Market Data

A World of Opportunity

Immigrant Entrepreneurs Translate into New Business Possibilities.

Immigrant businesspeople represent a viable market segment that is revitalizing the commercial real estate market in urban neighborhoods as well as in towns on the outskirts of big cities. Enclaves of immigrant businesses have brought new life to moribund commercial districts in Houston, Los Angeles, Chicago, and New York. Increasingly, immigrants’ presence also is growing in smaller cities, especially in California, Florida, Illinois, New Jersey, New York, and Texas, the six states with the largest numbers of immigrants.

Immigrant-owned businesses comprise a market too big to ignore. About 700,000 legal immigrants enter the United States each year. Half of those come from Latin America and another 25 percent from Asia, according to an E&Y Kenneth Leventhal Real Estate Group report. Collectively, immigrants earn more than $240 billion a year, and they are more likely to own small businesses than native-born Americans — 18 percent of all small businesses are started by immigrants, and immigrant-run companies account for 23 of the 200 best small companies, according to the Forbes magazine Web site (

Foreign nationals arriving in the United States today come for the same reason that brought European immigrants at the turn of the century: They seek better economic opportunities. In turn, they offer a new source of capital for real estate investment and represent an opportunity for brokers and consultants. Those who have the patience to target a particular group and overcome the barriers of language and culture may be well rewarded. Given the close-knit nature of most ethnic groups, a successful venture can translate into a steady stream of referrals.

Settling Down
Immigrants rely heavily on personal and family ties, often settling in areas where others from their countries have established roots. As others follow, ethnic retail businesses spring up to serve the new community — grocery, clothing, and department stores — followed by services such as travel and insurance agencies and law firms.

Because foreign nationals may be hindered by a lack of English-language skills, they often have limited employment choices. Going into business for themselves can be more feasible than competing in the outside job market. In addition, members of the same ethnic group may have established a presence in certain types of businesses. Many times an early immigrant learns a business and then teaches it to extended family members. As a result, Koreans have become identified with dry cleaning establishments, Indians with convenience stores and motels, and Vietnamese with nail salons.

But don’t think that immigrants only deal in small mom-and-pop service and retail ventures. Many immigrants from places such as Korea, Taiwan, China, India, Pakistan, and Bangladesh, skilled in computer science and engineering, have made their marks as high-tech entrepreneurs, particularly in California’s Silicon Valley. The growing New York Indian population has branched out into gas stations, the garment and jewelry businesses, and electronics and appliance stores.

As a group, immigrant entrepreneurs can be a powerful economic force, often reviving declining business communities. In 1979, Chinese immigrant Charlie Woo started an import toy business in an east Los Angeles warehouse district. Over the years, more than 100 Asian toy businesses followed him there, creating what now is known as Toy Town. Today, Woo runs Mega Toys, a $30 million toy business, and leases out many of the surrounding warehouses to toy distributors, importers, and manufacturers.

Types of Transactions
Immigrant entrepreneurs enter into the same types of transactions as domestic clients. They start businesses, lease space, and buy and sell buildings and land. They often are eligible for the 504 Small Business Administration loan program, which loans up to 95 percent of start-up costs for a small business including real estate acquisition.

However, foreign nationals often must deal with additional considerations that don’t affect domestic clients. Immigrants who are not permanent residents must follow special reporting requirements when buying or leasing farmland, due to requirements under the Agricultural Land Transfer Act, and land close to military facilities, which is regulated by the Hostile Nations Act. Also, setting up an ownership entity requires careful consideration. Transferring a business or property can be a problem, as estate transfer regulations differ. For example, citizens have an estate exemption of $625,000 each, while non-citizens have only $60,000.

Tax issues also are involved. Residency status can cause worldwide income to be taxable in the United States. In addition, the treaties the United States has with different counties specify how each country’s foreign nationals are treated here, in terms of income tax exclusions and types of visas that are most advantageous.

Under many conditions, the sale of property is subject to withholding. According to tax rules, the buyer or tenant of a property owned by a nonresident alien is responsible for withholding 10 percent of the sale price or 30 percent of passive income from remittances. Attorneys usually handle the reporting for a sale and property managers handle it for rental units, but brokers are liable for the taxes up to the amount of the commission.

Risk Factors
Dealing with immigrant clients can pose a few risks; a significant one may be the reliance on unconventional financial resources. The inability of illegal immigrants to access legal financial channels has led to the growth of an underground banking industry in large cities, in which large immigrant populations from specific regions have congregated. Legal immigrants may feel more secure using these "institutions" where their language is spoken for services such as sending money home, savings, payments, and loans. But because of their unauthorized and unregulated nature, these institutions can get into trouble, close up shop, and disappear.

However, don’t confuse these operations with informal financial assistance plans that many immigrant groups use. Koreans, for example, rely on a kye system, a lending circle created among close friends and relatives to combine financial resources to start businesses.

In addition, large immigrant populations often have their own commercial banks. For instance, Los Angeles County has 19 Chinese banks worth more than $5.1 billion in assets. Many urban banks recognize the potential of the immigrant market and often staff their branch offices in immigrant neighborhoods with representatives who speak the residents’ language.

Locating the Market
Most large cities have concentrations of immigrants; successful immigrants often migrate to specific suburbs surrounding big cities. For example, Skokie in suburban Chicago has seen its population shift from predominately Jewish residents to Asian and Indian immigrants.

To determine the growing immigrant populations in a market, research population trends and use personal observations. Observe the types of ethnic grocery stores in an area. These require a certain number of people to survive and indicate a critical ethnic mass.

After selecting your target market, look for ways to advertise to that group. In any large metropolitan area, immigrant groups have their own newspapers, radio stations, and social clubs. An advertisement or a presence in any of these is helpful.

Be aware, though, that some tried-and-true business practices may not bridge the culture gap. Many groups put a significant emphasis on personal relationships and referrals — a cold call in these societies is considered rude. Instead, people initiate business relationships after a formal introduction — usually through a family member. A relationship progresses through certain phases until the parties know each other well enough to do business.

Since many immigrants rely on personal referrals to choose the people they trade with, take the time to build a relationship and then provide excellent service when needed. As always, actions speak louder than words: Handling your first transaction in a competent and responsible manner will earn respect and referrals.

Part of building a relationship is learning about another culture, which also will help in developing marketing ideas. Locate and visit immigrant business associations and chambers of commerce in large cities; look for county- or statewide organizations in smaller towns.

When marketing to particular immigrant groups, speak their language. Have your business card, brochures, and Web page translated into the target language.

It may be useful to hire a part-time translator/interpreter. Local leases or sales transactions usually do not need to be translated, but make sure they are well understood. As a precaution, have clients dictate a native-language memorandum outlining their understanding of the documents. Certified translations of all documents are an absolute necessity for transactions outside of the United States.

Building Networks
Maintaining relationships with immigrant clients requires great diligence and attention to cultural and personal details. Foreign clients still may have real estate or business dealings in their native countries and may expect you to handle these transactions. To do this well, build up several kinds of networks.

Develop a network of professionals who deal in international affairs, such as real estate attorneys, immigration attorneys, international accountants, translators, interpreters, and contractors. Look for professionals who specialize in the same ethnic group. This is especially true with accountants. Thoroughly check the references of all associates, because their mistakes will reflect poorly on you.

Some Basic Differences
The clock works differently when dealing with immigrant clients, either on domestic or international transactions. Everything is more complex and therefore slower. If money has to come from abroad, verify when and how early in the transaction. Be informed about currency trends because a change in currency exchange rates quickly can kill a deal.

Immigrants sometimes bring large sums of cash to the table. Get a certified check from a bank and make sure a cash receipts transaction report is filed. Copies of cash showing serial numbers can be used for capital verifications for mortgage companies and landlords.

Going Globally Locally
Working with immigrant clients is not for everyone. In general, it takes more effort to gain the trust of immigrants, but they repay this trust with personal loyalty and referrals. If you have the patience and other unique characteristics that will enable you to succeed in this field, a whole new source of clients and challenges awaits you. Do a little market research in your area. Maybe the global marketplace is closer than you think.

David Segrest, CCIM, CIPS

David Segrest, CCIM, CIPS, is president of Segrest International Realtors in Charlotte, N.C. He specializes in the acquisition, disposition, and management of income-producing properties. Contact him at (704) 331-0433 or


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