TEXAS VS FLORIDA An Example of different US Property Markets

242 new homes scheduled to be built in Bradenton, Florida…  Why Florida???  Why not!!!

Hi Richard,

That is correct.  Obviously since the 2007 fall out in the banking system here it became extremely difficult to obtain financing for even the domestic "A" credit people but that is behind us for now.

I am literally in the thick of this industry day in and day out and I am seeing more and more leeway with lenders especially in the non-institutional side of commercial financing.  As a matter of fact it appears that the commercial lenders are easier to work with than then residential lenders as it pertains to foreign nationals.  Of course this goes back to the fact that the lender will be looking to the asset liability more than the borrower themselves.

Just as of yesterday I set down with a local community bank here in Central Florida with a foreign national (Chinese businessman) who I am structuring a 70% LTV loan on a $6.8M retail center.  As a local community bank there is two stages to the approval process so yesterday was simply a meet and greet between lender and borrower and we addressed a few questions the bank had to prepare for today's first level of approvals.  Here locally it is called the bank loan committee meeting and there is high expectations of a full approval on this deal. 

Back to the main point; even though the local banks are entertaining a foreign national (by the way this has been very difficult prior to the last 12 months) the bank is performing a lot of financial and market due diligence with the property itself.  Of course it is always helpful when a foreign national has good liquidity and a good track record.  The other positives the banks look for is the borrower's overall investment plan.  The bank wants to see the long term investor verses the buyer who will simply flip a deal.

I will stay in touch and update everyone as to the various lenders and how they are becoming easier to work with.

Hi Nigel and Rob,

Just a couple of questions as to how the nuts and bolts of securing a us property. How does it differ from securing a loan in Australia. ie;

find property.

organised through broker or bank loan based on;

– value of property,

– expected rental yield,

– equity borrower already has and any cash funds and

– finally current income and loans that borrower already has.

Does having equity in Australian property allow us to secure and purchase property in the US? Do we need to have established a loan here in Australia first or simply just have the cash?

Thanks in advance,

Invest2Surf

Thanks for that Nigel. The issue I have is securing the 40% for the deposit against the properties I have in australia. I havn't asked the my bank but Im assuming they won't lend it to me without the details of the property in the US. 

I'm assuming that the banks you are talking about are US based banks? Can we deal directly with them? ie can they use the equity in my australian property as the deposit (40%) and then borrow against the US house the remainder 60%?

Cheers. 

So this would only need to be for the 40%? 

Thank you for the interesting post. I prefer Texas property. I agree Texas tough laws, but economy is much better in TX. I was just checking out TX and saw increase  number of people buying houses in TX. 

Interesting point on Orlando vs Texas. One reason for the discrepancy in prices for residential property is that evictions can be pretty slow in Florida as the laws are a bit too tenant friendly. It's not a deal breaker, but something to consider. Also, with Florida being a judicial foreclosure state there may be a bigger backlog of foreclosures to work through the system which will keep a lid on price gains keeping yields high for now.

Ah what is better invest in a market that got crushed and is poised to bounce back massively , or a market that never really fell a lot but may not rise eieither I think the stats John points out are great… But Texas has no shortage of land so sprawl is the name of the game there

Net cash flow of 14 to 17 %.      Not in today's market unless extreme high risk.  See many post of those losing there rear ends

Jay –

I agree with you that 14-17% net cash flow don't exist much unless in the dumps (we know what happens on pro forma vs reality).  I think Nigel was saying 14-17% Cash on cash which is reasonable.  From what I gathered he was saying 60% loans so your 14-17% ROI would be based off of the 40% down plus acquisition costs. 

Funny, someone said to me the same thing the other day comparing TX to FL and said the obvious comparison was land mass and how much is available.  LOL.  Come to Florida and try telling the Armed Corp of Engineers that you want to cut down some wetlands to build a development.  They will pull your pants down and spank you so hard you won't know what hit you.  In SW Florida, the amount of developable land is WAY WAY less then what the aerial shows on a map that is vacant.  You can't kill owls, panthers, birds, pigs, deer, etc….Look up what "protected mangroves" are in FL.  If you even so much as brush up against one and a leaf falls off, you are facing 100000000000 years in prison!