Overview of US real estate owned by foreign entities
There are many ways that foreign entities can invest in US real estate. We’ll walk through the three main types of investments that foreign entities make in US real estate. Equity Investments are the ownership of stock in an American company that owns or finances real estate. Debt Investments are the purchase of bonds or loans from American companies that finance real estate. Real Estate Investments, like Canadian investment in US real estate, are when foreign entities purchase real estate in the US to earn a profit. The US government tracks real estate investments by foreign entities through a system called Foreign Investment in Real Property Surveys, or FIRPS. FIRPS tracks both the number of foreign investments in US real estate and how much those investments are worth. It’s important to note that FIRPS only tracks investments that are worth more than $100,000. So, it doesn’t track every real estate purchase made by foreign entities. FIRPS data shows that most of these foreign real estate investments are in commercial real estate, such as office buildings or industrial parks. That’s because commercial real estate is easier to finance than residential real estate, like single-family homes.
Reasons why Canada is the biggest foreign owner of US real estate
Canada and the United States have a close economic relationship, and real estate is no exception. Primarily, Canadian investment in US real estate is concentrated in the Northeastern United States. Canadian investment is so strong in the Northeastern US that it’s one of the largest foreign owners of property in New York City. In addition to the Northeast, Canadian investment has grown in areas like Texas and Washington State. Canadian investment has grown to be the largest foreign ownership of US real estate for a few reasons. First, Canada and the US have reciprocal tax treaties that make it easier for residents of each country to do business in the other.
History of Canadian investments in US real estate
Like many other investments in real estate, Canadian investment in US real estate has been around since the colonial era. The first large influx of Canadian investment into US real estate occurred during the Great Depression. At the time, the Canadian government offered loans to US citizens, allowing them to purchase Canadian goods and repay those loans with real estate. This program helped many Americans stay in their houses and Canadian investment in US real estate grew. Canadian investment has grown even more in the 21st century. Canadian investment has grown in Texas and Washington State, as well as the Northeast, where it has long been strong.
Benefits of Canadian investment in US real estate
The benefits of Canadian investment in US real estate are numerous. First, it establishes a close economic relationship between the two countries. It also gives Canadians easy access to the American real estate market, which has historically been very safe from economic downturns. Canadian investment in US real estate also bolsters the American economy. Canadian investment helps American companies and Americans stay in their homes and keep employees on staff.
Comparison between Canada and other foreign entities in US real estate
While Canada owns the most US real estate, many other countries also own large sums. China owns the second-largest amount of US real estate. Chinese investment in US real estate is growing in both commercial and residential real estate. British, Australian, and Indian investors are also large owners of US real estate.
How to get involved in US real estate investing for Canadians
There are many ways that Canadian investors can get involved in US real estate. You can invest in existing properties, purchase properties as part of a syndication, or even build new properties. Investing in existing properties is the most common path. To do so, you’ll need to find a way to access the US real estate market. Investing in US real estate requires US citizens or residents to act as the owners of the property. There are ways that foreign investors can get involved, but it’s a complicated process.
Canada’s large ownership of US real estate is important to consider as it shows the strong economic relationship between the two countries. It also shows Canadians’ access to the relatively safe US real estate market. Canadian investment can also be helpful for Americans, and it can help maintain the economic health of the US. If you’re a Canadian investor looking to get involved in US real estate, you have many options. These include investing in existing properties, purchasing properties as part of a syndication, or even building new properties.
