Author Topic: How to get a mortgage with foreign income?  (Read 3797 times)

Overseas Stache

  • Stubble
  • **
  • Posts: 130
  • Age: 34
  • Location: Democratic Republic of Congo
How to get a mortgage with foreign income?
« on: September 10, 2014, 01:05:31 AM »
So here is my situation. I am a US citizen who moved overseas about 2 years ago and I want to invest my money. I make $54000, much less the the foreign income exclusion which means I end up with no taxable income. So I can't take advantage of either a 401K or a Roth IRA, with that in mind I really like investing in real estate and the returns it can get are really good, especially the area in TN where my father lives. We found a property that after all expenses would give over 25% cash on cash return of the down payment. However, when we went to the bank they said that they couldn't verify my income because my employer is overseas and not an American company. Even though I do my tax returns they still would not put me on the loan. This was not a big problem because my father could qualify for the loan himself and we could draw up a signed agreement between us. In the ended up getting private financing from my Grandmother which saved on closing costs and meant both of us could be on the Title. Ok, but my question is there away for me to qualify for my own mortgage on a new property even though the bank can't verify my employer? Perhaps some of you know of a bank that would be willing to do that?

Some other info. I already own a house that is rented out that Nets about $4500/ year and property we bought together should also net me about $4000/year. My father helps me manage the properties and gets paid a small amount to do it. My financial ability to invest in properties will probably out pace my father, so while I am happy to buy properties with him I would also like to find away to purchase my own properties.

Thanks for your help,
« Last Edit: September 10, 2014, 01:18:20 AM by Overseas Stache »

jnc

  • 5 O'Clock Shadow
  • *
  • Posts: 93
Re: How to get a mortgage with foreign income?
« Reply #1 on: September 10, 2014, 05:13:44 AM »
I definitely understand your predicament. I am in a similar situation, however I've still been able to get loans because I work for a subsidiary of an american company so the bank was still able to verify my employment in the US.

I don't know if they'd be able to lend to you but I can recommend a couple of banks I've done business with in Memphis,TN:
- First Citizens Bank
- Supreme Lending

Perhaps give them a call and see if they can do it.

Overseas Stache

  • Stubble
  • **
  • Posts: 130
  • Age: 34
  • Location: Democratic Republic of Congo
Re: How to get a mortgage with foreign income?
« Reply #2 on: September 10, 2014, 07:09:36 AM »
HI JNC,

It's nice to see hear from another overseas real estate investor. I was ready a couple of your other comments and I am really interested in how you actually do it. You said you use a company for management but do they also find properties for you and then you buy them? How do you choose them? How does signing and closing work if you are not actually there?

Both my properties are in Chattanooga TN and the returns seem to be comparable. I used to live there and my father still does so it make things a little different, as in we haven't used a company at all, which is why I would be very interested in finding out more about your approach.

jnc

  • 5 O'Clock Shadow
  • *
  • Posts: 93
Re: How to get a mortgage with foreign income?
« Reply #3 on: September 10, 2014, 07:30:25 AM »
Lots of overseas investors are buying US properties, except they are paying cash :) unlike us poor schmucks having to get loans ;-)

My approach is very similar to the one laid out by "arebelspy" in his post about buying properties without having seen them, except that I am not assembling the team myself but instead going to a company that specializes in "turnkey properties". Some of these companies have a bad rep, so it is really important to go with one that you trust or have heard solid referrals for.

They buy the property, typically a foreclosure, renovate it, find a qualified tenant, and then sell it to you already rented out or close to being rented out. You purchase the property and going forward pay a 10% management fee. Since they are the local experts, they can very accurately predict the rent that the property will fetch. They usually recommend a bit lower than market rate which tends to attract longer term tenant.

As you can imagine, you want a trustworthy company that won't just put a junk tenant in there which bounces in a few months. These guys are in it for the long term and they get all their business from repeat investors and referrals so they are very honest and reliable.
They specialize in a couple of neighborhoods in Memphis and their properties are usually around the same price point and rent (it varies a bit, some are better deal than others) so it is easy to compare deals.

They also got a good team of banks/mortgage brokers they can recommend, attorneys for closing, etc... which makes the process a lot easier for out of state (or like us, overseas) investors.

So there it is, your start making your positive cash flow from day 1. They offer 1 year warranty on the house, as well as listing the house for no fee if the tenant leaves within 1 year for any reason.

I've also had another company guarantee the rent for the first 12 months, which came in handy when the house took some time to rent (gulp!).

Fire away if you have more questions. Would be happy to help.

Overseas Stache

  • Stubble
  • **
  • Posts: 130
  • Age: 34
  • Location: Democratic Republic of Congo
Re: How to get a mortgage with foreign income?
« Reply #4 on: September 10, 2014, 11:05:32 AM »
Jnc,

How did the Loan and title signing process work when you were overseas? Where you able to sign and notarize in your country of residence or did you have to be in the USA for that?
Also what is the name of the company that you used and are happy with?

For the property I purchased, I was in the states for a while and signed a document with the Title company stating that my Dad could sign on my behalf. But it is Address specific so I would have to sign a new one for each property.

Thanks

jnc

  • 5 O'Clock Shadow
  • *
  • Posts: 93
Re: How to get a mortgage with foreign income?
« Reply #5 on: September 10, 2014, 12:17:39 PM »
Jnc,

How did the Loan and title signing process work when you were overseas? Where you able to sign and notarize in your country of residence or did you have to be in the USA for that?
Also what is the name of the company that you used and are happy with?

For the property I purchased, I was in the states for a while and signed a document with the Title company stating that my Dad could sign on my behalf. But it is Address specific so I would have to sign a new one for each property.

Thanks

I had to notarize about 5 pages at the US consulate in my country of residence. Hopefully you have one not too far from where you live. It is a bit expensive ($50 per page!) but other than that, it was ok. Then I overnight the signed files back to the closing attorney in the US.

You can also do a specific Power of Attorney to your Dad but yeah that is specific to each property and the POA will have to be notarized at the US consulate too if you are outside the US. Would probably save you a bit of money as a POA is typically one page instead of 4-5 if you were signing yourself the relevant pages of the loan.
- Jad

Overseas Stache

  • Stubble
  • **
  • Posts: 130
  • Age: 34
  • Location: Democratic Republic of Congo
Re: How to get a mortgage with foreign income?
« Reply #6 on: September 10, 2014, 12:33:10 PM »
Thanks so much for that info. That sounds like a solid plan of having it notarized at the US consulate, which is either a 12 hour drive or a $300 flight.

jnc

  • 5 O'Clock Shadow
  • *
  • Posts: 93
Re: How to get a mortgage with foreign income?
« Reply #7 on: September 10, 2014, 12:41:54 PM »
Thanks so much for that info. That sounds like a solid plan of having it notarized at the US consulate, which is either a 12 hour drive or a $300 flight.

Oh, that sucks. They might be okay with a local notary but so far, the 3 loans I've done while abroad required notarization at the US consulate :(

Overseas Stache

  • Stubble
  • **
  • Posts: 130
  • Age: 34
  • Location: Democratic Republic of Congo
Re: How to get a mortgage with foreign income?
« Reply #8 on: September 10, 2014, 01:02:43 PM »
Well I live in the DRC so they shouldn't be ok with the local notary. For $25 I could have Obama's signature notarized, they don't require any proof of identity. All they care about is money.