Canadian investing in Ohio

[Harit Pat]

Dear BP members,

I'm in the process of purchasing my first property in Ohio within the next 1-3 months and am seeking information on financing options for a Canadian investing in Ohio. Specifically, I'm interested in exploring Fix & Flip as well as BRRRR strategies. Currently, I'm in the process of setting up my entity (C-Corp/GP/LP/LLC), and I have a few questions:

1) What is the required down payment, and which documents are necessary for the financing process?

2) What interest rates should I expect for Fix & Flip, renovation, and BRRRR properties?

3) In the event I am unable to sell the property after the Fix phase, what mortgage options are available?

Your insights and guidance on these matters would be greatly appreciated.

[Nick Belsky]

@Harit Pat

Your biggest challenge will be finding a lender that will work with a Foreign Investor.  Many will not at all or at greatly reduced leverages.  I am assuming you plan to still live in Canada, yes?  Setting up a US based entity is your first step, you are already doing that it seems.  Be sure to setup a US based bank account for the entity with funds in it as well.  Do you have any partners in your entity that live in the US?

For Docs, we'd like to see a photo ID, proof of funds, proof of experience (if any), and info on who will be your boots on the ground for the project.  Could be a general contractor or project manager.  Many of these loans are not full doc and we don't look at personal income or employment status, so those factors don't really matter.  How you are setup for success in the US while in another country is far more important.

Do you have any experience with Fix and Flip or Rentals in Canada?  I know a few lenders that will count international projects so long as you can back it up with docs/photos. 

As a Foreign Investor, I'd expect 25-35% down on the purchases with 100% rehab funds.  Rates will likely be 11-13% and interest only payments.  The good news is that if you already have some experience or once you get around 5 or so, the leverages will get better and rates may even a little lower for you.  Establishing a relationship with a lender will be essential.  

If you are unable to sell, the perm financing side can be similar; lower leverages and higher rates to accommodate the lender's perceived risk.  Many lenders will limit Foreign Investors to 65-70LTV for perm financing.  A few may go to 75LTV, but it's hard to say without knowing more about you and the whole scenario.

Cheers!