International buyers have always been a part of the NYC residential real estate market. Each year there are waves of buyers from different parts of the world. Foreign investment in the US residential markets – especially in NYC – occurs when certain market and financial conditions align. Foreign buyers invest when the dollar is weak, as it is cheaper for them to buy under such advantageous conditions. Additionally, when they experience economic instability in their own country or other desirable cities like London or Paris , foreign buyers focus on residential property in New York City, because in any case NYC in particular is considered a safe place for real estate investment.
As real estate brokers, we are often asked by sellers if their home is one that may be attractive to a foreign buyer, especially when it is widely advertised with a focus on overseas.
This week’s Ask an Expert column from the popular real estate blog Brick Underground featured information for overseas buyers who wish to buy in NYC, which I recommend that sellers review.
Some sellers do not know that overseas buyers mainly buy condominiums in NYC, since co-ops typically require applicants to have substantial assets in American banks, along with domestic social networks and tax returns for two to three years. Thus, condominiums are usually the investments of choice, and most often, new development condos are favored.
In the Brick Underground article, the question arose as to how a foreign buyer might obtain a mortgage. There are a limited number of banking options available, but generally there are enough options for foreign buyers who are qualified to obtain a mortgage; it just takes a little bit more time due to the complexity of the transaction.
Most US banks have created programs to accommodate international buyers. Foreign buyers can usually finance 50 to 75% of the purchase price, depending the size of the loan. Documentation requirements can be stringent, but some lenders are willing to waive these requirements in return for a slightly higher interest rate, to offset the increased risk associated with loans not fully corroborated. Moreover, most lenders require foreign buyers to show proof of income, assets, and monthly payments and carrying charges for any other real estate owned. US credit is not required, but a few banks require an international credit report.
An overseas buyer must be aware of certain tax implications of owning and selling real property in the United States. To ensure a smooth purchase process of a home or apartment in NYC, one is always advised to check with their accountant and/or financial planner for the most up-to-date rates and procedures, as they are subject to change. It is imperative for a foreign buyer to retain capable advisers on all aspects related to buying—including a knowledgeable real estate broker, a good lending institution, and an experienced real estate attorney.
Fortunately, we have very strong relationships with lenders and mortgage brokers in New York who are happy to work with foreign buyers.
If you are a foreign buyer looking to invest in New York real estate or are interested in more information, please do not hesitate to contact me for a free copy of my New York City Real Estate Buyer’s Guide, by emailing email@example.com or calling 212-937-7011.
All the best–