Foreign buyers looking for properties in smaller cities

Foreign buyers are still interested in purchasing properties in the U.S., but they may be looking outside of major cities. According to an annual report from the National Association of Realtors, foreign investors are buying more properties in the U.S. but spending less money on them. Instead of buying real estate in expensive markets like San Francisco, Chicago and New York, foreign buyers are looking for real estate in smaller Midwest and Southeast cities.

The NAR report found that 214,885 U.S. properties were purchased by foreign buyers between April 2015 and March 2016. That number represents a 2.8 percent increase in the number of U.S. properties purchased by foreign buyers compared to the last report. However, foreign buyers spent just $102.6 billion on the properties, a 1.3 percent decrease in spending year-over-year.

The types of properties that are being purchased by foreign investors and the locations of those properties has a lot to do with the decrease in spending, according to the executive vice president of Ten-X. Another factor that may be affecting foreign real estate purchases is the fact that there are fewer nonresident foreign buyers and more resident foreign buyers. A strong U.S. dollar and high home prices in major U.S. cities may also be causing foreign buyers to look into less-expensive real estate markets.

A residential real estate investor with properties in small Midwest cities may have an opportunity to sell to foreign buyers that are now interested in those kinds of properties. Before going forward with a real estate transaction involving a foreign buyer, an investor may want to talk to a lawyer about how best to structure the deal.

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