As of early 2018, China owned at least 5 million US residential units and 1.6 billion square feet (1.4 million hectares) of commercial real estate in America. That’s more than half of all homes in the United States and nearly one-third of all office space!
This doesn’t include other types of property that it owns here like airports or utilities, which also add up significantly. All told, this is enough to make Beijing the largest investor in U.S. real estate.
It’s important to note that while some Chinese investors buy direct properties from American sellers, most use offshore entities to do so. This article will focus only on whether or not owning US real estate is a long term investment for China.
Disclaimer: The content below has been written for general information purposes only and should not be construed as legal advice. We invite you to consult with us about any legal questions you may have.
Is investing in US real estate a good long term strategy for China?
Many people believe that buying large amounts of US real estate is a great way to build wealth. After all, rich Americans are wealthy because they own lots of expensive houses.
But is this true when it comes to Asia?
China is already the world’s number two economy, just behind the USA. It boasts the fastest growing major market economy in the last decade and is expected to remain the worlds’ biggest economy for the next few decades.
US real estate market
The United States’ real estate market has been growing steadily for over two decades now, with more than half of all households owning a home.
But what most people don’t realize is that almost one-third of all homes in America are owned not by individuals, but rather corporations or other entities.
This includes things like business conglomerates, such as Berkshire Hathaway, which own large swaths of office space throughout the country, or investment firms, like BlackRock, who buy up huge tracts of residential property to keep rents stable.
These types of companies are only part of the reason why so many Americans have access to a good quality place to live, though — some just enjoy doing it this way.
Foreign ownership of US real estate
As mentioned earlier, there is significant foreign investment in United States real estate. This includes buying and renting homes, as well as investing in commercial properties or business ventures.
This isn’t necessarily a bad thing, but it can be concerning when it comes to understanding how much money is in control of our country’s economy.
Foreign investors tend to invest in expensive property that requires large amounts of income to maintain and operate, which are assets that earn very little return. The value of these investments may drop significantly if the investor chooses to sell, leaving you with no savings and a house that costs more to live in than it does to buy.
These fears seem particularly relevant now, given the recent volatility in the housing market and economic uncertainty caused by COVID-19. Many people who invested heavily in the housing market have lost their houses, cars, and financial security due to falling values and bankruptcy.
Many Americans feel like the wealthy few are staying rich while the rest struggle to keep up, but this perception ignores the fact that most new wealth is accrued through hard work and saving money, not inherited from parents or largesse.
There has been some speculation about whether countries including Russia and Turkey will try to take advantage of America’s current situation by purchasing key infrastructure or resources, but so far they haven’t indicated any interest in American real estate.
Reasons why China is buying US real estate
One of the biggest reasons as to why Chinese investors are investing in American real estate is because it’s easy to do so. It is not necessarily the best investment option, but it can be a very lucrative one if you invest properly in your business.
Many people assume that all wealthy individuals are rich due to them owning large businesses or successful investments, but this isn’t always the case. Some become wealthy through other means, like property investing!
China is a prime example of this. Since the country was first opened up to international trade in 1978, they have been steadily increasing their stock of real estate. According to data from Kooskia Investment Research, over $1 trillion worth of properties were owned by just five countries back in 2012-13.
This number has since risen dramatically. In fact, according to the most recent figures we have from 2016, China now owns more than $2 trillion in real estate.
Potential negative effects of foreign ownership
As mentioned before, there are some concerns about how much overseas investment is going into our real estate market. Many believe that this could pose a risk to Australia’s home buying experience due to high property prices.
There have been reports of wealthy foreigners being targeted in recent times. Home buyers with less than perfect credit histories have had trouble getting loans to purchase properties because of suspicions they will not be able to pay back the money.
This is clearly not good for the economy as a whole or for individuals who want to buy a house. It also puts pressure on houses that are already overpriced!
Australia has quite an extensive system of real estate regulation that is protected under law. These include things like disclosure obligations, restrictions on when you can sell your own home, and even requirements to notify other people if you decide to move out.
These protections exist so that everyone knows what is happening with their house and what rights they have as owners.
Fortunately, we do not seem to have many cases where this has happened recently. So far, most reports describe people feeling uncomfortable around these investors but nothing too serious.
However, it is important to remember that investing in real estate is a risky business. People lose lots of money doing this all the time!
Foreign investment may still pose a threat to those looking to buy a house at present, especially if very expensive homes remain beyond their budget.
How to become a US real estate agent
Being an American property professional is one of the most demanding jobs in the world. You have to be licensed as both a broker (for buying) and a salesperson (for selling). There are also various licensing requirements for representing clients as buyers or sellers depending on your state.
In addition to all these licenses, you will need to be well-rounded in business, finance, economics, geography and more!
Given how competitive the housing market has become, many states require that you go through additional training and testing to verify that you can do this job.
It’s important to note that although it may sound like a lot, not everyone needs to be licensed as a broker or a salesperson. Some people only deal with individual home owners or investors so they don’t need a brokerage license nor do they need to take advanced courses such as financial literacy or marketing strategies.
However, if you want to grow your career beyond being a residential real estate agent, then getting at least one of those things done is worth looking into.
How to start a real estate business
Starting your own real estate company is not for the faint of heart, nor does it come with a guarantee of success! If you have a passion for real estate and want to make money investing in properties, then the best way to do so is as a professional broker or property agent.
Both are similar but one is more lucrative than the other dependant upon what area of investment you choose. The most powerful way to invest in real estate is through buying a residential house and renovating it.
This article will go into detail about how to be a successful real estate investor without owning a single property yourself.
What is dividend investing?
A dividend is an income payout made by an organization. This can either be large sums of money or proportionate amounts depending on the company. Some companies pay out dividends once a year while others may only need monthly payments.
Dividend investing was invented back in the 1940’s when investors could earn high returns by choosing between stocks that paid regular dividends and those that didn’t. Since then, this strategy has grown in popularity due to its potential profit.
You don’t have to hold each stock long enough to reap the benefits though – some give you just a few days to enjoy their earnings before they are forgotten about! As such, there are many web-based dividend trading platforms available these days where you can quickly buy and sell a stock with little effort.
Do I need a visa to live or work in the US?
The other major topic related to real estate is whether or not you need a visa to reside in the United States as a non-US citizen. This article will discuss some of the issues surrounding this. If you have already read my articles about all the ways Chinese investors can buy property in the us, you are well on your way to investing!
First things first, what does it mean to be a resident alien of a country? What documents prove residency in the USA? These questions really depend on where you live in America and how long you intend to stay.
The length needed to establish residency varies depending on if you are renting or buying a house, and if you are staying for a short period of time (less than 6 months) or longer (more than 2 years).
There are three main factors when determining if someone is considered a resident of the United States: their residence, their employment, and they must declare an intent to remain in the state for at least six months. All three of these must occur within that time frame for it to be valid.
Tips for starting a US real estate business
Being able to understand the laws related to owning property in America is one of the most important things you can do as an entrepreneur looking to start a real estate business.
Landlords are obligated under federal law to register their rental properties with either your state or local government, so make sure to check that out first!
While it’s not mandatory to be licensed as a broker or agent, it is recommended. Starting off without being officially registered can cost you money later, especially if you want to take advantage of tax breaks and incentives.
There are many ways to become licensed as a real estate professional in the United States including taking courses, passing exams, and/or filling out applications.