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  • Profile photo of British BuyerBritish Buyer
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    James2118 wrote:
    Does anyone know of a good mortgage broker in the Miami area? I was looking at the Flordia Association of Mortgage Brokers website, and I found a whole list (about 155 in total) of mortgage brokers in the Miami area, but there was no rating or anything, so I am not sure who is good or not, who would be useful for purchasing as a non-resident and things like that. So if any of you know anyone that you have had a good experience with (or even someone who you have had bad experience with so I can stay away) if you could let me know that would be great. Thanks

    .

    HI JAMES

    I'm currently talking to 2 banks in Miami about getting a loan.  I don't wish to divulge the names yet, since I don't know what the outcome will be.  I'll be talking to them in person at the end of next week, and as soon as I have more news (either good or bad) I can let you know (ie. the name of the bank plus the loan officer).  I should mention that these two banks may only wish to lend to people buying homes over $200K, and offer LTV ratios of 70% to 60%.

    I've also made contact with a broker, and he says he's looking for a lender for me. 

    Perhaps you should write down your particular needs for a loan and e-mail it to all those brokers.  I'm sure a good percentage will jump at the chance of helping you.  Never put your eggs in one basket.

    Profile photo of British BuyerBritish Buyer
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    anelxander wrote:

    Hi all,

    I just wanted to share this article with you , pay attention:

    http://www.wharton.universia.net/index.cfm?fa=viewArticle&id=1960&language=english

    Cheers

    Alex

    HI ALEX

    As an academic theory, it's very interesting (and if I were Obama I'd definitely adopt it as policy, namely for banks or the government to provide a cash prize of about 20% of a mortgage to all those who eventually end up paying off their mortgage in full).

    It seems amazing that the only thing Americans lose when they walk away from a mortgage is their credit history plus the 3% deposit they paid.  They get to keep their cars, sofas, TVs, computers, and just dump the house on the bank.

    But that's the price the country has to pay for being overly capitalistic and having no checks and balances in place.

    Thankfully that professor's ideas have about 0% chance of being adopted as policy, because if they were prices would start shooting up before we have a chance to buy.

    Profile photo of British BuyerBritish Buyer
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    [/quote]

    Hi Steve,

    The bank was Wachovia, however I am not "banking" on it. I have since spoken to a Mortgage Broker in the US, he has said that  Fannie Mae changed there lending criteria this year to exclude loans to foreign nationals who were not legally resident in the US.  As a result banks are not lending to this group as they can't sell on the Mortgage to Fannie Mae.

    He said that at this time he only knows of a couple of lenders in Florida who will offer non conforming portfolio loans (Portfolio loans are mortgages that are held as an investment by the lender. Usually they hold on to the loan because it doesn't fit the underwriting criteria)  These lenders will offer facilities to buyers of second homes which are normally quite expensive homes in specific areas which would not be good cash flow investments.

    As I already have a second home I could not use this facility if I wanted to.

    I will continue to refinance UK assets, however I am am not going to give up on US finance as the rates are so good. If you have any luck let me know.

    Kind regards

    Gary

    [/quote]

    EVERYONE NEEDS TO READ WITH GREAT CARE WHAT GARY HAS WRITTEN ABOVE

    What he has provided is an explanation of why banks don't want to provide an equity release (which is what they call it if you buy a property with cash, and then at a later date try to get a bank to loan you money by using that house as collateral).

    If you didn't follow what Gary wrote (and thanks for going into such detail Gary), basically the banks can't easily sell an equity release loan to another bigger lender (such as the government, or as mortgage-backed securities on the stock exchange).  This means that if a lender were to give you an equity release from a home you purchased in cash, that money comes out of the lender's pocket.  WHICH EXPLAINS WHY THE INTEREST RATES ON AN EQUITY RELEASE WILL BE MUCH HIGHER.

    And another very interesting bit of info gleaned from Gary's post is this:
    If you buy your first purchase with cash, and even if you do manage to get an equity release on that purchase, you will only be able to buy one more purchase with a loan (as a "second home"), and the bank will be very discriminatory concerning the price and location of that second home.

    TO SUMMARIZE:
    Here is the best strategy for buying in the US (for people in my situation at least):

    1. Don't rush into a cash purchase thinking you are going to easily get an equity release.

    2. Take your time, find a suitable lender, and while you're waiting for pre-approval for a loan, start your "window shopping", looking at single-family homes prices $150K to 350K.  They'll give you lower rental return, but because you'll be buying with a loan you can get greater leverage when prices rise, and you'll only need about 50K to 100K as a deposit.

    3. Be prepared to have to do a second trip to the US, because you'll probably just end up making lots of offers on your first trip, and you may have to fly back to close on a deal (assuming one of your offers is accepted).

    4. On your second trip, start shopping for your second purchase (assuming your funds are in order, and once again looking for single-family homes prices $150K to 350K), because you are still able to apply for your second (and final) loan

    5. If you still have cash to buy after your second purchase, use your wife/partner, since they can get up to 2 loans.

    6. If you STILL have cash, use cash to buy small apartments (50K), and then after 6 months get equity releases on them.

    Profile photo of jeff2tractjeff2tract
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    Hi Steve,

    I have looked at markets in Denver, Minneapolis and other area’s upstate NY, returns of minimum 10% is achievable, I am in the process of setting up a website that one can go to.

    You don’t need to live in Australia to be able to access the website. I have been reading some of the other blogs and there seems to be a number of local as well as OS investors that are looking at the US market.

    I know that Florida is well advertised but HOA will eat up monthly rentals there is a GLUT of properties. in Florida, also Atlanta has high vacancy rates, my brother in law purchased 4 homes in Atlanta and has only leased out 2 in 6 months, his property taxes were not fully disclosed. Again vacancy rates are a problem in certain cities as well as unemployment rates.

    Steve I can put you in touch with some guys that can give you very good positive cash returns and the properties are already tenanted

    Profile photo of jeff2tractjeff2tract
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    Steve,

    Don’t get me wrong 10% minimum is great, I am about to close on a deal that will give me 26% net. There are plenty of deals like this. If one is happy with 10% thats fine no problem. I know that there are better deals that will give one better than 10% more like 15-25%. I know it sounds to good to be true, these deals are out there

    you need to know were these deals are these properties are not REO or foreclosed, you will not find these properties on any MLS listings.

    If you are interested you can contact me if serious

    Profile photo of British BuyerBritish Buyer
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    ANOTHER COMPLICATING FACTOR (as if buying US property were not already complicated enough)

    I just found out from one of the lenders I'm talking to in Miami that it's difficult to transfer the property to a LLC.  I quote:

    "Yes, you can buy a property under an LLC under the following terms:
     
    LLC in the USA and established for 2yrs
    Articles of Organization (Must be registered to you)
    Business must be registered and appear on http://www.sunbiz.org
    Operating Statement
    Corporate Resolutions
    2yrs Business and Personal Tax Returns
     
    And the same is needed in order to buy under your own name and then transfer to an LLC.  "

    HERE'S A REMINDER OF WHY FOREIGNERS LIKE TO PUT THEIR US PROPERTIES IN AN LLC:
    1. can't get personally sued by your tenant should he/she suffer an injury on your property
    2. LLC's don't suffer from rent-withholding, in other words your tenant can't keep 30% of your rent, and give it to the government
    3. When you sell, the buyer can't withhold 15% of the selling price on behalf of the government.

    I seem to recall the above 2 withholding figures as being 30% and 15%, but I stand to be corrected

    Profile photo of Graeme FreerGraeme Freer
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    I have watched the US market fairly closely since 2004 when the overbuilding began (and coincidentally, the lending standards became more lax). Resisted the opportunity to buy multi family a homeunit block in Texas when the weakness in US housing was becoming apparent (I thought the market had bottomed in 2006 and still wondering if we are there yet!) . Glad that I didn't jump in when there was much further falls to happen. Big differences between the US and Aus ppty market persist. Largely around management (Aus ppty mgrs are more active and effective) , use of non-recourse loans (less commitment to hang on to the house and owners find it to easy to walk away creating a snowball effect, with falling ppty prices) and static population growth. 'Bargains' can prove be expensive in the long run. These days I stick to fundamentals and recommend the same for my clients

    Graeme Freer | Freer Property and Finance
    http://www.freerpropertyandfinance.com
    Email Me | Phone Me

    Buyers Agent

    Profile photo of British BuyerBritish Buyer
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    freerenterprise wrote:
    I have watched the US market fairly closely since 2004 when the overbuilding began (and coincidentally, the lending standards became more lax). Resisted the opportunity to buy multi family a homeunit block in Texas when the weakness in US housing was becoming apparent (I thought the market had bottomed in 2006 and still wondering if we are there yet!) . Glad that I didn't jump in when there was much further falls to happen. Big differences between the US and Aus ppty market persist. Largely around management (Aus ppty mgrs are more active and effective) , use of non-recourse loans (less commitment to hang on to the house and owners find it to easy to walk away creating a snowball effect, with falling ppty prices) and static population growth. 'Bargains' can prove be expensive in the long run. These days I stick to fundamentals and recommend the same for my clients

    HI FREERENTERPRISE

    Thanks for sharing your story and advice.

    Had you bought that Texas multihome in 2006, how much do you think it would have fallen by now?  According to the Case-Shiller graphs for Dallas, prices never crashed in Texas.

    You mentioned 2 differences between the Aus and US property markets.   Surely the 2nd one (the ability of borrowers to dump houses so easily when they're underwater) won't recur?  Surely next time lenders will have learnt their lesson?

    But then again, maybe not.  I see that Fannie Mae is still offering loans with only 3% downpayment.  At least prices are so low there's a good chance prices will not drop too much.  The problem will recur if they're still offering these kinds of ridiculous loans when the market is high and in danger of falling.

    Profile photo of James2118James2118
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    jeff2tract wrote:
    Steve, Don't get me wrong 10% minimum is great, I am about to close on a deal that will give me 26% net. There are plenty of deals like this. If one is happy with 10% thats fine no problem. I know that there are better deals that will give one better than 10% more like 15-25%. I know it sounds to good to be true, these deals are out there you need to know were these deals are these properties are not REO or foreclosed, you will not find these properties on any MLS listings. If you are interested you can contact me if serious

    Hi Jeff,

    I am interested in some more information about perhaps some recommendations you have. Could you please let me know where I could contact you. Alternatively you could contact me on [email protected]

    Thanks

    James

    Profile photo of jeff2tractjeff2tract
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    Hi Steve,

    I can be contacted at [email protected]

    Thanks

    Jeff

    Profile photo of MinimanMiniman
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    Hi Steve

    Some awesome information you have posted in this thread, well done.  I have just purchased my 1st property in Orlando and will be heading over around the 15th of next month to close the deal.  I know it could be done from here (Perth) but we want to snap up a few more when we go over.

    We used our line of credit here in oz to finance everything.  1st property was $205K – my sister in law will rent this property from us.  We plan to purchase a condo for about $100K in cocoa beach and grab a few single family homes in orlando around the $50k mark. 

    We chose Orlando based on the fact thats where the sister in law lives,  We have read some shocking stories of useless management agents and maintenance people.  By purchasing here we can have the sister in law manage the properties and her husband do all the maintenance.

    Not particuarly fussed about positive cashflow as our plan is to make the money in capital growth.  Plus as we have everything financed here in oz when the $AUS drops and the $US rises we will be getting more for our rental dollar.  In the meantime some negative gearing wont go amiss.

    I know you are keen on Miami (and we may even grab some down there too) but hopefully when we get back we will have some usefull information on Florida in general to share with fellow posters regaring reputable accountants, setting up LLC's, registering with the IRS  etc.

    Once we have exhausted the cash we will then look into borrowing to purchase more.  We have the option of selling investment properties here in Perth and tapping into the SMSF but I feel 6 or so properties in the US will add a nice balance to our investments wiithout throwing all our eggs in one basket.

    Good luck with your purchases
    Jason

    Profile photo of British BuyerBritish Buyer
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    Miniman wrote:
    Hi Steve

    Some awesome information you have posted in this thread, well done.  I have just purchased my 1st property in Orlando and will be heading over around the 15th of next month to close the deal.  I know it could be done from here (Perth) but we want to snap up a few more when we go over.

    We used our line of credit here in oz to finance everything.  1st property was $205K – my sister in law will rent this property from us.  We plan to purchase a condo for about $100K in cocoa beach and grab a few single family homes in orlando around the $50k mark. 

    We chose Orlando based on the fact thats where the sister in law lives,  We have read some shocking stories of useless management agents and maintenance people.  By purchasing here we can have the sister in law manage the properties and her husband do all the maintenance.

    Not particuarly fussed about positive cashflow as our plan is to make the money in capital growth.  Plus as we have everything financed here in oz when the $AUS drops and the $US rises we will be getting more for our rental dollar.  In the meantime some negative gearing wont go amiss.

    I know you are keen on Miami (and we may even grab some down there too) but hopefully when we get back we will have some usefull information on Florida in general to share with fellow posters regaring reputable accountants, setting up LLC's, registering with the IRS  etc.

    Once we have exhausted the cash we will then look into borrowing to purchase more.  We have the option of selling investment properties here in Perth and tapping into the SMSF but I feel 6 or so properties in the US will add a nice balance to our investments wiithout throwing all our eggs in one basket.

    Good luck with your purchases
    Jason

    Hi Jason

    Sounds like you're already sold on the Florida idea. 

    Can you give me (and any other readers) an idea of what you perceived the Orlando market to be like.  Ie. how cheap did things look?  Did you feel it was bottoming?

    I'm leaving China tomorrow, and will be in Miami on Wednesday.  I have no idea what to expect, other than a lot of self-interested estate agents and mortgage brokers.

    I've failed to open a US bank account from overseas, so the first thing I'll be doing is that.

    I will then make the rounds of a few lenders I've been talking to.  However, I will probably just submit my application and then start looking at property to buy with cash (ie. cheaper houses or condos).  If/when my pre-approval comes through I will consider buying a more expensive single-family home (about $400K).

    Profile photo of guillotemlguilloteml
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    British Buyer, I´ve been reading your posts as well as other´s in this thread for an hour… very very interesting!!!
    I´m on the other side of the world, Argentina, and I´ll be traveling to Florida this October 30st and I´ll be just a week there.
    My main goal on this trip it to open a bank account, see some real estate agents, visit some properties and find out about loans, mainly to start building credit. I think my wife will hit the beach meanwhile….

    I think market in Florida hasn´t bottomed yet, we have at least a full year ahead of us with prices still going down, maybe is time to buy cheap condo properties in the 50k range, trying to get a loan just for 10 or 20% of the property value, with the only purpose of setting a foot there and start building credit for the right moment. I thing rental return is not important in this phase, and tax and hoa fees for the next year should be considered as part of the investment amount.

    I´m focused in the Broward County area now, mainly because I´ve got a personal friend that lives in Fort Lauderdale and she can assist me in management tasks and be my eyes on the field. She has lived there for 30 years.

    Maybe we can meet to discuss strategies and start this investment journey as a cooperative force. We have the same goals and as far as I can see all of us in this forum can profit from the failures and success of each other. Through my research online all this months I´ve found that buying a property in the US can be tricky and challenging, there are many legal and tax issues to be considered, but even the most conservative approaches suggest it´s still a very good investment. We just have to be careful and choose the right people to work with to maximize the ROI of our hard earned money and avoid potential mistakes that can ruin our plans.

    Don´t forget I live in a country with an exchange rate of 4 pesos to 1 dollar, that makes each dollar valuable to me. :)

    I dont have 250k as you, I´m below 100k but I think the US real estate market can give me the tools to double or triple that money in a few years, and that´s just the beginning.

    Sorry about my english as it´s not my native language.

    you can contact me at [email protected]

    Profile photo of guillotemlguilloteml
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    Profile photo of guillotemlguilloteml
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    British Buyer wrote:
    ANOTHER COMPLICATING FACTOR (as if buying US property were not already complicated enough)

    I just found out from one of the lenders I'm talking to in Miami that it's difficult to transfer the property to a LLC.  I quote:

    "Yes, you can buy a property under an LLC under the following terms:
     
    LLC in the USA and established for 2yrs
    Articles of Organization (Must be registered to you)
    Business must be registered and appear on http://www.sunbiz.org
    Operating Statement
    Corporate Resolutions
    2yrs Business and Personal Tax Returns
     
    And the same is needed in order to buy under your own name and then transfer to an LLC.  "

    HERE'S A REMINDER OF WHY FOREIGNERS LIKE TO PUT THEIR US PROPERTIES IN AN LLC:
    1. can't get personally sued by your tenant should he/she suffer an injury on your property
    2. LLC's don't suffer from rent-withholding, in other words your tenant can't keep 30% of your rent, and give it to the government
    3. When you sell, the buyer can't withhold 15% of the selling price on behalf of the government.

    I seem to recall the above 2 withholding figures as being 30% and 15%, but I stand to be corrected

    As I understand, correct me if I´m wrong, as an individual, you can request an ITIN, which is a personal tax number and make the choice to treat your rental income as a business, that way you have to make your tax declaration but you can deduct expenses, maintenance fees and so, thus resulting in much less that the tipical 30%.
    As for the sale, I understand the withholding figure is 10% as long as the property sale value is equal or above 300,000… but I could be wrong.
    Putting your properties in an LLC has its benefits but it´s difficult to get financing that way….

    Profile photo of jeff2tractjeff2tract
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    British buyer,

    Were did you get the idea that a tenant can with hold rent, you would have a management company that would be renting the property out, no tenant would have the right to withhold rent. I would consider that breaking the lease. How would the tenant know that you were an overseas investor

    I own a number of properties here in Australia and just settled on one in the USA, the management company will deposit the rent on a monthly basis You need to speak with a US tax accountant

    I have spoken to 2 tax accountants here on setting up an LLC and no one has said the things you are saying….perhaps because you will be borrowing money…..most of the people that I am dealing with are cashed up.

    If you lived here in Australia I could put you in touch with a couple of very switched on Tax guys….

    Jeff

    Profile photo of jeff2tractjeff2tract
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    Gullotemi,

    I read the article that you posted. I am amazed at all the people that are purchasing in the Sth Florida area, I know that there seems to be good deal out there but as far as capital gain is concerned there are better area’s in the USA.

    I am investing in cities that has good vacancy rates, unemployment figures are promising and in some area;s there was no housing collapse.

    Getting positive cash flow around 25% net

    Jeff

    Profile photo of AussieFlyAussieFly
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    jeff2tract wrote:
    Gullotemi,

    I read the article that you posted. I am amazed at all the people that are purchasing in the Sth Florida area, I know that there seems to be good deal out there but as far as capital gain is concerned there are better area’s in the USA.

    I am investing in cities that has good vacancy rates, unemployment figures are promising and in some area;s there was no housing collapse.

    Getting positive cash flow around 25% net

    Jeff

    Like where jeff???

    Profile photo of MinimanMiniman
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    British Buyer wrote:

    Hi Jason

    Sounds like you're already sold on the Florida idea. 

    Can you give me (and any other readers) an idea of what you perceived the Orlando market to be like.  Ie. how cheap did things look?  Did you feel it was bottoming?

    I'm leaving China tomorrow, and will be in Miami on Wednesday.  I have no idea what to expect, other than a lot of self-interested estate agents and mortgage brokers.

    I've failed to open a US bank account from overseas, so the first thing I'll be doing is that.

    I will then make the rounds of a few lenders I've been talking to.  However, I will probably just submit my application and then start looking at property to buy with cash (ie. cheaper houses or condos).  If/when my pre-approval comes through I will consider buying a more expensive single-family home (about $400K).

    Hi Steve

    Compared to Perth the Orlando market is a steal.  To be honest we dont care if prices go lower, we are in it for the long haul so will still make good money when we decide to sell. At this point in time prices are a steal and the exchange rate is almost on parity so we are jumping in.

    This may go against most investors strategies but I go by gut feel, and Orlando feels right.  Some folk over analyse things to the point they find it hard to make a decision.  I have no clue what the unemployment is like in Orlando, but with disney and universal close by we will turn the properties into vacation rentals if need be. I have not looked at any graphs or statistics nor do I intend to.

    There may be better buys in better cities and good luck to those who do purchase these properties boasting cash flow positive figures.  For us we feel good with Orlando plus as I mentioned earlier we have family there who can keep an eye on things for us.

    My wife and I have used this strategy for the last 20 years, gut feel.  I have been retired for the last 8 years, since I was 30 so the strategy has done well by us.  Nothing ventured nothing gained as they say!

    Booked our flights today so hope to come back with some good information for other investors.  Folks no doubt will do more research than me and thats fine but at least I can help with the setting up information which seems a closely guarded secret by those posting for their own business gains here.  Fair call however we all have to make a dollar somehow.

    I wont be using the agent we bought this property with (extremely bad handwriting, looks rushed and my 8yr old writes better) May be trivial but the gut says there are better to be had. 

    Profile photo of guillotemlguilloteml
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    Miniman,
    I think the same way that you do, I haven´t made that much analysis, for some reason I feel good about south florida, miami and orlando area are right choices. Can´t visit Orlando this time but I´ll wait for your comments.

    I cannot say like you that my guts have brought me here, I´ve always worked for a salary in the IT industry, but a year ago I started thinking about my future and possibly about my financial independence, I think the US real estate market will give that.

    I´ll walk the streets of Miami and Fort Lauderdale this time, and I´ll share my experiences with you all.

    On the other side of your comments I also though this was a place for people like you and me, sharing experiences for the benefit of us all, but many people here is just around for selling their services.

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