Investing in Lincoln Nebraska - UK Citizen needing advice
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Lance A WhitePro Member
Flipper/Rehabber · Lincoln, NE · Member since 2014 · 171 posts · 54 votesThose are interesting questions. I am in a business group with a lawyer. If she is there tomorrow I will ask her. Typically private and hard money lenders are short term, usually 6 to 18 months. I can also talk with a banker friend of mine and get his perspective.
22 Replies
- This is a great question. I'm not a lawyer but I would think that since you're not a resident or citizen, a US investor would be exposed to lend you money unless he/she is on title/primary position. I'm certain though that you can apply for a Tax ID number with the IRS and get one. The only way I can see this work is you either form an LLC and partner that way or have a US investor act as transactional partner. Either way I would definitely consult an attorney and a CPA. You want to make sure that you're not exposed either!
I havent looked into private financing at the moment. Is there any where you would point me towards that is a good place to start? 20% down on a deal for me is preferable, but Im unsure what I am eligble for and can imagine I would need to put at least 30% down as a foreigner.
Thanks for the prompt reply.
- 11yLance A WhitePro MemberFlipper/Rehabber · Lincoln, NE · Member since 2014 · 171 posts · 54 votes
Those are interesting questions. I am in a business group with a lawyer. If she is there tomorrow I will ask her. Typically private and hard money lenders are short term, usually 6 to 18 months. I can also talk with a banker friend of mine and get his perspective.
First things first. You need to get a SS card and build some credit history. The same way international students do it. You can get a social security number. That will then let you apply for credit cards and you can build some credit. This is the bare minimum you would need going to any kind of conventional lender fyi.
Wow this is my first post with BP and all of your answers have been very insightful! I appreciate the due dilligence of both Jeff and Lance, and will look into an SS card Rich. I will also be contacting an attorney tomorrow Jan! I also have a meeting with Wells Fargo so i will let you all know how that goes.
Does anyone have an opinion about seller financing or partnerships with US investors in this case?
- 11yLance A WhitePro MemberFlipper/Rehabber · Lincoln, NE · Member since 2014 · 171 posts · 54 votes
Here is what my banker emailed back to me: "A person can obtain financing with a resident alien card & obtain a social security number or a TIN."
- 11yMindy JensenPro MemberBiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
@Ess Dee Seller financing can be difficult to come by. I would absolutely ask about it, but be prepared for them to say no. I would start exploring partnerships. What do you bring to the table on these partnerships? Think about how you can sell yourself to potential partners. Start formulating ways to answer the question, "Why should I partner with you?"
Good luck!
Hi everyone. Just to update on my bank meeting.
Wells fargo was very helpful, they gave me a list of requirements needed and it is indeed very possible to invest in the USA from abroad. I would need a particular type of Visa (B1 or B2) to get a loan or mortgage, and also provide a ton of documentation including my UK social security, tax documents, proof of income, an international credit check, financial statement etc.
Its pretty complex, and on top of that my standard visitor visa (ESTA VWP) might actually be valid for purchasing property according to some commentators online (it even says for business purposes on the visa). Of course this is only an option, I am exploring other avenues.
The USA has some great deals, try to come to London and you will not be able to buy anything! Thats why im so determined to get my first deal here. Its true what they say, America is the land of opportunity.
- Investor · Alexandria, OH · Member since 2014 · 32 posts · 8 votes11y
FYI, you cannot get a SS#. Years ago it was possible to get a SS# with a not for employment stamp on it but I am 99% certain that has all gone away. Most loans through a regular banking institution also need you to be a citizen or resident alien. I am sure there are other avenues but it would be some really non descript loan of which I do not know of any.
Stuart
ex-Pat Thanks Stuart. What do you guys think of Private Mortgage lending? I understand the interest will be higher but it seems like the best avenue for me right now. Purchase the property than put it under a US corporate entity. Good approach? Its either that or seller financing.
- Real Estate Agent · Madison, WI · Member since 2015 · 328 posts · 88 votes11y
Originally posted by @Rich P.:
First things first. You need to get a SS card and build some credit history. The same way international students do it. You can get a social security number. That will then let you apply for credit cards and you can build some credit. This is the bare minimum you would need going to any kind of conventional lender fyi.
That's a great place to start, but there are banks who will loan without an Social security card. Kind of like a non-recourse loan. Feel free to PM me @ess dee
- Investor · Stockton, CA · Member since 2014 · 167 posts · 49 votes11y
Originally posted by @Rich P.:
First things first. You need to get a SS card and build some credit history. The same way international students do it. You can get a social security number. That will then let you apply for credit cards and you can build some credit. This is the bare minimum you would need going to any kind of conventional lender fyi.
Wrong, Wrong, Wrong
OP is visiting US on visitors visa (B1/B2) which means he is not MOVING to US, which means he can not get Social Security Card or number to create credit history. Please do not provide wrong information, if you aren't' aware of the facts.
- Investor · Stockton, CA · Member since 2014 · 167 posts · 49 votes11y
Originally posted by @Ess Dee:
Hi everyone. Just to update on my bank meeting.
Wells fargo was very helpful, they gave me a list of requirements needed and it is indeed very possible to invest in the USA from abroad. I would need a particular type of Visa (B1 or B2) to get a loan or mortgage, and also provide a ton of documentation including my UK social security, tax documents, proof of income, an international credit check, financial statement etc.
Its pretty complex, and on top of that my standard visitor visa (ESTA VWP) might actually be valid for purchasing property according to some commentators online (it even says for business purposes on the visa). Of course this is only an option, I am exploring other avenues.
The USA has some great deals, try to come to London and you will not be able to buy anything! Thats why im so determined to get my first deal here. Its true what they say, America is the land of opportunity.
@Ess Dee I am in the exact same shoes that you are and i think we should exchange ideas with each other. I am from India, and have found some properties in california that i want to buy. Here are my two cents, more like four actually
Working with Large banks like wells fargo, Bank of America might not be the best idea as they are going based of your Income in home country (Indian/UK) which means even if they end up lending you with their crazy terms (like 60% LTV, PMI), it might not be good enough since they won't lend you for more than 1-2 properties based on your income in home country. I haven't done alot of research but i think working with small portfolio lenders will be the best option for people like us. The way portfolio lenders look at this is, the property is in US, lets lend safe amount say 75% and if anything goes wrong, we can always go against collateral.
As far as working with partner, i think that will help for sure as the bank can look at it as they still have 1 US citizen if not both. I have a long term friend and partner in california (from other business) that i am planning to work with. The idea is to form an LLC where we both are members and buy propertie(s) under that LLC.
Another option, i am considering is buying all for cash and then refinancing after holding a property for few months. This does few things, shows lender the positive cash flow (if they loan based on that). It will let me close deal when i find one, as a offshore investor i am going to make lower offers, lesser offers and obviously get very few opportunities to buy deals, and if i do, i don't want to loose the deal because bank took 5 months to lend to a foreigner. I realize this isn't an option for everyone as buying all cash needs something called CASH.
non recourse loan is one option i have heard some private lenders offering, 75% LTV, 6% interest and 30 years fixed, who knows if this is true or not.
Oh and dont' forget, seller financing is always a bonus if you can find some.
- Investor · Sunnyside, NY · Member since 2014 · 356 posts · 114 votes11y
Just putting it out there... on the back end of this deal, when you sell one day, you need to inform yourself about FIRPTA. In short, as a foreigner you are liable to pay 10% of the sale price in tax to the IRS. There are conditions to get an exemption from this tax and you would need to consult a CPA for information on whether you would be able to get an exemption.
In my case, when selling my condo (which was my primary residence) I was able to get an exemption. I submitted the forms to apply for the exemption as soon as I had a signed contract with a buyer and only got my exemption certificate some 6 months later. The 10% was held in escrow by the sellers lawyers after closing until I could provide the exemption certificate.
Just something to think about as you consider what your investment timeframe and goals are.
Originally posted by @Account Closed:
Just putting it out there... on the back end of this deal, when you sell one day, you need to inform yourself about FIRPTA. In short, as a foreigner you are liable to pay 10% of the sale price in tax to the IRS. There are conditions to get an exemption from this tax and you would need to consult a CPA for information on whether you would be able to get an exemption.
In my case, when selling my condo (which was my primary residence) I was able to get an exemption. I submitted the forms to apply for the exemption as soon as I had a signed contract with a buyer and only got my exemption certificate some 6 months later. The 10% was held in escrow by the sellers lawyers after closing until I could provide the exemption certificate.
Just something to think about as you consider what your investment timeframe and goals are.
Interesting, but isnt the IRS capital gains tax like 40% anyway? so would this be on top of that tax or, actually we are getting the better deal as foreigners?
- Investor · Stockton, CA · Member since 2014 · 167 posts · 49 votes11y
Originally posted by @Ess Dee:
Originally posted by @Account Closed:
Just putting it out there... on the back end of this deal, when you sell one day, you need to inform yourself about FIRPTA. In short, as a foreigner you are liable to pay 10% of the sale price in tax to the IRS. There are conditions to get an exemption from this tax and you would need to consult a CPA for information on whether you would be able to get an exemption.
In my case, when selling my condo (which was my primary residence) I was able to get an exemption. I submitted the forms to apply for the exemption as soon as I had a signed contract with a buyer and only got my exemption certificate some 6 months later. The 10% was held in escrow by the sellers lawyers after closing until I could provide the exemption certificate.
Just something to think about as you consider what your investment timeframe and goals are.
Interesting, but isnt the IRS capital gains tax like 40% anyway? so would this be on top of that tax or, actually we are getting the better deal as foreigners?
interesting question @Ess Dee but i think the 10% is suppose to be part of the 40% and you are still liable to pay the rest yourself. The point of this is IRS wants some portion of the taxes collected upfront because its very hard for IRS to collect from a foreigner as compared to US citizen
- Investor · Sunnyside, NY · Member since 2014 · 356 posts · 114 votes11y
The property was my primary residence so CGT did not come into play. But I think @Mohit Madaan
is correct: If in doubt, they probably want both.
@ess
We have sold to Canadians. They acquired mortgages from their bank in Canada....TD Bank, to be exact. I know not every bank offers this service in Canada, and I have even had some prospects tell me that reps from TD bank told them TD Bank did not make loans to Canadians in the US (proverbial...one hand does not know what the other is doing). The point is, your existence is tied to another country, until you get a green card here in the US. That is where the banks would process a case against you in the event of default.
The loans can either be collateralized with equity in your home country property (ies) or they will loan on the US property based on your relationship with them and mortgage the home here in the US. There will probably be tax consequences you will need to pay attention to depending on how the property is secured, so best to check with a tax adviser.
Check with UK banks that have branch here in the US to see if they offer to their US clients....just remember...many at the ground level have little clue of such offerings, so you might have to push a little to get the right answer.
- Lender · Nat'l Commercial Mtg Lender - Round Rock, TX · Member since 2014 · 916 posts · 235 votes11y
@Ess Dee the typical foreign national loans range in loan to values from 50% to 70% /75%. Typically the loan to value will depend on how many of the following criteria you have met: a bank account in the US, if you own other properties in the US, file tax returns, have credit, have a valid passport and unexpired visa, and have individual tax identification number or social security number. The more of the items you have listed above the higher the loan to value. But that being said, there are some private lenders who will go to a higher loan to value without the criteria listed above.
Conventional lenders will always ask you if you're a citizen, and when you're not, the next question is about your immigration status. I know because I'm not a US citizen and get asked every time. They'll not issue you a conventional loan on a Visa Waiver program. I think that's part of the Fannie/Freddie guidelines.
So you definitely need to find non-conventional programs. I would try speaking to B2R Finance which told me once that they could lend to non residents. And as another poster mentioned, you could also ask your home bank in UK if they would finance a US property. You may have a currency risk though. A friend of mine purchased a property overseas with his home bank in France, although they required colateral in France.
Jean
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