Seasoned real estate investors share insights on the qualities they look for in developing the right overseas investing partners.
President and Founder,
Holly Nance Group
Our overseas investing partners use us for three services: to buy turnkey or wholesale, or for private money.
Turnkey is when the property is already renovated and rented with property management in place. Wholesale is when we find a great deal and just put a fee on top of what we paid for a property and sell it to the investing partner, while that person or entity pays for any renovations. Once the property is complete, we resell it for the client or find a tenant.
We guide our overseas investors in navigating each step of the process. With that being said, we look for overseas investors who want a long-term relationship and have the same core values that we have, including trust, capital preservation, respect, faith, commitment and openness.
Logistically, we try to simplify the entity structure for our overseas partners the best way we can. Some overseas investors have attended so many seminars and boot camps that they overcomplicate their entity structure. We have attorneys and accountants in place that already have a cookie-cutter package ready for our overseas partners.
We also value oversee partners with good communication skills. Our properties often sell within 48 hours, so any overseas partner who can’t communicate in a timely fashion will never get to participate in any of our deals.
Lastly, we love to have fun! So our best partners are the ones who don’t only call us about business, but who also pop up at our office if they are visiting New York City so we can meet face to face.
Founder and President,
Norada Real Estate Investments
The most important factor we look for in working with foreign investors is simply the desire to work with us and learn the process. It’s not rocket science.
There is a step-by-step process, and we’ve laid it out as a “road map.” Sticking to the formula we know works all the time assures a hassle-free experience and a stable income property for our client.
Most foreign investors don’t realize there are mortgage loan programs available for them today. It is now possible to purchase properties with as little as 25 percent down with rates in the 7 percent to 8 percent range. And these are 30-year fixed-rate loans.
When you run those numbers, it is possible to achieve a double-digit cash-on-cash return and total ROI.
Of course, the key here is the properties must be in the right markets and in the right neighborhoods.
Another helpful factor is patience. It is important to have the right expectations since transactions often take longer than everyone thinks. Knowing that from the beginning helps us navigate through those bumps in the road (appraisals, inspections, underwriting, management) on the way to a successful closing.
Fourplex Investment Group
By now, most overseas investors realize that the United States has one of the best tools in history available to investors: the 30-year mortgage.
Educating overseas investment partners is a regular part of our day at the Fourplex Investment Group (FIG).
Many investors come to us under the impression that they can get the same Fannie Mae financing terms they hear about on podcasts, online, etc. While this is not the case, it doesn’t mean they can’t get acceptable financing terms.
Many times we’ve been able to get overseas investors to partner with U.S citizens in order to unlock those great Fannie Mae interest rates. Other times, we can set investors up with U.S.-based private lenders that are willing to loan at higher rates, but still lock in a 30-year fixed rate for the investor, with no balloon payment.
Overseas investors need to clearly understand how they are impacted by property management laws, foreign ownership of a U.S. company, depreciation and currency. It’s a process to learn these things.
Here at FIG, an overseas partner who works with us to understand them and put them into practice is a valuable partner!
Director of Acquisitions,
Developing worthwhile relationships overseas can be a daunting task.
In most countries, there are tremendous cultural differences, and it is nearly impossible to sell directly to these prospective buyers. Additionally, many people in other countries are unfamiliar with our contracts and how to take title. More importantly, it is not so easy getting their funds wired to the United States. This is not isolated to Asian countries. It applies across the board to Europe, South America, South Africa and even Canada.
Thus, you should look first for promoters in those countries who are selling U.S. real estate. The promoters will do all the hand-holding for sales: setting up U.S. LLCs, opening bank accounts, wiring the funds and overseeing the closing for their clients.
Every promoter is different, with a specific amount of money in mind for which to be compensated for the successful marketing of real estate in the United States. We look for promoters who have experience, tell the truth to their clients and are reasonable with their fees. In our experience working with overseas promoters, we have found that the ones with a reasonable markup are still with us today.
The key for foreign marketers to stay relevant is to adapt to our changing market.
In my 15-plus years working in the real estate investment market, I have had my fair share of overseas investment partners. More than anything, technology has greatly enhanced the ability to communicate, execute due diligence and process deals swiftly.
As an investment company that advises and helps guide others to financial success in the U.S. real estate market, we deal with foreign investors daily. The importance of recognizing and respecting the culture of an investment partner from a foreign country is crucial.
I always give a sort of indirect interview to potential clients during my first interaction with them to gauge their understanding of the market, trustworthiness and, most importantly, their ability to execute the deal. Just because an investor claims to have the mental capacity or monetary resources to move forward on a deal doesn’t necessarily make it so.
The greatest benefit of overseas investment partners is the access to their network of professionals and potential for long-term relationships, which are paramount to success in this field. In my opinion, working with overseas investors can help build long-term wealth, and business relationships built on trust will be the strongest.