Investing in the U.S. Dollar: Maximize Returns with U.S. Real Estate

Imagine your savings and investments growing steadily, buffered against market uncertainties, in a currency known for its stability—the U.S. dollar. For many international investors, now may be an opportune time to capitalize on U.S. opportunities, especially in real estate, where returns have historically outperformed other asset classes. This article explores why and how international investors can leverage the strength of the U.S. dollar, especially through real estate investments, to secure substantial and reliable growth over time.

Investment Strategies Using the U.S. Dollar

1. Saving in U.S. Dollars: Holding savings in U.S. dollars offers protection against currency fluctuations and inflation in one’s home country, acting as a hedge against local economic volatility.

2. Buying U.S. Stocks: U.S. equities provide exposure to some of the world’s largest companies, with average annual returns around 7–10%, though they carry market volatility risks. This option allows diversification and high growth potential but can be less predictable.

3.Investing in Real Estate: Real estate is a preferred asset class among international investors for its strong, steady returns.

• High Returns: Historically, U.S. real estate has provided stable returns through both rental income and property appreciation. In major markets, residential property prices have appreciated by an average of 5–7% annually over the last decade, with rental yields averaging between 4–10% depending on location.
• Access to Financing: Unlike many countries where financing options are limited for foreign nationals, the U.S. offers mortgage products like DSCR loans and foreign national loans, which allow non-U.S. residents to qualify without traditional income verification. This expands purchasing power, enabling investors to leverage capital efficiently.
• Stable Environment: The U.S. economy’s strength, combined with legal protections for property rights, provides a secure, predictable environment for real estate investments.

Is Real Estate The Best Way to Invest in the U.S.?

For international buyers, real estate in the U.S. offers several unique benefits:

1.Rental Income: Properties can generate consistent cash flow through rentals, particularly in high-demand markets like Miami, New York, and Los Angeles.

2.Capital Appreciation: Over time, U.S. properties tend to appreciate in value, offering long-term gains. For instance, cities such as Austin and Phoenix have seen property values grow by over 10% annually in recent years.

• Example: A Canadian investor purchasing a $500,000 property in Miami with a 25% down payment and a 7% mortgage could see significant returns over five years. With annual rental income at 6% ($30,000) and property appreciation at 5%, the property’s value would reach around $638,140. Total rental income would amount to $150,000, while mortgage payments would total $149,666 (mostly interest). After factoring in rental income, appreciation, and interest costs, the investor’s net gain would be approximately $159,140, reflecting a 127% return on the initial $125,000 investment. This demonstrates the robust growth potential of U.S. real estate for international buyers.

3.Tax Advantages: Foreign investors can benefit from tax deductions on mortgage interest, property taxes, and other expenses associated with investment properties. However, tax regulations can be complex, so consulting a tax advisor familiar with cross-border investments is essential.

4.Alternative Financing: Companies like Milo provide innovative financing options tailored to foreign investors, allowing them to purchase with a loan instead of cash, increasing flexibility and return on investment.

Current Trends in Foreign Investment

Recent data reveals significant insights into foreign investment patterns in the U.S. real estate market:

• From April 2023 to March 2024, foreign buyers purchased 54,300 existing homes—a 36% decline from the previous year—marking the lowest level of international investment since 2009.
• Despite challenges such as high prices and limited supply, foreign buyers still accounted for approximately 2% of total U.S. home sales. The average purchase price for international investors reached a record high of $780,300, with the median price at $475,000.
• Canada, China, Mexico, and India are the top sources of international buyers, with Canada alone making up 13% of foreign purchases. Florida remains the top destination for these buyers, accounting for 20% of international transactions.

In Summary For international investors, U.S. real estate offers a uniquely favorable investment environment. With the stability of the U.S. dollar, supportive financing options, and a resilient economy, this asset class provides opportunities for substantial returns. By investing in the U.S., foreign buyers can diversify their portfolios, benefit from both rental and appreciation gains, and enjoy a stable, high-growth market. Now is the ideal time for investors worldwide to leverage the strength of the U.S. dollar and capitalize on the opportunities that the U.S. real estate market provides.

The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.