Loans and Credit as a Foreign Investor

5 Replies

Hey all. I'm looking into buying properties throughout the US, but as a foreigner not living in the US, finding financing is a massive hassle! If I find someone willing to lend, I'm always faced with one of the below challenges:

-Loans with interest rates abot 7%

-Loans that require a downpayment of 40%

-Minimum loan value of $300,000

-Lending only offered in one or two states (in which I'm not looking to invest)

Another problem is that I don't have a credit score in the US. I do have a Canadian credit score, and I have a US investment bank account with cash parked in it, but I'm told I'd still need to build some credit in the US to get better rates. How would I go about doing that, when I eventually *do* own a property? If I buy outright or with owner financing, would paying the property taxes be enough to build credit? Or would I be better off trying to acquire more of a conventional loan and make regular payments on that?

This whole process is quite daunting, so I appreciate any and all help!

Kelly,

Welcome to the club of non-resident foreign nationals (NRFN)!

Yes all the problems you listed exist and more. The terms you were quoted are quite good from other stuff I have seen. What I found most frustrating was telling them upfront, in no uncertain terms, explicitly my status. They say no problem and request all kinds of info, you go through the song and dance and then... Oh you are a NRFN, we can't lend to you.... Ugggh.

Sorry to be the bearer of bad news but buildng a US credit rating; good luck with that. All the agencies work off of an Social Security Number (SSN). When you go to file your first US return (assuming you have not yet), you will be issued an Individual Tax Identifier Number (ITIN) which is not the same thing. To the best of my knowledge, the credit agencies do not provide scores for people with ITINs. If anyone has a solution to this, please please pipe in!!

Also, assuming you do NOT (many threads on BP on this) purchase the property in your own name (highly recommended), it will be the holding entity (LLC, C-Corp, whatever, etc.) that will be making the payments; NOT you. Even if the agencies tracked people with ITIN's, these payments would not show up under your name to build your credit.

Oren

Hi @Oren K.

I assume that the aforementioned is relevant to official lenders (banks) and hard money lenders.

What about private lenders ? I'd assume ITIN / SSN / credit score is not as important as how attractive is the deal (flip / cashflow rental), Am I correct ?

Thanks,

Use your US issued Visa, MA elsewhere .... You can even apply a commercial line of credit. Most banks will grant say $25K up front. When you apply for mortgage you apply in state of interest. 1 year variable now charges 4.1% interest with 20% down even you are foreign national....


Sam -- I don't have an American visa, and I'm not a foreign national. I'm a non-American living outside of the US, looking to buy real estate in the US. I have a margin brokerage account with Interactive Brokers. That's the extent of my current ties to the US.

@Kelly Wylde - As a Canadian, I am assuming since you have a Canadian Credit  Score, from an American perspective you are a Canadian Foreign National.

@Sam Shueh - Correct that you can get a US issued credit card or small line of credit from many banks that are used to dealing with Canadians (e.g. Florida, New York, basically Eastern sea board and border states) with your Canadian SIN or US ITIN. Unfortunately neither of these ID numbers helps with building a US credit score.

@Benny Gelbendorf - If your approach is BRRR, you are correct that many private lenders primarily care about the property and your track record. A good credit score would be a bonus assuming they even check. For a SFR long term hold, you may find credit unions / local banks that will provide "small" (<100K?) mtgs / loans at lower LTVs and somewhat higher interest but good luck with medium MFR (>10 units) / higher value assets getting anything better then what Kelly was quoted. If you do, let me know.