Hi Guys,
I read a lot of postings here about financing in the US and how difficult to get one for overseas investors. But, other overseas investors have managed to obtain financing in the US and had purchased few properties in the process.
As a proud Australian, I have following questions about financing in the US:
- What are the requirements when you apply for finance in the US as foreign national (i.e., foreign investors).
- What's the highest LVR that US lenders prepared to lend? Here in the bust market, you could get up to 75% LVR, is that the same case in the US?
- What's the cost of capital that you get charge (i.e. interest rate)
Thanks a lot!
In the last 6 months I have bought quite a lot of US property. (Like a LOT more than Steve M owns). Generally I have used assumed loans and talking the owners into carrying paper on the deals. I have been doing this for the last 10-15 years.
I usually put down 3-5% on each deal – just ask the question.
I don’t buy foreclosures (usually tend to be junk property IMHO – or you really need to know what you are doing) but quality stuff for big discounts. All cash+ and mostly MFR’s.
I doubt anyone from here would get genuine bank finance. Bank finance for me dried up in ’06. BUT…. with the assumable loan market, I have bought a number of buildings that carry their own finance. My broker over there can’t get a car loan right now – and he owns a lot of property, Im guessing in the 100’s of units. Finance IS that crazy there.
I applied for a U.S investment loan with Citibank and HSBC. Neither were prepared to offer loan products for rentals to foreigners, however, HSBC were happy to offer me a loan for a 'second home' or a 'holiday home' in the U.S. They were also prepared to lend me up to 80% LVR for a second home or a holiday home purchase. You could always purport to buy the property as a 'holiday home' or 'second home', however, legally you would be in breach of the loan agreement if you were to rent it out.
I approached my own bank here (NAB) and they are prepared to give me a mortgage to buy an investment property in the U.S. However, the mortgage will be secured against my property here in Australia. Given that the loan amount will not be particularly large ($150,000) the risk is not particularly big in my opinion.
The biggest negative is the rate of interest…….i will be paying Australian interest rates, not U.S. NAB are also prepared to issue a mortgage either in $USD OR $AUD
Quite interesting, thanks guys.
Hi jawsjs
Hate to disagree with you, however there are a few options for Australians purchasing in the US. There are not a lot I will agree, but there are some. Much of it is dependent upon the price of the property and the State it is located in.
My understanding of assumable mortgages is that any assumption need to be approved by the lender, and as such the lender needs to see evidence that the new purchaser meets standard qualification criteria. Which means most foreign national borrowers will not. Therefore, I presume you are buying commercial real estate (say multifamily homes of 5 or more), instead of SFH. If you are buying SFH, tell me where and I will check it out, as this takes my interest. I am based in the US so can do this with relative ease.
Zeus
What department of the NAB were you dealing with that offered you the USD loan for the property? Was the rate at US rates? I would have thought it would be. I would love to know
I have to second the question asked by Troy, and I have also raised the same question with regards to someone on this forum (don’t remember the post) that was offering assumable financing in Texas.
My first question is, how do you deal with the bank assuming the loan – in our experience, they are usually not that happy with that, and
second: if, as the case was with the Texas program, there is a $20K payment made, who makes that money? If the current owner is letting you take over his mortgage payments, most likely he is in default or close to anyway, so you’re really doing him a favour by assuming the mortgage.
I know the second question doesn’t apply to you, but just in case somebody picks up on it…
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