Author: Donald Klip

How Trump vs. Harris + The Fed will affect you?

I want to focus on how the election outcome and Fed rate cuts will affect the economy, interest rates and real estate prices.

Everyone has their own view on who they want as president, but the current odds are that Trump will win the election.

However, as we all know, anything can happen so we need to develop a view on all outcomes.

Many of us, myself included, have no sense of Harris’ economic policy yet, which will become clearer as time goes by, so for now, my view is Harris’ policies = Biden’s policies.

The Fed

Jerome Powell delivered his bi-annual congressional speech on July 10th and said that a rate cut was “possible” before inflation reached 2%. The market (Fed Fund futures) predicts a 0.25% cut in September but there is an outlier chance we see a 0.50% instead. I strongly doubt The Fed will cut “during” an election (the November FOMC meeting).

A rate cut is, of course, very positive for everyone! Let’s hope for a 0.50% cut!

Contrary to popular belief, The Fed acts independently, and its 12 members meet 8 times a year to discuss and vote on the FOMC’s open market operations, which are:

  1. The Fed Funds rate (what banks can lend to other banks using this overnight rate)
  2. The Discount Window (what The Fed lends to banks as lender of last resort)
  3. Bank Reserve Requirements (the amount of cash banks need to have sitting in the vaults of their regional Federal Reserve Bank)

The Fed’s “dual mandate” is to manage price stability (inflation) and employment—that is its only focus.

What happened next…

As a professional investor for nearly 30 years, I have never seen a sector/index rotation as violent as what we saw in the Russell 2000 (small cap index). 

So much money moved from big cap tech into small caps because of 1) expected rate cuts and 2) some elements of the Trump Trade (bank deregulation, reshoring of manufacturing - more below).

This, of course, is great for the economy!

Lower rates = lower borrowing costs for a broader part of the economy.

More profitable companies = more hires = more renters = good for property investors!

Who/What gets affected by Trump vs. Harris (Biden) + The Fed 

I’m going to focus on only the “good for” sectors under each candidate + The Fed, and not talk about potentially negative events like increasing taxes, 60% tariffs on Chinese imports, Fed balance sheet tightening etc.

  • The Trump basket

= tax cuts, deregulation, weak USD
Good for: crypto, energy, industrials, commodities, regional banks

  • The Harris (Biden) basket

= tax hikes, more regulation, fiscal spending
Good for: big cap tech, ESG, healthcare, construction

  • The Fed cutting rates

Good for: small caps, weak USD, home buying, refinancing

  • Weaker USD

Good for: overall growth, U.S. exporters are more competitive, everyone in Asia (cheaper commodity imports), U.S. real estate is cheaper for overseas borrowers

Note => a weaker USD is ‘GOOD’ for everyone!

U.S. real estate is possibly one of the best investments you can make!

My view is strictly from the standpoint of an investor earning rental income and capital appreciation - the fundamentals are as strong as ever!

Our argument in one sentence:

Between 2012 - 2022, there were 6.5 million more households formed vs. homes built!

Guess how many homes were built in 2023 - only 1.4 million!

My point is that the supply-demand imbalance is unfixable, and the trend going forward is more renters/less primary homeowners.

This is good for landlords who will continue to have pricing power. We are already seeing rental yields of 12-15% in the Sunbelt states and increasing!

You know who else knows this? Institutions like Blackstone.

Try Googling “Blackstone buying single-family homes.” You will see major institutional buyers of single-family homes. You can draw your own conclusions here.

What I tell my clients every day - if you can make the numbers work now, you will only make more money in the future as 1) rates come down (expenses) and 2) rents go up (income) = increased margins = increased profits.

When home prices increase, you can refinance the home at a higher value and recoup some of your initial investment. 

“…most (new homes) of it will be used for rentals and won’t address ongoing affordability challenges in the for-sale space,” said Hannah Jones, economic data analyst at Realtor.com.

Looking for a newly built single-family home?

We are offering brand new Texas single-family homes 40 minutes away from Dallas for US$300K+ with low teen gross rental yield. We also provide affordable property management services as well. 

Interested to dive deeper? Contact me directly. 

www.gmg.asia 

Average U.S. rental yields are 8% and rising!

International Mortgage Broker UK

8% and Rising!

That's right! Not a typo. The average rental yield in the U.S. is 8%.

It is unheard of in any major country, and it is quite a shock to nearly everyone who hears this, but it's true.

More importantly, we have a loan program specifically-created for international investors looking for an easy way to qualify for a mortgage by using the rental income and not personal financials (see below).

This article is a summary of a presentation we made to our clients.

On a LinkedIn survey last week, we also asked the following: 

What is the average rental yield in America?

RangeResponses
4% - 5%57%
5% - 6%20%
6% - 7%9%
7% - 8%14%

You can see the mean expectation is 4-5%, but in fact, if I could put 3-4%, most would probably choose that, but we couldn't put that many choices and still accommodate for 7-8%.

This illustrates the fact that most investors don’t realize the cash flow opportunities from investing in U.S. real estate. We want to change that perception. 

Global Rental Yield Comparisons

UAE 12.3% (Ranked #1)
USA 8.1% (Ranked #12)

G7
UK 4.3%
Canada 3.9%
France 2.6%
Italy 4.2%
Germany 3.4%
Japan 2.4%

As you can see, most developed countries have a rental yield lower than 4%, and half of the major Asian countries have a rental yield under 3%. Greater China countries are below 2%!   

When investing in these markets, investors “hope” prices will rise for capital appreciation but there is little to no cash flow opportunities. 

Why is the U.S. so high?

Severe Housing Shortage

From 2012 to 2022, 6.5 million 'more' households were formed compared to homes built. "Household Formation" refers to the change in the number of households (persons living under one roof or occupying a separate housing unit) from one year to the next. Let that sink in for a bit….

There is currently a 5.5M home shortage to meet existing demand.

Higher labor and raw material costs with stringent zoning laws make it difficult to build homes fast enough to meet demand.

Existing Home Sales

Existing home sales normally account for 90% of total home sales. 

Of the existing homeowners with a mortgage, 

99% are UNDER 6%
80% are UNDER 5%, and
40% are UNDER 3%

What this means is the supply is not moving unless sellers are willing to pay capital gains or move to a higher priced home using a 1031 Exchange - regardless, they will have to face a higher mortgage rate.

It's no surprise that in 2023, existing home sales fell to the lowest level in nearly 30 years, while the median price hit a record high, according to a recent report by the National Association of Realtors.

Scylla and Charybdis

Similar to boats crossing the Straits of Messina in Homer's Odyssey, homebuilders face a similar dilemma of whether to construct houses that buyers may not be able to afford with 7%+ mortgage rates or to hold back and therefore make long-term housing supply issues worse.

Institutional Buying

The current lack of supply plays right into the hands of Blackstone and its peers. 

The Blackstone Playbook is well-known : 

  • Identify supply-demand imbalances
  • Invest billions to build giant landlords
  • Dictate rental pricing

January 2024, Blackstone announced the acquisition of Tricon Residential for $3.5B, making it the 3rd largest landlord (62K homes) in the U.S. behind Progress Residential (84K homes) and Invitation Homes (82K homes). 

Meanwhile, just last week, Blackstone purchased private rental housing apartment firm Air Communities for $10B in cash! 

Demand

COVID accelerated WFM which was growing 2.5% per year before the pandemic. It suddenly went to 100% and reversing this trend is difficult and technology has become so good that execution-based roles can be done remotely. 

Meanwhile, when companies get to a certain size in expensive states such as California and New York, it becomes too expensive to live and operate a company, and many move their headquarters to a state with a lower cost of living and state taxes, like Texas. For example, Dallas has the most Fortune 500 companies in the world as their headquarters, and this is increasing every year. 

U.S. Rental Yields

Here is where it gets interesting….look at some of these rental yields!

Detroit32.9%Tulsa13.5%Las Vegas10.8%
Milwaukee20.7%Colorado Springs13.2%Anchorage10.4%
Omaha18.3%Nashville12.7%Atlanta10.3%
Baltimore17.2%Spokane12.3%Miami10.1%
Indianapolis17%Madison11.5%Denver9.5%
Memphis15.9%Tucson11.4%
New Orleans13.6%Ann Arbor11.1%

This is an illustration of what is happening due to the reasons stated above:

  • Unfixable housing shortage
  • Gentrification to lower cost-of-living states
  • Supply is further being squeezed by institutional buying
  • Marginal homebuyer has to rent, given high mortgage rates

It's never been a better time to be a landlord!

I always tell clients, if you can make the numbers work now, they will only get better because rental yields WILL RISE, and when mortgage rates decline, you can refinance to a lower rate. Over time, your net cash flow will only rise.

More importantly, when the value of the home rises, you can refinance 70% of the increased home value to lower the investment cost!

Mortgages for International Investors

AM Rental Coverage+

Our loan program was designed specifically for international investors looking for an easy way to qualify for a mortgage by using the rental income and not personal financials.

  • Up to 75% loan-to-value
  • 30-45 days closing
  • If rental income > mortgage and other costs = you qualify!!
  • No age restrictions
  • Closing documents signed at your local U.S. embassy

If you’re interested in learning more, reach out to us at [email protected] or visit our website at www.gmg.asia. Additionally, if you’d like to schedule a commitment-free meeting with one of our U.S. loan officers to explore your U.S. mortgage options further, you can do so using our 24/7 calendar link.

Interview with August One: Portugal Investment + Residency Program

Mortgage Loan Canada

GMGadvisor presents….

This week, we are doing something a little different and discussing the wildly popular Portugal Golden Visa Program. I learned quite a bit from this interview and wanted to share the findings with our audience. 

The Portugal Golden Visa has been very popular with U.S., Canada, and Asia-based clients looking to lower their cost of living and build residency in one of the most vibrant countries in the world. Even U.S.-based clients want to build a rental portfolio in the U.S. but live in Portugal. 

August One & Atlantico-II Fund

We had the privilege of sitting down with Sameer Narula, founder of August One, whose Atlantico-II fund offers investors access to the Portuguese Golden Visa, with a path to a European passport for them and their families. 

August One is a private investment firm that invests in innovative companies and real assets that have the potential to transform traditional industries, reverse climate change, and generate significant returns. They are regulated by the Monetary Authority of Singapore and the Portuguese Capital Markets Commission in the EU.

In the video, Sameer talks about:

  • Why clients pick Portugal for residency
  • His own and clients' experiences
  • The fund's strategy, sectors, and investment criteria
  • Rumours about Portugal's residency program cancellation
  • Next steps for interested parties
  • Potential returns and the local market outlook

Watch the Interview with Sameer

Portugal and The Golden Visa

Introduced in 2012, the Portugal Golden Visa program has attracted over €6 billion in investments thus far.

Much of the information uncovered in our research was new to me, and I never appreciated how amazing it is to live and do business in Portugal.  

Known as “The California of Europe,” Portugal has been the birthplace of several unicorns such as Feedzai, Talkdesk, Farfetch, Remote, and others. Portugal has also been voted one of the best globally in many categories: Lisbon, 4th best globally for starting a business, the cheapest country in Europe for running a business, and the best country in the world for trading across borders. 

What Makes Portugal Special?

When it comes to citizenship, Portugal ticks many of the boxes international families find important:

  • Safety - Ranked as the fourth safest country in the world, with low crime rates

  • Affordability - The cost of living is, on average, 35.3% lower than in the United States, with rent in Portugal being, on average, 51.1% lower than in the U.S.

  • High Living Standards - Portugal is one of the top 5 countries for expats, with an 84% satisfaction rate among those who have moved to the country

  • Blue Zone Quality of Health - Portugal boasts a life expectancy at birth of around 82 years, surpassing the OECD average of 81 years

  • Strongly Rated Passport - With Visa-free and easy access to most of the world

  • Innovation - The second-best country for innovation in the ECB, only behind Norway

  • Graduates - Second highest rate of engineering graduates in Europe

  • Quality of Life - Ranked #1 in quality of life out of 68 countries

How to Obtain the Golden Visa Through Atlantico-II Fund

An investment of €500,000 into an Atlantico-II fund will gain a Golden Visa residency permit for a family, including dependent children, as well as easy access to all countries in the Schengen Zone. After five years of residency (with only a 7-day stay requirement per year), an individual has the opportunity to obtain Portuguese citizenship for themselves as well as their spouse, dependent children, and parents. There are associated costs, including legal and government fees (contact us).

Begin your Golden Visa journey now 

Financing Options

GMG offers short-term bridging loans on U.S., Canada, U.K., Singapore, Thailand, Philippines, and Australian homes, which have been used to fund the €500,000 investment requirement. Given there is a deadline looming in December 2024 when some tax benefits of the residency program disappear, there is a rush to get access to the program as quickly as possible. 

Our loans can monetize up to 70% of the home value towards other investments -> such as the Portugal Golden Visa. For example, €500,000 - US$535,000 minimum investment amount. So if you had a home worth $800,000 (assuming no debt), you could borrow up to 70% or $560,000 -> used as an investment into the fund. This is purely illustrative purposes to show how financing can be done. The funds would be used towards the investment and given the recent rates of return generated by the fund, it could more than offset the cost of financing.   

Please contact us on the link below for more information:

Portugal Investment into Residency/Citizenship Program

Portugal Mortgages

While real estate investments do not count towards the Golden Visa, many of our clients naturally want to own property, especially if they are planning to spend more time in the country; our Portugal mortgage program is specifically designed for international investors with a process made easy to accommodate the needs of our global clientele.   

Here is the latest GMG Portugal Mortgage Program Sheet

For more information regarding a Portuguese mortgage, contact our European Market Head: [email protected]

[email protected]

What just happened? + How to bet alongside Blackstone!

Bridge Loan Mortgage

What a year it’s been and the resiliency of asset markets in the face of everything that was thrown at it was truly amazing!   

We are living through unprecedented times with technology and crypto experiencing another bull market, U.S. elections in 2024, and potential rate cuts around the world. Could we be “back to the races” again this year?

One exercise that we all do at the beginning of the year is to adjust our personal investment portfolio to reflect what we expect to unfold in the world over the short, medium, and long term.

For many, including myself, that means increasing the allocation to crypto and U.S. real estate investments.

The simple key to making long-term money is to create a portfolio of non-correlated investments, and there is no better time to increase your U.S. real estate investment exposure.

Our goal in 2024 is to bring more education, experience, and strategies to our client's real estate investing.

We are living through unprecedented times, and we want to be there for you on your journey as an international real estate investor.

Message me if you want to know what I recommend as your real estate exposure vs. your overall portfolio.

U.S. Real Estate Market - What Just Happened?!

In a year that saw:

  • 10-year Treasury yields at 5%
  • 30-year mortgage rates at 7-8%
  • Inflation as high as 6.5% 

How did:

  • Home prices rise across the country; in some metro areas 10-15%
  • S&P +25%; Nasdaq +55%

How did everyone get it wrong?  

In hindsight, it is clear to me that the extent of the positive impact of various layers of government stimulus going back to COVID (including the Fed’s BTFP) was severely misunderstood and underappreciated.  

Now, with inflation and employment (Fed’s dual mandate) seemingly under control, most of the world now expects around a 75 bps cut in Fed Funds rates (echoed by the Fed’s new dot plot).  

Hat’s off to our GMG Research team, which mid-2022 called for a supportive U.S. property market in 2023, but never did we expect a rising market to this extent.   

Our thesis was simple - it was based on the fact that: 

  • 24% of homeowners have their mortgages < 3%
  • 63% are locked-in < 4% and 
  • 83% of homeowners have mortgages < 5%
  • Severe lack of supply 

Existing Homes

In any marketplace, you need supply and demand. For U.S. real estate, the supply is Existing Homes and New Homes. Existing Home Sales are about 90% of Total Home Sales in the U.S.

Given that 83% of existing homeowners have a mortgage < 5%, they would have to be under financial stress to sell, given their new mortgage would cost 7-8%. As you can imagine, Existing Home Sales is at a 13-year low!    

New Homes

It’s widely known that there is a major shortage of homes in the U.S.; between 3-6M units, depending on what you read.

Lack of Homebuilder Motivation

With higher borrowing costs, higher commodity prices, and higher wages - there is no financial motivation for homebuilders to increase their development, given the lower margin potential from higher costs.  

More importantly, demand and affordability will be dampened by higher-for-longer mortgage rates. 

Remember, the large homebuilders are all publicly traded companies with CEOs compensated on share price performance. 

Higher profit => Higher EPS => Lower PE => Institutional Buying => Higher share prices => Higher CEO bonuses!

Sun Belt is Rising!

Elsewhere, the national reshoring of manufacturing is happening; it's happening now, and it's happening fast!

States like Georgia, Texas, and Florida are experiencing an unprecedented influx of employment seekers to match the growing opportunities.

Between January 2020 and January 2023, rents for a two-bed detached home increased about 44% in Tampa, Florida, 43% in Phoenix, and 35% near Atlanta. 

Why is this important for you (international property investor)?

Many Americans will not be able to afford a mortgage even if rates fall to 5-6%, so they will have to rent.

In the states mentioned above, we are seeing gross rental yields of 12% already!

I have no doubt that rental yields in these states will be 15% sooner than we think.  

You know who else knows this?

Wall Street, aka Private Equity (aka Blackstone and its pals)

Single-family homes are the next big institutional investment opportunity given its sheer scale and for the reasons I mentioned above.  

There have been many articles published this year about how institutions may own up to 40-60% of single-family home supply by 2030!

Hear Bobby Kennedy Jr’s speech on this

As an investment banker for over 20 years with Blackstone as its client, I can assure you if there is money to be made, they are going to make it!

The Perfect Storm to Invest in U.S. Real Estate

  • Extremely supportive supply demand
  • Low-entry price point
  • Ease of transaction
  • High leverage (even for foreign nationals living overseas)
  • Tailwind of institutional buying and 
  • Plenty of ways to maximize cash flow (lower tax)

Home prices will certainly go higher, given the expectation of lower rates in 2024!

If you are interested in taking your first step in owning a U.S. real estate investment property, send me a private message, and I can walk you through the entire process:

  • How to find the right city to invest in
  • Which cities have the highest rental yield
  • Setting up an LLC and bank account
  • U.S. tax specialist specializing in international investors
  • Property manager
  • Realtor….and, of course,
  • Financing for foreign nationals or expats living overseas

2023 In Review

Bank stuff…

Silicon Valley Bank was put into receivership after it failed to raise needed capital. SVB’s closure was the largest bank failure in U.S. history since the 2008 financial crisis. This led to the collapse of cryptocurrency-focused Silvergate Bank and Signature Bank as well.

The implosion of these three small-to-mid-sized U.S. banks ignited contagion fears across the globe in the months that followed, prompting the Federal Reserve to set up a US$12B emergency lending program - known as the Bank Term Funding Program (BTFP). More on this later.  

The programme couldn’t save First Republic Bank from closing down and was ultimately sold to JPMorgan Chase. 

This was just an amuse-bouche for what happened next as Credit Suisse collapsed with UBS paying only CHF 3B to save the company, a deal brokered by the Swiss government. Google “AT1 bonds,” and the story gets even crazier. 

Crypto stuff…

  • January - BTC $16,000; ETH $1606; SOL $9.9
  • February - Kraken shuts down
  • March - SVB collapses; Arbitum launches ARB token
  • April - ARK refiles Bitcoin ETF
  • May - DOJ investigation on Binance for Russia sanctions
  • June - SEC sues Binance CEO; Blackrock files for spot Bitcoin ETF; Fidelity, Wisdom Tree, VanEck refiles Bitcoin ETV
  • July - Blackrock CEO says BTC “could revolutionize finance”; Ripple won ruling
  • August - Paypal launches stablecoin, Grayscale wins lawsuit with SEC, 
  • September - Nomura launches Bitcoin fund
  • October - 1st ETH futures ETF launched
  • November - SBF found guilty; Blackrock files for spot Ethereum ETF; Binance settles lawsuit and CEO steps down
  • December - BTC $40,000; ETH $2,396; SOL $105 

Bad actors were removed, Binance settled, Ripple won, Bitcoin spot ETF (only a matter of time), and MicroStrategy bought $600M of BTC at $42K last night!

AI stuff…

It’s mind-boggling that ChatGPT reached 100 million users in just 2 months after launch. Just guessing here, but it must be the fastest adoption of any form of technology, language, or service in the history of humankind. The scary thing is that it’s only getting started. It’s now a necessary tool for nearly all organizations (ChatGPT is writing this now…just kidding).

An event prescient of things to come was the Hollywood strike, which, at the core, was about protecting Hollywood jobs from AI. The delay of Dune 2 till March 2024 was the biggest disappointment to me personally. 

Nvidia, the only company that is able to make chips capable of crunching AI’s large language models, saw its stock +200%. The rest of the tech incumbents went along for the ride: Meta +250%, Tesla +100%, Google, and Microsoft, both +50%+. 

Fun stuff….

  • Taylor Swift’s x ERAs tour is generating more GDP than many small countries. I’m a massive Swiftie, so bummed I couldn't get tickets.
  • Taylor Swift x Travis Kelce
  • Barbie x Oppenheimer
  • Coronation of King Charles III and Camilla

Sad stuff…

  • Hamas and Israel
  • Hawaii forest fires
  • Titan x Titanic
  • Matthew Perry, Tina Turner, Sinead O’Conner

Crazy stuff…

  • Twitter rebrands to X
  • George Santos gets expelled from the House of Representatives
  • Kevin McCarthy gets ousted as Speaker of the House
  • Torrential rain flooded Burning Man (I was supposed to go)
  • The Cricket World Cup breaches 1 trillion viewing minutes globally
  • Watching Harvard and UPenn botch their response to the ME events
  • Ozempic, a diabetes drug popular with Hollywood actors to lose weight, became mainstream to the point its manufacturer, Novo Nordisc, was the largest market cap stock in Europe, larger than LVMH!
  • Even crazier, General Mills had to research the impact Ozempic had on their business, given the potential lack of calorie consumption.

Sports stuff…

  • Messi-mania goes nuclear in Miami
  • Inter Miami is the most searched sports team on Google
  • Lebron surpassing Kareem in most points scored
  • South Africa wins the Rugby World Cup
  • Australia wins the Cricket World Cup

Update of our Global Financing Capabilities

  • International Residential Mortgages
    U.S.,  Canada,  Mexico,  U.K.,  France,  Spain,  Portugal,  Italy,  Dubai,  Singapore,  Japan,  Thailand,  Australia
  • International Asset-backed (Bridging) Loans
    U.S.,  Canada,  U.K.,  Singapore,  Thailand,  Philippines,  Australia
  • Asian Real Estate Structured Debt Financing
    Most of Asia
  • Listed Share Financing
    Most of Asia and the U.K.

I want to thank all our stakeholders for joining us on our journey to disrupt how international investors secure financing for global real estate investments.  

We wish you abundant health, wealth, and happiness in 2024!

Happy Hunting!

[email protected]

40-Year High

International Mortgage Broker UK

Between 2022-2023, the U.S. hosted over 1,000,000 international students, +12% from the previous year, the fastest growth rate in more than 40 years! (The Open Doors® 2023 Report on International Educational Exchange, Nov 13)

Let me repeat this…

The U.S. saw a 40-year high growth rate in international students attending U.S. universities between 2022-2023!

What was also interesting was Singapore (our headquarters) and India saw record numbers of students attending U.S. colleges. 

Did you know…

We created the world’s first U.S. mortgage, which allows your child to be the tenant, AM Student+.

Education

From our client surveys, Education was given as a key reason for their U.S. real estate investments. 

Most of the time, the objective of owning real estate to earn income almost always comes down to "could I live there one day"? 

A popular strategy for our clients is to purchase an investment property "in anticipation” of sending their child to college, set up a base in that city, and earn rental income along the way.  

Then upon college acceptance, the parents can live in the property when visiting and rent it out when it's not in use. 

Upon graduation, the price appreciation may even pay for college if they decide to sell. 

Another popular option, if the child stays in the U.S. for work, is to transfer the property to the child's name as a "graduation gift" to help build up their credit profile and/or earn rental income. Why high schools? 

Here are the following “Education-related” reports - there is plenty of good information here - including the best Public and Private high schools in California, Texas, Florida, and New York:

1. Top U.S. High Schools Property Investment Guide eBook

2. Buyers Guide to California - Education drives prices and rents

3. Buyers Guide to California - Demographics

Here is a list of our partners that can help with your U.S. real estate investment decision:

If you have any questions, please feel free to reach out to me directly at [email protected] or my personal mobile +65 9773-0273. 

www.gmg.asia

[Report] 2023 Foreign Buyers of U.S. Real Estate

France Mortgages

Considered the “bible” for foreign investor trends in U.S. residential real estate, the 2023 National Association of Realtor’s report on Foreign Investments has just been released, and the results are eye-opening!  

This is why we got into this business in 2017!  

Problem: Foreign Investors found it difficult to securing financing for their U.S. real estate investments. 

That is when we started on our journey to fix this!  

Watch our DemoDay Presentation! 

Before we start... 

 If I told you that in a year that saw: 

  • Interest rates rising globally (in the U.S., rates tripled!) 
  •  Russian-Ukraine conflict 
  •  Other Geo-political concerns 
  •  Inflation concerns 
  •  Supply chain issues stemming from Covid-19  

And I said U.S. real estate purchased by foreigners was ONLY 10% LESS THAN the previous year. 

Would you believe me? 

Of course not! 

Frankly, this report surprised me but states the resilience of the U.S. real estate market, especially with foreign investors and overseas investors.  

If you have any questions about this report or anything real estate financing-related, please feel free to reach out to me directly at [email protected] or my personal mobile +65 9773-0273. 

Sincerely, 

Donald Klip, Co-Founder 

Global Mortgage Group

Before we begin, I want to thank our summer intern, Angelina Hong, who is currently reading the Classics at the University of Oxford in the UK and the author of this report and many of our previous articles. We wish her the best in her future endeavours! 

International Buyers of U.S. Real Estate: 2023 Highlights 

In the ever-evolving landscape of global real estate investment, the United States remains a sought-after destination for international buyers. The year 2023 has brought about significant changes and trends in the international real estate market, with foreign buyers continuing to play a vital role. This article explores the statistics and key factors driving the international buyers of U.S. real estate in 2023.

Key Statistics (April 2022-March 2023): 

$53.3 billion of foreign buyer purchases 

84,600 foreign buyer existing-home purchases 

Average foreign buyer purchase price rose to $639,900 

Top foreign buyer: China 

Top destination: Florida 

Part I: Strong U.S. Housing Demand, Tight Supply, Soaring Home Prices 

The United States housing market has experienced its own set of dynamics. In 2021, it witnessed the highest levels of home sales since 2006. However, 2022 saw a slowdown and normalisation of the market due to various factors. In response to inflationary pressures, mortgage rates were raised, which impacted housing demand. 

As of the end of March 2023, the housing market faced challenges related to supply. Unsold homes were 4% above levels seen one year prior. The median price of existing homes also hit a notable milestone, reaching $375,700 in April 2023.  

Part II: International Buyers 

Purchases of Existing Homes 

The 2023 statistics reveal a shift in the international buyer landscape. The number of existing homes purchased by foreign buyers decreased to 84,600, marking the lowest figure since 2009. This decline represents a 14% drop from the previous year, with 14,000 fewer foreign buyers participating in the market. 

The dollar volume of foreign buyer purchases also decreased by 9.6% to $53.3 billion, reflecting the impact of market dynamics. 

READ – still $53 billion of demand, despite the issues mentioned above!

Origin and Destination 

The origin of international buyers continues to diversify. Asian buyers maintain their dominance, representing the largest group with a market share of 38%. Latin American buyers follow closely behind, accounting for 31% of the market. European and Canadian buyers hold 14% and 10% of the market share, respectively. 

China remains the top country of origin for international buyers, representing 13% of the market. Chinese buyers stand out with the highest average purchase price at $1.2 million, often investing in expensive states such as California and New York. In contrast, Mexican buyers tend to purchase less expensive properties, with Texas being a preferred destination. 

The top 10 countries of origin of international buyers:  

1. China
2. Mexico
3. Canada
4. India
5. Colombia
6. United Kingdom
7. Australia
8. Germany
9. Venezuela
10. Israel

In terms of destinations within the United States, Florida remains the top choice for international buyers, with a significant 23% share of the market. California and Texas closely follow, each with a 12% share.  

The top 10 states for international buyers:  

1. Florida
2. California
3. Texas
4. North Carolina
5. Arizona
6. Illinois
7. New York
8. Ohio
9. Pennsylvania
10. New Jersey

Financing 

Foreign buyers continue to exhibit a propensity for all-cash purchases, with 42% choosing this payment method, compared to 26% among all buyers of existing homes. Those foreign buyers residing abroad are more likely to make all-cash purchases. 

Property as a Real Estate Investment  

Foreign purchases of U.S. real estate saw 6% increase from the previous year, indicating a growing interest in real estate investment for various purposes. 

READ: Year-on-year INCREASE in property purchased for investment purposes!!!

The majority of foreign buyers prefer detached single-family homes, with 76% making such purchases. Additionally, foreign buyers tend to gravitate towards suburban areas, with 45% choosing this type of location. Interestingly, more than three-quarters of Asian Indian buyers opt for suburban properties. Conversely, Canadian buyers are more likely to purchase properties in resort areas for use as vacation homes. 

Part III: Reasons for Not Purchasing U.S. Property 

Despite the allure of U.S. real estate, some international clients cite their perception of hurdles for investing in this sector. 

Here are the common misconceptions, the actual facts and our solutions: 

Cost of properties  Not at all. See the following chart on price comparisons to global cities  
Difficulties in finding suitable properties      This can be an issue with time zones, which sites to look at etc. We have fixed this – AM Property Finder. 
Immigration Laws  As a foreign real estate investor, there are NO restrictions!   
Challenges in obtaining financing      This is all we do. Check out our Foreign National loan programs. 
Property taxes      You earn income, you need to pay taxes; however, there are many ways to deduct expenses to maximise your rental income. 
Exposure to U.S. tax laws      The reality of U.S. taxes is MUCH EASIER than perception. Some states, like Texas, don’t have state taxes, which is why it’s one of the most popular investment destinations. Also, there are many ways to deduct expenses to maximise your rental income. 
Maintenance fees      Any real estate investment will have maintenance required, but that is why you pay a small fee to the property manager. AM Concierge service can introduce you to our preferred managers to make your investment seamless and hassle-free.   
Currency transfer difficulties      No issues here. AM Concierge service has partner remittance firms that help our clients. Even in China we have viable solutions from our partners.   
Insurance  Insurance is a small percentage of the rental income you receive, and we have partners to help you with this.   
Exchange rate concerns  If you are funding the mortgage payments in your home currency, you may experience a currency loss, BUT you can easily hedge this, PLUS you will be earning USD rental income.   

America Mortgages Concierge Services: 

  •  Property Finder 
  •  Property Management 
  •  International Remittance Solutions (including China) 
  •  Property Taxes 
  •  Tax Advice and Filing 
  •  LLC company set up 
  •  Immigration Consultants 

In conclusion, the 2023 statistics on international buyers of U.S. real estate demonstrate a changing landscape influenced by global economic conditions, supply and demand dynamics, and evolving buyer preferences. While challenges persist, the U.S. remains an attractive destination for international real estate investment, drawing buyers from diverse backgrounds and motivations. 

Contact us at [email protected] and seize opportunities in the thriving U.S. property market. Visit www.gmg.asia for more information.

France – Not Only for Tourists, But for Real Estate Investors

Residential Mortgages UK

France has always been a popular tourist destination, but in recent years it has also become a hot spot for property investors. With its rich cultural heritage, beautiful landscapes, and world-renowned cuisine, France offers a lot of potential for those looking to invest in property. In this article, we will explore the benefits of investing in property in France and the GMG mortgage options available for investors.

Rental Income Potential

One of the main benefits of investing in property in France is its strong rental market. There is a high demand for rental properties, particularly in popular tourist destinations like Paris, Cannes, and Nice. According to SeLoger, the rental yield for apartments in Paris ranges from 3.2% to 4.2%, which is considered high compared to other major cities such as New York and London. In Cannes and Nice, rental yields can range from 3.5% to 5%, depending on factors such as location, property type, and seasonality. Additionally, the French government has implemented policies to support the rental market, such as tax incentives and subsidies for landlords.

Price Appreciation Outlook

Another advantage of investing in property in France is its potential for price appreciation. While property prices in some parts of France are already high, there are still many areas that offer more affordable options for investors. According to the National Institute of Statistics and Economic Studies, property prices in France have been increasing steadily since 2015, with a 3.9% increase in 2021 and a 3.8% increase in 2022. In Cannes and Nice, property prices have increased by an average of 4-5% per year over the past decade, according to French Property. Additionally, the French government has implemented policies to encourage foreign investment in the real estate market, such as offering tax incentives for long-term investors.

Low Cost of Living

France is known for its high standard of living, but it also has a relatively low cost of living compared to other developed countries. This can make it an attractive option for investors who want to keep their expenses low while they are managing their properties.

Mortgage Options for International Investors

GMG offers a range of mortgage options for international investors looking to invest in property in France. With a team of experienced mortgage advisors, GMG can help investors find the right mortgage for their needs. GMG offers both fixed and variable rate mortgages, and investors can choose from a range of repayment terms.

In addition to mortgage options, GMG also offers a range of other services to help investors navigate the French property market. This includes legal and tax advice, property management services, and assistance with the purchase process.

Overall, France offers a lot of potential for property investors looking for a stable market with strong rental demand and the potential for price appreciation. Paris, Cannes, and Nice, in particular, offer investors the opportunity to invest in growing tourist destinations with world-class attractions and stunning natural beauty. With GMG's mortgage options and other services, investors can navigate the French property market with confidence.

Get in touch with us to learn more about investing in France, properties available to purchase through our partners and about GMG's financing solutions for foreign national investors today at [email protected].

5 Reasons to Invest in Japanese Real Estate

International Mortgage

5 Reasons why Japan Real Estate Is a Good Investment 

In recent years, Japan has become an attractive destination for property investors due to its stable economy, low crime rates, and high standard of living. With its rich cultural heritage, stunning landscapes, and bustling cities, Japan offers a lot of potential for those looking to invest in property. In this article, we will explore the benefits of investing in property in Japan and of course GMG mortgage options available for investors. 

1. Surprisingly High Rental Income Potential 

One of the main benefits of investing in property in Japan is its strong rental market. There is a high demand for rental properties, particularly in popular tourist destinations like Niseko. According to Japan Property Central, the rental yield for apartments in central Tokyo ranges from 4-5%, which is considered high compared to other major cities such as New York and London. In Niseko, rental yields can range from 4-8%, depending on factors such as location, property type, and seasonality. Additionally, the Japanese government has implemented policies to support the rental market, such as tax incentives and subsidies for landlords.

2. Price Appreciation Outlook

Another advantage of investing in property in Japan is its potential for price appreciation. While property prices in some parts of Japan are already high, there are still many areas that offer more affordable options for investors. According to the Japan Real Estate Institute, property prices in Japan have been increasing steadily since 2013, with a 2.7% increase in 2021 and a 2.9% increase in 2022. In Niseko, property prices have increased by an average of 3-4% per year over the past decade, according to Niseko Property. Additionally, the Japanese government has implemented policies to encourage foreign investment in the real estate market, such as relaxing visa requirements and offering tax incentives for long-term investors.

3. Low Cost of Living 

Japan has a reputation for being an expensive country, but it also has a low cost of living compared to other developed countries. This can make it an attractive option for investors who want to keep their expenses low while they are managing their properties. 

4. Mortgage Options for International Investors 

GMG offers a range of mortgage options for international investors looking to invest in property in Japan. With a team of experienced mortgage advisors, GMG can help investors find the right mortgage for their needs. GMG offers both fixed and variable rate mortgages, and investors can choose from a range of repayment terms. 

In addition to mortgage options, GMG also offers a range of other services to help investors navigate the Japanese property market. This includes legal and tax advice, property management services, and assistance with the purchase process. 

Overall, Japan offers a lot of potential for property investors looking for a stable market with strong rental demand and the potential for price appreciation. Niseko, in particular, offers investors the opportunity to invest in a growing tourist destination with world-class skiing and stunning natural beauty. With GMG's mortgage options and other services, investors can navigate the Japanese property market with confidence.

5. GMG Concierge Program

We have a large list of exclusive secondary properties in Tokyo and Yokohama with very good return profiles which can be shared with you upon request.

Meanwhile we have extensive relationships with real estate developers with new projects which we can show as well in Niseko, Tokyo and Kyoto.  

Get in touch with us to learn more about access to our property portfolio as well our Japan mortgage options for foreign national investors at [email protected]. 

5 Reasons Why U.S. Housing Prices will not Crash but Surprise us!

International Mortgages

1. Lack of investment by homebuilders

According to data from the U.S. Census Bureau, fewer homes were built in the U.S. in the 10 years following the 2008 financial crisis than in any decade since the 1960s.

From 2010 to 2019, a total of 6.8 million new privately-owned housing units were completed in the U.S., significantly lower than the 9.7 million units completed in the 2000s and the 8.6 million units completed in the 1990s.

A major reason for the drop in new housing construction following the 2008 financial crisis was partly due to the housing market crash, which led to a decline in demand for new homes and tighter lending standards (Dodd-Frank).

2. Higher input costs

Additionally, builders faced various challenges during this period, including higher land and labor costs, regulatory hurdles, and a shortage of skilled workers for construction.

These issues are only more pronounced now with higher wages, higher input prices such as lumber, concrete, etc., and of course, financing costs as of last year!

3. Massive lack of housing supply to meet demand

Last year, Freddie Mac published an article, “Housing Supply: A Growing Deficit,” noting as of the fourth quarter of 2020, the U.S. had a housing supply deficit of 3.8 million units.”

Meanwhile, the National Association of Realtors projects that the housing deficit is closer to 6.8 million homes.

Lastly, a report published by the Fed last year, “Volatility in Home Sales and Prices: Supply or Demand?” find that a 30% increase in the monthly number of homes coming onto the market would have been necessary to keep up with the pandemic-era surge in demand​.

4. TikTokers need more space at home

However, there is a new dynamic that has arisen over the past 3 years, which is how labor is defined and its impact on housing. Many workers are now choosing to work from home, and also, the younger entrants into the labor force are now earning income from alternative methods, all requiring some “extra space” at home and not an office to go to (TikTok, Amazon sales, Crypto trading, etc.) – this is all very supportive of housing demand.

5. Stability

The stability of the U.S. housing market cannot be underestimated. Post-COVID, when mortgage rates were lowered to historically low levels, most homeowners took the opportunity to refinance their homes to take advantage of the interest rate savings. Fast forward to today, 50% of all mortgages outstanding are under 4%, fixed for 30 years​; 40% of all homes are owned free and clear, and nearly 100% of all borrowers have mortgages lower than the current rate!

Will we see a crash? NO!

We feel given the structure of the supply-demand landscape, there is no impending crash, but we feel the market will be supported faster than expected.

In summary, whether you say we are 4M units short, 6M units short, or 30% short – we are short, making this a great opportunity to start building your U.S. rental portfolio, given rental income and yields will continue to rise.