Having lived in Paris for the past few years, our client was rejected by two large U.S. banks for foreign earned income regardless of whether her credit score was 812. She had excellent credit, high income, and a sizeable down payment, yet the bank couldn’t see beyond her income being earned outside of the U.S. and not having a W2.
How We Helped
Our only focus is foreign nationals and U.S. Expats. We know exactly what banks, lenders, and finance companies need in order to view her situation just as if she was living and working in the U.S. The loan was closed in 37 days with ease.
Hawaii’s property appreciation is one of the main reasons the Aloha state brings in many real estate investors, overseas and local. There is no shortage of tourists looking to rent a property, and long-term rental yields are some of the best in the U.S. For U.S. expats and Foreign Nationals looking to invest in Hawaii, buying an investment property on one of the major islands is generally a safe and very rewarding investment. Is it time to invest in your dream Hawaiian vacation home?
Last week, we compared real estate prices on the East Coast and their profitability. This week, we venture into The Aloha State and bring you property prices and average rental income between four popular investment areas in Hawaii – Oahu, Maui, Big Island, and Kauai.
Owning a piece of paradise is a dream for most people that visit Hawaii on holiday. Many real estate investors utilize their property in Hawaii as short-term vacation rentals. Although some locations on the islands may be restrictions on the minimum stay a property investor is allowed to advertise, there is surely never a lack of demand. Whether it’s February, July, or October, Hawaii sees vacationers at any season. It’s the perfect temperature, ample sunshine, and some of the best beaches in the world that play an important part in investors being able to rent out all year round. It’s the ultimate “home away from home.” Prefer a more stable long-term tenant? Not a problem. The rental prices in Hawaii are some of the highest in the nation giving fantastic yields with long-term, stable tenancies.
Oahu
According to data from the Honolulu Board of Realtors, Oahu median sales prices have constantly increased yearly since 1985. Oahu has an active and competitive real estate market with its low inventory, combined with its high demand, making it an ideal opportunity to consider investing in Oahu property. From here on, prices and demand are likely to only go one way – up!
Location:Waikele, Oahu
Avg Purchase Price
USD 1,065,640 (2000 sqft)
USD 649,500 (830 sqft)
Avg Rental Income
USD 4,580
USD 3,640
Price Per Sqft
USD 530
USD 900
Location: Waikiki, Oahu
Avg Purchase Price
USD 2,640,000 (2000 sqft)
USD 432,500 (830 sqft)
Avg Rental Income
USD 15,280
USD 4,755
Price Per Sqft
USD 1,318
USD 840
Maui
Among the 8 major islands in the Aloha State, Maui is perhaps the most famous place to visit. Due to its popularity for surfing, amazing restaurants, popular white-sand beaches, and wonderful landscapes, sightseers from around the globe just can’t get enough of Maui. According to the Hawaii Tourism Authority, millions of tourists worldwide travel to Maui every year, with a record number of 3,071,596 vacationers in 2019. These are not just the only people Maui attracts; Real estate investors find Maui’s rental yield, purchase price, and property appreciation extremely alluring.
Location:Kihei, Maui
Avg Purchase Price
USD 2,532,040 (2000 sqft)
USD 772,000 (830 sqft)
Avg Rental Income
USD 12,425
USD 6,995
Price Per Sqft
USD 1,266
USD 980
Location: Wailea, Maui
Avg Purchase Price
USD 4,540,000 (2000 sqft)
USD 847,250 (830 sqft)
Avg Rental Income
USD 22,440
USD 7,030
Price Per Sqft
USD 2,270
USD 3,450
Kauai
Based on WSJ, this Hawaiian island has become a major destination for primary and secondary homeowners during the coronavirus pandemic. Ranked 6th in the list of places to buy a seaside property, Kauai’s real estate demand is steady and sure. Because of Kauai’s laws, only one out of every odd property can be utilized as a vacation rental creating properties that can be used as a vacation rental significantly more valuable and highly sought after. Properties that can be classified as vacation rentals can be categorized as one of two categories:
1. They are situated in A VDA (Visitor Destination Area) like Princeville and Poipu
2. They have a TVR (excursion permit). The region of Kauai isn’t giving out vacation licenses, so a property either has one or it doesn’t.
Location: Kauai
Avg Purchase Price
USD 1,060,800 (2000 sqft)
USD 444,750 (830 sqft)
Avg Rental Income
USD 9,525
USD 3,410
Price Per Sqft
USD 530
USD 580
Location: Princeville, Kauai
Avg Purchase Price
USD 1,765,980 (2000 sqft)
USD 873,250 (830 sqft)
Avg Rental Income
USD 10,560
USD 4,558
Price Per Sqft
USD 880
USD 690
The Island of Hawaii (Big Island)
Hilo
Positioned as a property investment opportunity zone, the Hilo area is home to lavish wilderness, dazzling waterfalls, and vast green farmlands that continue into Kohala mountains. A fantastic scene of calderas, magma streams, and endemic Ohia trees can be viewed from the Hawaii Volcanoes National Park. Hilo’s location makes it ideal for investors to purchase an investment home and receive passive income.
Location: Hilo, The Big Island
Avg Purchase Price
USD 611,550 (2000 sqft)
USD 453,250 (830 sqft)
Avg Rental Income
USD 4,000
USD 3,650
Price Per Sqft
USD 305
USD 630
Kailua-Kona
Kailua-Kona Known for its reasonable real estate prices and amazing value appreciation, the Big Island of Hawaii is most certainly drawing investors from around the globe. Big Island is known for its elite luxury resorts attracting a lot of High-Net-Worth vacationers. Like Hilo, it is also ranked as an opportunity zone for real estate, making it a very profitable and tax-efficient investment.
Location: Kailua-Kona, The Big Island
Avg Purchase Price
USD 1,119,210 (2000 sqft)
USD 698,000 (830 sqft)
Avg Rental Income
USD 5,016
USD 3,957
Price Per Sqft
USD 560
USD 640
Whether it is to have a pure investment property or a second home to relax and get away from, Hawaii is an opportunity investment that many dream about, but few achieve. When you invest in Hawaii real estate, you get peace of mind knowing that it is one of the most stable real estate markets in the U.S. Sit back, relax, have a Mai Tai, and enjoy investing and earning passive income while the property appreciations roll in like the wave. Ready to find your place in paradise?
As a company, America Mortgages’ ONLY focus is providing market-rate mortgages financing for U.S. Expats and Foreign Nationals. 100% of our clients are clients just like you. Get in touch with us at America Mortgages to understand more about how a mortgage can get you that dream home in Hawaii. [email protected].
The debt-to-income (DTI) ratio equals your total fixed monthly debts divided by your total monthly gross income.
DTI is essential for mortgage lenders to determine the applicant’s financial capacity of paying off the borrowed money in time. Several studies suggest that borrowers with a high DTI ratio are likely to struggle more in making the monthly installments. In this case, the breakeven point is 43, which means this is the highest ratio that a lender will still approve for a mortgage. However, some lenders may consider up to 50% DTI too.
All mortgage lenders check the front-end and back-end ratios to determine the DTI. The front-end ratio covers the house-related debts, including home loans, homeowners’ insurance, property taxes, and other expenses. On the other hand, the back-end ratio mostly includes the bills and debts on your credit cards.
The ideal front-end and back-end ratios should be lower than 28% and 36%, respectively. However, a loan approval does not solely depend on this ratio. Mortgage lenders will also take your credit score, percentage of down payment, assets, and a few other things into consideration. If these figures turn out well, you can get a loan with a slightly higher DTI.
Regular household expenses will not be considered as debts. Some other big expenses that will be exempted are healthcare costs, child support, and insurance premiums.
Our client is a clinical research director at a top university in Singapore for the past 12 years, and his kids are all studying in the U.S. Being abroad for an extended period of time, he no longer had any credit history in the U.S. or FICO score.
How We Helped
He no longer had any credit history in the U.S. or FICO score. Although he tried with several local and international banks, he was unable to get a loan due to the lack of credit. As we see similar situations often, we knew what loan program would work best for our client. He was able to get a great loan and begin to reestablish his U.S. credit again. Something vital to him when he retires back in New York.
For those who are new to investing in real estate, the common question is, what is bridge financing? A better question is, what is bridge financing, and how does it benefit commercial Real Estate investors?
For investors that are well versed in bridge financing, you understand the importance of having access to reliable and reputable bridge lenders. Bridge financing is short-term financing, sometimes referred to as private money, smart money, or hard money. Private individuals and not banks typically make bridge loans, so the interest rates on bridge loans are higher than bank loans. International bridge lending allows non-U.S. citizen / Foreign Nationals to invest in the U.S. or other global Real Estate projects by quickly and efficiently providing the needed capital.
Many commercial real estate investors who were able to purchase distressed commercial properties in recent years made out very well. To act on multiple opportunities simultaneously, many real estate investors have turned to bridge financing.
BRIDGE FINANCING BENEFITS INVESTORS IN 3 IMPORTANT WAYS:
– Bridge financing allows investors to make their money go further. For example, if two properties come together at the same time, an investor can purchase both properties using a bridge loan on each purchase.
– Bridge financing removes partners or family members from a deal. Investing with family members or business partners can be tricky. Bridge loans can remove other partners from the equation, allowing an investor more freedom and flexibility with a newly acquired asset.
– Bridge loans fund faster than bank loans. If an opportunity is good, it won’t last long. Bridge loans have fewer requirements than bank loans and thus close quicker. Bridge financing allows investors can grab a fleeting opportunity before another investor snatches it up.
INTERNATIONAL BRIDGE FINANCING FOR GLOBAL / INTERNATIONAL REAL ESTATE PROJECTS?
America Mortgages’ extensive network offers numerous options for Bridge Financing regardless of your citizenship. Whether for a hotel project in Spain, land in Thailand, or a dairy farm in India, America Mortgages is your solution for reliable capital sourcing.
OUR CAPITAL NETWORK AND EXPERIENCE FOR INTERNATIONAL BRIDGE LENDING EXPANDS BORDERS.
With over 70 combined years of experience in the mortgage and investment banking industry, and with access to funds worldwide, America Mortgages will consider most international bridge funding requests. Currently, we offer bridge lending on international and foreign borrowers with a minimum loan amount of US$3mm with no maximum with a maximum of 50% LTV/LTC.
Get in touch with us today to learn more about the structures and options of bridge financing solutions at [email protected].
Our client is a lawyer for a U.S. internet company in their Singapore office. They saw our flyer at the American Club and reached out to learn more.
How We Helped
The only thing we had to say is that we offer the same programs as you would find in the U.S., and that there’s a good chance we could even find something lower.
The fact that he could meet us in person already convinced him to use our services.
An adjustable-rate mortgage (ARM) refers to a mortgage with variable interest rates, which change regularly after an initial period. It fluctuates with the market interest rates, offering either a financial gain or loss to the borrowers. This is in direct contrast with the fixed-rate mortgage rules that impose a fixed interest rate for the entire repayment period.
Each ARM loan has an introductory period from 3 to 10 years where the interest rate stays lower than that of any fixed-rate mortgage. It’s possible to save a lump sum of money if you can settle the loan within that primary window.
After the initial fixed-rate period, an ARM’s interest rate will depend on the current market rates, meaning the rates can rise or fall over the mortgage’s remaining course. The lender will revise the rate at regular intervals, possibly once a year, and adjust it to the current market rate until the end of the term. To avoid paying extra money in rising interest, you can either sell the house or refinance the loan.
America Mortgages offers standard 5 and 7-year adjustable-rate mortgages (ARM) that you can qualify easily without going through much paperwork. You can also refinance if your home’s market price is at least $150,000 or pull out cash of the home equity.
An ARM might be the right choice if you can pay the loan off during the initial cap or don’t plan to live in the same house for your entire life. Ask the lender about the loan’s margin, the factors related to rate changes, and the intervals of rate changes to see if you can afford the calculated monthly installments.
A fixed-rate mortgage keeps the interest rate fixed throughout the loan term. This is the direct opposite of an adjustable-rate mortgage (ARM) that changes the interest rate regularly.
America Mortgages offers various fixed mortgage loans ranging from 15 to 30 years. Regardless of the length, the rate in all of them remains the same for the entire period.
In the case of a fixed-rate mortgage, if you purchase a home with a 15-year loan and your monthly payment is set at $1,500 in a fixed interest rate, you will be paying exactly this amount throughout the entirety of the loan.
People with a budget who do not want to deal with the sudden surge in interest rates will find this mortgage type ideal for them. However, these borrowers will not be able to take advantage of a drop in the interest rate unless they choose to refinance to modify their terms. A fixed-rate mortgage is also a good option for people who intend to live in the same house for the rest of their life. By paying a small monthly amount, they can eventually own the house when the mortgage period is over.
America Mortgages (www.americamortgages.com) is Asia’s only overseas mortgage company with Direct Bank Programs for Foreign Nationals and Overseas Expat to purchase or refinance residential property in the U.S.
I am a Hong Kong citizen and what’s happening now is heart-breaking to watch unfold. Hong Kong’s cultural identity, fortitude, and integrity are all being tested, and regardless of whose side you are on, one thing cannot be disputed – Hong Kong is not the same as it once was.
Previous Migration Trends
Hong Kong is no stranger to phases of migration. Starting in 1967 and lasting almost 10 years, social instability was wide-spread, with riots all over the small island city. Many Hong Kong citizens moved to South East Asia, South Africa, and even as far away as South Africa. Towards the end of 1984, when the “Handover” to China from the U.K. was officially signed, it was the beginning of the largest outbound migration Hong Kong has ever seen. At the time, the U.K. government did not offer passports to those born in Hong Kong as it once did. Then just a few years after, in 1989, the Tiananmen Square event happened, and Hong Kong citizens migrated en-masse, primarily to Commonwealth countries such as Canada, Australia, and New Zealand and, to a lesser extent, the U.S.
The Numbers Were Staggering!
Some estimate total emigration was up to 1 million during this period, with the peak between 1988 – 1994 at 330,000. That is about 20% of the entire population of Hong Kong in the 90s! Other research shows that an estimated US$4.2billion of outbound investment flowed to Canada during this period.
Why Is This Time Different?
What is different this time around is that back then, the “Handover” was relatively uneventful, and most Hong Kong-born emigrants returned home, a phenomenon known as “香港回流潮” or Hong Kong Returning Tidal Flow.
Fast-forward 20 years to today, and the landscape is very different. Every conversation with friends, colleagues, and family, Every news channel, Every newspaper – it all revolves around the protests. Hong Kong is emotional, it’s tense, and its energy is visceral. We now have a small glimpse into what the future may be like, and it’s different from the landscape during the Handover.
Folks Are Looking To Move!
Hong Kong has the most expensive property prices globally, and the market has increased consistently for 30 years with a few pullbacks – Asian Currency Crisis 1997, SARS 2003, G.F.C. 2008, to name a few. Meanwhile, the H.K.D. is pegged to the USD, so being able to cash out your Hong Kong property to purchase homes in the U.S. is starting to make a lot of sense. It’s already happening.
Year
Number of P.R.’s Issued to H.K. Citizens
2016
1,360
2017
1,360
2018
1,525
Other Destinations
Canada issued permanent residency for Hong Kong Citizens:
– San Francisco: home prices fall first time in 7 years
– Manhattan: Slowest 1Q sales since 2008
– Vancouver: down 9.6% from its peak in June 2018
– London: down 20% from its peak in 2014
– Sydney: down 15% from the peak in July 2017
Case Study: U.S.A.
The reasons why the U.S. attracts the most Foreign Purchases of Investment Property:
– Education – “Something for Everyone” Most universities in the world. The U.S. has approximately 5,300 colleges and universities in the world vs. 2,600 globally. That is a staggering 20% of all colleges and universities in the world!
– Evidence Supported Top Foreign Buyers in the U.S. in 2019: China $13.4bn Top Destination (more below): Florida (20%); California (12%); Texas (10%), Arizona (5%), New Jersey (4%)
Here is just a small sample in (no particular order):
Location
Rental Yield
Home Value Increase
Arlington, Texas
7.5%
10.3%
Columbus, Ohio
7.9%
9.2%
Las Vegas, Nevada
5.3%
15.9%
San Antonio, Texas
6.4%
8%
Orlando, Florida
5.7%
10.7%
** Did you know Orlando is the most searched city in America for Chinese real estate investors?
Since June 15, 2019, America Mortgages has seen a steady increase in loan inquiries from Hong Kong, with about 70% of them in the process of an actual home purchase!
Location
Enquiries
Loan Processing
U.S.
12
10
U.K.
8
5
Canada
8
7
Australia
6
3
Japan
6
4
Hong Kong is an amazing city, and it has provided so much, for so many, for so long.
However, Hong Kong, just like any other country, is not immune to domestic turmoil, and you have to wonder if this current Migration Wave is different from the others?
“There is nothing wrong with being prudent and diversifying your investments aboard.”America Mortgages Partners
America Mortgages has bank loan programs that are easy to qualify for. We can close loans in 30 days with many loan programs not requiring any income proof or the need to leave Hong Kong. Overseas Expats and Foreign Nationals to Purchase or Refinance.
America Mortgages Inc. is a mortgage broker focusing only on U.S. Expats and Foreign Nationals living overseas. We offer over 150 U.S. bank and lender programs direct to our international clients. America Mortgages is wholly-owned by Global Mortgage Group Pte. Ltd. an international mortgage specialist based in Singapore.
