Welcome to 2014! I am hoping this to be a really big year for myself, have set a few goals which may be a bit ambitious but hopefully they can be fulfilled.
I just wanted to share that I have almost completed a deal for a US House in Florida with finance, this is a big step as it was starting to get too onerous to simply save up each time and buy outright! I did not expect it to be as easy as it is in Australia to get finance but all in all it was not too difficult, although I should not get too far ahead of myself, still a long way to go with it.
In short, the property is $82,000, 30% deposit required for the loan and with a few other fees there is approximately $30,000 closing costs associated with the property. Loan is a 5/1 ARM at 4.5% Per annum initially (bit higher than the rate that US residents would get but cannot really complain too much). Property already has a tenant and the rental repayments will easily cover the mortgage repayments (approximately $400 per month from memory).
I am looking to receive all the loan documents in the coming days and I will be able to have a good look at all the terms and conditions associated with the loan itself, I am curious to see how it works over there to be honest so expect it to be a good learning experience.
I hope to be able to share any experiences along the way and hopefully keep anyone else interested in obtaining a loan from avoiding any mistakes I do make (fingers crossed there are none!)RedwoodParticipant@redwoodJoin Date: 2013Post Count: 340
Hi Streamline, firstly congrats!
Are you purchasing personally or through a LLC? If you don't mind sharing which bank you are with that would be fantastic, there are a million banks in the US however, some of the leading banks are extremely poor, particularly with my clients.
Be sure to have a local expert review documentation with an understanding of the state and local taxes and laws in Florida.
Thats interesting we have been able to get finance for commercial properties which can include apartment complexes at between 60-70% as a non recourse deal however I was not aware that these deals were available for under $100,000 houses.
The finance will be with Capital Bank, same bank I have my bank accounts with over there so that has made things run a bit smoother. Also the loan will be in my LLC's name as oppose to my own.
Yes I was surprised to see loans at such low values, but I talked to a mortgage broker when I was last over there and he said they would generally go as low as a $50,000 loan, so approximately $75,000 property would be the minimum property value you could go for.EngeloRumoraParticipant@engelorumoraJoin Date: 2010Post Count: 618
Those loan figures look great.
The best our lender can do is 50% loan of appraised value – 30 years non recourse – 10% interest – No income verification – no credit check – minimum loan amount $20,000.
The have done over 300 loans in the last 4 years with 75% of those to foreign investors.
Thanks and have a great day.speedy gonzalesMember@speedy-gonzalesJoin Date: 2010Post Count: 149
Hi Streamline. Well done. From someone who used to be on this forum a lot…I know this is something you have wanted to achieve for a while so again well done. I am not sure what the laws are like in Florida for executing the documents but in my past experience dealing with Texas banks….the mortgage docs needed to be signed either at the US Embassy by a Notary or I had to get a Notary and an Apostille seal from DFAT….again not sure about Florida.
It works the same way with Florida and it does in Texas
I will certainly look into this bank. I was not aware that finance could be obtained for finance under $100,000. So that would be a further game changer
I remember with my first property we had to chase down a notary public to sign the documents. It was quite a hassle because a Notary Public over there is the equivalent of a Justice of the Peace, so they are really easy to find over there but very difficult to find over in Australia. Not so much difficult but expensive, I remember we had to pay approximately $350 for our Notary Public to put his seal on approximately 8 documents, compared to a JP which in most cases would do it for free. Anyway, I am not sure if Notary Public is required, however my contact in the US is a manager (with limited power) in my LLC and hence should be able to do that part for me, which would save a lot of hassle.
I am still waiting for my loan documents but looks like I should get them early next week, definitely looking forward to reading them thoroughly.
YOu will need a notary for the security documents IE the mortgage itself. All states in the US are the same when it comes to the acutal security document that is recorded at the county recorders.. Be it a Mortgage or a Deed of Trust… there may be a few other afidavits they want a notary stamp on.
And yes Notaries in the US can be anyone you just take a simple open book test pay a few dollars and your a notary.. This creates a huge amount of fruad in the US when it comes to this issue.
As oppossed to what your used to as a Notary who is like an attorney.. I found this out the hard way.. I was in Canada and was closing a deal I needed to have the Warrenty deed notorized ( I was selling a property) walked into a Notary and they would not do it at all.. they needed to reivew my LLC docs and other due diligence. So I just crossed the border walked into a bank and had it done for 10 buckaroos.
ON the financing what I would guess is that you have a small regional bank that will Loan ONLY in their Footprint IE were the regulators allow them to lend.. So if they are in just one market they can lend there as long as it meets their guidelines. I would say though it is a rare thing indeed to be able to find a lender that would take the risk to make such a small loan under those terms and conditions.. Its definatly not the norm at all.
When we had to get documents notarized we found a guy in Sydney who was very willing to help us out, wasn't cheap (about $50 per document I believe) but he was very helpful and a pleasure to deal with.
Just to update on the proceedings, I have now received the Loan Documents from Capital Bank, seems to be a never ending list of documents to sign! Nothing too exciting though, I had a lot of questions about the loan application itself, I do not know who filled it out or where they got their information from but it was all over the shop, hopefully it is not too much to change.
I am hopefully going to submit them back to the bank by the end of the week and still aiming to close mid-February.
One good thing they do in the US is allow you to upload the documents via the internet, it is very helpful, not sure if they currently do this in Australia (haven't opened a loan in this country for few years).
If anyone was interested in a full breakdown of the loan application process just PM me, I will be happy to go through all the documents and fees that were associated with the process.
If you got loan docs to sign and Notorzie would usually mean your loan is fully approved and once loan docs are signed and notarized its a matter of days before the loan closes and records and funds… ( settles to you guys)… The application is usually done by the bank once you give them basic info so they can have the word processor do it and its ledgable. YOu will usually fill out one on the puter or by hand then they massage it and have you sign a final one at closing ( settlement).
If your still having to wait till mid feb.. then I suspect your loan is still not fully approved IE stipulations ( we call them Stips) still have to be cleared. And again I would not think you would have been sent anything that require notarization a this point. But maybe being off shore it is different docs and underwriting etc than if you were here and US citizen.
Good luck with this one everyone is waiting on you to see if you can truly pull this one off with a True bank in the US>
Well hopefully now that I have the loan documents it should all be completed very quickly and smoothly. Our initial closing date we just said anticipated closing to be in a month (which was mid February) so we just aimed for that, looks like we are slightly ahead of target there so that is good news. Still a little way to go yet.
There is one document that needs to be notarized, I need to have a US Agent apparently, to be honest I do not even know what that is and it needs me to have myself sign it, my US agent sign it, and have it notarized. I have questioned what this is exactly and how they want me to achieve it, given I am currently in a remote area, a long way from any Notary Public. Hopefully I get an answer about that shortly and can still submit the loan documents soon.
Will definitely open a lot of doors for us if this is successful.RedwoodParticipant@redwoodJoin Date: 2013Post Count: 340BoughtWithEquityParticipant@boughtwithequityJoin Date: 2013Post Count: 68
Congrats on finding a financing source and working towards getting it closed. I can't imagine any US lender doing a $20k loan…most have a $50k minimum as with anything less, I don't think they are making any money on it. We do have a couple of private lenders who will finance 50% on our renovated & rented shared housing products and will finance foreign buyers for these. We can buy down the rate so it's a win-win all around. We have a nice 5bed/3ba minutes from downtown atlanta kicking out $21,600 in nets rents that will sell for $150k US. Both lenders like that we do shared housing which minimizes the risks on lending and we cover a 10% net return for 18 months. Let us know how the project works out for you! Happy investingRichard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,018
Florida Mortgage Corporation have been offering Non Resident loans since the 90's and never really stopped over the GFC period.
We have done dozens of deals with them for a lot of our UK clients.
Yours in Finance
Richard.. banks here on the West coast will do them as well. However they are for Primary residence's and Second homes.. They will not do Investment properties unless your talking about higher end commerical.. I think what most of the investors on this site have are sub 100k rentals.. those are pretty hard to get done… Many banks will not lend to a landlord be it domestic or foriegn if they live more than 100 miles from the rental, this is the case with most of your community banks.. They only lend in the footprint and only to those that live in the banks footprint…
Best.Richard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,018
Yes for all if our UK clients we do then as second homes as it a skip and a job out of Heathrow.
Yours in Finance
Just to keep it updated –
I have submitted all of my loan documents except one (approximately 20 documents all together), the only one I have left to submit is a US Agent Authorization form, it seems like a useless form, it states
"As my authorized US Agent in the United States. This appointment includes but is not limited to acting as a translator on my behalf and/or in my absence regarding the affairs related to the above described property and mortgage. Responsibilities of Authorized United States Agent shall also be to assist in any service of process in connection with any legal action or proceedings in the courts of the United States"
It looks like I need a US Agent for the life of the loan, still do not really know the reason for it, but I guess just in case something goes wrong they will have someone to contact in the US. This was the only form I had that needed to be witnessed by a Notary Public, hence the delay, being out in the outback it took some time to organise an appointment with a Notary Public. Eventually I was able to drive a couple hours and meet one in Toowoomba, saw him for about 15 minutes, he signed my documents and put his seal on it, and then back out to work it was. Hopefully I will be submitting that to the bank shortly (still need to send it over to my US Agent to have her side notarized as well)
Still hoping to close by mid-February. Fingers crossed for the time being.
Funding is more available than ever before. We are able to obtain between 60-70 on non-recourse loans on commercial property including apartment complexes. Now you could not get these loans 12 months ago. What this means is much higher cash on cash returns.
The fact that Richard has been able to get loans for UK citizens for sometime indicates it is only a matter of time before we see cheaper investment loans on houses for foreign nationals