How To Invest In Chinese Real Estate

America is at risk of becoming the fountainhead of a new inflationary outburst. The U.S. dollar is now in decline, gold is moving sharply higher and new global …

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America is at risk of becoming the fountainhead of a new inflationary outburst. The U.S. dollar is now in decline, gold is moving sharply higher and new global currency turmoil is on the horizon. The Federal Reserve’s actions are clearly inflationary. The US is printing money as fast as it can, while destroying wealth and capitalism.

The total monetary base, already at astronomical levels, is now expected to take another big hit with the new Fed policy of buying up U.S. longer-term treasury bills in a bid to drive down long-term interest rates.

With limitations of acceptable risk levels of traditional US investments, there is an alternative to consider: Chinese real estate.

11 Reasons to Buy Chinese Real Estate

  1. Because inflation is coming (see article)
  2. There is ZERO property tax in China!
  3. There is ZERO capital gains tax in China!
  4. Foreigners are free to own Chinese real estate
  5. The US Dollar is getting weaker
  6. Because there are no attractive alternative investments in the US without significant risk
  7. With a huge Chinese population, real estate prices are extremely stable
  8. China is a cash-based economy. USA is a credit-based economy. This makes China real estate extremely stable.
  9. This investment can be self-directed in an IRA or 401(k) account
  10. Asia is a huge growth opportunity (see article)
  11. Even buying US property at low prices does not guarantee safety.

How Do You Know Which Properties To Invest In?

Just like America, real estate is about “location, location, location”. That being said, there are some cultural differentiators that should influence which properties you should buy. For example, there are suburbs of Shanghai that are growing very quickly. We recommend certain areas, and not others. Your property should be located next to major transportation hubs. Your property should be newer, not older, in most cases. We also recommend that you be near some of the foreign-owned areas which tend to have exceptional amenities.

How Much Money Can I Make?

Obviously, with any investment, we don’t attempt to predict returns. However, here’s what we believe: as US dollars become “inflated”, that is, they become worth less, it will take more dollars to buy the same asset. If the asset is not influenced by dollars (aka, foreign real estate), then that property will be worth many more US dollars over time. Therefore, even if your property does not appreciate (which we also believe is unlikely), then the value will trend up with an inflated dollar. We believe Chinese real estate can provide a great return even as US real estate prices fall.
All of that being said, the Chinese economy is still growing at a robust 7%. That growth rate combined with inflationary US dollars, no taxes, and no capital gains tax will accelerate your returns

How Do I Get Started?

You will need to open a bank account in China and you will need to travel there. For an investment of this size, you would probably want to view your investment regardless. A company like ChinaRealEstateNOW.com can assist with travel plans and provide financial details and walk you through the entire process.

Here are some common questions concerns about investing in Chinese real estate

What Are the Risks?

Like any investment, there is an element of risk.  But what is the risk if you keep your money in CDs in the United States? In many instances the perceived risk is different than the actual risk.  If you wish to sell your property in China using a realtor, then you simply get a realtor to manage the transaction, and the title company will wire you money wherever you wish.

Is It Safe To Invest In China?

We believe so. Shanghai, Beijing, and surrounding areas are still growing, and the government of China has a great interest in keeping real estate prices stable. Shanghai (our favorite) is a very safe, international city. The economy is still growing, and many foreigners live, work, and own property there.  The government is extremely stable and they realize that their economic future is dependent on stable real estate prices. With inflation and devaluation of the American dollar coming, we believe it is more dangerous to leave your money in US currency in American banks. Shanghai is a world-class city. It always has been and we believe, will continue to be. A comparable flat in Shanghai for $1MM USD in New York City is $5MM+.

How Can I Get My Money Out?

China has reputable title companies that can wire money overseas, just like the United States. When you sell your property, you simply have the title company wire funds to any account you choose.

Investing Overseas Is Scary. How Can I Trust You and the Chinese?

Many Americans own property all over the world. Many Americans own retirement property in Mexico, Europe, and South America. Many Jewish-Americans, for example, own “flats” in Israel. While we cannot predict the future, some people may say that China’s government is much more stable than any government in Mexico or South America. Considering the recent strength of the RMB (China’s currency) and its strong cash position in the world, we expect China (and all of Asia) to continue to strengthen economically in the future.

Is It Un-American To Invest In China?

China is the largest purchasers of US debt. They buy most of our Treasury bonds. Our countries are the largest trading partners in the world. Many Chinese individuals own United States real estate. They don’t do it because they like us. They do it because it’s in their interest to do so. Our economies are tied together. We believe trade between our countries is a good thing, and this relationship keeps us out of conflicts. Money often times is a more important influencer than "politics".

Can I Lease My Property?

Yes. There are many English-speaking property management companies in Beijing and Shanghai.

How Are Taxes Handled?

If you earn a capital gain on your property, and the proceeds are wired to you back in the United States, you are required as an American citizen to report that gain to the IRS. However, if you keep your money in China, there are no taxes.

Can I Get A Mortgage?

Unless you are a Chinese citizen, it is difficult to get a mortgage. However, we have some very attractive properties outside of Shanghai proper around $60,000. If you are capable of buying properties at $1,000,000+, we can introduce you to Hong Kong bankers who can give you a mortgage with 30% down payment.
 

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