How do Canadians finance their remote properties in USA?

[Lubica J.]

Hi everyone,

I am considering buying a property in USA remotely, while still living and working in Canada.

Couple of US lenders I talked to seem to be unable to offer me a mortgage because I don’t have American SSN (Social Security Number).

I wonder how other Canadians obtain financing without SSN and American credit score?

Do you only use hard money lenders or buy cash – or is there a way to obtain a regular U.S. mortgage?

There seem to be a mortgage with RBC bank, but their APR is from 6.472% to 7.188% which is very high.

I assume their penalties and pre-payment privilages will be similarly unfavourable – but I still need to set up an appoitment to figure their product out.

Can anyone advice me how did you go about getting your mortgage in USA with the local US lender while living in Canada?

Thank you in advance.

[Spencer Riche]

If you are not a U.S. resident, you will be limited to only a few options depending on the asset class.

Canadian banks will only lend to you personally, which is based on your personal DSCR. It's not a scalable option since they only consider a % of the rental income in their underwriting; moreover, exposing you personally to liability issues. Canadian banks will not lend to corporations purchasing U.S. real estate.

Canadian banks are also far less creative; I highly recommend building a relationship with U.S. lenders.

For every house I own in The U.S., I use B Lenders, which are typically 70%-65% LTV, 6.5%+ rates, but they lend to my U.S. C Corps, have no lending limits, and do not require me to have any personal income, residency, credit score, etc., just the down payment.

The best route I've found is closing cash on enough properties that I can group 4+ units, then getting a blanket/portfolio loan across each asset; you get the best terms.

Closing with U.S. financing as a Canadian can be quite the financial gymnastics since you will be required to have your signatures notarized by U.S. notaries; thus, you either have to travel down to The U.S. each time to sign or spend $1,500+ to have the U.S. consulate in Canada authentic the signatures (which cost me a small fortune during COVID), OR, if you have the option of designating a power attorney who is a U.S. resident to sign on your behalf.

This process typically takes 50+ days for a foreign national. It can kill the deal depending on where you are buying, so I always close cash to secure the property, get the best entry price, and worry about financing later.

You've got to pay to play in The U.S., especially after factoring CAD dollar right now... but over the long-term, there is far more opportunity south of the border.