With the increase in banking regulations in the past few years, it has become very difficult for foreign investors to obtain long term financing in the US. Most banks will not lend to them, simply because a foreign buyer cannot ‘fit in the box’ that banking regulations and government sponsored agencies (Fannie Mae and Freddie Mac) require. What options do they have left?

Not many, to be honest. I know of only one lender who will lend ‘100% asset based’ to foreign investors for single family rental houses.

The way they underwrite the loan is purely based on the income the property brings.  Where most lenders focus on the ‘credit piece’ meaning on the borrower other assets and obligations, this lender will focus on the property’s financial numbers.

Why would a lender do that and what is the drawback of these loans? They lend to foreigners because they believe the quality of the collateral is more important than the buyer’s credit. To have a more secure loan they will require more equity into the deal, likely 25% as a minimum and potentially a bit more.

The interest rate is a little bit higher but will start at 5.99% which is still quite low when you compare to historical data (in the 80s Interest rates were well above 10%) and consider the fact that the rate is locked for 30 years. The loan is possible both in direct purchase transactions and cash out refinance transactions.

In my business, I help foreign investors purchase in the US, they usually are cash buyers and have resigned themselves not to have access to financing. With this product, they can leverage their existing portfolio into multiple properties, de facto increasing the assets they own multiple times and creating long term wealth.

If you are an international investor and you are discouraged by the response banks are giving you, feel free to contact us.

francois@cozy-homes.com