I would have to agree with this article. After many many months of due diligence on our company and the inventory that we supply to our clients we were able to get a local commercial bank in Dallas to lend to our foreign national clients. It was not an overnight process and took plenty of face to face meetings with senior bank executives and finally the bank board for approval.

For a foreign national,  finance is hard to get…no doubt about that. But look at this realistically. Banks took a hiding on the residential property market. The issue they face is that your asking them to take a bet on someone who doesn't even live in the USA, someone who likely has zero experience or background in property investing. Someone who likely doesn't have a clue where good neighborhoods are, someone who probably has no idea on buying foreclosures or what is a quality refurbishment is needed by a bank and would most likely be out on their own with property management. There is a lot more to consider then just your income, assets etc to decide whether they want to take you on or not.

Our foreign national buyers have exclusive access to the real deal…foreign national finance from a commercial bank. It is real…we have closed plenty of loans so far. Basic terms are 30% downpayment with a rate of 5.75%. Loan terms are either 15 or 20 years depending on the loan amount and a 1% origination fee. Currently limited to Dallas but shortly will be available for Houston and hopefully San Antonio as well

Prior to this finance coming on board I agree with what Nigel  & WI stated. Products for foreign nationals were either way to expensive or promises that would never come to fruition. Private finance did came from around 9.5% but you needed to refinance or repay it in 3 years so it was only a short term solution. You have to be wary of private finance or finance provided directly by the company selling the homes….good chance you will pay too much for the home.

Hi Sab,

Your probably going to get a few opinions flowing on where & why but I'll start with my opinion. One of the features of incorporating or forming an LLC is that you do not necessarily have to form the company in the State where you do business (in your case this means buying property). When deciding on which State to incorporate in, there are basically 2 choices:

1. The state where you live or where you carry on business
2. Wyoming, Nevada or Delaware (thought I'd throw in another state people sometimes mention)

For the majority, incorporating or forming an LLC in your home state or where you do business is usually the easiest and least expensive option. This is because virtually every state has laws that require you to "re-register" a Delaware, Wyoming or Nevada company in the state where it is actually doing business. For example, if you form a Nevada corporation but your physical business (buying properties) is located in Colorado, the state of Colorado will want you to "re-register" as what’s called a "foreign corporation" (a company that was not originally incorporated in Colorado). This is especially true if you intend to get a bank account and business license. In most cases, registering as a "foreign corporation" or LLC will subject you to all the same taxes and fees as an in-state company. So you will probably have not avoided any taxes or fees, plus there is the added expense of registering as a "foreign corporation" in your home state and any annual fees in both states.

Delaware is where most large corporations (Fortune 500, Nasdaq, etc.) are incorporated. The reason for this is that Delaware’s body of law is more business-oriented and they have a large and advanced business court system to handle complex legal litigation. It is the state of choice for both large corporations, foreign corporations and many fast-growing or high-potential companies.

Nevada has popularity for both large and small businesses. This is due to Nevada’s very pro-business climate, low-tax mentality and the lack of an information sharing agreement with the IRS (all other States share company information with the IRS). Also, shareholders in Nevada corporations are not public knowledge (though Officers/Directors and Members of LLC’s are).

Wyoming also has a very business-friendly climate and features some benefits compared to a Nevada entity including lower filing fees, lower annual fees, and more

As far as taxes….an LLC is a flow though entity meaning once all the income and expenses are taken into account the outcome or difference flows through to the members or shareholders which would need to lodge a tax return with the IRS.

Hope this assists.

Hi Richard,

For the benefit of any forum readers who may not understand some of the lingo….I think it's important for you explain to them the difference between qualifying for a "second home" loan versus an investment loan. Quite a difference.

I agree with Lawsj…..quite a few banks will entertain the second home loans for foreign nationals but investment loan approvals is pretty limited. We are fortunate we have a bank that we deal & refer clients to that will do investment loans for foreign nationals and have been keeping them busy with pre-approvals which we insist on before they try and secure any homes if using finance. They give us a pretty quick turnaround for a pre-approval and take about 72 hours. Once they select a home and go to contract it takes about a month by the time they could close on the deal.

You forgot to mention previous roles in selling two tiered real estate in Queensland

labradorinlove

I have to tell you it doesn't sound like a good situation you find yourself in. I have a good friend who lives in Phoenix. He is a real estate agent, knows finance and is an investor himself and knows plenty of good attorneys. This guy is taking you for a ride for sure.

If you send me an email I will pass on my friends contact details to you to see what he can sort out for you. I think you know your going to have to eventually jump on a plane to Phoenix.

30%

You will get no arguments from anybody when it comes to comparing the banking system in the US versus Australia. In some ways they are advanced yet in other ways 20 years behind the times. I kept an article from USA Today when I was over in Dallas on of the trips last year. It stated "the venture announced on Wednesday by BoA, JP Morgan & Wells Fargo will allow customers to transfer money electronically from their checking accounts to another persons account. Initially customers won't be able to transfer unless the person your paying has an account at one of the 3 banks but by next year they plan to open it up to all institutions"  WOW…how advanced is that !! What a joke….but at least it looks like technology is catching up.

The issue with Wells Fargo and needing to be at a branch to send a wire transfer happened to one of my clients as well but he ended using the bill pay system for what he needed where they sent a cheque…said up to 10 days but took 4.

I have a personal account with Patriot Bank USA and thankfully all I need to do is email a signed letter and they send funds back to Australia within 24 hours of my letter so not all banks are bad !!

You don't need a ITIN to get an EIN for the LLC. The IRS will allow it without the responsible party having a SSN or ITIN

More then happy to. You will need to change your member contact details as it says you do not accept emails.
The places are close by to our office so we can arrange to pick you up, go to the office and meet the team, spend a day or so out having a look at properties and area's we deal. You would also get a chance to stop by our Property Management office to meet the Property Managers and ask them questions. Then after that we drop you back off to your hotel. My preference is the Holiday Inn when I stay. Can't beat the $6 breakfast for value !! Our corporate rate gets the room at least $30 a night cheaper there.