BRRRR - Experiences with the refinancing part for non US-citizens?

Question

Hi guys,

We're landlords here in Belgium, but are planning on investing in our first BRRRR in Detroit soon.
For the refinancing part, we're wondering if someone has experience with loans for non-US citizens?

What are the possibilities as foreigners for:
- Conventional loans
- Bank/credit union loans
- DSCR loans

THANK you and have a nice sunday evening.

River Sava · Answer

Hi Helena -

This can be nuanced, but for DSCR loans there are a few options for you. Are you/your partner(s) foreign nationals or non-permanent resident aliens? Also, are you planning on going through an LLC? If so, then there can more flexibility there.

Happy to connect and chat further if you'd like!

River Sava · Answer

I'll send you a dm!

Drew Sygit · Answer

@Helena Goyvaerts rate for a 30-year fix would be at least 8.5% with some points (1% of loan amount).

Most DSR lenders have a minimum credit score requirement from the applicant. Hopefully, some of the lenders posting here can address that challenge...

Connor Hibbs · Answer

Hi @Helena Goyvaerts,

Investing in the US from a different country is fairly similar to investing as a US citizen, but there are a few differences and a few things to keep in mind.

1. Loan To Value (LTV) will be lower than it would be as a US citizen. For long-term loans the loan is usually based off your credit score and the property's cash flow for investment properties. Without having a credit score you can expect to have a 10% reduction on the LTV or loan amount towards a purchase or refinance. Purchase and rehab properties will have a similar reduction, but as long as you have experience within the US, you should still be able to get some pretty good terms. Rates shouldn't be impacted here.

2. You'll need a US LLC and a US based bank account with the US dollar as currency in it. Most lenders will also typically require reserves which would also need to be in US dollars in this case.

3. Be prepared to answer how you will monitor the property. not everyone asks and not everyone will press hard on this, but it's good to be prepared, especially for rehab properties.

4. This isn't a lending requirement but have some boots on the ground other than just the construction company. It never hurts to have an additional set of eyes to look after your property. I'm sure that your contractor will be great, but it never hurts to get some unbiased eyes on the work being done.

If you need help finding financing, I'd be happy to help you find something, regardless...

Happy Investing!

Brittany Minocchi · Answer

DSCR is going to be your best bet here. Foreign National programs sometimes require that you have US credit and most will want you to have a US-based bank account. If you're closing in an LLC/entity, there will be some requirements there as well. For down payment, plan to need 30-40%. For reserves, some lenders want 6+ months. Expect rates to be higher than "typical" financing programs - right now, I'd plan for at least 8%+ depending on the whole scenario. Happy to answer any other questions if you'd like to connect!

Helena Goyvaerts · Answer

Thanks again Drew. Do you have experience with loans for foreigners like us? When you talk about 'higher interest rates', what range have you seen passing by?

Drew Sygit · Answer

@Helena Goyvaerts it will be tough without 2+ years of USA tax returns showing you are profitable.

Higher interest rates have negatively affected most lenders and many of them are getting more aggressive with offering more flexible programs.

Keep looking, but be prepared for higher interest rates with maybe maximum of 65% loan amounts (hopefully more though).

Andrew Postell · Answer

@Helena Goyvaerts thanks for the post.  For "Foreign Borrowers" your loans are very limited.  Just like I can't use a loan that most Belgium citizens would use....a "Foreign National" cannot use most loans that US citizens get here either.  That means, no conventional loans, bank loans, DSCR loans.  Now a "Foriegn National Mortgage" has similarities to those mortgage types but you will pay a higher interest rate and be required to have a higher downpayment as well (usually about 35% down).  These loans do come from banks directly (Fannie/Freddie loans come from the Federal Government) so each bank that offers these types of mortgages might have slightly different requirements.  And since there are over 8,000 lenders in the US...I can't speak for them ALL.  But the essence of these loans is a higher rate and more money down.

Hope all of that makes sense.

Arthur Schwartz · Answer

I would call or email a specialist in FIRPTA such as "Tax solutions FIRPTA consulting" in Katy Texas, since they can answers all questions about the law plus investor friendly lenders

BRRRR - Experiences with the refinancing part for non US-citizens?

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