Inman News just published a video from Real Estate Connect New York City with a panel of experts on international real estate investment and sales.
It may not sound like what you’re used to hearing here… international investment? Why does this matter to me?
Foreign money is nothing new for the American real estate market, but it makes a big impact in driving up the prices of certain areas.
Lots of investors are constantly looking for additional sources of capital, but surprisingly they overlook the foreign markets.
Jonathon Cooper, VP-Investment for McDonald Realty Group, works with thousands of Chinese investors from their base in Vancouver BC. He says there are thousands of recent changes in national financial policy that are beneficial to the real estate investor community.
For his investors, China has recently simplified and streamlined the process for qualified Chinese investors to make outbound investments in a foreign currency.
Cooper said that prior to this overhaul, there was direct oversight including a preapproval process that added lots of time. Now, he’s seeing Chinese money flooding into the market, particularly in places like Manhattan.
In most parts of the US and Canada, investors are limited to $50,000 in outbound money, Cooper said.
This is per individual, so money transfers happen a lot through family members, intermediaries and through US subsidiary companies that belong to Chinese corporations.
Make sure that your investors are familiar with money policy, and inform them gently (don’t offend).
If they want to close on a property, there are limiting restrictions about how long the funds have to be onshore – sometimes 90 days prior to closing. You have to prudently inform them of these restrictions prior to making plans around closing dates, etc. – and that means you’d better do your homework so you know these policies well.
Of course, there are different rules in Canada versus US, and varies from state-to-state (and some local regulations in your market may impact foreign investment).
On the plus side, if you do your homework, become the local expert, and build relationships with the right people, you can attract huge amounts of wealth and capital to your community.
Marti Gallardo, a VP of Global Ad Sales for the Wall Street Journal, was the panel’s moderator. She offered a great insider tip for investors: watch international airlines to anticipate a flood of investment money from that country.
When you see an airline [out of China, Brazil, etc.] open up new flights in your hub, get ahead of it and start preparing for foreign investment, said Gallardo.
Eleonore Rojas, VP of Partnerships and Product Integration for Move, Inc. and Realtor.com has extensively studied the data on international purchasing.
Rojas said that foreign buyers tend to cluster together. For example, she has seen Brazilians buying a lot in New York, as well as heavy investment from Chinese and European investors.
According to Rojas, foreign investors see many reasons to migrate and purchase in the United States. The reasons are as personal as a 2nd home, investment, advance anticipation of child studying here, and job opportunities.
It may be cheaper to buy here than in some countries, plus the American lifestyle is very attractive to many people, said Rojas.
Immigration laws are favorable for purchase here over time, she continued. Home ownership here is very stable and seen as a good investment.
All these factors make the US a very attractive place to invest in real estate, she said.
Cooper added that it’s really important to know your clients and the regulations of the local market.
Chinese investors don’t have access to “own” land in China – it’s all leasehold – so the concept of ownership in US real estate is extremely attractive to wealthy individuals, because they can leave it to their heirs as part of a larger legacy.
Rojas said that recently, Detroit has showed up as top search target in international search on realtor.com. They traced the origin back to international news of Quicken’s billion-dollar investment there. As a distressed market, Detroit is very attractive to investors, said Rojas.
Gallardo reminded the audience that this trend of increasing foreign investment has been continuing for quite some time, not really new…
we are all watching this unfold and figuring out how to capitalize from opportunities within the trend.
Caron Ling, a broker at Hawaii Real Estate in Honolulu said that right now big development happening within Hawaii that is very attractive to offshore investment. Cities within cities are being built – huge walk-able mixed-use developments that create up lots of opportunity.
Ling said that with foreign investors, it’s very important that you eat with them, even let them win at golf…
You need to get to know them, because that’s how you build relationships and trust Cooper added that once you do a deal with them, go visit them in their home country, meet their family, and eat meals with them.
With his business, he said that it helps his team to know the clients and their culture much better – his company sees it as a very important business development activity.
Rojas delivered a stellar reminder: friends and past clients are always best and most efficient ways of getting business, after that is web – that’s why it’s really important to have great online representation, and it’s getting more important every day.
She added that it’s important to have testimonials to build credibility online.
InvestorCarrot’s research on real estate investor websites has proven just how much credibility matters online to real estate investors.
Click here now to check out the full report.
If you want to watch the full 20 minute video of the panel discussion, check it out below.
