USA loan for foreigners at 90% LVR?

Sounds good Troy

What sort of rates does that lender offer and how long are the loan terms?

Thanks.

I would just be worried about refinancing out after a few years. If longer term you could use the cashflow to pay off the loans which would make it safer/

Hard money loan? most hard money loand companies will not go 90% I would venture to guess anyone doing 90 has a vested interest in the asset. and is basically seller ther asset for 2 to 3 time they paid for it and then putting the loan on it.

US citizen cannot even get 90% unless its hard money or some other owner carry deal where the owner gets all their cash upfront and the loan is gravey.

JLH

Hey Troy,

Sounds interesting….

In what states does your lender’s loans apply?

can I get a link you your website and is there a published rate sheet.

couple questions

1. is it 90% of acquisition or ARV appraisal

2. and if there is no proof of income (stated income loan) is it credit score based.

3. or to get one of these do you have to prove very large cash reserves and or pledge any cash reserves or any other type of cross collateral. Is this what you mean for the right type of investor.

Would be interesting to know what the underwriting guidelines are. And what the rates and fee's might.

OK just re read the thread and at 9.5% and most likely 3 to 5 points you are hard money lending. and when you say the rate goes up for a 90% loan then I would assume it goes much higher.

These are very dangerous loans for not only the lender as a whole but the borrower I do not know if you have personal Guarantee's attached to these loans. The reality is 90% of the rentals especially at 30k or there abouts will never over time produce 15 to 20% net cash flow. Expenses and vacancies will eat into that figure. So if folks are thinking its as simple as leveraging up at 9.5% and I am going to get my 15% or better and make the spread that is just wishful thinking.

Its real simple anyone who has any experience in US rentals especially anything that is low end must use 45% to 50% of gross rents BEFORE mortgage payment to figure out their NET yield.

Very easy calcs and if you use these your not going to get hurt if you think you can do it for half or little to no vacancy or on going expenses then its just wishful thinking.

Take Gross rent.

Deduct

10% for prop management
15% for tax's and insurance  and if its a state like Texas or City like Detroit tax's Or inner Memphis with its double tax. Tax's will be much higher,
10% for vacancy reserve and that could be low as its not uncommon for a property to take 2 to 3 months to rent. But 5 months vacant over a 5 year period is not out of the question and is the norm anything less and again its just setting yourself up for dissapointment. I have corresponded with one person on this board who had a friend buy an Atlanta property that took 2 months to rehab once they settled and that was middle feb and as of last communication first of July its still vacant and the rents that were used to calulate the NET cash flow had already been lowered by 10%. So there is no that property for the first 5 years will ever come close to the 12% NET returns that the company who sold it to them touted. negative from day one.

10 to 15% maintenance especially if its an older home and in a cold climate. on Average thats only spending 700 to 1000 a year to keep your property in perfect shape, and god forbid you have the a turn over of tenant and you have to spend 3 to 5k for new carpets flooring appliances paint etc. Again this is the norm especially in these asset class's.

So thats 45 to 50% expense's. Some may do a touch better some will have a nightmare tenant and do a lot worse but those are good numbers to plug into the scenerio and see how your going.

So say you have a 700 dollar rent. deduct 350 right off the top for expenses. that leaves 350 and that 4200 a year net cash flow

lets say your in the asset 40 to 50k, if you want a decent area. quick math shows you that thats under 10% net return. Which is a great return and realisitic. Add debt service of 9.5% a year and you basically have an asset that is negativily geared ( love that term) when you calcuate in your cost of filing a tax return setting up a LLC traveling to look at the property etc.

So In my mind if you have a lot of liquidity a loan can be fine because you have the funds to pay it off or suck up the negative cash flow, however if your just a wage earner with good credit and modest CASh savings this is no investment that you should be looking at its far to skinny and risky. 

Again in my humble opinion and based on owning over 500 cash flow rentals in the US.

Troy
That sounds like an interesting, albeit very unusual, product.
As Jay stated, we also work with both US- and non-US buyers, and even our American clients don't get 90% loans.
What is the lender looking for, in rough terms, both from the investor and the deal itself? We would probably have clients that would be interested in knowing more about the product.

[email protected]

Troy,

I've heard that in America the loans are non-recourse loans and the lender can only take possession of the property if the borrower defaults. They cannot come after the borrower for any short fall.

Is that the case with these loans too?

Thanks Troy and Jay.

Incidently, foreign judgments can be enforced in Australia in many circumstances. I think the judgment needs to be obtained over there in a superior court