Most investors expect the still-young Joe Biden presidency to mark a return to a new “normal” for U.S.-bound investment. The U.S. has for a long time been the world’s largest recipient of foreign direct investment (FDI), but the unpredictable legislative and regulatory environment of the past four years have seen many investors hit “pause” in their plans to establish or expand U.S. business operations, and to purchase real estate for either business or personal reasons.
Above all, real estate investors want predictability, and though the foundations of the U.S. economic, political, and regulatory environment are familiar and reassuring to investors, deviations from established practice in the areas of immigration and trade policy caused many business leaders to postpone U.S. real estate investment plans during the Trump Administration.
The good news is that President Biden has quickly moved to undo the former administration’s policies on immigration (which created visa uncertainty for investors), and Secretary of State Anthony Blinken and Special Presidential Envoy for Climate John Kerry have been busy shoring up relations with America’s allies.
The U.S. real estate market has historically been perceived as a safe haven in times of economic uncertainty. Today, low interest rates and taxes, a relatively stable U.S. economy, and the liquidity and transparency of the domestic real estate market have contributed to an acceleration of real estate activity – including record amounts of foreign investment.
At the same time, given the complexity of US law, with its multiple jurisdictions (e.g. federal, state and municipal), as well as real estate regulations that can differ by region, careful planning and counsel is important for all U.S.-bound real estate investors.
As an example, there can be dramatic regulatory differences for developers between a property located within New York City and another located a few miles away on Long Island. An unwary investor – and we have seen this time and time again – can find a project (with its attendant financing) unable to move ahead because required permissions have not been obtained from regulatory agencies.
There are, of course, tax considerations as well, with companies and individuals investing in the U.S. subject to separate federal, state, and local taxes regardless of the taxpayer’s residency.
There is much more to real estate investment than taxation, however.
Taking a Holistic Approach to Real Estate Investment Advisory
We approach real estate investment from a holistic perspective, identifying and overcoming the issues investors may face in pursuit of their objectives.
Issues to consider include the selection of potential joint venture partners; identifying and dealing with trustworthy real estate brokers and securing finance on favorable terms; retaining experienced construction professionals, such as contractors and architects; then navigating the process of negotiating and signing contracts with all the parties and, subsequently, conducting the necessary due diligence to understand the legal risks accompanying the acquisition.
Failure to understand and address regulatory issues that may be unique to a particular jurisdiction can have catastrophic consequences for a real estate investment.
Something we have also found helpful to many of our real estate clients is our long experience internationally. Our real estate attorneys speak many languages, including Chinese, Russian, Spanish, French, Portuguese and German, and our understanding of how real estate markets work in other countries helps us ensure that our clients are invested comfortably in U.S. markets with minimal risk and an eye to maximum returns.
If you are a foreign individual or company looking to establish (or further develop) a real estate presence in the U.S., some of the issues you will face include:
- Finding the best location and negotiating the best price
- Acquiring the property after conducting necessary due diligence to understand and minimize legal and business risk
- Navigating complex regulatory structures
- Structuring sensible financing
- Making strategic entity decisions and minimizing tax liability
- Obtaining necessary permits and licenses for construction and operation
- Dealing with zoning, restrictive covenants, and encumbrances
- Finding and enlisting construction, title, and other service providers
- Preserving anonymity when possible
Many laws and regulations govern business operations in the U.S. – what’s most important is to be as informed as possible about the operational and legal contexts relevant to your business, and to get sound legal advice every step of the way when you’re making investment and business decisions.
Our domestic and international lawyers have decades of commercial real estate experience, including as published authors, frequent lecturers and panelists at conferences and seminars, and law professors. We also are experienced real estate litigators, bringing strong negotiation and risk mitigation skills to every transaction.