Global Real Estate Update: Positive Market Trends for International Investors

Post author By Premela R.
Post date July 12, 2024

Here is the latest roundup of global real estate trends in key real estate markets around the world. Whether you're a seasoned investor or just starting out, these insights can help inform your global investment strategy.

Australia

The Australian housing market is facing varied price increases over the next year. Smaller capitals like Perth and Adelaide are leading with significant growth prospects due to affordability and limited supply. Hobart and Canberra show more modest forecasts, while Sydney, Melbourne, and Brisbane are looking at moderate rises. Suburbs in Perth and Adelaide, such as Darlington and Plympton, had notable price spikes, a sign of a strong market.

GMG Australia Loan Program:

Rate: Starting at 7.8% variable
Term: 30 years max
Max Loan-to-Value (LTV): 85% LTV and interest-only payment available.
Max Loan Amount: AU$2,000,000
Second Home Allowed: Yes
Borrower Type: Salaried and self-employed
Processing Time: 30 days after documents are submitted

Canada

Despite the Bank of Canada's quarter-point interest rate cut not leading to a surge in homebuyer demand, Canada's housing market shows resilience in other areas. The national aggregate home price increased by 1.9% year-over-year to reach $824,300 in the second quarter of 2024. Demand continues to outpace supply in regions like the Prairies and Quebec, highlighting robust market dynamics even as activity slows in cities like Toronto and Vancouver.

GMG Canada Loan Program:

Rate: Starting at 4.99% - 6.79% fixed rates; variable rates at 5.8% - 7.2%
Term: 1-10 years fixed; 5-year variable rate; maximum 35 years amortization
Max Loan-to-Value (LTV): Up to 95%*
Max Loan Amount: No maximum
Second Home Allowed: Only for permanent resident card holders or expats
Borrower Types: U.S. expats or foreign nationals
Processing Time: Conditional approval within a week; funded within 30 days

Read more: The tale the market tells': An update on Canada's real estate markets

UK

UK house sales are expected to rise in the next three months as a reduction in mortgage rates is anticipated. A Rics survey shows a positive outlook, with 20% of professionals predicting increased home sales - the highest since January 2022. Following expectations of Bank of England's rate cut from 5.25% to 5%, major banks have already started to lower mortgage rates. The newly elected Labour government has targeted to deliver 1.5 million homes, boosting market confidence. Additionally, 54% of survey respondents expect house prices to rise, indicating a vote of confidence despite current challenges.

GMG UK Loan Program:

Rate: Starting at 5.5% (lowest)
Term: Up to 25 years
Max Loan-to-Value (LTV): 75%
Max Loan Amount: £10 million (higher amounts possible)
Second Home Allowed: Yes
Borrower Types: No primary residence requirement
Processing Time: 5-6 weeks

Portugal

Planning to retire in Portugal post-Golden Visa reforms? The recent end to Portugal's 'golden visa' scheme, aimed at easing pressure on the housing market, has reshaped residency options but hasn't closed all doors. While property investment no longer qualifies, alternatives like investing in research or cultural projects under the Autorização de Residência para Atividade de Investimento (ARI) visa are viable. Another popular option is the D7 visa, requiring proof of steady income, such as pensions or rental earnings. Despite the changes, Portugal’s appeal remains attractive, with lower living costs compared to other cities, making it a desirable investment destination.

GMG Portugal Loan Program:

Rate: Starting at 3.5%
Term: Flexible terms available
Max Loan-to-Value (LTV): Up to 70% (max 60% preferred)
Max Loan Amount: Varies
Second Home Allowed: Yes
Processing Time: 6-8 weeks
Requirements: DTI up to 40% (can exceed in some cases)

France

The French Riviera's luxury property market is seeing a cooling trend after surging during the pandemic. Prices in places like Cannes and St. Jean Cap Ferrat have dipped slightly, providing a great opportunity for potential buyers. Global uncertainties and higher interest rates have slowed demand from foreign buyers. Despite this, exclusive areas like Saint Tropez and Monaco continue to command high prices due to their limited supply and prestige.

GMG France Loan Program:

Rate: Starting at 3.5%
Term: Maximum 75 years old and/or 20 years
Max Loan-to-Value: 70%
Max Loan Amount: No maximum
Second Home Allowed: Yes
Loan Costs: Approximately 0.5% from the lender
Processing Time: 3 months
Requirements: DTI 35%

Whether you are investing in Tokyo's vibrant wards, considering retirement in Portugal, or exploring opportunities in the U.S., Global Mortgage Group offers tailored lending solutions to support your international investment goals. Stay informed, seize opportunities, and navigate global real estate with confidence. Get in touch with us today to make well-informed decisions for your investments.

[email protected]

Need cash? Your global home equity can help!

Post author By Premela R.
Post date June 28, 2024

Has your international property appreciated in value? If so, your equity—the portion of the property you own—has likely increased as well!

A popular way to tap into this growing equity without selling your home is through a conventional Cash-out refinancing or Asset-backed bridging loan.

Quick Comparison

Bridging loan

Approval 48 hours
Funding in as fast as 7 days
Up to 70% of your home's value
Available for primary homes, second homes, and investment properties
Short-term (1-2 years) and not meant to replace a bank loan
No age restriction in many countries
Qualify on property value only (no need to show income)

Cash-out refinance

Exactly the same as a conventional residential mortgage
Qualify using your salary or rental income of the property
30-45 days funding times (each country may vary)
Often used to purchase more property

How Bridging Loans Work

Bridging loans are short-term loans, usually 1-2 years, used to bridge a funding gap where banks cannot meet borrower requirements such as speed of funding, loan-to-value (LTV), and certainty. These loans are asset-backed, relying on the collateral value of the property rather than the borrower's personal financials. They typically feature "interest-only" or "interest-servicing only" payments with a bullet repayment at the end of the term.

$186M bridging loans funded in Singapore YTD!

In a recent press release in Singapore, Global Mortgage Group set a new benchmark in a record-breaking month by facilitating bridge loans for two high-end condominiums, three bungalows, and one Good Class Bungalow (GCB). In 2024, GMG has funded over $186 million in bridging loans in Singapore alone.

Recent Funded International “Bridging Loans”

USA

An Indonesian family office owned 3 homes in California free and clear, worth $17M. Since the homes were empty and used as second homes, bank financing was not an option, and the client needed funding within a month to be repatriated back home for working capital. We secured an interest-only $10M loan for 2 years, funded in 2 weeks!

England

A private bank referred a client who needed to purchase a Golden Visa in Europe. However, since their country had capital controls, they were not able to move the required amount of funds in the necessary time frame. We secured a bridging loan against their U.K. prime real estate to be used for the Golden Visa investment. Terms were 1 year, 70% LTV, funded in 3 weeks!

Singapore

Our client, a Singaporean entrepreneur, owns a $15 million bungalow. To expand his retail business, he secured a $11.25 million bridge loan (75% LTV) over 12 months. This provided liquidity to complete his shophouse purchase without selling his bungalow, funded in 3 weeks!

Amount of Home Equity in the U.S., England and Australia

With global home values rising and equity growing, many homeowners now have significant equity to extract cash for personal use.

USA

$17 trillion in U.S. home equity!
38% of homes are debt-free (CoreLogic, 1Q2024)

England

8.8m homes are owned outright.
Total home equity is estimated at £2.5 trillion (Octane Capital, 2022)

Australia

Home value $9.3 trillion vs corresponding debt level of around $2 trillion
78% home equity of $7.3 trillion (Robert Baharian, 2022)

Global Bridging Loans

For investors looking to release equity from their property globally, Global Mortgage Group offers bridge financing in the U.S., Canada, U.K., Europe, Australia, Dubai, Singapore, Hong Kong, Philippines, and Thailand.

Global Bridging Loans

USA - from our subsidiary, America Mortgages

A practical way to tap into this growing equity without selling your home is through a conventional cash-out refinancemortgage or an asset-based bridge loan.

Foreign nationals and U.S. expats often face unique challenges when leveraging home equity in the U.S. America Mortgages's loan programs are designed to meet these needs, making the process smoother and more accessible.

1. Conventional Cash-out Refinance Mortgages

Cash-out refinance mortgages are a good option if you have consistently made regular mortgage payments in a timely manner since owning the property or if you have no existing mortgage on the property. However, we recognize securing a mortgage can be challenging for foreign nationals and often U.S. expats because they lack a U.S. credit history. At America Mortgages, we can use international credit reports and other financial documents in lieu of U.S. credit. It’s so straightforward that Foreign nationals are eligible to borrow up to 75% of their property's appraised value, while U.S. expats can borrow up to 80%.

Key Loan Features and Requirements

Income: Foreign income accepted
Credit: Overseas income and credit accepted (if required)
Term Lengths: 30-year and 40-year fixed-rate mortgages regardless of the borrower's age
Term Options: Fixed 10-year, Interest-Servicing Only (Interest-Only) mortgages available
Loan Amounts: From US$100,000
Cash-out Refinance Loan-to-Value: Up to 80% for a U.S. expat and 70% for a Foreign National
Property Types: Single-family, multi-family (5+ units), duplexes, triplexes, quadplexes, condominiums, townhomes, commercial, industrial
Location: All 50 U.S. States
Amortization: All loans can be amortized over 30 years, regardless of age
Closing Time: 30-45 days

2. Asset-backed real estate bridge loans

Asset-backed bridge loans are designed for U.S. expats and foreign nationals who need flexibility and quick access to funds. These loans are perfect for short-term financial needs or investment opportunities and normally do not require the borrower to provide financials.

Key Loan Features and Requirements

Income: No income required
Credit: No U.S. credit is required
Eligible Loan Types: Purchase, refinance, and cash-out refinance
Term Lengths: 12-24 months
Loan Amounts: US$200,000 to US$100m
Payment Options: Monthly, interest-only, interest rolled up
Loan-to-Value: Up to 75%
Property Types: Single-family, multi-family (5+ units), duplexes, triplexes, quadplexes, condominiums, townhomes, commercial, industrial
Location: All 50 U.S. States
Amortization: Interest-Only Servicing
Closing Time: 3-10 days

America Mortgages and Global Mortgage Group aims to simplify the process for foreign nationals and U.S. expats, providing the financial flexibility they need. Our tailored loan programs are designed to suit your unique situations, helping you make the most of your property's equity.

With our fast approval process, flexible terms, and international reach, we’re here to support your financial needs. Schedule a meeting with us today, and let’s turn your home equity into cash for whatever you need. Get started now!

www.gmg.asia

Global Mortgage Group’s Record-Breaking Month with Bridge Loans for Condos Bungalows and a GCB

Post author By GMG
Post date June 27, 2024

LLC and Tax Strategies for U.S. Real Estate Investors

Post author By Premela R.
Post date May 28, 2024

What is an LLC or Limited Liability Company

Investing in U.S. real estate can be an amazing opportunity for non-U.S. residents, offering opportunities for substantial yields, capital appreciation, stability and portfolio diversification. However, navigating the complexities of the U.S. tax system and legal environment requires expert advice, and America Mortgages, besides being your mortgage partner, is there with you at every step of the process. One of the most common and effective strategies for foreign national investorsis to use a U.S. Limited Liability Company (LLC) combined with smart and logical tax planning. Here’s why;

1. Liability Protection

An LLC offers liability protection, meaning that investors are typically not personally responsible for the debts and liabilities of the company. This is crucial for foreign investors who may not be familiar with U.S. litigation risks. Should any legal issues arise, the LLC structure can help shield personal assets from lawsuits or creditors.

2. Flexible Tax Treatment

LLCs provide flexible tax options. By default, a single-member LLC is treated as a disregarded entity for tax purposes, meaning income is reported on the investor's personal tax return. Multi-member LLCs are treated as partnerships. However, an LLC can also elect to be taxed as a corporation. This flexibility allows foreign investors to choose the tax treatment that best suits their financial situation and goals.

3. Simplified Estate Planning

Every investor should be aware of U.S. estate tax laws, especially in the event of the property owner's death. By holding property through an LLC, foreign investors can structure ownership in a way that may mitigate these estate tax implications. For example, ownership interests in the LLC can be transferred more easily than direct ownership of property, simplifying estate planning and succession.

5. Operational Efficiency

Owning U.S. real estate through an LLC can simplify the daily operations, especially if the LLC holds multiple properties. This centralization can streamline property management, accounting, and tax filing processes, making owning and managing real estate from abroad as easy as owning it in their home country (maybe even easier).

6. Proper Tax Planning

While an LLC offers numerous benefits, proper tax planning is essential to maximize those benefits and ensure compliance with U.S. tax laws. America Mortgages works with professionals who understand the complexities of foreign-owned or U.S. expat-owned real estate. Here are key considerations for foreign investors:

7. Understanding U.S. Tax Obligations

The U.S. tax filings are not as complicated as many people believe. It is important that foreign national investors understand their U.S. tax obligations, including federal, state, and local taxes. Engaging a tax professional experienced in international taxation can help navigate these obligations and identify opportunities for tax savings.

8. Utilizing Tax Treaties

The U.S. has tax treaties with many countries that can provide benefits such as reduced withholding rates on dividends, interest, and other income. Investors should review applicable treaties and incorporate them into their tax planning strategy.

9. Structuring Investments

Proper structuring can minimize tax liabilities. For example, layering LLCs or using a combination of LLCs and other entities, like corporations or trusts, can provide tax advantages and additional asset protection.

10. Consulting with Experts

Given the complexity of U.S. tax laws, consulting with legal and tax professionals who specialize in real estate and international taxation is essential. They can provide tailored advice, ensuring compliance and optimizing the investment’s tax efficiency.

In conclusion

For foreign nationals, investing in U.S. real estate through an LLC offers significant advantages, including liability protection, flexible tax options, and simplified estate planning. However, these benefits can only be fully realized through careful tax planning and compliance with U.S. tax laws. By leveraging the expertise of professionals and utilizing strategic planning, foreign investors can navigate the complexities of the U.S. real estate market effectively and achieve their investment goals.

Want to learn more?

We are excited to invite you to our month-long webinar series, offering a wealth of information on U.S. real estate investment.

First, join us for an informative session on "Why and How to use an LLC for U.S. Real Estate Investing" Discover the benefits of forming an LLC for overseas property investment, including legal protection, asset security, tax advantages and cost of set-up.

Webinar: Why and How to Use an LLC for U.S. Real Estate Investing

Date and Time: June 7, 2024, 07:30 AM SGT
Registration Link: Register here

Next, don’t miss our session on "3 Tax-Smart Strategies for U.S. Real Estate Investing" Learn how strategic tax planning can enhance rental income for overseas investors, offering insights into U.S. tax strategies that reduce liabilities and boost cash flow.

Webinar: 3 Tax-Smart Strategies for U.S. Real Estate Investing

Date and Time: June 13, 2024, 6:30 PM SGT
Registration Link: Register here

Get ready to elevate your investment game! We can't wait to see you there.

Australia’s Rental Boom: Your Investment Opportunity Awaits!

Post author By Premela R.
Post date May 10, 2024

Australia's rental market is heating up, catching investors' attention nationwide. With rental prices skyrocketing, many view it as a prime investment opportunity. Seizing this opportunity requires savvy strategies, and Global Mortgage Group is here to assist you.

Australia's Rental Market

A recent report from The Business Times shows that Australia's rental market is not just heating up; it's in full swing. Rent prices are soaring due to surging demand, limited housing supply, and rising property values. Tenants in bustling cities and quiet regions feel the pressure as rents hit new highs. According to the property data provider CoreLogic, the median rent in Australia is now $627 a week.

Investment Opportunity

For investors, this rental surge offers promising prospects. With high rental demand, there's potential for a steady income and attractive returns. Plus, property values may rise over time, boosting profits.

To Thrive in the Rental Market:

Location, Location, Location: Choose areas with strong rental demand and growth potential.
Choose wisely: Invest in properties that meet renters' needs.
Crunch the numbers: Calculate costs, expenses, and potential income.

GMG Australia + Loan Program

With our expertise in international financing and Australian property, we help foreign investors confidently secure loans. Our GMG Australia + loan program is designed specifically for non-resident investors interested in the Australian rental market. It does not require Australian credit or residency, and you can get up to 85% LTV with GMG Australia +.

Australia's rental market boom holds tremendous potential for investors hungry for high returns. Non-resident investors can navigate the market terrain effectively by using savvy strategies and partnering with Global Mortgage Group. Contact us today at [email protected].

For more information, please contact Leonard Lee, Head of Australia, at [email protected] or +65 8282-5388.

International Real Estate Financing

We also offer residential mortgages in: the U.S., Canada, LATAM, U.K., France, Spain, Portugal, Dubai, Japan, Thailand, and Philippines.

International Equity Cash-out “Bridging Loans”

Need Cash Fast? We offer short-term loans based on the equity value of your home in: the U.S., Canada, U.K., Singapore, Hong Kong, Philippines, Thailand and Australia. These have been popular ways to access cash when speed of financing, high loan-to-values and certainty are the priority.

www.gmg.asia

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

Post author By Donald Klip
Post date April 19, 2024

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?

Range	Responses
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!

Detroit	32.9%	Tulsa	13.5%	Las Vegas	10.8%
Milwaukee	20.7%	Colorado Springs	13.2%	Anchorage	10.4%
Omaha	18.3%	Nashville	12.7%	Atlanta	10.3%
Baltimore	17.2%	Spokane	12.3%	Miami	10.1%
Indianapolis	17%	Madison	11.5%	Denver	9.5%
Memphis	15.9%	Tucson	11.4%
New Orleans	13.6%	Ann Arbor	11.1%

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.

Global Cities Price & Rental Yield Comparison

Post author By Team GMG
Post date March 28, 2024

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?

Post author By Premela R.
Post date March 8, 2024

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.

State	Cost 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

State	Disposable 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

Post author By Premela R.
Post date February 8, 2024

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.