Back in law school, I studied abroad for a year in the United Kingdom. It was one of the best times of my life, and I made lifelong friends from around the world. In fact, one of my best friends still to this day was a study-abroad student from France.
A few years ago, she was recruited to work for a consulting company here in the United States and was granted an H-1B visa. She makes good money, and she often contemplates buying a vacation home her extended family could use when they visit. When it’s vacant, she’d like to rent it out as an Airbnb.
Non-Americans purchased over $100 billion in U.S. real estate in 2015, the most recent figures available. But for property owners who opt to rent their vacation home, like my friend would like to do, there can be some challenges due to the current laws, specifically those concerning H-1B visas.
Fortunately, there is a workaround available to non-American property owners who want to earn an income from renting out their vacation home — a property manager.
What Is an H-1B Visa and How Does It Impact Vacation Rentals?
It’s estimated that 700,000 individuals hold non-immigrant H-1B visas in the United States, with more than two-thirds working in the IT field. These work visas allow highly skilled non-Americans to work in the country for three years, with the option to renew for an additional three years before they are required to leave the country for one year before re-applying.
A number of H-1B visa holders may opt to purchase real estate, which can be used as a source of revenue. But therein lies the problem because while visa holders are allowed to work in the United States, they are not permitted to own a business and work at that business.
Real estate that is used as an investment property falls into the realm of a business venture and as such, H-1B visa holders cannot own and manage the property because management is akin to employment in the eyes of the government.
In fact, this is true of all investments. Another example would be a non-American H-1B visa holder who holds stock in a company or maintains another form of business ownership. In this situation, it would be considered a violation if the person were to assume an active role as an employee of the company where he or she held stock.
This places H-1B visa holders in a challenging position because vacation rentals do require property management. It’s virtually impossible to maintain this type of property without someone to oversee property management tasks, from arranging maid service and lawn care to tending to repairs and upgrades, overseeing bookings, and managing marketing efforts in an effort to increase the number of bookings.
But there is a workaround.
How Can an H-1B Visa Holder Own a Vacation Rental Property?
Since visa holders are allowed to own a business, non-Americans are certainly free to purchase investment real estate and make rental income from that investment. To avoid maintaining an active role in the management of that business venture, these property owners can opt to hire a property manager who can tend to the vacation home’s oversight on their behalf.
Notably, expenses — including property management fees — can qualify as a tax deduction. Many vacation homeowners find that their revenues actually increase when they hire a property manager. Property managers can increase bookings and the amount you can charge per booking. They can also minimize damages and losses from theft and improve your guests’ overall experience, thereby increasing the chances that you’ll see repeat bookings.
Hiring a property manager to oversee your vacation rental can also be beneficial for any non-Americans who ultimately decide to leave the United States in the future since it’s virtually impossible to manage the property from a significant distance.
Additionally, H-1B visa holders are typically highly skilled workers, many of whom work in a lucrative field. In fact, the average salary offer for these workers in the fiscal year 2015 was $79,201. This is approximately twice the typical American’s salary. Many visa holders may find that they are better suited to maintain an active role in their primary business venture while allowing a property manager to oversee their vacation home rentals.
Will President Trump’s Proposed H-1B Visa Changes Affect Real Estate Investors?
There have been three proposed H-1B visa overhauls offered up by lawmakers, including one proposal that would give visas to the “highest bidders.” Currently, these visas are issued on a lottery basis. In 2016, the volume of applicants was three times greater than the 85,000 available H-1B visas.
It has also been proposed that students educated in the United States would receive preference, and President Trump has indicated that he would like the Department of Labor to be afforded greater authority to perform in-depth audits and investigations into foreign applicants and H-1B visa sponsors.
With these changes in mind, there is no indication that Trump’s proposed H-1B visa changes would have any real impact on the real estate industry. Assuming no additional changes are proposed, the revisions should not have any impact on visa holders who choose to purchase a vacation home.
If you’re an H-1B visa holder who is in search of a property manager for your vacation home, turn to Rented.com. We’re your source for some of the nation’s most sought-after property managers. Create a free account to receive offers from property managers who are ready to manage your vacation property. Get started today at Rented.com.