Everything You Need to Know About Buying US Assets as a Foreign National

Contrary to what some may believe, it’s possible for virtually anyone — regardless of where in the world they are located — to buy real estate property in the US. According to HG Legal Resources, “the United States treats sales of real estate to foreigners almost the same as sales to citizens.” In fact, wealthier foreign nationals with access to more capital routinely buy vacation homes, condos, and multi-unit apartments.

Even more surprising, however, is not only that any foreign national is able to buy real estate property or other physical assets in the US, but that they are able to do so regardless of how much money they do or don’t have. That is, so long as they know where (and how) to look for the right property at the right time to purchase using asset-based lending.

This strategy has allowed many foreign nationals to become successful real estate investors in the US, including native Canadian Marco Kozlowski. For nearly 30 years, Kozlowski has been able to scale his real estate business by purchasing properties in the US through asset-based lending as a foreign national; all without having to use any of his own money or credit. Now, Kozlowski is helping to coach other foreign nationals with a keen eye for investing in US real estate on how to do the same using his industry knowledge, experience, and strategies.

The US banking system has power in numbers

One of the primary advantages of investing in US-based real estate as a foreign national is the sheer number of banks and lending institutions the country boasts. As of 2021, there are more than 4,500 FDIC-insured banks in the US, meaning that once you put money into an account with one of these banks, that cash is protected by the US government. The US also claims roughly 8,000 secondary (i.e., smaller) banks, along with hundreds of thousands of private lending institutions.

When Kozlowski first began investing in US real estate in 1999, he was a struggling concert pianist. Though he was already dabbling in real estate at the time, he started looking for ways to access cash to buy properties in the US as a Canadian because US dollars are historically worth more and green-backed; two benefits he was unable to find in his native Canada.

“With way more banks in the US than in Canada,” says Kozlowski, “that means more competition. Each bank has an appetite for lending in its own way to attract new customers. After talking to hundreds upon thousands of different US banks, I realized there was something called ‘asset-based lending’—loans that are given based on a property or asset’s value, rather than its purchase price. This was a complete game-changer for me.” 

The value of asset-based lending over credit-based lending

As Kozlowski explains, most Canadians are familiar with credit-based lending, in which they go to the bank and the bank asks for pay stubs, tax returns, financial statements, “just about everything short of your firstborn male child and a blood sample,” Kozlowski says, “and maybe they can get you approved, but it’s a pain that not everyone can go through.” 

To add to the hassle of credit-based lending common to many foreign nationals, most will find they often need a significant amount of cash to put down (often 20% of the price or higher) whenever they purchase an asset in their native country. If one has too many loans or properties, or the bank deems the lending risk to you is too high, denial is a common result to be expected. This holds true no matter how much money a foreign national looking to invest in US-based real estate or assets make (or don’t make), and regardless of how good or profitable that deal is they are trying to grab.

“With asset-based lending in the US, it’s the exact opposite,” Kozlowski continues, “it’s a very specific kind of loan with a very specific lending institution. They lend on value — on the basis of the deal — not based on your creditworthiness. It’s black and white compared to lending systems in most other countries since there are no credit checks or personal guarantees. It doesn’t matter if you’re living in the US, Canada, or anywhere else in the world. You don’t even need to have an SSN because asset-based lending is completely based on the cash-flowing asset itself.” 

According to Kozlowski, most of these banks, institutions, and private equity funds based in the US will lend up to 70% of the value of the cash-flowing property, rather than its purchase price. That means that when a foreign national buys their first property with a 30% discount, they don’t need money or credit to come to the closing table. 

“As long as you know what you’re doing and present a deal in the right way,” adds Kozlowski, “there’s no need to worry about risking all your assets in Canada or wherever they are, no matter what you have or don’t have by doing a deal in the US. They only care about the cash-flowing asset. You just need to know how and where to look for them.”

How to identify and find distressed sellers in the US

As a foreign national, there are two immediate advantages to doing business in the US: the Freedom of Information Act (FOIA) and the Privacy Act. The former, as Kozlowski explains, is one of the strongest tools that foreign nationals looking to acquire real estate assets in the US through asset-based lending have at their disposal. This is because the FOIA allows them to find which property owners in need of quick cash in exchange for equity on their property.

“Canada’s privacy act prevents you from getting information on anyone at all,” Kozlowski says. “However, with the FOIA in the US, you can find people that are behind in payments, have medical issues, who are going through a divorce, or that are of retirement age and entering the US’s social security program. There are so many things you can find for free if you know where to look. It can sound a bit terrifying as a foreign national to know that someone with an app can find out basically anything about you financially if they know where to look, but remember that you’re not doing anything malicious by utilizing the FOIA; you’re helping folks that need to sell their property quickly in exchange for quick cash—cash you get from asset-based lenders.”

By knowing what types of distressed sellers are out there, as well as how to find them in the US as a foreign national, it can be possible to get funding from an asset-based lender to acquire their property in as little as 10 days. According to Kozlowski, this process is almost like having your own checkbook to write on the right assets for the right price, so long as they can come down to the right numbers. This allows foreign nationals to have easy conversations with distressed sellers who need money faster in exchange for some equity (or 30% off) on their assets. 

“In Canada, it’s impossible to compile this kind of information you can get in the US completely for free,” explains Kozlowski, “and since the money, loans, asset-based lenders…everything…is available in the US, this means that so long as you can get the right property at the right price, you’re going to make money.” 

For foreign nationals looking to buy real estate property or other equivalent assets in the US, it’s important to remember that you’re not putting people in foreclosure or through a lawsuit. Rather, you’re helping those that need quick cash by covering what they need now with asset-based lending.