Global Cities Price & Rental Yield Comparison

Bridging Loan Canada

Our research team has put together fantastic comparisons of the average property prices of the major global cities and their respective rental yields.

As you can see, property prices are high in the world’s major global cities, and gross rental yields are generally under 4% in local currency. More importantly, limited financing is available for non-resident foreign nationals.

For a property investor, why would you pay more and get less?

This is what makes investing in U.S. real estate so appealing for investors:

  • Low-cost entry point
  • Positive cash flow
  • Capital appreciation
  • Strong USD
  • Up to 75% financing based on rental income only, not personal financials
  • Tax benefits from owning via LLC
  • Lack of supply of housing causing rents and prices to increase
  • Remote property management

The 1% Rule!

In fact, the U.S. is one of the few (maybe only) major real estate markets where you can find rental properties that fit the 1% rule!

That is, a property whose rental income is at least 1% of the purchase price. For example, if the rental property is $500,000, the monthly rental should be at least $5,000.

15% rental yield is on the horizon!

We have long maintained that this will continue to increase as the lack of housing will create an environment where the average buyer will have to rent instead, normalizing a higher portion of disposable income for rent.   

As of 1Q2024, some of the top rental yield markets in the U.S. are already nearing mid-teens gross rental yield, according to a Attom Report, March 13, 2024.

This is just a snapshot of what the market is like in the U.S. at the moment. There are other investment strategies like the BRRRR Method which forces capital appreciation.

Seize this opportunity and explore how America Mortgages can support you in achieving your real estate goals. Reach out to us today to discover more and begin your path to financial success. Alternatively, connect with us for a no-obligation consultation with one of our globally based U.S. mortgage loan officers by using this 24/7 calendar link.

www.gmg.asia

How to determine which state to buy in?

Canadian Mortgages

As a professional investor for most of my life, I have developed systems to derive my investment choices. 

For real estate, I prioritise positive cash flow and, to a lesser extent, capital appreciation, although both are correlated. 

Real estate investment is not to be confused with a second home, pied-de-terre, or vacation home. These are not income-generating assets and have very different reasons for owning. 

Since positive cash flow is my priority, I look at which states have high rental yields, potential rent growth, and what specific criteria drive this growth.

Supply and Demand => If more folks are renting in a community faster than the supply of available rentals can support, rental prices tend to increase over time. 

What drives Demand?

Typically, this is population growth. For example, if California is expensive to live in, you can move to Arizona. If New York is expensive, you can move to Florida, and so on.  

What attributes would attract people to move to another state?

  • Cost of living
  • State income tax rates
  • Education
  • Job prospects
  • Wage growth, and many more

In this article, I will examine the Cost of Living and Disposable Income criteria.

In later articles, I will share how I screen for these other criteria, so stay tuned!

What is the Cost of Living?

It is the amount you spend on essential expenses under a normal and reasonable lifestyle.

We also need to take into consideration Salary and Wages since a low Cost of Living state is often associated with lower salary prospects.

We will now look at the average amount you have “leftover” after spending on essentials = Disposable Income.   

Does a high disposable income state represent the best place to own an investment portfolio?

Not necessarily, since taxes, property prices, education, and other factors are not taken into consideration.

Without giving away the secret sauce, the top states to own for cash flow are around the middle of 2 lists.

Next week, I will look at: Average property prices, Population growth, GDP growth, and Rental yield to determine which state(s) is the best to own a U.S. real estate investment in.

StateCost of living (annual $)
Mississippi$32,336
Arkansas$32,979
Alabama$33,654
Oklahoma$33,966
New Mexico$34,501
Tennessee$34,742
South Carolina$34,826
West Virginia$34,861
Kansas$35,185
Missouri$35,338
Kentucky$35,508
Louisiana$35,576
North Dakota$35,707
Iowa$35,871
Ohio$35,932
Indiana$36,207
North Carolina$36,702
South Dakota$36,864
Michigan$37,111
Montana$37,328
Wisconsin$37,374
Nebraska$37,519
Wyoming$37,550
Texas$37,582
Idaho$37,658
Georgia$38,747
Arizona$39,856
Maine$39,899
Pennsylvania$40,066
Florida$40,512
Utah$40,586
Illinois$41,395
Minnesota$41,498
Nevada$41,630
Virginia$43,067
Vermont$43,927
Delaware$44,389
Rhode Island$44,481
New Hampshire$45,575
Colorado$45,931
Oregon$46,193
Connecticut$46,912
Washington$47,231
Maryland$48,235
Alaska$48,670
New Jersey$49,511
New York$49,623
California$53,171
Massachusetts$53,860
Hawaii$55,491
StateDisposable income
New York$25,247
Washington$25,119
Massachusetts$22,740
Illinois$22,535
Virginia$22,523
Connecticut$22,398
Minnesota$22,142
Colorado$21,939
Maryland$21,515
New Jersey$21,379
Michigan$20,889
Ohio$20,598
North Dakota$20,093
California$20,049
Rhode Island$20,049
New Mexico$19,899
Texas$19,718
North Carolina$19,518
Georgia$19,253
Missouri$19,182
Arizona$18,764
Wisconsin$18,746
Pennsylvania$18,404
Tennessee$18,078
Delaware$17,871
Kansas$17,665
Iowa$17,649
Nebraska$17,551
Alaska$17,460
Indiana$17,293
New Hampshire$16,975
Oklahoma$16,974
Alabama$16,966
Wyoming$16,890
Utah$16,774
Oregon$16,487
Maine$16,061
Kentucky$15,982
South Carolina$15,824
Arkansas$15,591
Florida$15,468
Louisiana$15,364
Vermont$15,263
Montana$14,872
West Virginia$14,309
Nevada$13,860
Idaho$13,692
South Dakota$13,026
Mississippi$12,844
Hawaii$5,929

With years of experience in finance, I've developed a keen eye for identifying lucrative investment opportunities. At Global Mortgage Group and America Mortgages, we understand the importance of strategic decision-making in real estate ventures. By carefully examining critical factors such as cost of living and disposable income, we guide U.S. expat and non-resident investors towards maximizing their returns while minimizing risks. As we explore various aspects of real estate investment, our commitment remains steadfast in empowering our clients with the knowledge and tools necessary for financial success. Get in touch with us today to navigate the ever-evolving landscape of U.S. real estate together.

www.gmg.asia

The BRRRR Method of U.S. Property Investing for Overseas Investors

France Residential Mortgages

The BRRRR (Buy, Rehab, Rent, Refinance, Repeat) real estate investment strategy is a popular approach that involves finding a mispriced/distressed property, fixing it up, renting it out, and then using a Cash-Out Refi to pull cash out towards another property purchase.

The mindset shift focuses on 2 things: finding a mispriced property, “forcing” appreciation, and then pulling cash out of the increased valuation in the form of a Cash-out refinance.

Yes…this is achievable as a Foreign National, Non-U.S. Citizen or U.S. Expat living overseas, AND it can all be done remotely!

America Mortgages and its parent company, Global Mortgage Group, are the world’s ONLY place you can obtain a U.S. mortgage outside the U.S. 

Speak to our Loan Officers to learn how an overseas investor can use leverage to lower your cash investment and increase your returns for your U.S. real estate investments! 

Don’t believe us?

Watch a recent interview with one of our clients, a young Singapore-based couple who used our loans for the BRRRR Method and built a 11-unit cash-flowing rental portfolio in only 3 years - all remotely from Singapore. They have recently quit their jobs and are now full-time U.S. real estate investors!

Here is how it works.

BUY

The key to the BRRRR method is purchasing a mispriced property. There is a fine line between distressed and mispriced. The more distressed, the cheaper it will be, so there is a higher potential for “forced appreciation,” but you will have to spend more on refurbishment.

Financing the initial purchase can be tricky since all lenders will require an appraisal on the property, which needs to meet certain criteria. A distressed property will unlikely meet this criteria, but a mispriced property may.

One option is to use a Short-term Bridging Loan to purchase the property and then use a traditional loan to refinance. Bridging loans are based on the asset value of the property and are more flexible in terms and conditions. This is a common approach to the BRRRR method.

Another option is, of course, to pay for the home with cash and then refinance.

REHAB

This takes a little expertise, but costs of renovations and materials are very inexpensive in the U.S., and it is fairly easy to get everything at Home Depot, IKEA, etc. You will need to find a good contractor in the neighborhood, but generally speaking, most of the REHAB should be cosmetic and nothing foundational. That includes painting, flooring, changing bathrooms, kitchens, etc.

The key to the BRRRR strategy is calculating the After-repair Value since that will be the value that you refinance once the rehab is complete.

A common rule of thumb is the 70/30 rule. If the ARV value is $300,000, you should not pay more than 70% or $210,000.

RENT

Finding rental comps is fairly easy - even if it's for short-term rentals (Airbnb, VRBO, etc.). This does require some work, but Zillow and AirDNA are good places to start your research. 

Choosing tenants requires a little common sense, but a simple checklist would be:

  • Good credit score (if they don’t pay their banks, they won't pay you on time)
  • A stable job with a steady income (name of company, position, how long they have been there, etc.)
  • No criminal record
  • Positive references
  • Young family (families don’t normally have time to host parties)

I personally use the 1% rule in real estate investing, and only in the U.S. can you find these deals. Here is how it works - multiply the purchase price of the property (ARV) by 1% to determine the base level of rent. In this case, financing will need to be less than 1%. More later.

REFINANCE

Here is the big mindset shift - to use a Cash-out refinance towards the next purchase, which often means your net initial outlay is ZERO!

You can qualify for our AM Rental Coverage Plus loan program by using the rental income of the property to cover the mortgage costs.

REPEAT

The final step in the BRRRR method is to repeat the steps again. There is no rush here, and it’s important to learn from the entire process.

Pros and Cons of the BRRRR Method

Pros - With a limited cash outlay, you can start to build a portfolio of cash-generating assets, “force” equity appreciation, and use debt to your advantage! Remember, debt is not taxed in the U.S.!

Cons - This takes work, but we think the satisfaction of seeing your assets “Pay You” is worth the effort. Work includes research, building a team on the ground, finding the properties, and maximizing cash flow, to name a few. 

Example (for illustration purposes)

Home price: $200,000

Nearby comparables: $250,000 - $300,000

Renovation costs: $30,000

After-repair value: $310,000

After-repair monthly rent: $2,500

Scenario 1 - All cash payment

  • Purchase price = $200,000 + Rehab $30,000 = $230,000 cash outlay
  • After-repair value = $310,000
  • Cash-out refinance using AM Rental Coverage Plus =  70% x $310,000 = $217,000
  • Monthly mortgage = $1,700
  • Gross monthly rental income = $2,500
  • Net rental income = $800
  • Now, you have $217,000 towards your next investment.

In this scenario, you spent $230,000, and then borrowed $217,000, which means your total cash outlay was $13,000.

  • With $13,000 spent, you are now earning $800 monthly!
  • After 12 months, you will have earned $9,600 in passive income (Yes, 74% return!)
  • After 16 months, the property would have paid back your entire investment!

Scenario 2 - Bridging loan to purchase

  • Purchase price = $200,000
  • Bridging loan = 70% loan to value x $200,000 = $140,000 loan = $60,000 down payment
  • Bridging loan term = 12 months @ 12% per annum, interest-only
  • Total Bridging loan interest = $16,800
  • Down Payment = $60,000
  • Rehab = $30,000
  • Total initial outlay = $90,000
  • After-repair value = $310,000
  • Cash-out refinance using AM Rental Coverage Plus =  70% x $310,000 = $217,000
  • Monthly mortgage = $1,700
  • Gross monthly rental income = $2,500
  • Net rental income = $800
  • Pay back Bridging Loan = $217,000 - $140,000 = $77,000
  • Subtract Bridging loan interest = $77,000 - $16,800 = $60,200
  • Now you have $60,200 towards your next investment

In this scenario, you spent $90,000, then borrowed $60,200, which means your total cash outlay was $29,800

  • With $29,800 spent, you are now earning $800 monthly!
  • After 12 months, you will have earned $9,600 in passive income (Yes, 30% return!)

It gets better!

In both scenarios - after 12 months, you can renegotiate a higher rent once the lease term ends and refinance the loan to a lower 30-year fixed-rate mortgage at a higher property value!

Money in GOES UP + Money out GOES DOWN = MORE MONEY!

There are strategies for finding the best states and cities to invest in. If you want to learn how to identify which city to start your BRRRR Method journey, please feel free to contact us!

In conclusion, the BRRRR method offers a great opportunity for investors from overseas to invest in U.S. real estate. America Mortgages, along with Global Mortgage Group, is your go-to for getting U.S. mortgages abroad. With success stories like the couple who built a rental portfolio from afar, it's clear this strategy works. For those keen on making the most of their investments, our team is here to help. Reach out today at [email protected] to learn more about how the BRRRR method can boost your real estate journey.

www.gmg.asia

Wholesale Lending and Why it’s Important!

Wholesale Lending - Mortgage Brokers USA

Key takeaways:

  • A wholesale mortgage lender is an institution that funds mortgages and offers them to third parties, such as a mortgage broker, bank, or credit union
  • Non-bank lending accounts for about half of all U.S. mortgage origination
  • Wholesale mortgage lending differs from other mortgage options in that it requires the borrower to work with a mortgage broker instead of the lender
  • Wholesale lenders can offer cheaper rates and more relaxed eligibility guidelines compared to traditional lenders 
  • America Mortgages is the only U.S. mortgage broker outside the U.S. that focuses 100% of their business on Foreign Nationals and Expats living overseas

Wholesale Lending, Mortgage Brokers.... and Why It’s Important for International Clients 

The concept of wholesale lending is not understood outside the U.S. but actually accounts for about half of all mortgage origination in the U.S. 

One way to think about a wholesale lender is a bank that does not take customer deposits and only buys and sells mortgages.

A research article by The Ascent highlights the presence of non-bank financial institutions as the top three largest mortgage lenders in the U.S.

According to The Ascent's analysis of the top 25 mortgage lenders, 72% are independent mortgage companies, and 28% are banks!

Thanks to a regulation called Dodd-Frank after the financial crisis, retail banks only focused on “Prime” borrowers since these mortgages eventually would be sold to Fannie Mae, a government-linked entity providing liquidity to the mortgage market.

Prime borrowers are U.S. citizens with very good U.S. credit who hold high-earning, long-tenured, salaried jobs and borrow for their primary residence. Nearly all other types of borrowers fall under wholesale mortgages.

This includes our clients => international borrowers, both foreign nationals and overseas expats!

The Customer Journey

Whether it's a purchase loan or a refinance - retail lenders work directly with individual borrowers, while wholesale mortgage lenders don’t. 

Instead, they partner with mortgage brokers, who work with you to find the right loan — often at a discounted rate — and prepare your application.

America Mortgages => The world’s only U.S. mortgage broker with a 100% focus on Foreign Nationals and U.S. Expats!

What is a wholesale mortgage lender?

A wholesale mortgage lender is an institution that funds mortgages and offers them to third parties, such as a bank, credit union, mortgage broker, independent mortgage company, or professional.

How wholesale lending works

In wholesale lending, the borrower doesn’t have direct contact with the lender; instead, the borrower interacts with the third-party mortgage broker, who is responsible for facilitating the loan origination and application process and communicating throughout the lender’s underwriting. The mortgage broker works for the clients, and not just one bank or wholesale lender. This gives the clients more options of loan programs and qualifications.   

A wholesale lender lets mortgage brokers know what the loan options and terms are, and the third party then matches borrowers with an appropriate loan.

Once the loans close, wholesale lenders typically sell them in the secondary mortgage market to free up capital to fund more mortgages.

When working with America Mortgages, you gain access to our extensive network of over 50 wholesale lenders and will have access to competitive rates and more flexible loan options and requirements.

If you're seeking the best mortgage rates and expert guidance through the lending process, opting for the broker and wholesale lender route is your best choice. 

America Mortgage's sole focus is on overseas borrowers and we have the knowledge and experience to meet your specific needs. This is all we do!

The role of mortgage brokers in wholesale lending

You’ll work with our international-based loan officers to complete each step in the application process. Once your application is ready for review, we will coordinate with the wholesale lender’s underwriting team for a pre-approval in 72 hours.

You can then use the pre-approval to show proof of financing when you start house-hunting.

Our job as a mortgage broker doesn’t stop with assisting the prospective borrower with their mortgage application. 

We will also work to find you the best deal on a mortgage. Since we will have access to loan programs specifically designed for overseas borrowers, you will be able to secure more competitive rates and terms than you would if shopping for a home loan independently.

More importantly, since we understand the requirements of foreign borrowers significantly better than any U.S.-based mortgage broker, our team will be more effective and efficient in guiding you through the entire loan process.

Wholesale mortgage lending process

Below is an overview of what to expect if you decide to work with one of our internationally-based U.S. loan officers:

  • Step 1: Connect with our International Loan Officers to complete a standard loan application 1003 and gather documentation the wholesale lender needs to make a decision
  • Step 2: The mortgage broker confirms your application is complete and submits it to the wholesale lender for review
  • Step 3: Upon receipt, a member of the wholesale lender’s underwriting team analyzes your loan application, along with the supporting documentation, and verifies the entries to make a lending decision
  • Step 4: Once your application is approved, the mortgage broker provides you with a commitment letter from the wholesale lender detailing the loan terms and any applicable conditions
  • Step 5: The mortgage broker coordinates with the wholesale lender to close and fund your home loan. If there are any conditions the borrower must satisfy for the loan to close, the mortgage broker notifies the borrower during this step
  • Step 6: Once all conditions are met, the wholesale lender issues the “clear to close” to the mortgage broker, and the broker notifies the borrower. The borrower sends their down payment and the funds for closing costs to the title company shortly before closing
  • Step 7: At closing, the borrower signs the loan documents at the local embassy to finalize their end of the transaction and mails the documents to the title company
  • Step 8: The wholesale lender closes and funds the home loan

Key points of wholesale mortgage lending

  • A mortgage broker will search for the best loan option from a network of wholesale lenders
  • Less stringent eligibility guidelines
  • Potentially access more competitive rates and flexible loan terms
  • Personalized support from a mortgage broker
  • No direct contact with the lender
  • Mortgage broker fees  
  • Higher likelihood of loan sell-off following closing

Is wholesale mortgage lending right for you?

Getting a mortgage from America Mortgages is your only choice outside the U.S. if you are a non-resident foreign national or overseas expat looking to purchase an investment property or second home. 

A U.S.-based mortgage brokers WILL NOT know the ins-and-outs of borrowers living overseas, but THIS IS ALL WE DO - and we are in your time zone and speak your language!

Here are our popular U.S. loan programs. 

In conclusion, understanding the dynamics of wholesale mortgage lending is crucial for international clients, especially non-resident foreign nationals and overseas expats.

At America Mortgages, we navigate this landscape with over 50 established relationships with wholesale lenders, offering you access to competitive rates and flexible loan options.

If you're seeking the best mortgage rate and a guided lending process tailored to your international needs, reach out to us today to take the first step toward securing your U.S. property with confidence.

Top 5 U.S. Record-Smashing Luxury Home Sales of 2023

Despite the overall decline in home sales in 2023 due to increased interest rates, high-net-worth U.S. real estate investors remained active in the luxury market. In the third quarter of 2023, the luxury market outpaced the mainstream market, growing three times faster. According to Jason Aleem, Redfin's Senior Vice President of Real Estate Operations, paying cash “helped wealthy buyers weather the storm of high mortgage rates.” A recent Redfin report noted that 42.5% of luxury homes sold in the third quarter of 2023 were purchased outright in cash, “others are choosing to take on a higher rate and refinance later - an expensive option that isn’t feasible for a lot of lower-income consumers,” Aleem explained. 

We’ve compiled the top 5 record-smashing luxury sales based on Jonathan Miller, President and CEO of appraiser Miller Samuel’s annual list.

Notably, 2 of the 5 properties were located in Palm Beach, Florida. This highlights Palm Beach County in South Florida as a consistent and attractive investment destination for luxury property investors. The real estate market in the region is robust, with luxury properties demonstrating a history of appreciation over time.

1. $190 million - 27712 Pacific Coast Highway, Malibu, California

Source: Zillow

Beyoncé and Jay-Z set a new record in California real estate with their recent purchase. The property, designed by Tadao Ando, includes 7 bedrooms and 11 bathrooms, sits on 8 acres, and features a private beach and an infinity pool overlooking the Pacific Ocean.

2. $170 million - 589 North Country Road, Palm Beach, Florida

Source: Addison Development Group

The property, spanning 24,131 square feet, boasts 8 bedrooms and 12 bathrooms. Situated on 1.6 acres, it includes 150 feet of direct oceanfront. This off-market sale involved Robert Stiller, founder of Green Mountain Coffee Roasters, and luxury car dealer Michael Cantanucci. Stiller and his wife reportedly purchased this property for $25 million a decade ago, illustrating South Florida’s remarkable property appreciation.  

3. $155 million - 1495 North Ocean Boulevard, Palm Beach, Florida

Source: Zillow

Estée Lauder cosmetics founder William Lauder purchased this 2.7-acre oceanfront property in an off-market sale from the widow of Rush Limbaugh. The property has 5 bedrooms, 20 bathrooms and 4 guest houses, with approximately 250 feet of ocean frontage and direct access to the beach. Limbaugh had initially purchased the property in 1998 for $3.9 million, serving as a testament to South Florida’s property value appreciation. 

4. $138.8 million - 499 Indian Field Road, Greenwich, Connecticut 

Source: Sotheby's International Realty

Hedge fund billionaire Ray Dalio acquired the 50-acre property, boasting 8 bedrooms and 10 bathrooms. With nearly a mile of waterfront offering views of Long Island Sound, the property includes luxury amenities like a 75-foot heated swimming pool, tennis court, and two private beaches.

5. $112.5 million - 700 Meadow Lane, Southampton, New York

Source: Trulia

Nestled on 8 acres between the Atlantic Ocean and Shinnecock Bay, this 15,521-square-foot property boasts 500 feet of ocean frontage, offering stunning water views from every room. With 11 bedrooms and 12 bathrooms, it includes amenities like a private boardwalk to the beach, an indoor gym, and basketball and tennis courts. 

America Mortgages – HNW Foreign National and U.S. Expat Mortgage Experts

At America Mortgages, we specialize in assisting foreign nationals and U.S. expat investors in securing financing for luxury real estate ventures in the U.S. Our commitment to streamlining the financing process for foreign nationals and U.S. expats sets us apart. For our high-net-worth clients, we provide flexible lending options, including fixed interest-only loans and loans with non-traditional income documentation - suitable for entrepreneurs and business owners.

Join us in exploring the robust luxury real estate market with practical solutions tailored to your financial goals. Visit www.gmg.asia or reach out to us at [email protected] to steer your real estate journey.

How Can Singaporeans Obtain a U.S. Mortgage?

Singapore Mortgages

Singapore is known for academics and education, with many high school graduates attending the best universities in the world!

Similarly, the U.S. is known for having most of the top global universities.

Singapore currently has 21,666 students studying abroad, according to UNESCO, and according to a recent Open Door report, Singapore had 3,901 students studying in the U.S. – a record number!

A typical Asian family will want to explore owning a property near the university the child will be attending – as a place to stay when visiting or if the student prefers not to stay in the dormitory.

After graduating, the property’s value often goes up. It might be enough to pay for college, or parents might choose to give the property to their child if they plan to work in the U.S. before returning home. This allows the child to build credit, something very important in the U.S.

However, not many can pay for a home with cash and just give up when they assume that obtaining a mortgage is not available. 

Contrary to what you may think…..

  • You CAN get a mortgage as a non-U.S. citizen or Expat living in Singapore
  • You DO NOT need U.S. credit or residency
  • You CAN QUALIFY based on your Singapore income OR by using the rental income of the U.S. investment property   
  • You CAN get market-interest rate mortgages while living in Singapore 
  • You CAN sign the closing documents at the embassy on Napier Road

Actually, we are the world’s first and only U.S.-based mortgage broker with offices in Singapore, right on Telok Ayer. Come visit us for coffee! 

Let us guide you through this process from: 

  • Introducing you to a realtor
  • Helping you screen for the best locations to buy
  • Setting up your LLC
  • Discussing the benefits of using an LLC
  • Introducing you to a property manager

[Must Sign Up!] A Singapore Couple’s Path to Financial Freedom through U.S. Real Estate Investing! 

Meet Han and Tracy, an incredible couple from Singapore who made a bold move – they left behind their regular 9-5 jobs after successfully diving into the world of U.S. real estate. Now, proud owners of 12 cash-flowing properties, achieved through strategic moves in just three years, they’re here to share their story.

Register for our exclusive webinar “Singapore Couple’s Journey to Financial Freedom through U.S. Real Estate Investing,” on January 18th at 6:30 PM SGT. Join Han and Tracy as they unravel the details of their transformative journey. Learn the secrets of how this dynamic duo achieved financial freedom through their savvy investments in U.S. real estate. Don’t miss out—reserve your spot now!

AM Student+ 

Investing in your child’s future just got easier. America Mortgages’ Student+ loan program removes the financial barrier for parents who want to purchase a property in the U.S. for their children’s education. This innovative program allows parents to qualify for a loan using the projected rental income of the property, eliminating the need for a U.S. credit history. This means that even parents who are new to the U.S. can provide their children with a safe and comfortable place to live while they study.  

With America Mortgages’ Student+ loan program, parents can invest in their children’s future and build wealth at the same time. The program’s flexible terms and competitive rates make it an attractive option for investors. Contact us today to learn more about this unique program and start investing in your child’s bright future.

[email protected]

A Secret Strategy Top Real Estate Investors Use

International Mortgage

A secret many wealthy U.S. real estate investors use is the practice of holding properties within an LLC. 

Using an LLC to hold real estate for investments has almost become a given with many tax benefits, liability protection, and acceptance by lenders. If you think about it, any company earns revenue, and in this case, LLC’s revenue comes from the rental income of the property. Also, like any company, you have operating expenses related to running the company (your company-related tax deductions) – more on this later. 

In this article, we’ll break down how an LLC operates and dive into the advantages of opting for an LLC when dealing with rental properties.

Opening an LLC

An LLC not only shields you from liabilities but also brings in tax advantages. This offers a seamless and flexible approach to handling your investment efficiently.      

Process: 

  1. Choose a State:
    Decide in which U.S. state you want to establish your LLC. Each state has its own rules and regulations regarding LLC formation.
  2. Name Your LLC:
    Choose a unique and compliant name for your LLC. It should comply with the naming rules of the state.
  3. File Articles of Organization:
    Submit the required paperwork, usually called the Articles of Organization, to the appropriate state agency. This is often the Secretary of State’s office.
  4. Operating Agreement:
    While not always required, it’s advisable to create an operating agreement that outlines the structure and operation of your LLC.
  5. Obtain an EIN:
    Apply for an Employer Identification Number (EIN) from the IRS. This is like a Social Security Number for your LLC and is necessary for tax purposes. 
  6. Bank Account:
    Once your LLC is approved, you can open a business bank account. While banks do not help in the formation of the LLC, they are crucial for managing your LLC’s finances.

The benefits of using an LLC to hold a rental property

  1. Single or Multiple Members Allowed
    An LLC allows for flexibility in membership, accommodating either a single member or an unlimited number in a multi-member LLC. This flexibility enables individual investors to enjoy an LLC’s benefits and protections. However, if the LLC is treated as an S-Corporation for tax purposes, there is a 100-member limit.
  2. Pass-Through Entity for Tax Purposes
    An LLC is treated as a pass-through entity for tax purposes, meaning profits or losses flow through to each member based on their ownership percentage. Members report income or loss on individual tax returns and pay taxes based on personal income tax rates.
  3. Flexible Pass-Through Structure
    While LLC profits and losses are generally distributed based on ownership percentages, members can agree to a different allocation in the operating agreement. For instance, a member in a higher tax bracket might seek a larger percentage of the depreciation expense for a more substantial tax write-off.
  4. Management Flexibility
    The operating agreement of an LLC can be tailored to allow management flexibility. For example, one member with property management expertise may handle daily property details, or the operating agreement may mandate that all members vote on significant decisions like refinancing or sale of the property.
  5. One LLC for Each Rental Property
    Many investors opt to establish a separate LLC for each rental property they own. This adds an extra layer of protection by isolating potential claims against one property from the entire real estate portfolio for those with multiple rental properties. 
  6. Contribution of Personal Assets
    Members have the option to contribute personal assets, such as real property or funding, to an LLC. The LLC can also pay reasonable interest to members for loans until the borrowed money is fully repaid.
  7. Easy Transfer of LLC Interests
    Shares in an LLC may be sold or transferred to new members based on the terms outlined in the operating agreement. Real estate held under an LLC can remain within the LLC’s control even when under new members.
  8. Professional and Business-Like Image
    Holding rental property under an LLC provides real estate investors with a more professional business appearance. This could enhance credibility with tenants, lenders, and vendors.
  9. Inexpensive and Straightforward Formation
    Depending on the state forming an LLC can be a relatively simple and cost-effective process, from $50 to a few thousand, depending on the state. 

Certain states impose a minimum annual LLC tax, require annual reporting fees, and may necessitate payment of registered agent fees to an agent for service of process in the state where the property is located.

Choosing an LLC to hold a rental property can shield an investor’s personal assets in case of a lawsuit. Typically, in a legal dispute, only the business assets would be at risk, offering a protective barrier for personal belongings.

What is the best state to form an LLC in? 

While forming an LLC in your home state is typically advantageous, there are exceptions for non-residents and specific LLCs. Non-U.S. residents have the flexibility to choose any state, with Wyoming and Delaware being recommended options. For real estate LLCs, the “home state rule” doesn’t apply. According to doola.com, Delaware provides business owner anonymity, as it doesn’t require the owner’s name on entity formation documents. Wyoming allows listing a “nominee” as the LLC owner for added privacy.

Pre-Approval Process

Launch your U.S. real estate investment journey confidently with America Mortgages’ 72-hour pre-approval process. Our team simplifies required documentation and timeframes, providing solid assurance. House shopping is much easier when you have an official lender pre-approval.

Tax Considerations

Effortlessly navigate tax complexities with America Mortgages’ tax partners. Understand all the tricks that billionaire real estate investors use to minimize tax liability and maximize profit potential. Consult with our tax professionals for an optimized strategy.

Property Management

Ensure remote property maintenance with America Mortgages’ property management partners. Our team connects you with reliable day-to-day management, offering peace of mind even when you’re not physically present.

Legal Assistance

For smooth transactions as a foreign investor, legal advice is crucial. America Mortgages connects you with experienced professionals for essential guidance.

Property Insurance

Protect your property with suitable insurance through America Mortgages’ trusted partners. Obtain the right coverage for a well-structured risk management strategy, ensuring peace of mind for your investment.

Stay Informed

Stay updated on U.S. real estate changes and regulations affecting foreign investors. Continuous education is essential for informed decision-making and adapting to evolving market conditions.

Navigate your U.S. real estate investment journey with America Mortgages. Together with our partners, we provide comprehensive support from swift LLC formation and a 48-hour pre-approval process to tax expertise and reliable property management. Let us guide you in developing clear exit strategies and staying informed about market changes. Trust America Mortgages for a seamless and informed U.S. real estate investment experience. Contact us today at [email protected] for a seamless investment experience.

www.gmg.asia

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]

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