Foreign Investors are Taking Advantage of Hesitating US Homebuyers
David Garner
FREE DOWNLOAD: 10 Costly Mistakes Foreigners Make Buying U.S. Real Estate
Foreign Investors are Taking Advantage of the US Housing Market
The U.S. housing market has shifted decisively in favor of buyers. With inventory reaching its highest level in five years and 34% more sellers than buyers, foreign property investors face a rare window of opportunity.
We’ve been buying property in the USA since 2016, building a portfolio of over 120 properties. Now we help other non-U.S. citizens do the same. The current market conditions – essentially a buyers market – creates a unique advantages for international investors.
Why The Market Has Shifted
The rise in inventory stems from affordability challenges in regional markets. Home prices and mortgage rates have increased rapidly while household incomes haven’t kept pace.
This combination has pushed homeownership beyond reach for many Americans in certain markets. Homes aren’t selling as quickly. Time on market is increasing. Eventually, housing inventory in these markets has surpassed pre-pandemic highs. Nationally, there are approximately 500,000 more sellers than buyers.
The result? Sellers must reduce prices or offer better concessions to attract buyers. It is this unique set of circumstances that creates substantial negotiation leverage for investors.
At its core, this shift follows fundamental economic principles. Supply now exceeds demand in many markets, so prices are adjusting downward.
Strategic Opportunities For Investors
Our acquisition strategy is focused affordable metro markets where local homebuyers can still purchase homes. In my experience, properties between $150,000 and $300,000 offer the best balance of affordability and appreciation potential – especially if local homebuyers can afford the price point at current mortgage rates.
The working-class neighbourhoods outside city centers in affordable metros are brimming with strong, stable investment opportunities. Real estate in these areas is well-priced, and so maintains steady demand from both buyers and renters.
Nearly 45% of U.S. home sales now include seller concessions, up from 39% a year earlier according to Redfin data. We’re actively leveraging this trend for our clients.
Practical Negotiation Tactics
We target motivated sellers, particularly house flippers and builders. These sellers need to move properties quickly because they’re paying interest on expensive hard money loans while homes sit unsold.
Our primary negotiation strategy focuses on securing seller concessions to cover closing costs and buy down mortgage rates on DSCR loans.
With a $5,500 rate buydown on a $150,000 DSCR loan, investors can save approximately $36,000 in interest over the loan term. This also reduces monthly payments by about $100, improving cash flow immediately.
Typically, we secure financing pre-approval before making offers. This strengthens our negotiating position and signals serious intent to sellers eager to close quickly.
Financing For Foreign Investors
Most foreign buyers purchasing U.S. investment properties use DSCR (Debt Service Coverage Ratio) loans. These loan products are ideal for overseas investors because they don’t require U.S. credit, tax returns, U.S. income, or a social security number.
Interest rates typically range between 6.75% and 7.75%, depending on the down payment amount and the property’s cash flow potential. By paying a few extra percentage points of interest upfront at closing, we can secure a much better interest rate for the full 30-year term of the loan.
Long-Term Investment Philosophy
The market rewards time-in, not timing. We take a conservative approach to underwriting and use current conditions to negotiate better deals.
If a property in a great location cash flows today with conservative assumptions, there’s no reason to wait for lower rates or prices. At the end of the day, the longer you wait, the more you’ll pay one way or another, even if that’s just the opportunity cost of doing nothing with your money.
We’re aiming to double our equity within 5 year. To do that, we’re relying on only 5% p.a. price appreciation, which is more than achievable if you’re buying in a location where the fundamentals support steady future price growth.
We evaluate markets based on solid economic fundamentals. A strong regional economy with reasonable cost of living, affordable housing, and available jobs attracts new residents, which ultimately drives demand for housing.
Our conservative cash flow analysis accounts for all operating costs including property taxes, property management, repairs, vacancies, and capital expenditures. We don’t project aggressive rent increases and we factor in annual inflation for expenses.
By taking a conversative approach we’re more likely to be pleasantly surprised with the real world result, and we’ve built in enough margin to cushion against unexpected costs, vacancies, or a market slowdown.
Quality Matters More Than Timing
There are more renters in the U.S. than ever before. We focus on creating high-quality rental properties that compete for the best tenants.
A good tenant pays rent on time and stays through multiple lease cycles. This translates into a significantly more profitable investment over time.
We invest in high-quality interior remodels with new bathrooms, kitchens, flooring, and lighting. We also focus on replacing major capex items like the roof, plumbing and wiring. This approach limits future renovation costs while improving immediate cash flow through higher rents and lower vacancy.
Building a team of high-quality local operators in your chosen market is essential for remote investing. This includes renovators, real estate agents, contractors, property managers, insurance agents, attorneys, home inspectors, and appraisers.
The Foreign Investor Advantage
Foreign investors often bring a different perspective to U.S. real estate markets. They tend to be less concerned with the latest headlines and more focused on long-term fundamentals.
Investing from a distance can lead to more objective decision-making with long-term goals in mind. When you’re dealing with countries where interest rates often exceed 100% annually, 7% doesn’t look so bad.
The current window of opportunity won’t last indefinitely. U.S. house prices historically rise over time. The real choice is simple: buy now at a better price or wait and pay more.
For non-U.S. investors looking to build wealth through American real estate, today’s buyer’s market offers a rare combination of negotiation leverage, affordable financing options, and long-term appreciation potential.
FREE DOWNLOAD: 10 Costly Mistakes Foreigners Make Buying U.S. Real Estate
GROW YOUR WEALTH WITH U.S. REAL ESTATE
Start your US real estate investment journey today, and book a Free 1-2-1 Discovery Call with a member of our senior management team.
“Having personally invested in over 120 US rental properties from overseas, I know the true value of getting the right advice and support.
David Garner – Cashflow Rentals
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