In this Ask Us Anything! U.S. Real Estate Investing & Financing webinar, Robert Chadwick, CEO of America Mortgages, and Donald Kilp, Co-founder of Global Mortgage Group, provided valuable insights into U.S. mortgage trends, including the latest rate updates, market strategies, and investment opportunities for international investors.
For those who couldn’t attend, the recording is now accessible here.
During the session, Robert Chadwick (RC) and Donald Kilp (DK) addressed a variety of questions, offering informative responses to help investors make informed decisions in the current market environment. Remarks have been edited for clarity and brevity.
As an expat, I don’t receive a W2. Does that impact my rate or the terms that I qualify for?
RC: No, not having a W2 does not impact the rate or terms for expats, as the loan programs are designed for clients living and working abroad.
Is now still the right time to invest in U.S. real estate?
DK: Yes, given the current supply constraints, property prices are unlikely to decrease significantly, even with fluctuating interest rates. Buying now can be advantageous since future rate reductions could allow for refinancing at lower rates.
What expenses or costs can we expect when owning a property in the U.S.?
DK: Initial closing costs are around 5% of the loan amount, including fees, insurance, and taxes.
RC: Ongoing costs include property insurance, maintenance, property taxes, and any HOA fees, depending on the type of property.
I stayed up very late for this webinar, and I’m glad I did. As a Canadian, first-time U.S. real estate investor with excellent Canadian credit but no U.S. credit, how do I qualify to buy an investment property? What are the steps?
RC: You do not need U.S. credit to qualify. Programs exist that do not require credit history. Investment properties can qualify based on rental income rather than personal income.
Can you purchase real estate as an LLC?
RC: Yes, purchasing through an LLC is recommended due to liability protection and tax benefits.
How do you manage the properties?
DK: Property management services like Ausplan are available to assist with tenant management, maintenance, and overall property oversight.
How would you describe the current state of the California market?
DK: The California market is mixed. San Francisco is soft but has likely bottomed out, while other areas like Irvine have seen strong price growth.
I have a high-value property in California that is approximately US$18M. I have no debt on the property. It’s important for me to monetize the asset; what are my options?
RC: Options include a conventional mortgage or a short-term bridge loan for faster liquidity. A bridge loan can be arranged quickly, with the option to refinance into a conventional loan later.
Are there any recommendations on how to get the other 20-25%?
RC: Down payment requirements must come from the borrower’s own funds, though leveraging equity from other properties is an option for obtaining the necessary amount.
When should I apply for pre-approval prior to the expected date of purchase? And for how long is pre-approval valid?
RC: Apply for pre-approval when you begin looking for a property. It is valid for 60 days, assuming your financial situation remains the same.
Do we have to be working in the U.S.?
RC: No, it is not necessary to be working in the U.S. The programs are designed for foreign nationals and U.S. expats.
Does owning investment/rental property in the U.S. require me to file tax with the IRS – rental income tax, capital gains or inheritance taxes? Asking from a non-U.S. citizen and Middle East resident perspective.
RC: Yes, rental income requires IRS filing. However, proper tax planning can minimize tax obligations, especially for non-residents.
Does the loan cover other costs, e.g. legal, title, commissions, etc.?
RC: No, the loan covers the purchase price or appraised value but does not include additional costs like legal fees, title insurance, or commissions.
Where are we in the real estate cycle?
DK: Traditional cycles have shifted. With strong demand and supply constraints, despite higher interest rates, the market remains favorable for investment.
Will AM assist buyers with finding real estate across the States?
DK: Yes, America Mortgages can refer clients to vetted realtors and assist with finding suitable properties.
Do you have advisors in Italy I can talk to?
DK: While there are no advisors specifically based in Italy, America Mortgages has loan officers in Europe who can assist.
Can an investor utilize the 10-year interest-only period at any time during the loan term?
RC: The 10-year interest-only period applies at the beginning of the loan term and then converts to a principal and interest loan for the remaining 20 years.
Regarding interest rates, what is your forecast for 2025?
DK: Interest rates are expected to trend downward over time, although the exact rate is uncertain. Lower rates will benefit property investors through refinancing opportunities.
My husband is a dentist in Australia. Eventually, we want to move to the USA because the rest of our family lives there. Any suggestions for us?
DK, RC: If planning to move to the U.S., you can either buy an investment property now and convert it later or purchase a property as a holiday home. Pre-arranging financing with proof of income abroad can ease the transition.
Do we get to choose where we want to go in the U.S., or are there areas that are pre-set up for us?
DK: Investors have the freedom to choose any location. America Mortgages can provide guidance based on investment goals, such as rental income, lifestyle preferences, or market growth.
Does AM provide a one-stop-shop approach to investing in real estate in the U.S., i.e., source the property, secure the finance, manage settlement, etc.?
RC: Yes, they offer a concierge service that includes everything from finding properties to securing financing and property management.
What cities are the most promising, in your team’s opinion?
DK: Promising cities include Texas (Dallas), Georgia, and parts of the Midwest. The choice depends on investment goals and preferences.
In my experience, short-term rental can triple the cash flow. Am I allowed to rent my properties on Airbnb as a foreign citizen? Or must I obtain a working visa to do short-term rental business?
RC: You can qualify for the loan using long-term rental income, but how you rent the property (e.g., Airbnb) is up to you. There may be local requirements or regulations.
What is your down payment request per purchase?
RC: Foreign nationals need a 25% down payment, while U.S. expats need 20%.
How do we know we are getting the best market rate?
RC: As both a direct lender and broker, America Mortgages passes on the best rates available without additional markups.
Will an investor be able to monitor their investment online or via an app? i.e. view property, check capital growth, basic info to keep them satisfied with their investment?
RC: It depends on the property management company, though apps are available to monitor property performance.
Can I do cash out from Turkish property (equity)?
RC: No, loans are not offered for properties in Turkey, but equity from other eligible properties could be considered for investment in the U.S.
Do you charge any broker fees to your client? Or do you collect your commission from the financial institute?
RC: America Mortgages charges a brokerage fee directly to clients to secure competitive rates.
Can commercial property be purchased?
RC: Yes, commercial properties can be financed, though foreign nationals face more restrictions for properties above four units.
What is the standard term on rental agreements for investment properties in the U.S.?
RC: Typical rental agreements range from 12 to 24 months, depending on location and property management policies.
If I have a down payment of circa 25k (25% foreign national), what’s the upper limit/type of property I should be looking at to invest in, i.e. what amount of mortgage can I expect to go for? Also, who organizes things like finding sols/representatives?
RC: With a $25,000 down payment, the minimum property value should be $100,000. America Mortgages can assist with finding suitable realtors.
Loans to commercial properties, e.g. multifamily
RC: Yes, loans for one to four units are straightforward, but foreign nationals face more restrictions for properties with five or more units.
When investors analyze a deal, we will look at different metrics like capitalization rate, cash-on-cash return on investment, cash flow, IRR, and GRM. In your opinion, which metrics outweigh the other metrics? How do you define a good deal?
DK: Emphasizes the “1% rule” for rental income relative to property price and stresses positive cash flow as the key indicator of a good investment.
What about the approval? Are there any stumbling blocks on the way?
RC: Stumbling blocks are minimized through straightforward underwriting, focusing on the property’s cash flow rather than the borrower’s income.
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