Hello, my friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today’s question comes from John and John is from New Zealand. He says, hi Marco. We have been listening to your great podcast for a couple of years and have purchased two properties through your Dallas Fort worth provider. Congratulations John. We have had good growth with these properties and are wanting to purchase more, but we are struggling to find that stateside financing so we can finance them in the US we have found a couple of companies that will finance us, but the rates are North of 8% which kills the cashflow. Can you help with this? As we have funds we can use for deposits, I assume you meant down payments to make another four purchases immediately. If we can get financing in terms of around 6% we love your show and have learned a lot from the great podcast you have released. Keep up the good work. Thanks, kind regards. John.
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John, thank you so much and thanks for being a client and for your trust. I’m not sure if you spoke to your investment counselor here about this already. If you have, great, if you haven’t that would be your next step. I’m just checking my notes here to see when you submitted this question. So this was in the second half of October so I apologize for the delay in answering this question but for you and for everyone else, let me just say this, there are lenders, a number of lenders right now that are lending to foreign nationals, meaning an investor that is outside the US meaning a non-resident of the United States. So it’s gotten fairly loose or I shouldn’t say loose but liberal five six, seven years ago there was virtually no loan programs that we liked or that were available for foreign national investors.
But if you are a real estate investor or want to be a real estate investor and you’re not a resident of the United States, there are a number of lending programs, so that’s the good news. The better news is that many of these loan programs are very attractive, meaning that these lenders will go as high as 80% loan to value, but typically it’s in the range of 70% I’ve seen 70 I’ve seen 75 I’ve seen 65% loan to value and I’ve even seen 80% they come and they go and they change somewhat frequently. What’s interesting is that many of these lenders will offer 30 year fixed rate loans just like our conventional loans here in the United States. So that means that you can get a loan that’s somewhat similar to what as us citizens and us residents can get at through conventional financing, which is a fixed-rate mortgage that is for 30 years and amortized over 30 years and for us at least at the time of this recording, the conventional loans are somewhere around 5% they’re as low as four, three quarters as high as five and a quarter, five and a half percent for these non-owners occupied loans and that’s what you know that’s just the going rate, which is a good rate, but that’s the going rate for a 30 year fixed rate mortgage with four national financing.
Those rates can be similar. There are never as low as, but they’re similar. I, I’ve actually seen six point something percent for 30 year fixed rate mortgages for non-owner occupied for national loans. That is still great depending on the property and the numbers. Even an interest rate that’s above 7% or even North of 8% as you mentioned, can work. It just depends on uh, the numbers on the property and also your strategy. If your investment strategy is growth in a high growth area, then what you’re making up in that growth far exceeds the lack of cash flow or even in some cases negative cashflow. Uh, and also depending on your tax situation, the tax benefits that come off the depreciation of a property, if it applies to you, will actually wipe out the negative cashflow. So on paper, you actually have a positive cash flow because of the tax savings.
This is true for us residents, but may not be applicable to you depending on what your tax situation is and how that’s set up. And that’s a question for you and your tax advisor. Long story short, there are lenders and more than one for international investors, whether you’re from New Zealand, Canada, great Britain, Japan, Europe, wherever you may be, these lenders lend to most people in most countries. Just speak to your investment counselor here. I don’t know who that is, but obviously you’re working with one of them. Anyway, John, I hope that helps. If not just reach back out or better yet, since I travel a lot, just reach out to your investment counselor. All right. That’s it. At least that’s it for today. So if you have a question about real estate or investing or finance and you’d like me to try answering it here on the show, maybe I can even email you back. Just click the ask Marco button at the top of the website at passiverealestateinvesting.com. Remember to subscribe and share the show with other likeminded people, friends, family, other investors that you know. Thanks for listening and we will see you on our next episode.
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