income, which can push you into a higher band or affect your personal allowance. None of that is good.

The Renters' Rights Act has moved tenancies to a periodic basis and abolished the old no-fault route, so regaining possession now requires specific grounds. Whether you think that's fair or not, it lengthens and complicates the process.

Add higher stamp duty on additional properties plus the non-resident surcharge, and leveraged UK buy-to-let is harder work on thinner margins than it was in 2015. That's just fact. It isn't the same as saying UK property is a bad investment, and if you bought before 2016 you're probably sitting on capital growth that no US Midwest rental would have given you.

This played out in a conversation I had recently with a guy who had a large London portfolio, including two small hotels in Victoria. He'd spent his entire life, more than 40 years, building his UK portfolio. Now he's selling up. According to him, the more challenging property management environment combined with the potentially higher tax burden has just made the whole thing no longer worth it from his point of view. He's selling up and probably moving overseas, and he's taking his money and economic activity with him.

I think that's sad, but it's the way it is, and he's not the only UK resident I've spoken to who feels that way.

What the US genuinely offers

Higher gross yields. In the Midwest markets I buy in, a renovated single family home at $150,000 to $250,000 typically produces gross yields of 10 to 12%, against 3 to 5% typical in the UK and lower in London. Now, I know there are higher yield markets in the UK, but they're not in places where I want to hold property. In ten years of doing this, the biggest problems I've ever had with property anywhere haven't been the property itself, but the people living in it. With that in mind I don't like the cheapest end of the market in any country. Not the UK. Not the US. If you want to see what those yields actually net once you have paid the property tax, insurance, and other operating costs, I ran the numbers on five real turnkey property listings in the best buy-to-let markets in the USA.

But the real advantage is the mortgage, not the rent. A US DSCR loan is a 30-year fixed, self-amortizing mortgage. Every payment reduces the debt, and the rate never changes. UK buy-to-let is usually interest-only on a two or five-year fix, so in year ten you owe exactly what you owed on day one and you are relying on the market to build your equity. That difference is what makes US property a long-term wealth proposition, and it matters far more than the headline yield.

And the financing doesn't cap you either. A US DSCR loan qualifies the property's rental income rather than your personal income, so there's no debt-to-income ceiling limiting how many you can hold. There are no personal income checks, and no credit checks either. You can have as many loans as you want provided the rent and property value support the mortgage payment and loan amount. I've written about this in more detail in my foreign national DSCR loan guide. For UK investors who've hit their borrowing limit at home, this can be appealing.

US tax treatment of the asset itself. Mortgage interest is deductible and the building can be depreciated over 27.5 years, which frequently reduces US taxable income to nil. I haven't paid any US income tax in 8 years, across a portfolio in which I have purchased 120+ properties. Just remember the section above about what that does and doesn't achieve for you.

Scale for the money. Lower entry prices mean more properties per pound, and low transfer taxes on purchase. In Ohio, transfer tax runs about $1 per $1,000 of value, so roughly $200 on a $200,000 home, against a UK stamp duty bill on an additional property that can run into five figures. That's not a reason to invest in and of itself, but it is a small win for team USA.

Process, in many states. Fixed twelve-month leases are standard, and in the markets I operate in an eviction typically runs 30 to 60 days rather than many months. This is probably the biggest win considering the recent UK legislation. In most US states, though not all, laws are landlord friendly. I've run an eviction in less than 30 days before, but that's an exception, not the rule. You should plan for 60 days in most counties. The point is that you can evict, and you can choose not to renew a lease at your pleasure.

What UK buy-to-let still does better

This is the part that probably works against me, considering my day to day involves helping foreigners, including Brits, buy rental properties in the US. But in the spirit of fair play, here it is.

You can shelter the income properly at home, and you can't over there. Section 24 does not apply to companies. So a UK landlord holding through a UK limited company deducts mortgage interest in full, the way landlords always used to. That option is genuinely open to you at home. A pension will not do the same job, and the charges for trying run to about 70% of the property's value, which I have set out in can you hold US property in a SIPP.

It is not open to you in America, at least not if you want a mortgage. US lenders will not accept a foreign company in the ownership structure, so you borrow through a US entity with yourself as guarantor, and the income lands on you personally. Which means Section 24 applies to it and your relief is capped at 20%, however much tax you pay.

That asymmetry is the single most important thing in this section. The US property can produce a higher gross yield and higher net operating income, and still leave a higher-rate UK taxpayer with less money in the bank, purely because the UK version can be structured to deduct its interest and the American one cannot. On the numbers I have run, the gap is not marginal. It is several times over.

Then there are the ongoing property taxes. This is the cost UK investors underestimate most, and it's not small. US property tax is an annual charge on the owner, forever, and it varies enormously. In the UK, your tenant pays council tax, which does a broadly similar job. In the US, that falls on you, the landlord.

The amount varies wildly between states and counties. In my Midwest markets, the effective rate ranges from 1% to 2.5% of the property value, and that difference has a very real impact on your cash flow. One thing to watch: the tax figure on a term sheet is whatever the property is assessed at today, and a sale often triggers a reassessment. I have seen sheets quoting as little as 0.36% of value at purchase, which is exactly the sort of number that rises once the county catches up. And let's be clear, taxes of any flavor are not likely to come down.

Over a ten-year hold, that difference runs into thousands and it partially offsets the stamp duty advantage the US enjoys at purchase. Anyone comparing the two markets on purchase taxes alone is giving you half the picture.

No currency risk. Your US rent arrives in dollars and your life is priced in pounds. Sterling-dollar movement can add or remove several percent from your returns in a year, entirely outside your control. UK property has no such exposure. I have some personal opinions about what the powers that be have planned for the value of the US dollar over the next 10 years, but that's a subject for another article. Here's a hint: a lower value dollar diminishes the enormous US debt burden, and inflating it away has been done before.

No cross-border compliance. A US rental means a US tax filing, holding through a US entity in most cases, having a US bank account, and reporting the income to HMRC as well. That's real cost and real administrative drag every year. UK property is one tax return you already file. That said, tax filing for a few rental properties is not especially complicated or time consuming if you know what you're doing. Still, it's a job.

No US exit mechanics. When you sell a US property as a non-resident, FIRPTA withholding takes a percentage of the gross sale price at closing, potentially refundable later, and you have depreciation recapture to settle. It's manageable, but it's paperwork and cash flow timing that UK property simply doesn't have. Our FIRPTA withholding calculator shows the size of that timing gap on a real sale, and how much of it comes back.

Familiarity, and this is probably bigger than you think. You understand English or Scottish property law, you can visit, you can meet the agent, you know what a good area looks like without being told. You can drive by your property and inspect it personally. Buying 4,000 miles away means trusting other people's judgement about neighborhoods you've never walked, and the whole purchase happens remotely. That's a genuine risk, and it's the one that has cost overseas investors the most money. I run and manage my US portfolio from my home in Brazil. I manage just fine, but I've spoken to plenty of other foreigners who've had serious problems.

And possibly cheaper borrowing. If you have strong personal income, a UK lender assessing your covenant may well beat a DSCR loan on rate. DSCR rates I've seen in 2026 have run from about 6.5% to 8%. That's not because you're a foreigner. The average US 30-year fixed rate for citizens was 6.58% in the week to July 23, 2026 on Freddie Mac's survey, so the 6.875% we just secured for one of our Canadian clients isn't so bad considering he had no US income, credit, residency, visa, or social security number.

The honest side-by-side

Financing: UK buy-to-let mortgage versus US DSCR loan

The products work on genuinely different logic, and that's the bit worth understanding.

A UK buy-to-let mortgage assesses you and the rent, with stress-tested interest coverage, your income, your credit file, and increasingly your total portfolio. I compare the two products (US vs UK rental property mortgages) in detail, with real terms from both countries, in buy-to-let mortgages in the USA. A US DSCR loan assesses the property only. If the rent comfortably covers the mortgage payment, taxes and insurance, you can borrow, with no US credit history, no US income and no social security number required.

Practically, for a UK buyer: expect 25 to 30% down, closing costs of 3 to 5%, and cash reserves of 3 to 12 months of payments held in your own account. You'll borrow through a US entity with yourself as guarantor, which is why you can't simply use your existing UK limited company. In fact this is a bigger problem for UK buyers, because most US lenders won't allow a foreign corporate entity in the ownership structure at all. So a UK limited company is out if you want to use leverage.

DSCR loans carry a prepayment penalty in the early years, so these suit holders rather than flippers. The full mechanics are in my guide to what DSCR loans actually cost, and if you're pricing cheaper properties, note that small loans price worse, which I've broken down in DSCR loans under $100,000.

One warning I'd give any British buyer: shop the loan properly. On one deal I priced for a client, quotes on the identical property varied by roughly a point of interest and thousands in fees. I've published the side-by-side in two real DSCR quotes compared.

The question that determines everything

Before you look at a single property, answer this: do you want income now, or a portfolio over twenty years?

It sounds like a soft question. It isn't, because the two answers point to different ownership structures and very different tax positions.

If you want income, money coming back to you in sterling, then it's coming to you personally, Section 24 applies to it, and you should go in with a clear-eyed calculation of what you'll actually net as a higher-rate taxpayer. This is the simpler path with less to go wrong, and for plenty of investors it's the right one, particularly if you're not heavily leveraged.

Believe me, I've looked at all the potential loopholes and workarounds and paid very expensive tax professionals for opinions. There is no clever wrangling with structures or paperwork that makes a UK tax bill on personally held US rental income disappear.

If you're building a long-term portfolio, with rent retained in the US to fund reserves and deposits on the next purchase, and you don't intend to take distributions personally, that's a materially different proposition and it needs to be set up properly from the beginning rather than retrofitted. At scale, portfolio loans also change the economics. The rules around how UK tax treats retained profits in a US entity are genuinely complex and contested, and getting them wrong is expensive.

I'm a property consultant, not a tax adviser, so what I'll do is tell you plainly that this question, about your long-term intentions and investment strategy, changes how you should set things up, and that you should resolve it with a dual-qualified UK and US accountant before you commit money. What I won't do is pretend there's a neat structure that makes the problem disappear, because there isn't one.

What I can tell you is how it landed when I actually modelled it. I ran a real Liverpool terrace against a comparable Kansas City rental at the same price, over ten years, on identical assumptions. The US property produced more net operating income. But after UK tax, a higher-rate taxpayer ended up with meaningfully less in the bank than if they had bought in the UK and held it in a limited company.

Reverse the objective and the answer reverses too. For an investor taking no distributions and building for the long term, the US came out ahead, and it was the financing that did it. Because the American mortgage amortizes, an investor putting all their surplus rent back into the loan can own the property outright in as little as eleven years. You cannot do that on a UK interest-only mortgage, because there is no principal to attack.

So the short version is this: if you want income to spend today, the UK is probably the better answer. If you want a self-funding portfolio over ten or twenty years, the US is. The full side-by-side with all the numbers is in my comparison of UK and US rental property mortgages, linked above.

What you're likely to be sold

This is my biggest gripe about the US market, and something I know a lot about.

If you start searching for US property from the UK, you'll quickly meet companies marketing packaged US rentals to British investors. Some are good, maybe. Most sell properties and an investment model I'd avoid entirely.

The pattern to watch for is cheap stock in the $80,000 to $140,000 range, sold before renovation, with the refurbishment promised afterwards and the yield quoted on paper rather than on a signed lease. What arrives is often a superficial cosmetic job over hundred-year-old plumbing, wiring and roofing, in a neighborhood nobody showed you properly, let to a tenant nobody screened carefully. The result is more often than not disastrous.

I go through in more details in what British investors get sold in the USA.

I'm not neutral about this because I did a version of it to myself. Call it financial self-flagellation if you will. I bought the cheapest properties I could find, scaled up to a portfolio of 120+, and had to sell down hard when repairs, turnovers, vacancies and evictions all arrived at once against thin margins. I hold 30 today and they outperform everything I had before. The full account is in my piece on how I nearly went bankrupt buying US rentals.

The practical test: a good yield on a cheap house in a weak area is a number on a spreadsheet, not a return. Ask what the property rents for now, on a real lease, who inspected it, what was actually replaced rather than painted over, and what comparable homes on that street have sold for. If the answer to any of those is vague, walk. Overstated rent is also one of the most common reasons a loan collapses at the appraisal stage, which I've written about in why DSCR applications get declined. My own buy box is a minimum 1,000 square feet, 3 bed 2 bath or better, in areas with genuine homeowner demand, and I've explained the reasoning in my markets guide.

Who this suits, and who it doesn't

It probably suits you if your objective is long-term wealth rather than income to spend now, you are content to leave the rent working in the US rather than bringing it home, you've hit your borrowing ceiling in the UK, you're not so heavily leveraged that Section 24 eats the return, you can hold for at least five years, and you're comfortable relying on a team you've vetted rather than your own local knowledge.

It might also be worth some consideration if you're an experienced UK landlord who is feeling a little jaded about all the new regulation and tax treatment from our beloved HMRC.

It probably doesn't suit you if you're investing for immediate income to supplement your lifestyle and you're an additional-rate taxpayer with a big US mortgage, you'd struggle with the annual cross-border compliance, or you're being sold something at $90,000 that looks too good on paper. That last one isn't a market problem, it's a product problem, and it's the most common way British investors lose money in America.

For what it's worth, I hold both views at once: US rentals have been very good to me, and they nearly ruined me when I bought badly. The market didn't decide which of those happened. What I bought did. That's on me, but I contend that I learned some very valuable lessons which now carry through for my clients. I speak from a position of battle scars, not books.

If you want to run your own numbers before speaking to anybody, the free tools in my foreign investor starter kit will let you size a deal, work out the real cash to close, and check the financing.

The bottom line

Is buy-to-let in the USA a good investment? For a UK resident, it depends almost entirely on what you want the money to do. If you want income to spend now, the honest answer is probably no, because a UK buy-to-let held in a limited company will usually leave more in your pocket after tax. If you want to build long-term wealth, and you are content to leave the rent working in America rather than bringing it home, then yes, and the reason is the mortgage rather than the yield.

For a UK higher-rate taxpayer who borrows heavily, the answer is more complicated, because Section 24 follows you across the Atlantic and there may be no US tax paid to credit against your UK bill.

None of that makes the UK a bad market or America a good one. It makes them different tools. Decide what job you're hiring the property to do, get the tax position resolved before you buy rather than after, and buy quality in a decent area whichever side of the Atlantic you're on. If you decide it's for you, my step-by-step guide to buying US property as a foreign national covers the process end to end.

Remember, investing is a game of probabilities. The goal isn't to find the better country, it's to stack the odds in favor of the outcome you actually want.