All Forum Posts by: Matt Wan

From my understanding, mortgages are considered riskier investments than most other loans because the borrowers can repay early with little to no extra cost. If I hold a 6% bond and the rate on new issues drops to 3%, then my bonds are worth more because they pay more than the new issues. If I hold a 6% mortgage and the rate for new loans drops to 3%, my borrower will probably just refinance (thus the invention of the CMO). Even without changing interest rates, the duration of a mortgage is never as certain as that of other bonds. 

In light of this, would lenders see me as a higher risk if I have a history of paying off mortgages early? 

 Nothing unfortunately. But my local real estate market is unreasonable for investing. I'm in a 1,300 sq ft apartment that's worth about $1.5 million and rents for $3,000 per month.

 Thanks for the reality check. It sounds like the separation between success and failure is based on proper preparation and realistic expectations. Do you feel this is controllable or that it's mostly up to chance who succeeds and who fails? 

 Thanks for the input. That makes sense to me. Can you give any examples of when you'd need to visit a property? The only thing that comes to my mind is problems with the property manager and you need to find a new one.

 Thanks for the input. The struggle to understand the US culture is a major concern for me. I grew up in the States but never lived there as an adult. I don't actually know what it's like to be a renter or landlord over there. Even little things like where I live, renters pay property tax. I would have assumed that's relatively universal if I hadn't started reading up.

 Thanks for the input. Do you mean that you bought without seeing the properties or without seeing the location at all? If the latter, how did you find good realtors and PMs without meeting them in person?

How many local properties did you have before you branched into long-distance?

I'm thinking of buying US real estate as an overseas investor. How important is it for me to be able to easily visit my target market? I can get a direct flight to major metropolitan areas, but it would be much more difficult to get to Topeka or North Dakota, for example.

I feel that I'd like to see the market at least once, to get a feel for the area and to meet the local team. The cost of that trip would effectively be included in my purchase price. Once the initial setup is finished, how often do you visit? Do you ever have to take a last-minute trip?

I'm newly interested in real estate as an investment. Up to now I've put my money into the stock market and I'm looking into diversifying into real estate as well.

My current goal (assuming I decide to move forward) is to actively start in a year or two by buying a single modest place as a long-distance investor. As I gain experience I would expand. Once I have a strong system set up, I don't want to dedicate too much time to real estate, though.

It's also important to note that I'm a US citizen who wants to invest in US real estate, but I live abroad. I have a US credit score, US bank accounts and some US-based income, but my paychecks are not. I also wouldn't be involved in day-to-day operations onsite. I view this last point as an advantage, because it leaves me open to any market and forces me to build a hands-off system.

A quick internet search suggests that foreign national loans can provide up to 75% LTV. Is that correct? DSCRs seem to be up to 80%. Is there a benefit to foreign national loans for a US citizen with a US credit score (the 791 I mentioned in the original post is my American score)? How do the interest rates usually compare between the two?

@Nick Belsky