While
many
of
the
latest
conversations
around
the
U.S.
real
estate
market
have
focused
on
affordability
and

interest
rates,
one
segment
continues
to
move
forward:
foreign
investors.

While
domestic
buyers
remain
more
cautious,
investors
from
abroad
are
driving
much
of
the
transaction
volume
in
many
U.S.
markets.
One
reason
is
that

foreign
buyers
view
risk,
financing
and
timing
differently.
Perhaps
the
most
important
difference
between
the
two
is
the
role
of
interest
rates.

Foreign
investors
may
be
less
affected
by
U.S.
mortgage
rates

International
investors
are
often
less
affected
by
interest
rate
fluctuations
than
domestic
investors.
One
reason
is
that
some
of
those
investors
purchase
properties
with
cash,
and
those
who
do
take
out
loans
typically
view
U.S.

mortgage
rates
as
more
attractive
than
those
in
their
home
country.
For
example,
several
key
Latin
American
markets
still
see
significantly
higher
mortgage
rates,
with
Mexico
and
Brazil
in
the
10-11%
range,
and
Colombia
in
the
12–13%
range.

Mortgages
in
Argentina,
too,
are
elevated
relative
to
the
U.S.
Even
in
countries
where
rates
might
be
lower
than
in
the
U.S.,
such
as

Canada
and
Israel,
investing
there
could
be
less
attractive
due
to
higher
down
payment
requirements,
lower
rental
yields,
or
fewer
deductible
expenses.

Additionally,
financing
options
might
look
very
different
in
other
countries.

First,
many
international
investors
are
used
to

adjustable-rate
mortgages,
but
with
a
fixed-rate
mortgage
in
the
U.S.,
they
might
prefer
to
lock
in
a
consistent
payment
so
they
can
more
easily
predict
cash
flow.
In
addition,
unique
loan
products
like

DSCR
and
other
non-QM
loans
enable
scalability
for
investors,
including
foreign
nationals.
Would-be
purchasers
may
qualify
for
these
types
of
loans
based
on
a
property’s
ability
to
generate
cash
flow,
not
based
on
the
borrower’s
personal
finances
or
U.S.-based
income.

On
top
of
that,
there
is
no
formal
limit
on
the
number
of
DSCR
loans
someone
can
secure,
enabling
investors
to
scale
and
build
their
portfolios.

Currency,
seasonality,
and
time
horizons

Changes
in
currency
also
impact
how
global
investors
see
the
U.S.
market.

When
the
U.S.
dollar
weakens,
foreign
currencies
can
go
further
when
used
in
the
U.S.

real
estate
market.
A
prime
example
is
the
British
Pound,
where
we’ve
seen
Brits
climb
among
the
top
five
foreign
buyers
in
the
U.S.,
per
the

latest
report
from
the
National
Association
of
Realtors,
after
not
being
on
the
list
in
years
prior.

With
better
exchange
rates,
U.S.
properties
become
more
accessible
and
favorable
for
international
investors,
reinforcing
cross-border
demand.

Seasonality
is
another
key
element
for
U.S.
homebuyers.
They
tend
to
buy
around
school
calendars
and
are
therefore
concentrated
in
the
spring
or
early
fall.
Real
estate
investors,
on
the
other
hand,
buy
year-round
and
some
even
look
for
off-season
opportunities
when
there’s
less
competition.

Finally,
foreign
investors
think
in
longer
time
horizons
than
domestic
homebuyers.
They
view
U.S.
real
estate
as
one
of
the
world’s
greatest
wealth
preservers
and
growth
vehicles.
Over
a
sufficiently
long
time
horizon,
U.S.
real
estate
has
trended
upward.

Bringing
it
all
together

Combine
appreciation
with
monthly
cash
flow
from
investment
properties,
and
you
have
a
winning
combination
for
a
long-term
investment
strategy.
In
a
slower
market,
that
perspective
is
helping
keep
U.S.
real
estate
moving.

Yuval
Golan
is
the
founder
and
CEO
of Waltz,
a
fintech-proptech-wealthtech
startup.

This
column
does
not
necessarily
reflect
the
opinion
of
HousingWire’s
editorial
department
and
its
owners.
To
contact
the
editor
responsible
for
this
piece: [email protected]