09Sep

Spring Efforts in getting financing in USA

6 comments so far

Buying Property in USAMaybe the most important part of buying property in usa is actually getting a financing in the USA. If you followed similar path of acquiring property in USA, you have also founded an American LLC and probably bought a first property for cash. It was clear last year, when I was trying to get a usual mortgage that it won’t be the right solution for me.

However after talking to a few people including real estate agents last year, during my trip when I bought the two properties, I put my efforts in another way of getting financing for the investments. The product I was trying to reach is called: “Equity line of credit”. What does it mean?

Simply you own for example a property worth $100K. You bought it cash, so the whole property belongs to you. You want to invest in one more property. You will go to the bank and ask for equity line of credit, with the first property being your collateral. The bankers should check your profile and the property, and offer you for example equity line of credit for $60K. You can use these money or you don’t have to use all of them as well. Once you will use them, you will have to start paying it off at a certain interest rate conditions.

So this way you can buy the next property even without using any of your personal money.

So this was the theory. How does it look at the current financing market in the USA?

I spent almost 2 months this spring in Kansas and then in Las Vegas, going to various banks and trying to get some type of financing for a next investment. Unfortunately the situation in United States didn’t get so much better yet, and the banks are still really scared to borrow you money.

In Kansas, the smaller banks are pretty healthy. They would even consider doing that for me, but the problem they had was that the properties were too far away for them to manage. So in a case I wouldn’t be paying off the loan, and they would have to sell the property, it would be really difficult for them. They said they would consider a collateral property in the midwest area, but not in Las Vegas or Phoenix.

In the bigger banks (like Bank of America,..) which have branches in all the states, there are really strict conditions, and therefore they won’t even talk to you, if your company isn’t more than 2 years in profit or if you are a foreigner.

Then I went to Las Vegas, hoping to achieve this thing in the smaller banks there. However Las Vegas banks are in pretty bad shape. All of them are suffering and they simply don’t consider borrowing money with a property as a collateral.

It’s sad, but in the end I returned to Europe, without really having any good results.

The only possibility I have now I guess, would be sellers financing, but that’s totally different chapter.

Anyway, what are your experiences? Did you try to get financing in some of the states? Maybe somewhere the conditions are better? Please share your experience with me and other readers in the comments. Anything is appreciated!

Thursday, September 9th, 2010 at 7:05 am and is filed under buying property in usa. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

6 Responses to “Spring Efforts in getting financing in USA”

  1. Posted by Jindou 22nd September, 2010 at 10:31 am

    I’m in the same situation.
    I think it’s going to be tough trying to get financing.

    At the moment even vendor/owner finance is hard. I found a deal where the owner was considering providing 75% loan @ 6%. I’m looking at it and hope it works out.

    But I am going to keep ringing around for the smaller banks like you said.

  2. Posted by Tony 26th September, 2010 at 5:57 am

    Hi,

    I am currently looking at potential investment property. Would like to ask, which bank did you go through? I tried SUNTRUST and they knocked me back. I am looking at a few other option, none of which has prevailed. Let me know how you go.

  3. Posted by admin 6th October, 2010 at 4:07 pm

    Hi guys,

    I am actually trying again talking to banks in Kansas – the last two were Community Bank in Topeka and Fidelity Bank. The problem seems to be that I don’t have 2 years of taxed US income (since my main source of income is taxed outside of US).

    Jindou, the deal your owner offered you doesn’t sound bad. If the price of the property is good, I would definitely go for that. I wish I would find something like that too. ;o)

    Otherwise I found this at the bigger pockets forum, there are a few banks listed, will try those probably: http://www.biggerpockets.com/topics/46515-mortgage-lending-to-foreign-nationals-?forum_id=110&page=1#posts-290687

  4. Posted by Jane 21st November, 2010 at 6:52 am

    Hi – I am just in the process of buying my first property for cash – I quickly formed an LLC today. I’ll be interested to hear if you get around the financing issues. I’m from Australia and have set up a blog that will hopefully capture any successes and pitfalls to avoid. http://janes-condo.blogspot.com

  5. Posted by admin 22nd November, 2010 at 6:54 pm

    Hi Jane,

    thanks for the comment and your blog.
    I actually tried again and the banks didn’t get me any financing again. However I was successful in finding a seller considering seller’s financing, and I am right now negotiating the terms. I will give an update soon!

  6. Posted by Jindou 31st December, 2010 at 2:38 am

    Hi Admin,
    I have found some exciting prospects.
    Either seller financed deals, being able to be the seller financier or even hard money lending.

    I love the fact that you do not accept no for an answer! 😀