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US lending to foreign investors

Discussion in 'General Property Chat' started by Ozzie in Texas, 11th Nov, 2015.

  1. Ozzie in Texas

    Ozzie in Texas Well-Known Member

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    Reposting here .......

    There are loans geared to foreign investors. But nothing that I could find that meet the needs of a new US resident. And seriously, I spoke to dozens of them.

    That is - until yesterday.

    By chance, I had offered to check out lenders on behalf of a fellow Aussie who was interested in investing in San Antonio.......and I scored for both of us. A local bank who offered non-US citizen financing from as low a 3 year fixed at 4.99%. And was willing to finance me as well under the same terms.

    In the US, lending .......even accessing a credit card......is based on FICO score, which in turn is based on your history of paying bills, dealing with credit/making payments, etc. Your credit score determines how much money you can access and what interest rate you will be charged. The lower your score, higher the rate of interest.....and lower funds availability.

    My hubby hasn't lived in the US for about 15 years and his credit score was worthless when we returned. Mine, was non-existent.

    To build credit quickly, we've taken out secured lines of credit - i.e. $ for $ secured loans and credit based on our own funds.
     
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  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    Thanks.

    For you or anyone else who might know - for us Australians wanting to buy there - how would credit scoring work since we haven't borrowed there before?
    What LVR do you think would be available?
    Are the loan features similar to what we'd find here?
     
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  3. JohnPropChat

    JohnPropChat Well-Known Member

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    If you don't mind me asking - are you guys over there on an E3 or is hubby a citizen/resident?
     
  4. Ozzie in Texas

    Ozzie in Texas Well-Known Member

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    Ok course I don't mind. My husband is a US citizen. We met while spending a scholarship year studying at University of California, Irvine in 1998. We immigrated back to Sydney in 2000 and after many trips back and forth, we decided to move back September last year.

    I came over on a K3 visa and praise the Lord - my permanent residency was proved a couple of weeks ago. The whole immigration process took almost 4 years.
     
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  5. Ozzie in Texas

    Ozzie in Texas Well-Known Member

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    Howdy again DT.

    LVR varies from lender to lender. Anywhere from 25 - 50%. Also, lenders in the US tend to specialise in certain markets / states.

    Lenders to foreigners are varied. There are a few banks and mortgage brokers who will lend at rates comparable to locals with at fair/good credit scores

    I would recommend finding a good lender and then base your investments appropriately.

    Alternatively, if you don't like those cities, you can swim with the hard money loan sharks who charge 14% + interest.

    But there is something there for anyone.
     
  6. Ozzie in Texas

    Ozzie in Texas Well-Known Member

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    I have 3 children, ages 9, 12 and 14. It was important to me that I found a place to live in the US that I felt would provide my children with a safe home as well as sound future prospects. After a ton of research, we settled on San Antonio, Texas.

    Texas, is the one of the most affordable places to live in the US. It’s a non-union State and thus, wages tend to be lower (and also one of the reasons major corporations find their way here)…..but cost of living is still relatively more affordable than other cities in the States.

    In comparison to other major cities in Texas, San Antonio is hands down even more affordable than Dallas, Houston and Austin.

    As I said elsewhere, San Antonio is expected to double its population in the next 10 years. It’s median age is 34. It’s home to a huge medical research centre, headquarters to a number of major corporations and 3 military bases, strong tourism industry……and thus, has a diversified economy and good property and rental growth.

    Unlike most other cities in the US, property prices in Texas…..and San Antonio…..were mostly unaffected by the property bust experienced elsewhere during the GFC. San Antonio is as safe as it gets. It enjoys a dry climate, it sits safely outside of the range of tornado alley, far away enough from the coast to suffer from hurricanes. It’s economy is strong – with lower unemployment rates than the national average.

    And that is how I decided on my first investment in the US.....and our eventual move to the US.
     
  7. Ozzie in Texas

    Ozzie in Texas Well-Known Member

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    From my research, there are lenders willing to finance deals in certain cities like California, Nevada and Florida. I also found a few in Texas. And I know that list isn't exhaustive.

    I know nothing about the Florida market. In all honesty, I don't want to live a place that is constantly under threat of hurricanes. That is just my choice/decision. No offence to anyone here who has decided to invest there.

    California - I LOVE the place. I don't like its economy and personally, IMO, property prices are expensive and better deals can be had elsewhere.

    Texas to me makes sense. Yes, it's hot. But it's a safe place to live and work and invest.

    We also don't have to contend with weather extremes. Personally, I didn't want to live or invest anywhere that experienced hurricanes, tornadoes, snow, earth quakes, etc.

    I know others here have ventured in the US property market as well.......and perhaps, they can share why they chose the market they did. That is - how they made their decisions.
     
  8. JohnPropChat

    JohnPropChat Well-Known Member

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    4 years! Wow, that's a long road home. I read that processing times for partner visas in Australia are also rapidly approaching 1.5 to 2 years.

    Would US banks lend to non green-card holders as well? Something like an E3 would be the typical case for aussies.
     
  9. Ozzie in Texas

    Ozzie in Texas Well-Known Member

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    I know. Painful. But I don't regret my decision. My children are thriving and excelling at school.

    In Australia, I was paying a small fortune to send them to Catholic schools.

    I spent hours and months to find neigbourhoods in San Antonio with excellent public schools. My children have access to educational programs here that they could never have accessed in Australia. My children are in advanced/ gifted and talented programs. One is pursuing theatre/arts. One in IT. And another in advanced math, science and English. And it's publicly funded education.

    And that is how I narrowed down my search area. By focusing on school districts and their ratings. Property prices closely correlate to school rankings. The better the school district, higher commanding property prices.

    Unfortunately, my application got catch up in a political bum fight over what to do with illegal Mexicans and their US born children. For a time, priority was given to those over anyone else trying to immigrate. It pushed processing times . Normal processing time usually isn't that bad...a year or two My timing was bad. Oh well. I'm here now.

    In relation to E3 Visa - I just googled it, because in all honesty, I didn't know what it was.

    As I said in an early post, the lender I spoke to personally yesterday was willing to fund/lend to foreign/ non-US citizens and residents. I just received my permanent residency here, but still qualify under their lending program.
     
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  10. Ozzie in Texas

    Ozzie in Texas Well-Known Member

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    I think that the same sort of investment and relocation decisions hold true in whatever market. You need to make decision based on principles of how anyone lives........and does it make sense to you.

    For example, it doesn't make sense to invest in a 1br rental in a family orientated neighbourhood.

    Does it make sense to invest based on price alone in rural/remote areas if you are going to struggle finding tenants......and the same applies to well-known ghettos in the US.

    Does it make sense to invest in area commanding high property prices but with lower rental yields than more affordable entry points with higher rental returns.

    Anyway - those are some of my opinions and experiences. I know others make decisions on different factors. These are mine.
     
  11. JohnPropChat

    JohnPropChat Well-Known Member

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    I was just looking up San Antonio. Zillow says there are close to a 1000 foreclosures. How is the current economic climate there? What are the current growth drivers?
     
  12. D.T.

    D.T. Adelaide Property Manager Business Member

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    Ozzie - do you know if there's any difference between getting finance for a single family home vs a multi?
     
  13. Ozzie in Texas

    Ozzie in Texas Well-Known Member

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    1000+ foreclosures in San Antonio sounds a little steep. I also did a search on redfin.com and it came up with a similar number.....however, when you look into the details, very few are genuine foreclosures. Auction.com currently has 72 properties listed in San Antonio.....and Fannie Mae has 28 and HUD has 15 listed.

    Just be aware that foreclosures often require renovations - and you need to keep that in mind when financing such a deal.

    San Antonio is the 7th largest city in the US. The unemployment rate in Texas is around 4%, compared with the national average is about 5%. It has a huge military presence with 3 bases - Fort Sam Houston, and Lackland and Randolph AFBs......but it also has a fairly diversified economy.

    Please excuse the cut/paste. It's easier to refer you to a link that tells you more if you want to know more about San Antonio.

    The City of San Antonio maintains a strong financial position with a “AAA” general obligation bond rating from all three major rating agencies. The Milken Institute has ranked San Antonio No. 1 on its Best-Performing Cities list.

    As the seventh-largest city in the United States, San Antonio is experiencing solid economic growth in 21st century industries such as bioscience and healthcare, aerospace, IT and cybersecurity and green technologies.

     
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  14. Ozzie in Texas

    Ozzie in Texas Well-Known Member

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    Last edited: 12th Nov, 2015
  15. MTR

    MTR Well-Known Member Premium Member

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    Ozzie

    I have sourced finance as a foreign investor at around 6.25%-8.25 30 years, interest only, this is purely an equity release for foreign investors who have properties in USA, similar to a lo doc/no doc loan. It will be dependent on valuations, quality of the property and I believe its around 60-70% LVR.No jumping hoops with the banks.

    To date I know of only one Aussie investor who has sourced finance direct from a US bank as he has over 20 properties in USA, however once he reviewed the costs involved in set up fess etc he decided not to go ahead with this.

    I have decided not to go ahead with any finance unless something special comes along multi unit complex where the yields are very high as I just don't want additional complications with paperwork, fees etc.

    If you can source bank finance that is works for you great:)

    MTR:)
     
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  16. D.T.

    D.T. Adelaide Property Manager Business Member

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    Hi MTR

    The reason I asked Ozzie to write about this was because it'd help Australians invest there more efficiently.

    EG if I was interested, I could go over and buy 1 or 2. The logistics of it and economies of scale would mean that this would be a waste of time. However, if good lending facilities were available, that might bump the quantity up to 5-10 and then it'd be worth the trip and all the setup costs.

    You say you sourced 6.25-8.25 finance , was that here from Australian equity or over there?
     
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  17. euro73

    euro73 Well-Known Member Business Member

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    Agree with D.T... if someone can map out a step by step guide to purchasing in the US , from issues around LLC's to finding reliable lender support - even if its at 50-60% LVR, I expect many of us on here would happily look at 5-10 purchases there. There could be a very tidy little business opportunity for an Australian based American ( Ozzie?) who can put a nice safe little model together...
     
  18. Ozzie in Texas

    Ozzie in Texas Well-Known Member

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    As mentioned else, I have also sourced one locally that offers 4.99-5.7% with 25% deposit to foreign investors.......with 6 month cash reserves deposited with the lender.

    Cheers
     
    Last edited: 12th Nov, 2015
  19. MTR

    MTR Well-Known Member Premium Member

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    You wont find any lender who will finance in US to foreigners unless you can leverage from US properties and if you do not have a credit rating then the only way around it is equity release. I have been down this road and researched it for years. Ozzie scenario is totally different, google finance in USA?

    think Nigel? on this forum buys in Texas, the only way they were doing it for foreigners was via Vendor Finance. Perhaps check out some of his posts. I am not interested in this product, some may be though

    MTR:)
     
  20. Ozzie in Texas

    Ozzie in Texas Well-Known Member

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    D.T. - as I mentioned previously, I bought my first sight unseen........however, I researched the area and used google map to check out the neighbourhood.....as well as sought out local advice. If you're concerned about cost of travelling, you can travel for free from the comfort of your own home online. ;)