Hello all, I am an American citizen living overseas who is looking to invest in rental income properties in Charlotte, North Carolina.
I was wondering if it's overwhelmingly difficult to apply for a mortgage with foreign-earned income? (I have no W2s as I am working for a foreign company in China)
According to my understanding, investment property mortgages require a minimum of a 20% down payment up front which is fine as I have already managed to accumulate a down payment somewhere in the ballpark of 50-60% of my max budget -- my questions are:
Would it be better to take out a mortgage for the remaining 40-50% of the cost and pay it down with income over time, or to just save up the remainder and buy it outright? Is this the only option I have as I am currently living overseas without any reliable means of proving my income?
Real Estate Agent · Naples, FL · Member since 2016 · 298 posts · 268 votes
6y
I have helped a few investors with your scenario this year alone. In my experience all that mattered was if you were a us citizen. I would get in contact with some lenders in the Charlotte area asap though
Real Estate Agent · Naples, FL · Member since 2016 · 298 posts · 268 votes
6y
I have helped a few investors with your scenario this year alone. In my experience all that mattered was if you were a us citizen. I would get in contact with some lenders in the Charlotte area asap though
Thank you for your reply Frank! Can I ask whether these investors managed to purchase their rental properties with mortgages, or did they pay for the properties entirely in cash?
Realtor · Charlotte, NC · Member since 2017 · 357 posts · 292 votes
6y
Hi @Christian McKinnon, that's a great question. In my experience, you just need a great lender that can use different sources of income. I'll send you a DM with some contacts if that would be helpful for you! I think it's wasting time, especially in this market, to try to save up to be able to purchase with cash. Charlotte is appreciating well above average, especially in the more affordable price ranges. With interest rates as low as they are, it's a no brainer for me. Find a lender that will work with your situation and go from there. Just my two cents!
It is going to be difficult for you to get loan from the banks who use the fannie mac and freddie mae standards to underwrite the mortgages. Here are some of the options that I can think of that might help you:
(1) Purchase the entire property using cash. Most of the Chinese investor do it this way and it is easy to do. Lower closing cost and faster the transaction. But if you are looking at the deal as an investor, the cash on cash return will be very low. It will also be hard for you to re-finance the cash out, so that your cash will be locked into the properties.
(2) Seller finance. There are sellers out there who are willing to do seller financing to the buyers who cannot get a loan from the bank. So you can still use leverage to purchase the house. I would suggest to work closely with your realtor on this method because there will be a lot more communications involved.
(3) Form an LLC and use portfolio loan or hard money lender. If you plan to invest in the properties in Charlotte, maybe it is a good idea to form an LLC and purchase the properties under the title of LLC. You won't need to be physically here to form the LLC or to purchase the property. Plus, the LLC will give you better protection on the liability side.
Thank you so much for both of your replies and I feared that this was the case. I don't really know of many other Americans who are in similar situations (living overseas and trying to purchase investment properties in the US) and so these replies have been very incredibly helpful.
It seems reasonable to go ahead and try to pursue financing of some kind -- whether it be a hard money lender or forming an LLC. Considering current market conditions and the amount of time it may take to save up the remainder of my target and purchase the property in cash, I'd agree that it couldn't hurt to explore financing options.
I do, however, wonder why it would be difficult to cash out refinance a property that I own in it's entirety simply because I purchased it without a mortgage?