Refinance on investment property for non-resident

15 Replies

Hi All, 

I'm a long-time member,  first- time poster.

My husband and I tried a couple times to refinance our two SFRs in Las Vegas,  both of which we bought with cash in 2011 and have had good rental yields since then. Both properties have appreciated quite a bit,  and we'd like to access some equity to make other real estate investments. 

We have run into a couple hurdles,  and I'm wondering if anyone can offer advice if you have seen or been in a similar situation in the past:

The issues are as follows:

1. Until recently,  we were both working for ourselves. Our income was high (when we had clients) but not consistent between years. We have both had permanent jobs for the last 1.5 years, though. Our income is lower now, but is "safer" in that we both have traditional salaries. 

2. Although we are both citizens, we live and work overseas (Sweden at the moment). We still report all our income to the IRS, but our main income does not come from within the country. 

For these reasons (primarily the second one), two banks and a mortgage broker have not been able to work with us (due to their own  internal rules, not legal ones).

The houses provide good collateral, and we can provide proof of employment and income, so I feel like this shouldn't be impossible. 

I'd love to hear from you if you or someone you have worked with had a similar experience and managed to resolve it. Thanks!

@Heather H.

Hey heather, regardless of your situation I would almost always bank and hit the mortgage brokers. They should be able to help you. They should be counting 100% of your period-depreciation rental income, as well as any income reported to the irs on your tax forms. 

I would especially assume something safe for the mortgage company  should be easy for them (50-70%). 

Do you have a FICO credit score? Over 700?

Are there any decent rental opportunities in Sweden? (If you plan to stay there for some another option would be to sell the Las Vegas properties and buy there, or buy in the us from a seller offering seller Financing?  

Thanks for both responses!

@Bill Brandt yes we both have a credit score of over 700. I would think that the rental income would be enough, but we were hit with a couple big bills for roof and air conditioner replacements over the past few years, so the numbers weren't impressive enough for the banks. Investing in Sweden is an interesting idea that we have looked into, but it's a very landlord unfriendly market, and it's actually not legal to be a private landlord in many situations. We have looked elsewhere in Europe, but the language barriers and unfamiliar regulatory environments keep pushing us back home. Deals with seller financing are interesting too - I'm looking into that at the moment - the typically higher rates initially turned me off of the option, but it's a possibility if conventional financing doesn't work out.

@Phillip Dwyer that's interesting, I hadn't found any that only consider the asset (although I initially assumed that some would, and was surprised to not find any). I'll ping you for details if there are any that you would specifically recommend. Thanks! :)

Hi Heather--

This is a pretty straightforward Rental refi that we do using non-bank Private Equity funding sources. There is no need to show any particular bottom line on tax returns, nor prove any monthly job income. As long as you can show assets in a domestic bank and your credit scores are in your indicated range, we can offer rates starting in the upper 5's . Rates/points are determined by LTV, credit score, loan amount and monthly cash-flow. Feel free to PM details for a best-efforts quote. Thank you.

Originally posted by @Heather H. :

Hi All, 

I'm a long-time member,  first- time poster.

My husband and I tried a couple times to refinance our two SFRs in Las Vegas,  both of which we bought with cash in 2011 and have had good rental yields since then. Both properties have appreciated quite a bit,  and we'd like to access some equity to make other real estate investments. 

We have run into a couple hurdles,  and I'm wondering if anyone can offer advice if you have seen or been in a similar situation in the past:

The issues are as follows:

1. Until recently,  we were both working for ourselves. Our income was high (when we had clients) but not consistent between years. We have both had permanent jobs for the last 1.5 years, though. Our income is lower now, but is "safer" in that we both have traditional salaries. 

2. Although we are both citizens, we live and work overseas (Sweden at the moment). We still report all our income to the IRS, but our main income does not come from within the country. 

For these reasons (primarily the second one), two banks and a mortgage broker have not been able to work with us (due to their own  internal rules, not legal ones).

The houses provide good collateral, and we can provide proof of employment and income, so I feel like this shouldn't be impossible. 

I'd love to hear from you if you or someone you have worked with had a similar experience and managed to resolve it. Thanks!

I worked with an LO who closed a loan for a guy in a similar situation.  The borrower's income came from when he had been a Montessori teacher in France a couple of months previous and he had just moved back to the states.  This was on an owner occupied loan, but similar in that it had foreign income.  PM me for LO's information.  

Moderator, not a solicitation.  We don't do conventional financing at US Commercial.

Best of luck

Stephanie

Thanks all! @Daniel Y. , we actually applied at US Bank and Prime Lending (which is a mortgage broker). At US Bank, the main reason it ended up falling through was due to our self-employment and resultant variable income, whereas with Prime Lending, they were fine with that, but couldn't budge on us not living in the US. We also had conversations with loan officers at several other banks (including Chase) and one other mortgage broker, who advised that it wasn't even worth making the application. However, these were all institutions and loan officers who are used to working with owner occupiers, who can be very cautious when dealing with a situation that is slightly out of the ordinary. We seem to having some success at the moment with an Arizona-based loan officer who often works with investors, and I will post details if it ends up working out.

@Heather H. thanks for getting back. I've been interested in Vegas, but it being so hot right now and their unique lending rules. I am just trying to trying to gather info and keep a pulse on the market before I try to jump into it in the future. Looking forward to your update and hope it works out.

Sell Vegas is a great idea. But don't buy Sweden. 

Sell Vegas and buy Vegas.  1% net monthly still available. 

Did you buy a $80,000 rental now worth $300,000.

Seems you caught All of the YuGE 🏃 up in prices. 

@Daniel Y.   I love Las Vegas for a few key reasons:

1. It's a great city for tenants because the casinos employ a lot of people, and the tourism industry stayed strong during the recession.

2. It's dry and hot - mold and rot are rare. Snow-based issues and frozen pipes are not a concern. There are flood areas but outside of that, there are few severe weather events to worry about.

3. Grass isn't common so yard maintenance is super easy - "mature desert landscape" means dirt, rocks, and maybe some desert plants.

4. No state income tax, low property tax, and very landlord friendly laws.

Our houses have done very well but the market has risen so much over the past several years that you would be very hard pressed to find good rental yields at the moment. For example, we bought two 3 bed/ 2 bath SFRs that were both built in the 1980s for $51,125 and $65,475 in 2011, which are now valued at $174,000 and $203,000 respectively. They rent for $835 and $875 per month respectively, which are slightly below  market rates but vacancy kills yield, and we have good long-term tenants in both of them so we're not raising the rent too much (although we have had our share of tenant issues previously - that's another story but just a word of caution to people thinking about getting into real estate - it's awesome but not passive!). Neither of them would rent for more than about $915 per month. If you take the 1% rule as a guide, if you were to buy a comparable property today, it doesn't even come close (unfortunately - otherwise I would buy more!). If you were to buy the more expensive one of them at these numbers today, that is only 5% gross yeild, which would approach 0% net. Of course capital appreciation has been good, and that is a different goal. However, Vegas is very cyclical, and I don't know how much higher these prices can climb, so that game is too risky for my taste at the moment.

@Eric Adobo are you saying that it is possible to get 1% monthly net yield, which would equate to 12% net yield annually in Las Vegas? If so, I would be very interested in getting more information on where/how. I watch the Vegas market carefully and aren't seeing anything close. At the original purchase price of both these properties, they haven't even achieved 12% net every year so that sounds a bit too good to be true, but I would be so happy to be proven wrong! And we have bought in Sweden, haha! You've gotta live somewhere :)

@Heather H. Yeah, that is what I see in the numbers and what has drawn me to Vegas. I just wished I was interested in real estate the same time you bought, then again I am sure everyone wishes the same, lol.

@Daniel Y. haha yeah, that's always the way. I wish we would have bought more at the time! I had no idea there would be any appreciation though - we were just after cash flow, and this has been an unexpected bonus. This experience actually makes it hard to get back to property investment though, because that might have been a once-in-a-lifetime opportunity, but since it's my point of reference, everything since then has seemed like a bad deal. I'm trying to get over it and adjust to the new normal. We're looking at San Antonio right now - the cash flow seems okay on cash investments, but on financed properties realistic net rental yields look closer to break-even. So this time, it would be about appreciation, which feels more risky because of course we can't know the future. We've also looked pretty closely at Memphis and Cleveland to a lesser extent, where a lot of people are investing for cash flow right now. They are working out for some people, but we don't really want to invest in cities that have problems with crime and lack of growth. 

@Heather H. Yeah, San Antonio probably has been potential out of all of the large markets in TX (some might try to argue Houston, but with forced flood insurance by the lenders and overall raised premiums on all insurance from the recent hurricane it just digs into the cashflow too hard). I invest in Dallas/Ft Worth TX area. I haven't found much deals there lately.


I hear you on those two areas. I haven't looked much into Memphis, but heard you really have to know the area to make sure you don't choose a bad area. I've been looking into Cleveland, but agree with you that the appreciation growth is definitely on the slower side.

Originally posted by @Heather H. :

Hi All, 

I'm a long-time member,  first- time poster.

My husband and I tried a couple times to refinance our two SFRs in Las Vegas,  both of which we bought with cash in 2011 and have had good rental yields since then. Both properties have appreciated quite a bit,  and we'd like to access some equity to make other real estate investments. 

We have run into a couple hurdles,  and I'm wondering if anyone can offer advice if you have seen or been in a similar situation in the past:

The issues are as follows:

1. Until recently,  we were both working for ourselves. Our income was high (when we had clients) but not consistent between years. We have both had permanent jobs for the last 1.5 years, though. Our income is lower now, but is "safer" in that we both have traditional salaries. 

2. Although we are both citizens, we live and work overseas (Sweden at the moment). We still report all our income to the IRS, but our main income does not come from within the country. 

For these reasons (primarily the second one), two banks and a mortgage broker have not been able to work with us (due to their own  internal rules, not legal ones).

The houses provide good collateral, and we can provide proof of employment and income, so I feel like this shouldn't be impossible. 

I'd love to hear from you if you or someone you have worked with had a similar experience and managed to resolve it. Thanks!

 Most residential lenders have very similar underwriting guidelines. I'd imagine this will be a hurdle with all of them.