What are my chances of getting a loan? Foreigner with SSN, bank account.

Question

Hi,

I'm a foreigner but I used to live and work in the US and so have a SSN and bank account with money in it. I held a mortgage with this bank and paid it off. My credit score may have been dinged though by some credit card fraud (not by me of course). I can't look up my credit score without a US address.

I live overseas now but will try to return to the US if I can. This would help of course.

I have money to invest but want to leverage it via loans and buy a dozen or more properties over the next 5-10 years. States where the 1% rule works, in good neighborhoods.

How would you assess my chances of getting decent loans? I'll start slow if I need to and can lock up some money in some sort of security account if that helps. I'd hope that after a year or so I'd be able to get better loans.

Account Closed · Answer

@Tom S.

As a fellow foreigner, you need to also look down the road to the future when one day you need to sell your investments. Any standard contract of sale for real estate requires you to disclose if you are a legal resident (citizen or green card holder). This is not an impediment to purchasing the property but it is an impediment one day when you sell your property. As an investment property, you will be liable for FIRPTA (Foreign Investment In Real Property Tax Act). Essentially, with FIRPTA, you are liable to pay 10% of the sale price of a property to the IRS in taxes.

There are circumstances in which you can apply for exemption from FIRPTA and not have to pay 10% of the sale price of the property, for example if it was a private residence, but you will need to factor this in if you are purchasing for investment purposes only. Definitely consult a good CPA here in the USA to fully understand your tax liability before you decide to purchase. Note: To the best of my knowledge, you can't avoid FIRPTA by purchasing a property in an LLC.

Jared Rine · Answer

@Tom S.I think you're correct.  In order to obtain the financing you're looking for, the more information that is seasoned here in the U.S., the better - address, income, SSN for credit, bank accounts with funds in US account, etc.  I deal with foreign clients all the time for both residential and commercial real estate financing.  It sounds like in your situation though, you would probably be eligible for hard money financing, otherwise you should probably take the steps you mentioned.

Tom S. · Answer

I'm looking for "good" loans - say 20% or 25% down, and moderately competitive interest rates. So that I get cash flow on properties. I get the impression that only traditional banks tend to give such loans?

I suspect I'll need a US residential address, decent US income, and excellent credit in order to get these. So it might take a couple years or more to be in that position.

Neil Aggarwal · Answer

Lenders need to send you a 1098 form each year to report your interest paid.  They also need to periodically send you statements and other info. It would be much easier for a lender if you have a US address.  In my experience, private lenders do not care about credit.  They focus on the value in the property.

Tom S. · Answer

No US address. I wonder if getting a forwarding mail address in the US helps when building credit?

Neil Aggarwal · Answer

Do you have a US address?  If so, I think private lenders should be able to give you a loan since you have a SSN.

Account Closed · Answer

As a fellow foreigner I would say that if you are present in the US the most important factor on your ability to raise funds is your US credit score.

Mark Esposito · Answer

With that being said there are experienced lenders on the forum who can answer your question.

Personally, I would think with money in a bank account there would be lenders willing to loan money on property if secured...this is a capitalist country...but the lending regulations may restrict them post 911.

Tom S. · Answer

I started on an H1B and eventually got a green card, but gave that up after I left the US. AFAIK my SSN is for life?

Mark Esposito · Answer

Were you on an HB-1 visa?