Forums / Property Investing / Overseas Deals / Finance for US Property

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  • Profile photo of Joel.MacdonaldJoel.Macdonald
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    3 months on, finance approval seems to move slowly. 

    Have spoken to a couple of brokers and they are witnessing domestic application volume increasing which is making some brokers less motivated to work with foreigners when there is so much domestic demand coming through their doors.

    Still possible but we need to be a little bit more patient.

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    Profile photo of sonic81sonic81
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    Hi guys.  Just curious any updates with financing in USA for foreign nationals?  I have a decent portfolio but I haven't been able to get refinancing at all.  I got pre-approves with HSBC but then they changed their underwriter so pulled the application.  Citigroup requires like $500k USD cash in bank in order to process a refinance which is too much.

    Cheers

    Profile photo of BennypBennyp
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    Would you advise in investing in the US over Australia? 

    Profile photo of swhite576swhite576
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    What is the current state of the US particularly with what has happened to Detroit?

    Profile photo of Nigel KibelNigel Kibel
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    Detroit is a terrible market and always has been. The fact that Detroit has gone broke is not a reflection on the whole US market. 

    The are great vendor finance deals available in the United States especially in states like Florida

    Nigel Kibel | Property Know How
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    Profile photo of EngeloRumoraEngeloRumora
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    We have been working with a company that lends in 12 states.

    50% lend at 7% interest.

    3 years fixed.

    They have a certain target area they will only lend in for each state.

    The dont require any tax returns from the burrower and they dont do credit checks.

    An appraisal is conducted on the property and also a building inspection. They want a copy of insurance declaration page and tenant lease agreement. Once all is complete they finance within 48 hrs.

    Thanks.

    EngeloRumora | Ohio Cashflow
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    "Make a PASSION an OBSESSION and you'll never work a day in your life"

    Profile photo of jayhinrichsjayhinrichs
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    Engelo   sound like private money lender… as they are targeting areas state and federal lenders are not allow to target areas.. Its called Red lining  another words they wont lend in the hood…. Clinton came out with this legislation in the mid 90 called CRA  this is what forced lenders to lend in areas heretofore they would not lend in because they knew it was a foreclosure cluster.  So now private lenders will only lend in certain areas… State and federal banks are obligated to lend in all area however they have changed Underwriting to make it all but impossible to get loans in the ares the banks do not want to lend… SO IE if you make 100k a year and want to live in the hood you can get a loan :)  You make 20k a year have crappy credit and want to live in the hood your not getting a loan.

    Profile photo of EngeloRumoraEngeloRumora
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    Hi Jay,

    Thanks for your comment.

    Yes, they are based locally here in Kansas City.

    Alex Franks put me in contact with the group around a year ago.

    I like the new underwriting lol.

    Do you think the market will start to move North more once the US banks lending criteria loosens?

    Thanks for your time.

    EngeloRumora | Ohio Cashflow
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    "Make a PASSION an OBSESSION and you'll never work a day in your life"

    Profile photo of jayhinrichsjayhinrichs
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    your probably talking about JP   him and I have been on panels together solid guy…. he sells his paper to an insurance company so its private paper with certain underlying guide lines.  he also has a 30 year product FYI…I highly endorse JP.  In my ever it to be humble opinion you will see rise in the hot markets… AZ  FLA  CA  OR WA NV ( las Vegas not Reno) Atlanta,,  alittle bit in some of the better mid west markets…

    Profile photo of FreckleFreckle
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    engelorumora wrote:

    Do you think the market will start to move North more once the US banks lending criteria loosens?

    Credit doesn't drive the property markets these days. Cashed up foreign buyers initially drove prices after the GFC followed in recent times by hedge funds. That momentum is almost gone and given current moves by Funds to try and monetise portfolios through derivatives there is every chance that we will see property retrace in the next few years if not crash once again. My bet is on a crash worse than 08 with no recovery for decades.

    Your market in KC is particularly vulnerable to recessions. Unemployment has started to head back up since Jan13 and everything I see in the US economy says recession.

    The US economy has literally stalled if M2 is anything to go by. 10 year treasuries are rising and the FED is struggling to retain control of the bond market. It's buying everything trying to prevent interest rates from rising. 

    Not long now I think. A year until this thing goes pear shaped would be optimistic. 

    Putting all your eggs in the US market is financially suicidal. The smart money has been leaving for the past 12 months or more. 

    Profile photo of EngeloRumoraEngeloRumora
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    Hi Jay and Freckle,

    Thanks for your comments.

    Have a great day.

    EngeloRumora | Ohio Cashflow
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    "Make a PASSION an OBSESSION and you'll never work a day in your life"

    Profile photo of jayhinrichsjayhinrichs
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    We are selling however I do not buy the house is falling down… too many properties have been bought with cash and or ultra low interest rates  IE 2.75 to 4%…Millions of homes have been refied or purchased with these rates, and millions of homes have been bought with cash.  In my mind the crash was created by over leverage and sub prime rates. IE rates in the 9 to 12% range  these being home owners and most of them not very educated about finances.. Remember there was a whole culture of americans that bought homes that really should never have.. so many americans make buy decisions based on " what does it cost a month" without any forthought of an adjustable mortgage rate or the interest rate at all.

    Profile photo of Ben GrayBen Gray
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    Decent financing is still out there. We recently secured an LLC genuine US bank financing for a 10 year term at near enough 5% with 30% down payment. Another client just bagged 15 years at  5% with 40% down payment. The catch for this particular program is that the loan amount has to be over 100K.

    There are a few programs available to foreign investors with more popping up everyday. If you want to find one I'd suggest making a list of banks in the city state you want to purchase in and ring around. Try to get directly on the phone with mortgage specialists – the front office staff will have no idea how to help you and will probably just say "no". Be wary of time wasters though. There are a lot of mortgage brokers who tend to promise the world but then fail to deliver. A potential client just had someone from Wells Fargo promise a foreign investor loan and they are pursuing it aggressively. I fear it'll be a big waste of time for them, but will report back it they have any luck. Could be an easy avenue for many would-be investors :)

    Profile photo of FreckleFreckle
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    jayhinrichs wrote:
    We are selling however I do not buy the house is falling down….

    The problem with property markets is that you have HF's mopping up capacity and consequently pushing up asset prices crushing yield. On top of that you have banks leveraging MREIT's to the moon on free FED money(Repo's) to buy MBS's. There have been several upsets that have seen banks dump MBS's to deleverage on MREITS when Repo rates tic'd up.

    Things'll get very dodgy if (when) the market destabilises. A GFC like credit freeze will almost ceratinly see rates rise faster than banks can liquidate. That'll signal a potential collapse in property prices if the big guys decide to dump everything and run or the system simply stalls like the last event.

    My guess is that the property market will get crushed between rising rates and HF's monetising rentals.

    • MREITs are a growing part of the US shadow banking system. When they have to liquidate their holdings of MBS, of which the banks also held $1.3 trillion (as of end of March), they might take some banks down with them. How fast have they grown? Over the last three years, their holdings of MBS have nearly tripled to $460 billion. Fitch had warned about the issue at the end of June: "A repo funding disruption in which leveraged MBS investors need to liquidate some of their holdings could create negative knock-on effects for the $6.7 trillion agency MBS market more broadly." And banks would get hit.

    Profile photo of jayhinrichsjayhinrichs
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    Freckle,  Blackstone is now securitizing their lease agreements to raise more capital.. So they raised capital to buy the asset then put a tenant in and wrapped up al lthe lease's and borrowed on them.. B Stone could be heading down a deep dark hole when rents fail to appear.. And anyone who has owned US rentals know that rents are anything but a certainty compared to AU and other countries.

    Profile photo of EngeloRumoraEngeloRumora
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    WOW,

    There might be some good buying opportunities again if the bottom falls out from all of these funds.

    Thanks.

    EngeloRumora | Ohio Cashflow
    http://ohiocashflow.com/
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    "Make a PASSION an OBSESSION and you'll never work a day in your life"

    Profile photo of FreckleFreckle
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    engelorumora wrote:
    WOW,

    There might be some good buying opportunities again if the bottom falls out from all of these funds.

    Thanks.

    Not in the US and maybe for a long time. The next GFC event will almost certainly hasten a change in the reserve currency from the US$ to a basket of currencies (incl the US$). That creates a huge problems for the US currency.

    The US currency is seen as a commodity to facility global trade. The US can run deficits into the global system to supply the US$'s countries need to trade effectively. If the US$ is not needed then the trillions of US$ in the system become surplus and essentially worthless. You might get 10 cents on the dollar until the system rebalances … I'm not sure how it's going to work out but it certainly won't be good. Anybody holding US$ or assets in US$ will have a bad day.

    If the US$comes under threat in this way then interest rates are likely to rise substantially (think mid 80's @ 22%) to mop up excess US$ liquidity.

    Currently inflation is being misreported by the US government because if the true rate were published (in excess of 10%) then interest rates would have to rise substantially to contain inflation. There's no way they raise rates without going belly up.

    It is very difficult to envisage any way in which a transition from US$ reserve status to a basket of currencies will play out. I can't see any way in which it will be good for investors. The upside is that the US economy would become more competitive by a significant margin. You might even see the US and China sort of change positions. China becomes a consumer and the US a manufacturer. God knows US manufacturing quality is streets ahead of the Chinese.

    Interesting times ahead.

    Profile photo of EngeloRumoraEngeloRumora
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    Freckle wrote:
    engelorumora wrote:
    WOW,

    There might be some good buying opportunities again if the bottom falls out from all of these funds.

    Thanks.

    Not in the US and maybe for a long time. The next GFC event will almost certainly hasten a change in the reserve currency from the US$ to a basket of currencies (incl the US$). That creates a huge problems for the US currency.

    The US currency is seen as a commodity to facility global trade. The US can run deficits into the global system to supply the US$'s countries need to trade effectively. If the US$ is not needed then the trillions of US$ in the system become surplus and essentially worthless. You might get 10 cents on the dollar until the system rebalances … I'm not sure how it's going to work out but it certainly won't be good. Anybody holding US$ or assets in US$ will have a bad day.

    If the US$comes under threat in this way then interest rates are likely to rise substantially (think mid 80's @ 22%) to mop up excess US$ liquidity.

    Currently inflation is being misreported by the US government because if the true rate were published (in excess of 10%) then interest rates would have to rise substantially to contain inflation. There's no way they raise rates without going belly up.

    It is very difficult to envisage any way in which a transition from US$ reserve status to a basket of currencies will play out. I can't see any way in which it will be good for investors. The upside is that the US economy would become more competitive by a significant margin. You might even see the US and China sort of change positions. China becomes a consumer and the US a manufacturer. God knows US manufacturing quality is streets ahead of the Chinese.

    Interesting times ahead.

    Thanks Freckle,

    Your up early lol

    Have a great day.

    EngeloRumora | Ohio Cashflow
    http://ohiocashflow.com/
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    "Make a PASSION an OBSESSION and you'll never work a day in your life"

    Profile photo of FreckleFreckle
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    engelorumora wrote:

    Your up early lol

    Not if you're in NZ…

    Profile photo of Nigel KibelNigel Kibel
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    Generally  the best asset class is either apartments or hotels however they will also look at retail depending on the quality of the Tennant.

    In terms of occupancy we generally look at properties that are fully let or just under unless it is a renovation opportunity.

    Nigel Kibel | Property Know How
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