US Real Estate: Smart diversification option for HNI Indians

US real estate: Smart diversification option for HNIs

The Economic Times
Deepa Venkatraghvan Nov 15, 2011, 04.42am IST

In the last few months a number of interesting trends have emerged that point to the rise of the US real estate market as an attractive destination for international investors, and quite significantly wealthy Indian investors. According to a recent survey by the National Association of Realtors USA, for the 12 month period ending March 2011, foreigners purchased close to 4% of homes in the US. Of this, Indian buyers accounted for 7%.

The reason is perhaps not hard to come by. Rohit Prakash, President – American Full House LLC says, “In the last few years property prices in India have risen significantly. Investors who invested at the lows in India have gained from this rise. They are now looking at booking profits and investing in other assets that are available at reasonable valuations. The US real estate market is one such avenue where prices are currently at the lower end of the range with potential for strong upside. In addition, while smaller investors may be hard pressed to find good properties at $100,000 in India very easily today, there are quite a few such opportunities in the US.”

Prakash, for instance, explains one way, “Once clients have decided to buy real estate in the US, we set up a simple holding company for their real estate with the client as owner. In the US, it is necessary to have a Tax ID number (similar to a PAN card), a legally registered US address and agent. Having a holding company accomplishes this as well as provides for liability cover and allows you to easily open up a bank account to receive rents and proceeds from sales. An operating agreement will give you (or your nominee) authority to approve all property purchases/sales and includes limits on normal operating expenses.”

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