All Forum Posts by: James Hutchinson

Interesting topic. It's not too hard to get a US tax ID.

Great discussion! It's definitely possible to purchase US property as a foreign investor.

It seems that regular financing is almost impossible to get. Unless you build up a good credit rating over the course of a year or two. The best way to do this is to firstly purchase a property with cash. There are properties in a large number of cities in the US for under $50k.

Thanks for the great reply guys.

Ben,

Have you actually set up a HSBC Premier account? I remember my business partner and I tried a few months back and there were some difficulties. Do you have a contact within HSBC? Ideally, we'd like to set up an account with Citibank but to do that one of us needs to travel to the US. It's a very frustrating process.

Cheers,
James

Thanks Charles, let me know if you hear anything from your lenders.

In the mean time I will work out a way to try and develop some sort of good credit rating.

Charles,

Would you by any chance have any contacts for a bank that would operate in Florida? I understand requiring a larger deposit and expected to need a minimum 30% deposit, possibly up to 50%.

I will also look at how to best develop a credit rating, not having a bank account in the US, I have no credit history. My Australian credit history would be fine, but understandably they would not take this into account.

All really depends on your situation as the others above me have pointed out. If the reduced interest rate lets you significantly pay down the loan in the next 5 years, then maybe it is the best option.

However if you will still have a large chunk of principal left after 5 years, then it probably is not a good option, the interest rate will most likely increase fairly considerably in the long term future.

For example - assuming you have a $400,000 loan. Make repayments of $4,000 per month and planning to pay down the mortgage as soon as possible. And then assuming after the 5 year fixed period, the interest rate goes up by 1.00% every year after that, i.e in the 6th year the rate is 3.875%, 7th year the rate is 4.875% etc etc. With a maximum interest rate of 9.00%

Using a spreadsheet it shows the ARM 5/1 mortgage being paid down approximately 9 months earlier (in just under 10 years)

But if your repayment was only $2,500 per month. Then the fixed rate will be paid off approximately 21 months earlier (in just under 21 years)

So yeah it all depends on the situation, and unfortunately it also comes with predicting where interest rates will go in 5 years time so it puts a bit of uncertainty into the situation.

Hello all,

I am new to this forum but am eager to get some useful information from people who may have experienced similar situations.

Basically, my business partner and I started an LLC based in Florida (both of us are Australian citizens), and we purchased a property in cash in the Fort Myers area. Things are going great with the property and we are making a solid return and we would like to increase our property portfolio in the area.

Since it is difficult to save up enough cash to buy a property outright every time (our first property was $50,000), we are hoping to be able to obtain finance for a property and provide a deposit. I must stress that if we could obtain finance, we would not be looking at properties around the $50,000 mark, and we would tend to go for $150,000+ market. I understand financial institutions do not want to deal with small loans and this is understandable.

I have been asking around and most people have said it is next to impossible to get a loan from a US bank given the lack of credit rating and not living in the country, but I was seeing if there is an alternative. I know there are hard money lenders, but I am hesitant to do this as the interest repayments would simply be too high and it would defeat the purpose of looking for cash flow properties.

There are also Australian companies that provide finance for properties in the US, but again the interest rate is fairly inflated, typically around 8.00% and over so again it is not really worth it for us.

Anyone have any ideas on how we can get around this hurdle?

Thanks
James