I've been asked about financing almost a dozen times in the last week and I figured I would address: This is based off of lenders I have spoken to. Anyone successfully doing loans for U.S Property please let us know your successes / fallouts.
I have 2 lenders I have spoken to that offer financing for foreign nationals. Most inquiries have been for homes priced under $100,000. Both lenders said it will take about 60 days to close once the investor submits all of their required documentation. I have looked at Good Faith Estimates which disclose Origination fees, bank fees, expected monthly payments, etc… Be prepared to pay about 8-10% with both lenders in closing costs. Although origination fees are about 5%, it is higher than the traditional expenses. Part of the reason is that they have to make money like this on loans under 100k to justify lending the money. Makes sense a bit, but that is what it is.
Investors looking to finance will have a hard time getting a true REO type price. Investors pay cash for those prices and by the time someone is willing to take financing on offers, it will likely have been wholesaled a couple times. Typical preferred turn times with most quality wholesalers is 30 days. I have recently accepted financing on 2 of our properties from an Australian and Israeli investor. We'll see how it goes but its been 3 weeks and I still don't have a Conditional Approval for the loan.
The best option in my opinion is drawing a line of credit from your home in AU and purchase US property using cash. I know that is not what most prefer to hear but it will assure you the better deal. I will continue to keep this thread posted with how the loan is going, but if there is anyway to draw cash from somewhere it would be preferred to most quality US wholesalers. Banks are not accepting many investor offers with financing. They don't need to.
So if anyone knows of any good lenders with quick turn times, please let us know. The most important thing to do is ask the lender what required docs they need from you. Get them first, get your prequalification, and then go about your other due diligence. Getting the paperwork could be tedious so give yourself some time.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone Me8-10% of home value or loan value? and 5% origination..
so property value = $100k, 30% down
loan = 70k
so ur saying possibly 10% + 10% +5% = $17,500 in fees? is that paid upfront or tacked on the loan?
I have a call with the broker in charge of this loan. Unfortunately I tried to go direct to the bank for this loan but the mortgage broker has some type of exclusive loan product with the bank so we have to use the broker, which isn't all bad…except for some fees.
In first glance at the Good Faith Estimate there are $5,075 in origination fees which are broker, application, underwriting fees, etc.
This is based off a purchase price of $85,000 and a loan amount of $59,500.There are more costs and some that I need clarification on. I will post another response tomorrow after I get on my call.
IN DEFENSE to the origination fees, the broker probably gets half that. In dealing with foreign national financing in the past, this process is VERY tedious and incredibly time consuming. So before anyone says "WHAT A RIPOFF", this is a full time file that will take the broker tons of time and efforts.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeI found someone that will offer finance to foreigners in South and SW florida at local rates.
Details:
$60k min loan
3% fees of loan value to broker all inclusive
$900 fee to actual lender.just message me if you want me to link you
PropertInvestor: I do not do loans, I am simply quoting a lender that has offered it to International Investors. The application fee is $500 based off of their quote.
White Goodman: I am not challenging your statement but if I may play devil's advocate: That seems too cheap for me to believe, but it won't be the first time I am wrong about quotes if I am about this. Keep in mind there are going to be additional closing costs with escrowing taxes and insurance. Be sure to ask if they require some type of "reserve fund" as some of these could be pricey. If they do require it, make sure that money stays in escrow, not released to any entity.
Could you please Private Message me a link? I am looking for international financing for clients and would like an opportunity to speak with them. Thanks!
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeI have just been reading through your comments, interesting find for the lending. I have also seen in previous threads your comments about the high cost of Loans USA. Their fees seem minimal compared to the costings your quoting. Why wouldnt you have a company in Australia do all the running around for you and find the best deal out there also?
Not all of their lenders require PITI, most of them have fixed lending charges with no exit fees.
Maybe they could be a good place to check your findings with?
USA wrote:I have just been reading through your comments, interesting find for the lending. I have also seen in previous threads your comments about the high cost of Loans USA. Their fees seem minimal compared to the costings your quoting. Why wouldnt you have a company in Australia do all the running around for you and find the best deal out there also?Not all of their lenders require PITI, most of them have fixed lending charges with no exit fees.
Maybe they could be a good place to check your findings with?
this is true, im struggling to find something without the ridiculous fees… the main difference from that one I found this morning is the rates and terms… in the My USA thread someone said like 7.5% fixed over 5 years…. with this lender u can get typical 15 and 30 year loans for 4-6%… still i havent used them so this could all be fluff from their end..
I was researching this for quite long time as well. Once I found a mortgage broker who was promising me similar great rates in Florida (I think it was Bayburg financial). I was dealing with him over a month – putting all different paperwork ready, statements, proofs of address, credibility from my mortgage here etc. Long story short, when it came to the actual deal, he found out that it's not possible for some reason and that the loan wasn't available for foreigners any more. ;o/
In the end the only financing I have succeeded with was owner's (seller's) financing, but that's something you can't do with REO's for example..
Update on Financing:
Ok, so we already established the fact that financing is available. Rates and terms are fine. The problem is the SEASONING requirement that they all seem to have.
In short, you as the investor have to purchase a property that has been owned by the seller for a minimum of 90 days. Your only resource for homes is wholesale. It's just a matter of how many times the property has been turned over and finding a seller that will hold a property 90 days for you. Direct wholesalers who buy from banks will not typically do this. My firm for example prefers 30 day turnovers…60 at the very most from the time we acquire. These lenders will not even begin underwriting your file until that 90 day seasoning. Assuming it takes 45 days to close the loan, that puts me at 135 days. We don't offer that and I'm not sure how many direct wholesalers do.
I sell to other wholesalers, who sell to other wholesalers. You may find a wholesaler who will entertain the 90 day hold for you, but the other problem you will run into is the appraisal. It will be incredibly hard to get a home appraised for your purchase price once it is turned over a couple times.
Seller financing could be an option, but again, that is not something we offer. Puts a big monkey wrench into this financing thing. Does this make sense to everyone? Let me know and I'll do my best to explain.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeHi all
See my post on this website a month ago – it is quite extensive and will give you some insight into how financing in the USA works for foreign nationals
https://www.propertyinvesting.com/forums/property-investing/overseas-deals/4335151
Troy –
Great post. I agree with everything you said. However, I have looked into private equity funds myself. Problem is you have zero control and are exposed to bigger issues like fraud, comingling, etc….I've seen it a thousand times. Then again, some funds and REITS are good…but that is my opinion. Int'l lenders are very limited and the hardest thing to get over is actually seasoning of 90 days which most require in FL.CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeWhat we do is take over existing properties and transfer the existing finance to the property. It is a little more complex however it works well and avoids the need to obtain finance
Nigel Kibel | Property Know How
http://propertyknowhow.com.au
Email Me | Phone MeWe have just launched a new website join our membership today
Nigel,
Are you talking about assuming mortgages? They definately don't allow that in most states I know about, especially with foreign national investors.CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeWe do and that is the secret of what we do
Nigel Kibel | Property Know How
http://propertyknowhow.com.au
Email Me | Phone MeWe have just launched a new website join our membership today
You are having investors assume an institutional mortgage? Or do you have separate hard money lenders that buy and share title with the investor. Sounds confusing.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeThanks for the feedback CheevesFinancial.
With what Nigel does…. Nobody wants a mortgage. They want what a mortgage can give them. That is, they want to purchase a property, usually with as little money as possible. So an assumable mortgage is a solution, although they are quite rare now as not many lenders allow it . A purchase money mortgage (vendor terms) is another solution, and buying a property subject to the mortgage (or deed of trust depending on which State you are in) is a third.
Two things I will say about these options however:
1. They usually result in a higher purchase price for the seller, as there has to be some incentive to consider this option over a straight sale
2. You can forget about acquiring properties that are in foeclosure or bank owned under these options as well.
So there is no magic solution that I can see.
Troy or Cheeves, Just wondering if you thought using the Dow Jones property Index could be the best way to invest in US property as you can get 100% finance, great leverage and at the moment I believe a yeild of 30%. Seems to me to be the easiest and most lucrative way to get in . . Troy you could assume a loan preforeclosure tho, couldnt you?
Investing in the stock market is way different than investing in real estate. In my opinion you have to catch them just right. My opinion on why some parts of the country has hit bottom is because a lot of the top 10 REIT's, if you will, have been issued uptrend alerts. I watch a few of these and a couple in particular is Camden Property Trust and AvalonBay Communities. Camden was issued its uptrend alert in July and has since gone up 40% or so. In fact most ETF's or REIT's were issued their upward trend alerts in mid 2010. If you wanted to make money, you should have got in before 6/10….but that is unforseen as nobody really knows where bottom is and lets face it…stocks take some luck if you are in REIT's.
They restructured a lot and as rental rates stabilized, so did the stock and with the addition of Value Add complexes, their stocks did very well. Keep in mind that a lot of stockholders took a beating during the crash…So the upward trend movement is positive for the U.S housing market.
Right now, I think its a good thing to possibly diversify in a bit, but tangible assets like outright real estate ownership will likely do better for you. It is always fun to play the market though.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeCrusty – JB Global run this index option, and after having a look at it about 6 months ago, it appears quite low risk. Capital protection at 100%, with worst downside being loss of interest. But if yield is not high enough to cover intrest, what is the point? You cannot control yield, yet direct investment you can at least have control soewhat over rent received.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
