How to Invest in US Real Estate: 5 Things to Know as a Non-Resident

From transparent pricing to the wide availability of rental agents and support services, the US offers a structured real estate ecosystem, making it an attractive destination for foreign investors.

However, some international buyers lack familiarity with Western markets and may not fully understand the process of investing in real estate in the US.  

Prospective investors often misjudge the nuances of overseas property markets, highlighting the importance of an informed approach.

While some advocate focusing on emerging markets abroad, investing in the US remains a practical choice for those seeking stability and opportunity.

This guide outlines five critical factors to consider when entering the US real estate market, helping you understand how to start investing in real estate with confidence.

US Real Estate Investing for Beginners

Here are the five main factors to consider before buying real estate in the Land of the Free.

1. Plan for Litigation Risks

The first thing you should understand is that property investors in the US face the highest litigation risk in the world. 

This isn’t really a Western thing – it’s a US thing. 

If you invest in the United Kingdom or Ireland, it’s less of an issue, but in the US, people love to sue each other. 

Folks from the US often enter some of the emerging markets we discuss, see a small nail sticking out from the wall, and start to panic.   

They think someone will come and take everything they own if they get a scratch. 

But that’s just not how it works in most countries. 

It is, however, the way things work in the United States. If you’re not used to that, you should be aware of the litigation risk. Make sure you get an attorney to structure things for you properly in the US. 

You will want to have a lot of insurance, consider the next point, and build an asset protection strategy.

2. Have an Asset Protection Strategy

Most Nomad Capitalist clients use Limited Liability Companies (LLCs) to hold their properties. It’s a more tax-efficient structure for a lot of people, depending on where you live and your personal tax situation in your own country. 

This isn’t typical of just our clients, either—many people in the United States hold their properties in LLCs, a transparent structure that’s different from a corporation. 

Some people form LLCs for each property, while others form one LLC for two to five properties. 

Either way, you will need to put properties in an LLC in the state where you’re investing. If you’re investing in different states, that can complicate things. 

But ensuring your assets are protected – as well as ensuring nobody slips on a banana peel, sues you and takes all your investment properties – is definitely a concern in US real estate. 

Plan accordingly.

3. File Your US Tax Return

The third thing to be aware of is that you need to file a tax return if you are going to invest in the US. 

There are specific forms for non-resident investors, and there may be different tax treatments, but you want to make sure that you’re not screwing with the Internal Revenue Service (IRS). 

Yes, we know – in some countries, you can get away without filing a tax return, or maybe it’s optional where you’re from. 

In the US, the IRS is much more dialled-in. People in the US fear the IRS in a way that people in many other countries aren’t afraid of their tax authorities.

We don’t say that to scare you. Instead, we say that to reiterate that you won’t have to worry about the IRS if you do everything correctly and legally – as you always should.

You should never do anything offshore without having an internationally-focused US tax preparer. The consequences of not doing so are too great.

To ensure everything is done properly, find someone who is used to working with foreigners and who is familiar with non-resident alien investors. 

You may not have large amounts of tax to pay if you’re earning small rents and taking depreciation, but make sure that everything is in line because the penalties are pretty substantial.

If you have an LLC, you will need to file an informational return called Form 5472 for any LLC that has transactions within a calendar year. 

The penalty for not filing it is US$25,000. This rule not only applies to real estate investors but also to anyone who’s using a US structure. 

4. Avoid the Estate Tax

Now, you would think that if you don’t live in the US and you die, the US would not take a bite out of your assets. 

However, even if you’re not a US taxpayer, you may be subject to estate tax in the event of your death. 

If you’re a US taxpayer, you get a substantial estate tax exemption through the unified estate tax credit that you can use throughout your lifetime. 

But, if you’re not a US taxpayer, your exemption upon death is much, much lower. We’re talking tens of thousands of dollars. 

If you have rental property in the US, you’re going to trigger that estate tax when you die, as the US is going to ask for its share. 

Because you have a US asset – US real estate, if you’re a foreigner and own US property in your own name, that’s going to be a problem. 

We see this issue come up all the time at Nomad Capitalist. 

People want to make investments in the US and buy a home using our trifecta method.  They may want to spend three or four months in a relatively tax-friendly way, living in New York or Los Angeles. 

It’s possible for foreigners to spend a few months a year living in the US. You can own a home there, no problem. 

You can also buy US stocks or similar investments, but you should be aware of this particular issue and structure your affairs appropriately. 

If you plan to invest or spend time in the US, you will need to maintain your diversification mindset and structure your affairs internationally to avoid triggering the estate tax. 

5. Understand Your Financing Options

If you’re new to investing in US real estate, it pays to find someone who can help you understand your financing options as a foreign investor.

While it’s possible to secure loans in the US, it’s not always straightforward – such is life in a country rife with bureaucracy and red tape.

Many US banks require foreigners to make a substantial down payment and may request proof of financial stability. Additionally, interest rates and terms can differ significantly from those offered to US citizens.

Keep in mind that securing a loan may be challenging or even impossible with certain lenders unless you have a US-based credit history. 

That doesn’t mean you’re out of luck, though. 

Often, we see foreign investors choosing to work with international banks or pay in cash to avoid these hurdles altogether.

If financing is your route, shop around and be ready to provide ample documentation. 

You should work with lenders familiar with non-resident investors to ensure the process runs smoothly and you get terms suited to your financial goals.

How to Start Investing in Real Estate in the US

Not put off by our warnings? Ready to start investing in US real estate? 

We’ve got a few more tips to help you make your first property investment in the US a success.

If you’re seeking a hands-off approach, real estate investment trusts (REITs) offer exposure to property markets without owning physical assets. 

REITs operate more like mutual funds and can provide steady income through dividends.  

Online real estate platforms are another option, connecting investors to large-scale projects for potential returns through equity or debt investments. 

While these require upfront capital, they offer a way to diversify without direct property ownership.

Buying rental properties is a popular choice if you want more direct control, which can lead to a strong passive income stream.

However, you need to thoroughly research the local rental market and know its nuances. 

For the ultimate challenge, you might try flipping a house by finding an undervalued property, renovating it and selling it for a profit. 

If you’re good at it, you can even turn it into a full-fledged business.

Ultimately, each strategy comes with its own risks and rewards, so do your research, consult the right people and choose the option that best aligns with your investment goals. 

If you want to invest in foreign real estate like a local and tap into prime global property opportunities when they arise, create your plan here. 

How to Invest in US Real Estate: FAQs

Are Legacy Brand Countries a Good Investment?

The US property market can be lucrative. It’s undoubtedly strong and house prices are expected to keep climbing throughout 2025. The US is also the largest economy in the world and is a brand that many associate with stability. 

On the downside, the US has massive debt, some very unwieldy bureaucracy, likes to snoop into your business, and is on the decline in terms of living standards.  

So, don’t assume that the US brand means you are making a good investment.

There could be other options. 

Wherever you buy property, you want growth and potential. You may find it in developing economies and lesser-known countries. 

When we advise people to go where they’re treated best, that doesn’t simply mean parking your cash in a stable place like the US.

It also means considering the wider spectrum of countries where you can buy properties and earn the best returns. 

In fact, we don’t advise rushing into any investment before you know all the implications. 

That’s where Nomad Capitalist comes in – we work with you to create a holistic plan that’s designed to lower your taxes, protect and grow your assets, and enhance your lifestyle and personal freedom. Discover how we do things here.