Finacing and managing properties for out of country investor

[Steve F.]

Hi Folks,

I am a Canadian investor looking to acquire some multi-family properties in the US. I've had some success investing in condos in Canada, but I cashed out of the market because prices are totally ludicrous.

Anyhow, I've identified some multi-family properties in the Omaha area . Going through the demograhics and rental stats, it seems like a decent market (and I am planning to drop by there in a couple of weeks to see it on-site). I have already touched base with some agents to see about the market, so I'll lay some groundwork before I go there to look around.

In any event, I was hoping someone could help me with a few questions I have:

1) The properties I am looking at are in the $500K-$1M range, and I'll be looking to finance a majority of the purchase. I am looking to put up 25-30% of the purchase price, but given that I am a foreign national, does anyone know what the financing options are like for this kind of commercial property (and it's not a turnaround situation - I have no interest in hard-money loans)?

I'm looking for a 30-year mortgage with a 7-10 year term, non-recourse. With a 30% downpayment and stabilized income in the property itself, what kind of financing is available to a non-US citizen? Am I barking up the wrong tree?

2) What steps do people take to generate good leads on Property Management companies? I previously managed my properties by myself, but given that I'll be looking to acquire investments where I'm not on-site, I'll need a strong PM.

Thanks in advance.

[Roy N.]

Originally posted by @Steve F.:

Hi Folks, In any event, I was hoping someone could help me with a few questions I have:

1) The properties I am looking at are in the $500K-$1M range, and I'll be looking to finance a majority of the purchase. I am looking to put up 25-30% of the purchase price, but given that I am a foreign national, does anyone know what the financing options are like for this kind of commercial property (and it's not a turnaround situation - I have no interest in hard-money loans)?

I'm looking for a 30-year mortgage with a 7-10 year term, non-recourse. With a 30% downpayment and stabilized income in the property itself, what kind of financing is available to a non-US citizen? Am I barking up the wrong tree?

2) What steps do people take to generate good leads on Property Management companies? I previously managed my properties by myself, but given that I'll be looking to acquire investments where I'm not on-site, I'll need a strong PM.

Thanks in advance.

Steve,

Welcome to BP!

As another Canadian who started the process of investing in a couple of different areas in the U.S.A. last year I can offer a {very} small amount of assistance.

Since you have identified Omaha as your target market, if you have not already so done, you might want to find an experienced, local partner {other than Warren}. Finding the right partner will give you in depth knowledge of the local market, boots on the ground, and assistance with financing.

I would also suggest you find a good accountant and real-estate/business attorney here at home to properly set-up your ownership organisation before you begin making offers. To be able to minimise the withholding {US} & dividend {Cdn} taxes and control the timing of earnings repatriation you should explore using an U.S.A. incorporated entity which is a child subsidiary (100% owned) of a Canadian corporation. Again, find a good accountant and attorney to help you create the structure that meets your current and future needs.

W/r to financing, you will be looking at commercial lending, which is very similar to here at home {it is the residential lending that is quite different}. You will most likely be looking at terms of 5-years - we have encountered 10 and 15, but there was an interest rate premium. With a U.S.A. incorporated entity and a local partner, you will encounter better reception from more banks.

As for finding a strong PM ... there's lots of information here on BP about the various efforts folks use to screen, select, and manage property managers. It is not an area where we have had much good fortune - either here at home or away. As a consequence we have brought our management in-house.