Unlocking Dubai Mortgages: A Guide for Expats and Overseas Investors Transcript

Unlocking Dubai Mortgages: A Guide for Expats and Overseas Investors Transcript

02:52
Robert Chadwick
Hi everybody, this is Robert Chadwick with Global Mortgage Group. Thank you for joining us for one of our original webinars or our first webinar on providing mortgages in Dubai foreign nationals and Dubai expats that are looking to purchase in the market. I’m proud to have Khurram, you want to turn your camera back on? I’m proud to have Khurram Asif with us. Khurram is our country manager for Dubai. He is probably the biggest expert when it comes to providing mortgages foreign nationals and expats to purchase or refinance properties in Dubai. So, Khurram, thanks for joining us. I don’t know if you have anything to start out with. The presentation will go with discussing Global Mortgage Group and our capabilities, not just in Dubai but internationally. And then Khurram will come in and he will discuss the specifics of divide mortgages.

04:07
Khurram Asif
Khurram, thank you, Robert, thank you. It’s a pleasure to be on the show with you.

04:12
Robert Chadwick
Okay, so with that, I’ll start the presentation. There is a chat box or question and answer box on the zoom call. If anybody has any questions, we’ll address them at the end. Whether it is for Global Mortgage Group, for America Mortgages, or about purchasing properties in Dubai and Dubai mortgages, just feel free to put it in and we’ll address them all at the end. In the chat box there is a link to register for an appointment with Khurram if you would like to arrange a time to speak with them or with somebody with America Mortgages or Global Mortgage Group as well. So with that said, I shall start.

04:59
Khurram Asif
Excellent. Thank you, Robert.

05:06
Robert Chadwick
So Global Mortgage Group is an international brokerage specifically for investors to purchase, refinance, bridge, whatever it may be, for global real estate. We are based in Singapore. We were originally founded in 2018. We are backed and originally invested in by two korean banks and we provide mortgage loans for investors and expats in a variety of countries. Our biggest market by far is the U.S., where we are a direct lender. However, we also offer it in the UAE, as you’ll soon see, UK, Australia, Japan, Thailand, Philippines, throughout Europe. And we have recently just launched Central America, Mexico and South American loans. So our goal is to be able to provide any international investor a one source stop when it comes to mortgage financing in Singapore, we’re quite unique.

06:19
Robert Chadwick
We only provide asset based mortgages, so a property is worth x and we’ll lend up to 80% normally based just on the value of the property. Besides Singapore, we do that globally. Last year, just in Singapore alone, we funded over 400 million in these transactions. I think what most people associate when they think of mortgage financing, they think of banks. However, as everybody is probably aware, banks are, what I like to say, broken. So we like to find alternative sources to financing. Certainly if a bank is a viable option, normally it is the cheapest option, but it’s not always the easiest option. So our global network tries to curate funding sources from private lenders, family offices, wholesale lenders and institutional funds.

07:21
Robert Chadwick
Our loans tend to be more bespoke to the client and tend to, in most cases, especially with Global Mortgage Group, tend to be larger transactions. So our international residential capabilities, certainly the U.S., I’m sure most of the people on this webinar are very familiar with America Mortgages. We are by far the industry leader when it comes to providing foreign nationals and expats financing for U.S. mortgages. We also provide mortgages in Canada, Mexico, UK, Spain, Italy, France, Portugal, Dubai, Singapore, Hong Kong, Philippines, Thailand, Japan and Australia. If you have the option or you have the availability to purchase a property in a country that’s not listed, you can always reach out to us and we may be able to secure some type of financing. So one of our biggest divisions is our international bridge lending.

08:34
Robert Chadwick
These are short term, twelve to 24 a month asset backed loans based purely on the value of the property and not the borrower’s finances. Now, this is especially handy when it comes to being able to access financing quickly and easily. Because we go only off of the value of the property and not the financials, we can do these transactions normally from start to finish in one week. In the countries that we operate quite frequently is us, Singapore, Canada, UK, Hong Kong, Thailand, Philippines and Australia. So we have other types of financing that we’re able to do. And a lot of this has to focus around being able to provide financing for what would be considered high net worth individuals. So we can do share financing in most countries. We can do remittance.

09:41
Robert Chadwick
If you’re in a country that may have difficulty moving funds. We have aviation and vessel financing. So with that said, I will hand this over to Khurram. And he can go over the capabilities for the Dubai market. It’s an exciting market, as Kram can surely tell you, and I’m excited to learn more about it myself. So with that said, Khurram, thank you again and I will give you the floor.

10:11
Khurram Asif
Thank you, Robert, for that lovely introduction. I’m very happy to be part of GMG and represent the Dubai market in that perspective. Now, as everybody knows, in the last 20 years, the Dubai freehold market has gone skyrocketing heights from when they first launched the initial bid, and today, where we’re one of the leading cities in the world offering freehold ownership on properties, foreign ownership, and at the same time offering also non-resident mortgages to clients who may not necessarily be living here or earning here. I’ll get into the details, but the bullet points for such an interface are the most important. Any client applying for a mortgage to a property in Dubai, to purchase a ready property in Dubai does not need to provide us with a credit report or tax returns from their home country.

11:06
Khurram Asif
So unlike most of the other major cities where credit reports and tax returns are part of the documentation, one of the major documentation for mortgage approval. If you’re borrowing something in Dubai for up to 5 million dirhams, you do not need to give us a credit report from your home country. We don’t want to even see your tax returns or how many taxes you’re filing or whatnot. It’s quite straightforward. The income in your home country, or even in any other country that you work in, other than Dubai, other than UAE, is accepted for a mortgage. We have mortgage facilities that can cover all seven cities of the UAE. We have seven cities, they’re referred to as seven emirates over here. But basically there are the seven cities, Abu Dhabi being the capital and Dubai obviously being the main metro business center.

12:05
Khurram Asif
We have mortgages available for all these seven cities. And being a non resident who is earning outside the UAE, not landing their salary or income in a bank here, possibly even living here temporarily, but still earning outside, can avail up to 65% finance for a ready property. Anything that’s ready or going to be ready in the next 60 to 90 days can be mortgaged. We can acquire a mortgage approval, wait for the handover and then finance 65% of it, which is a really good number, a great incentive for non residents. The moment you tell them that you can pay just 35% down payment and the bank covers everything else, it gives them two things. One, it gives them a sense of security that there is a local bank in Dubai taking over the majority of their investment.

13:05
Khurram Asif
Secondly, it also gives them a chance to enjoy absolutely tax-free rental income. We have no taxes in Dubai on property acquisitions, so you could buy a property here and not pay any sort of federal tax or property tax on it. Being a non-resident, if you’re buying for investment and you take a mortgage from a bank, you do not pay any extra taxes on the mortgage facility other than the initial one-time charges of the bank and the yearly interest that’s agreed upon. And most importantly, when you rent out that property, the rental income comes net 100% to your account in Dubai, which in a majority of cases helps to pay the mortgage back. So a typical non-resident living in Europe or Africa, any part of Asia, anywhere, just needs to pull down 35%, and get the mortgage through our company.

14:04
Khurram Asif
We also have a short-term and long-term rental division that takes care of the asset in case you want our assistance to rent it out. Once we’ve mortgaged it, the rental income here comes on either a quarterly, yearly or sometimes half a year income. It goes straight to your mortgage account with the same bank from where we’ve arranged your finance. And in effect, it pays your mortgage payments. It also helps you pay the yearly community fees on your asset. And at the end of the day, it still leaves something to go back into your pocket. This is the program we have for non-residents who are earning outside Dubai. We have a huge back office here, which is no less than a bank itself.

14:51
Khurram Asif
So the moment you engage our services at GMG, we don’t just pick up your documents and send them to any leading bank or approving bank. We have our analysts in the office who review your documents. They do their assessment and within 24 hours we can give you a 99.9% indicative idea of how much mortgage eligibility you have, and what you need to make it more or less. Our office can do that for you, even before you pay any of the bank login fees or any other sort of processing fees. Once you’re satisfied with our result and you want to go ahead, then we ask you to pay the one-time bank fee to log in the case, which is a minimal amount in Dubai, considering the property prices right now.

15:43
Khurram Asif
And we endeavor to finish everything between 30 to 45 calendar days. I’m talking about the application to the collection of keys to the property. This sort of facility applies to already properties, whether you’re purchasing from a property developer or whether you’re purchasing from what we call here, the secondary market, which would mean that, for example, I’ve bought a villa from a developer and now I’m reselling it on the market. And you want to buy it. That would be a secondary sale, or there would be a primary or developer sale where you buy from the developer. The facility applies to both. The maximum repayment as of now in Dubai for a mortgage is 25 years, up to the age of 65, whichever comes first. So if you’re 40 years old when you apply for the mortgage, you can get 25 years to pay back.

16:39
Khurram Asif
If you’re 45, you get 20 years and so on. Obviously, like any banking structure, we have partial prepayments and early settlement options, so nobody is locked in for 25 years or 20 years. You can get out of the mortgage at any time from 90 days to two years to five years, depending on the market, depending on your discretion or what you want to do with the property. Obviously, at the exit point, you do not pay any of the preceding interest charges that you would have paid in 25 years. We have a very minimal fixed fee of only 10,000 dirhams.

17:18
Khurram Asif
So at any point in time, if you want to sell your property or close the mortgage, or you have extra funds and you decide you don’t want to continue the mortgage and pay interest to a bank, you can approach the bank or approach our offices, and we will arrange your early settlement. You will only pay the principal outstanding and a fixed fee of 10,000 dirhams, which is by far one of the lowest early closure fees as compared to any major city around the world. We also have loan programs or mortgage programs here that can be structured purely on rental income.

17:57
Khurram Asif
Those are a few preferential case-to-case basis scenarios, but we’ve done that for a lot of investors, for a lot of non-residents who may not have the sufficient income, or who may just have a portfolio of other properties in Dubai which give them enough rental income, we can use that as collateral and we can arrange a new mortgage for them to purchase new properties. So, in effect, you are using your existing portfolio and the rental income to increase your property spread in Dubai. Thank you for that. What kind of people can borrow from us? Needless to say, the citizens of the country, the UAE citizens, are on the highest slab and can borrow up to 90% of finance on ready properties. Next in line come the residents who live and earn in this country.

19:01
Khurram Asif
They’re not UAE citizens, they are foreigners, like myself, like a lot of other people here. The UAE is a multicultural country, and Dubai alone has more than 140 different nationalities living and earning here, other than the citizens. A non UAE resident, someone from another country who chooses to live and earn here, can borrow up to 85% finance on a ready property. Next come the non-UAE ex-pats who are living in other countries. They’re living overseas. They’ve come to Dubai. They like the place. Or they heard about Dubai, they’ve heard about our tax free rental incomes, our tax free haven, and they want to invest here. They can borrow up to 65% finance, as I mentioned a few minutes ago, we do not require borrowers to have a UAE residency necessarily, and we absolutely do not require them to have a bank account in Dubai.

20:00
Khurram Asif
As part of the mortgage process, the lending bank also opens a savings account for the borrower. Through this account, the borrower can make his mortgage payments, either transferring the funds himself from his country, either relying on the rental income checks, which is 90% of the scenario here. This account can also be used for minimal amount transactions, shopping. You get an ATM debit card, international ATM debit card and online banking access. So you can be living in any other part of the world and monitor your mortgage, your rental income, your repayments, everything on your iPad, without necessarily traveling to Dubai. Process wise, again, I’ve done mortgages in a lot of other cities other than Dubai. Also. Obviously, we’re a big group where spread over all major cities.

20:58
Khurram Asif
As Robert explained, I can tell you that our mortgage process here is one of the shortest turnaround time, if not the shortest, but one of the shortest as compared to all major cities. Within 24 hours, our back office gives you an assessment. Once you submit your documents, we can give you a pre-approval, which is an in principle approval, within 48 hours. It’s not your final approval, but it’s an in principle approval based on your income, demographics, the price of the property, things like that. Once we’ve got the whole set of documents and you’ve selected your property, then it’s a 30 to 45-day process. The mortgage process, in simple words, has three stages in Dubai, the pre-approval, as I mentioned just now. Then we have the property evaluation by the bank.

21:51
Khurram Asif
Like any major city, the bank here evaluates every single property where they’re surveyors, irrespective of what your buying price is. Maybe you’re buying at a really good price. Maybe you’ve managed to get a distress deal, or maybe you’re buying at market price. Irrespective, the bank evaluates every property that you’re buying and the bank lends you the finance percentage, whether it’s 65 or 75, 85 or 90. They lend you that on the lower value between your buying price and the bank evaluation. Once we’ve done the evaluation comes the final stage, which is the actual physical mortgage contract signing. That’s when we request the non resident client to visit Dubai to sign the mortgage contract. With that, we also get the account opening signed.

22:41
Khurram Asif
We get your account opened in the same bank as I mentioned, and at the end of 30 to 45 days, you can meet the seller of your property in one of the government trustee offices to register the title in your name, the bank makes the payments to the seller and the seller transfers the property title to your name and effectively, you collect the keys to the property. We also have some exceptional cases on a case-to-case basis where we have managed to get special approvals from lenders here to complete the entire mortgage process while the buyer is in his home country, Orlando, or any country where it’s earning. There are circumstances, sometimes medical circumstances, economic circumstances, or anything else that’s stopping a client from coming to Dubai. But it doesn’t stop the mortgage process.

23:33
Khurram Asif
It always helps to know that much in advance from a client that he or she will not be able to make it to Dubai to sign the mortgage contract and do the account opening. We can then apply for special approval with the lender to process the entire thing remotely with a certified person or manager in the client’s country who will go document sightings, and things like that. It’s not part of a regular policy, but we’ve managed to achieve that for many clients. Case to case basis. Eligibility the most important question for any client how much loan can I borrow? Our loans minimum loans in Dubai start from 250,000 dirhams. So if you’re buying a property for 500,000 dirhams, you could easily take 50% from us or 60%. If you’re buying something for 400,000, you could still barely make the benchmark.

24:31
Khurram Asif
But if you’re buying for below that, it may not be easy to get you a mortgage approval. Most banks here would prefer to book a minimum case of 250,000 dirhams. It just makes business sense for the bank and also makes financial sense for the client to pay four or five one-time costs to the bank, one-time charges before he takes the mortgage. There’s no limit to the maximum amount of mortgage you can borrow. We do have a product profile which says up to 500 million dirhams. But we’ve booked cases. We’ve booked cases depending on the value of the asset, we bookcases for even higher than that. So as such, there’s no hard and fast rule.

25:15
Khurram Asif
If you’re planning to buy a residential building or a complex of villas, which will bring you a very high substantial rental income, and the pricing goes over 500 million, we can still look at it, we’ve done it. The minimum age, of course, to borrow a mortgage in this country is 22, because the legal age to get work in most major cities is 21. So we would expect a client who’s 22 to have at least six months of work experience before we lend him a mortgage, and the maximum age is 65. Beyond 65, the only mortgages that can be extended are to the UAE nationals, any expatriates, foreign nationals, non UAE, all have to have closure by 65. The type of people who can get a mortgage are obviously the easiest ones are the salaried profile. All banks love salaried clients. Fairly straightforward cases.

26:14
Khurram Asif
Next come these self employed clients who have an array of businesses and different incomes. So it requires a little more structuring. Everything that our back office does for the client before we submit the docs to the bank. And then we’ve got a high net worth individuals who aren’t really relying on a monthly income, but they have an overall portfolio giving them really high income. We actually are experts in that kind of case and structuring those along that line with the high net worth. Every now and then we also receive clients referred to as peps, which translates to politically exposed persons. So we do have solutions for peps. Clients who directly work with the government or indirectly are connected to a government office in their country via a family member or a spouse, some even via heritage.

27:03
Khurram Asif
I had a client whose father used to work as a member of parliament, so he was classified as a pep. But we get those approvals. We have solutions for almost anything under the sun when it comes to the minimum work experience, unless you’re 22 years old, if you’re older than that, the bank doesn’t really focus on your minimum work experience. What they look at is your flow of income. When I say the flow of income, the banks don’t even expect you to have an x amount of salary when you’re a non-resident. For residents who have income in this country, there is a minimum salary. But for non-residents, we would like to look at your last six months’ bank statements to see your income, even if it’s variable, to see your spending habits, and to see the average balance you maintain.

27:49
Khurram Asif
That’s what a bank would look at, and not specifically a fixed number of income. Blood relations and spouses we have clients at times who don’t make the marks on single applications, or they want to borrow higher than what they can on a single application. Blood relations or spouses are allowed to be co-applicants or co borrowers. In this case, as long as there’s a blood relation. Could be parents, siblings, brothers, sisters, sons, daughters, or spouses. You could. We could use you as a co-borrower if you also have income to declare, or bank statements that show some income that we can add to our main applicant, we almost finance anything that’s real, anything that you can touch and feel. We finance can be a plot of land, townhouses, villas, apartments, the hot favorite in Dubai, and apartments for investors.

28:48
Khurram Asif
We also finance mansions and towers, and we also do commercial and retail. Like any market, the majority of business happens on the residential side. But in the last two years, commercial has picked up a lot in Dubai and hence the banks have adapted to that. So we also have commercial and retail finance solutions. What you’re seeing is one of the key premium properties in Dubai. Obviously, there are many properties in Dubai for sale at many different levels. But what we can see on this slide is one of the signature villas on the Palm Jumeirah Island, the world’s first man-made island. We all know about that. And we’ve got two other islands now that are gearing up to also offer properties. But the palm as such, the first palm Jumeirah, is a full, complete, and mature community.

29:42
Khurram Asif
We’ve got units, and assets there, starting from 5 million all the way up to 150 million. As you can see on this slide, this is a signature villa developed by an award-winning international group called Select Group. Their major emphasis was in the UK, where they started, but now the majority of their projects are in Dubai. All of them are luxury, ultra-luxury. And this is one of them. As you will observe on the slide, even at a high price of 150 million, we’re looking at an ROI of approximately 6% to 8% on this, six to 8% ROI on this sort of asset. The interest rate for a mortgage, is not more than 7%, somewhere between 6% to 7%.

30:27
Khurram Asif
And even on an asset of this value, the maximum loan period of 25 years applies as long as you’re below 40 when you apply for the mortgage. Next is another ultra-luxury community in Dubai. It’s almost 20 years old, one of the first luxury communities that Dubai started when they launched the freehold market here. Foreign investments. It’s called the Emirates Hills. It’s an array of ultra-luxury, golf-facing golf courses, and facing villas. 99% of all the villas here have inbuilt elevators and they go up to two or three stories high. The one we have on display here is approximately 300 million dirhams. And for this sort of asset, we can offer 50% finance.

31:20
Khurram Asif
So if you are interested in buying something in this range, we could get you a 50% mortgage from a bank where you put down only 150 from your pocket. Again, the same tenure of 25 years. And even the interest rate, unlike most major cities around the world. The interest rates in Dubai do not fluctuate based on the loan amount you’re borrowing. So you could borrow 5 million from a bank or you could come and ask for 100 million. The interest rates don’t necessarily fluctuate with the price of the asset. They’re based more on the client’s profile and source of income and the comfort level banks have with them. To the next slide in a moment. And here’s something on the other side. On one side we have ultra-luxury assets in Dubai, and mortgages available for those.

32:28
Khurram Asif
And then we also have lower price units in the most popular area, called Business Bay. It’s the business hub of Dubai. It’s what it says by name. It’s mainly comprising office towers, commercial buildings, and also a lot of residential buildings. 15 North Side Tower, the one you see here, is one of the most popular residential towers in Business Bay. Very good ROI when it comes to short-term rentals in this asset, we can even look at 10% to 12% per year net, which is unbelievably high compared to any other city. For this sort of unit, we could offer up to 65% to 70% mortgage. Also, when it comes to the bank financing bit, they don’t only look at the client profile or the asset price, but nowadays they also focus on the ROI.

33:21
Khurram Asif
So if we show them the ROI numbers of other units in the same project, at times we’re able to push for a higher mortgage amount. It’s a combination of things that our back office does before the application goes to a bank. To answer the age-old question which people ask at times like, why should we come to a mortgage broker and not just go to a bank? Because when you go to a bank, they will tell you policies. When you come to us, we will tell you solutions, not policies. Anybody can get the policies online. We give solutions the same tenure of 25 years. As you can see here, whether you use it for end use or whether you put it out on rent through our other offices, the ROI is about 10% to 12% on short-term rentals in this area.

34:13
Khurram Asif
We also have a very good referral system in place with GMG higher than any other market, higher than London. I can tell you that because I have referred cases there. Once the case is booked and we have received payment from the client, within 48 hours, GMG is happy to give a 20% kickback or referral fee to the referring person. Needless to say, this stays strictly between the referring person and GMG. At no point does this come on record in front of any client? Thank you. I think this would be the end of this presentation. I think Robert’s back on.

35:00
Robert Chadwick
Yeah. Thank you, Khurram.

35:02
Khurram Asif
Pleasure.

35:03
Robert Chadwick
Yeah, super interesting. I know I took down a lot of notes myself because I’m not really familiar with the market, but maybe you can help me with a couple of questions that I have, and then we’ll get to the question and-answer session, which we have, actually, in quite a bit.

35:25
Khurram Asif
Absolutely. Really. Good question, Robert. So, the majority of the banks nowadays are offering fixed rates and also variable, but they aren’t very interesting. The variable rates are not really interesting, and I think they’re purposely being calculated in such a way that most clients are inclined to go for fixed rates. The fixed rates also are low. They’re not very high at the moment. Last year this time, if were speaking, were close to 7%, but currently, we are looking at something like 3.8%, 3.9% fixed for three years. Three years is the most popular period over here. For fixed rates. We have one year. We have three years. Some banks offer five, and one or two banks also offer ten years. But the favorite pick is always three years with most clients that we see.

36:27
Robert Chadwick
And is it always principal and interest, or are you able to do interest-only loans?

36:31
Khurram Asif
Always. Always principal and interest from day one. We stopped doing interest-only loans about a decade ago, so now it is purely principal and interest.

36:40
Robert Chadwick
Okay, another question. Is there a way to structure it differently by, say, opening up a company in Dubai to be able to get more favorable terms?

36:54
Khurram Asif
Okay, that’s not something we recommend to a client if he’s only doing it for the purpose of getting a better mortgage. For opening a company in Dubai, which would make you self-employed, you would need to have at least a minimum of twelve months of banking operations in your company account. At a minimum, three employees are on your company’s payroll and a properly structured business. And that with all that, it wouldn’t take you more than 70 or 75% finance. The max you could get is 70% to 75%.

37:32
Robert Chadwick
Okay, so a straightforward transaction.

37:35
Khurram Asif
Absolutely.

37:37
Robert Chadwick
The citizenship or residency is the best way to go?

37:42
Khurram Asif
Absolutely.

37:43
Robert Chadwick
Okay, another question. And again, apologies if you covered this, but no. Is there a debt-to-income ratio or how does that qualify? Is it qualified on debt only in Dubai, or is it qualifying on debt globally? How does that work?

38:00
Khurram Asif
Okay, so if you’re a resident earning inside Dubai, then your debt burden ratio, as we call it, a DVR, is a max of 50%. You cannot pay more than 50% of your fixed income towards liabilities in the country. But for non residents, there is no hard and fast DBR in place. So a lot of times non residents show us income. We also see debts in their bank statements, we see other mortgages, we see credit card payments. But again, as I said, it’s not just about the income of non-residents, it’s also about the average balance. Maybe someone with debts. A non resident with debts maintains a higher average balance than someone who doesn’t have debts but spends his entire income and has no balance. So the bank looks at it from this point of view for non-residents.

38:49
Robert Chadwick
makes sense. Also, you had mentioned earlier, that going to a mortgage broker that can actually structure this properly rather than going to the bank is just going to look at it and say rejected or approved, right?

39:01
Khurram Asif
So, well, that’s absolutely the reason why we have a lot of traffic, a lot of foot falling here, because if you go to a bank, we have about 15 banks in this country offering mortgages, out of which 10 are the really active ones, and they are too busy to structure cases. They like, as we put it in sales, the low-hanging fruit. So if you go to them straightforwardly, and this is my income, I have, I don’t have many liabilities. I want a mortgage. They’re happy the moment they see that this requires structuring and extra work, they rather not onboard such a case, than spend two months on it and then say no. But that’s when we come into the picture with the moment a client comes to us within 24 hours, we know exactly how to structure this case.

39:45
Khurram Asif
And we come back to a client from our office and tell them like, look, you have this income, but we need to see this or you need to reduce a bit of this. We know how to structure the cases.

39:55
Robert Chadwick
Excellent. And you know, and I can say personally, working with you for over the last couple of years, I don’t care what time of day I message you’ll reply. So, I don’t know if it’s just me, but I really, think you’re an absolutely fantastic person too.

40:11
Khurram Asif
Thank you, Robert. It’s very kind of you, but I will share a small thought on this, what you just said. Thank you for your kind words. The thing is, I was in Canada some years ago and just to humor myself, I applied for a mortgage facility. As a non-resident, I selected a property with some family members and we applied for a mortgage facility. We started making inquiries. We didn’t apply for the application. It took a whole week for the mortgage broker there to come back to us and ask us the essential first questions before we could even give the documents. So this stayed in my mind because were pretty disappointed at the turnaround time. This is obviously much before I even knew GMG. Things changed drastically once I connected with you under the group.

40:55
Khurram Asif
So I always held this in my mind as a key factor. Like whether the answer is yes or no. Don’t waste time. Come back to the client as soon as possible. Because clarity is everything in this business.

41:07
Robert Chadwick
I absolutely agree. So, okay, so let’s get to the questions that. Again, thank you everybody for joining. There is in the chat box a link if you want to schedule an appointment with Khurram directly or with any of the other loan officers handling a variety of countries. So first question, I guess that would be for me. It says, do you offer mortgages in New Zealand as well? And yes, we can provide New Zealand mortgages. There are certain restrictions on qualifications based on your passport in New Zealand. But please reach out to us and we can assist. Next question. Am I able to get equity out of my property in Dubai? Can GMG help? Khurram?

41:57
Khurram Asif
Absolutely you can. Equity release is one of the major products. After we have a 1st-time mortgage, we have the secondary market as I explained. And we have refinance or equity release. We call it equity release here. The bank will evaluate your property on today’s market value. And up to 50% of that can be given to you as cash in hand. It’s not. It’s not a hard and fast rule. But at some point, the bank will want to know what is your other income other than just the property. If you’re one of the investors who only has a property giving you rental, we can still make it work. But 50% is the cap on equity here.

42:39
Robert Chadwick
Thank you. Next question. Are there any specialized mortgage products from GMG designed specifically for international investors interested in the Dubai real estate market? Khurram?

42:51
Khurram Asif
Right. So most of the part of the presentation obviously covers this for international investors. But in short, you can borrow up to 65% finance. As an international investor, you don’t need to have residency in this country. You don’t need to live here. You surely don’t need to have income here. You could be someone who just saw Dubai on a video with someone and liked something. Maybe you never came to Dubai. We can still do up to 65% mortgage by GMG Dubai.

43:21
Robert Chadwick
Fantastic. And Khurram, if say somebody wants to get pre-approved for a mortgage which is probably the first thing that they should do in any country. Are you able to refer them to realtors that you’ve worked with in the past that, you know, are fantastic like yourself, to work with? I mean, is that an option that you’re able to provide as well?

43:43
Khurram Asif
Absolutely. So, obviously, in our line of work, we know a lot of realtors, but I’ve got five very reliable realtors in different communities in Dubai. And every now and then I get this request from a client whom I’ve given a pre-approval to, saying that I’m not finding the right realtor. I want a specialist. I then refer them to a specialist from my side if required.

44:07
Robert Chadwick
Fantastic. Okay, next question. Is it true that Dubai is a completely tax-free market for property owners? Very good question.

44:16
Khurram Asif
Absolutely true. I’ve been living here for 48 years and I’m a property owner for a good part of 15 years now. The only thing we pay is our community tax to the master developer, which is a norm in any part of the world. We do not pay any sort of federal tax, income tax, or nothing. I’ve got one property rented out. We get rental income on that. It all comes in our pocket. We’re free to do what we like with it. There is no compulsion of any kind. No tax, no hidden taxes, no fees named in some other way. Nothing.

44:51
Robert Chadwick
That’s fantastic. Unfortunately, I mean, fortunately, and unfortunately, me being an American, I don’t have that luxury, but I think almost everybody else does. Next question. Why Dubai? Why should investors purchase a property in Dubai as opposed to other major cities?

45:11
Khurram Asif
Okay, so obviously, reiterating again on the tax, any major city in the world will offer you the best properties. They’ll also offer you mortgages. I mean, GMG themselves do mortgages in all major cities. We can get you up to 75% to 80% also in some cities. But there’s no running away from the taxes. The moment you acquire a property under your name, you are liable to pay yearly taxes on it. There are some cities, major cities, where the more your property appreciates, your taxes go higher, even on capital appreciation, you pay on that also. So that’s one major reason we can give undisputed reason, we can give anybody to come to Dubai, buy a property, and just enjoy a tax-free life.

45:56
Khurram Asif
The other most important reason where you might wonder why people are buying property here and a lot of them moving here, is our security. This is one of the most secure countries in the world. Abu Dhabi, which is the capital of the UAE, was ranked number two recently in a recent international poll. These are not polls conducted inside the country. They’re international polls. We’re one of the safest places in the world to invest property in, to come and live in, to start a life with your family here, to educate your kids here, and so on. I mean, these are the two important things that any investor or any buyer will look at. Safety and tax-free.

46:37
Robert Chadwick
Fantastic. Okay, next question. If you have a Dubai golden visa, how much can you borrow?

46:45
Khurram Asif
In terms of borrowing? It doesn’t make any difference to the bank because the golden visa is something that just strengthens your demographic when you’re applying here as a non-resident. But yes, the compliance process of the bank, is checking your background and things like that. If you’re a first-time buyer or first-time borrower, that definitely gets shortened by 50%, because to even get the golden visa, there is a stringent compliance process in this country. So if the government’s gone through that and already given your golden visa, the bank has no reason to waste more time than required on checking your background. But in terms of lending or eligibility, as of now, it makes no difference.

47:26
Robert Chadwick
Does it make a difference on the loan to value?

47:30
Khurram Asif
Unfortunately not.

47:32
Robert Chadwick
Okay, next question. Do I need to have a local partner who owns 51% of the LLC in Dubai if I want to buy the property using the LLC?

47:46
Khurram Asif
Okay, so this is a question with two questions in it. One just for general knowledge for everybody, the days of having a mandatory local sponsor are behind us. So in the last two years, the government has changed that rule, and today you can walk into Dubai and acquire a business license, 100% in your name, and 100% ownership. If Robert Chadwick comes here and starts a business, the license will say, Robert Chadwick, 100% shares, owner or proprietor, whatever you like. So that requirement is out completely. Number two, you can use this license to buy a property. Obviously, the developer or seller won’t care. They register the property in your license name if you need it. But banks do not offer mortgages to an asset that’s registered under a company here.

48:37
Khurram Asif
So during the process, or maybe after buying the property in a year’s time, you came to a bank looking for equity. They would require you to first transfer the property back into your own name and then give you a mortgage. But if you just like to buy on cash and keep a property under a company name, it’s possible without intervention from any local sponsor.

48:58
Robert Chadwick
Very interesting. Thank you. Next question. What are the interest rates for these mortgages for non-UAE residents? We are Singapore residents, but Indian citizens.

49:10
Khurram Asif
Okay, so the interest rates for people who have no, income in this country start from 5.8% fixed for three years, 5.8%, and go all the way up to 7% depending on the case and the technicalities concerning the buyer. It doesn’t matter even if you have a golden visa. I have clients who have started a small business license here, a company, and they have visas from the company. As long as you’re declaring your income outside the UAE, you will always get the non-resident rate. You won’t get the resident rate.

49:46
Robert Chadwick
And what is the resident rate? If you are living?

49:48
Khurram Asif
3.89% starts from 3.89%. For individuals working on a salary in this country. Ironically, you could be living in Singapore, but if you’re still employed with a company here and they land your salary into an account here, you could get 3.89%. Your physical residence doesn’t matter to the bank. The only thing that they care about is your income. Where are you paid? In UAE or outside?

50:14
Robert Chadwick
And curious. Obviously, we’ve seen interest rates rise across every market. After COVID, how low were interest rates in Dubai?

50:26
Khurram Asif
Well, there was a time when it was 2.2% also.

50:34
Robert Chadwick
Okay.

50:35
Khurram Asif
Yes, but today, considering the inflation rate globally and even in Dubai, and considering the Fed rate and so many other factors, that just wouldn’t be a practical rate now. I would imagine 3.89 is still a very good rate today. Absolutely lower than most major cities. So 3.89% fixed for three years.

50:57
Robert Chadwick
Okay, fantastic. All right, next question. Are we able to purchase an investment property in Dubai, and how can we go about finding the tenants? So I think this kind of leads to the services.

51:10
Khurram Asif
Correct. So firstly, yes, you can absolutely purchase an investment property. Two, you can also get a mortgage on it, up to 65% if it’s a ready property, and three, if you choose to use our services, our other division can also help you rent out the property, and they can be the property managers for the property, maintaining, cleaning, short term, long term, whatever you need. We have an office that takes care of all these things.

51:40
Robert Chadwick
Fantastic. Thank you. Is there an LTV? Is the LTV the only thing affected if you work for a startup in Dubai? I think that probably works for any company.

51:55
Khurram Asif
Right. So whether you. Well, if you work for a startup. Okay, so you’re not. What I understand is you’re not starting the startup, you’re working for a startup. So in this sort of scenario, the bank would want to look at the validity of that company first. So you could be three months employed, but we could still give you a mortgage if the company was formed three, or four years ago. But if someone started a startup, initiated a startup six months ago, and you came on board three months ago, it could be a little challenging because you would come under a salaried profile and the entire crux of the mortgage lies on you getting your salary on time from a company that’s operating more than two years at least, and is in a healthy position to keep paying salaries and not lay off stuff.

52:40
Khurram Asif
This is the credit point of view of any bank.

52:45
Robert Chadwick
Makes absolute sense. And I think it’s probably seemed more lenient in Dubai than it is in most countries when it comes to it.

52:52
Khurram Asif
Absolutely is. Another thing I’ll quickly add is our mortgage eligibility process, or the whole tat of our mortgages is really simple for one major reason. Again, I’m just repeating the same thing. We don’t have taxes here, so you don’t have to give us your tax filing reports. We don’t need to see, okay, you’re earning x income, but you’re paying y taxes. How much are you left with? It’s very straightforward. In Dubai, this is your income, these are your liabilities. The gray area in between is your mortgage eligibility.

53:22
Robert Chadwick
Makes sense. Okay, next question. What is the outlook for the property market in Dubai? Is it already in a bubble?

53:32
Khurram Asif
No, we don’t believe that absolutely. In fact, we don’t even use the word bubble anymore because, in the last four years post the COVID issues here, we’ve seen substantial growth and expansion of properties. Here we have a lot of non-residents now coming to Dubai buying properties not just for investment, but making it a home, making Dubai their home. Anybody who randomly even connects to an online forum or picks up the phone to buy a property will realize after a month that this is a majorly undersupplied market. We have more buyers and less properties for sale. We don’t see this as any sort of bubble. In fact, we see this as a universe. We see it as a never-ending universe that is getting better and better. There is very strong speculation and not, well, I wouldn’t say speculation.

54:23
Khurram Asif
There are very strong reports from government entities that they are highly considering also giving UAE national passports to a lot of buyers and investors. There are obviously some criteria for that, but these are reports from government offices that are driving even more people. More and more people are looking to make Dubai their home and live over here. And if nothing else, the safety aspect I mentioned, that’s just the cherry on Dubai. Everybody likes the safety.

54:51
Robert Chadwick
Fantastic. This is a little bit off-subject, but what do you need to get a golden visa? If you know about that?

55:02
Khurram Asif
Sure. If you can purchase a property for as low as 2 million dirhams, you can be eligible for a golden visa. Again, there are reports that this benchmark is coming even lower, to maybe 1 million very soon. It started with 10 million 2 years ago. Let me just put that in there. So two years ago, if you wanted a golden visa, your property should have been 10 million. And then it came to five, and today it’s on 2 million, which is another reason that everybody is coming to Dubai. The golden visa is for a minimum of ten years, which means for the next ten years, you can stay in this country as a resident. No need for visa renewals, no need for medicals, blood tests, or anything. The golden visa also allows you to open bank accounts here, and get a driver’s license here.

55:50
Khurram Asif
It also allows you to join any employer of your choice where you’d like to work. And if they hire you, all you need to make is a labor contract with them. And your golden visa is not connected to that employee. Even if you stop working over there, your tenure still goes on as long as you have the property. And I’ll quickly add that for the golden visa, it doesn’t need to be necessarily a ready property or a full cash property. So you could have bought a property for 2 million and borrowed 50% from us, and you could still get the golden visa.

56:22
Robert Chadwick
So just to clarify on the golden visa, if you said it’s down to 2 million, you can finance a portion of that. You don’t actually have to come in with the full 2 million cash.

56:34
Khurram Asif
No.

56:35
Robert Chadwick
Very, very interesting.

56:36
Khurram Asif
You could put down 40% – 35% as a non-resident, and we could finance 65 and still get you the golden visa. Luckily, we also have another division that manages golden visas, because obviously, it’s the next thing on the menu. Clients ask about properties, then they ask about mortgages, then they ask about tenancy. And the next question nowadays is always, can you help me with the golden visa? We have a dedicated department only looking after golden visas and company formations.

57:04
Robert Chadwick
Fantastic. Definitely a turnkey service there. Okay, the last question, I believe. No, one more after this. So, 3.89% of borrowers buy income. What is the interest rate for those with income outside side of Dubai?

57:23
Khurram Asif
Sure. That interest rate starts from 5.8%, fixed for three years, and can go up to 7%. It depends on your profile, depends on how old or new you are in the job in your country, and also depends on the property price sometimes. But 5.8 is the bare minimum for non-residents, which is, again, a very good rate for someone who’s not earning in this country.

57:50
Robert Chadwick
Okay, and last question before we end the webinar. The cost of a golden visa application. Can you maybe kind of expand on that? Seems to be quite interesting for a lot of people.

58:01
Khurram Asif
Sure, sure. I can give you a range because there are different costs for different demographics at times and different things. But it starts from 13,000 all the way up to 18,000. Between 13 and 18,000.

58:19
Robert Chadwick
Okay, perfect. Thank you. That will conclude our webinar for today. Khurram, as always, thank you for your time. We really appreciate it. Thanks, everybody, for joining. Again in the chat, there is a link where you can book an appointment with Khurram or with one of our loan officers globally.

58:45
Khurram Asif
Sure.

58:46
Robert Chadwick
So with that, Khurram, do you have any last parting words?

58:50
Khurram Asif
Well, firstly, I’d like to thank you, Robert, for the time and for organizing this. I want to thank the attendees. I can’t see their names yet, but I’m sure I’ll get messages, so I’ll know. And finally, I would just simply say that if there’s ever a time to buy a property with a mortgage, now’s the time.

59:09
Robert Chadwick
Absolutely.

59:10
Khurram Asif
It’s not tomorrow. It wasn’t yesterday. It’s today. It’s now.

59:14
Robert Chadwick
Okay, Khurram, thank you very much. All right, everybody, thank you. We’ll have another webinar in, I believe, in two weeks. You should be getting a notification on that pretty soon, whether it is focused on the U.S. or the global markets. So have a good weekend, everybody. Appreciate your time. Khurram, thank you again.

59:31
Khurram Asif
Thank you, Robert.

59:32
Robert Chadwick
Thank you, guys.


Disclaimer: This transcript is AI-generated, so kindly pardon any transcription or grammatical errors that may be present.

Robert Chadwick
CEO, America Mortgages
SG: +65 8430.1541
(Direct/WhatsApp) | U.S.: +1 830.564.3290
Email: [email protected]

Khurram Asif
Manager, Dubai Mortgages
(Direct/WhatsApp) | U.S.: +971 58.647.5964
Email: [email protected]

How Can Mexicans Get Mortgages in the U.S.?

Non Resident Mortgage USA

Yes, you Can Buy Property in the U.S. as a Mexican Citizen!

Great news! Just like U.S. citizens, foreign nationals, including Mexican nationals, have the same rights to acquire and own real estate in the United States. Mexico is the second largest country of origin for foreign buyers in the USA. 

Important Points to Note For Mexican Citizens Obtaining a U.S. Mortgage

Many Mexican buyers pay cash simply because they aren’t aware of the mortgage options available. Let’s clear up some misconceptions and share some points you need to be aware of:

  • You don’t need U.S. credit history to secure mortgage financing from America Mortgages.
  • All mortgage options are available whether you’re buying a house as a second / holiday home or as an investment.
  • Last year, 33% of Mexico’s property purchasers offered cash. This is often due to a lack of awareness about available financing options from America Mortgages.
  • You can qualify only on the rental income of the property. No personal income needs to be provided. 
  • If you are not a legal resident of the United States, you will need to file an annual tax return reporting any rental income earned from the property; however, with proper tax planning taxes due can be mitigated.
  • You need a valid U.S. visa to be able to get a mortgage.

What are the differences between getting a mortgage in Mexico versus the U.S.?

Buying a home is a huge opportunity, whether it’s in Mexico or the U.S. On top of that, the process can be quite different between the two countries. We understand that, so let’s break it down so you know what to expect when applying for a mortgage in the U.S.

Down Payment

In Mexico, people prefer to pay for property with the majority in cash. It is common to make a down payment of as high as 50% and finance the rest with a bank loan. While in the U.S., most international property investors take out a mortgage with down payments as low as 25%.

Loan Terms

In Mexico, the average mortgage repayment period is much shorter—it typically lasts 10 years. The loan repayment period in the U.S. is much longer and can span 30 years and, in some cases, up to 40 years. 

Amortization

In Mexico, mortgages are ‘fully amortizing’, which means every payment covers both the principal amount and the interest incurred. This works a bit differently in the U.S., where There are options for a principal and interest loan and an interest-only loan. 

To qualify for a bank loan in Mexico, you need a good credit history and must earn at least three times the monthly loan payment. For America Mortgages loans you don’t need U.S. credit and can qualify based on the rental income of the property alone. 

Ownership

In Mexico, the bank owns the property until the loan is fully paid off. Whereas in the U.S. you own the property once the closing costs are covered and the documents are signed. At the same time, the bank holds a lien on the property until the loan is paid off. 

What are the Documents Required for a U.S. Mortgage Approval?

The following documents are needed based on citizenship status when obtaining a U.S. mortgage:

  1. Copy of passport, Green Card, or a U.S. visa
  2. Two months of bank or financial statements showing you have the funds for down payment and any closing costs (purchase)
  3. Tax Identification Number (ITIN) if available
  4. Income letter from your employer if employed or your accountant if self-employed OR you can qualify on the rental income of the property

How Can Mexican Citizens Obtain a U.S. Mortgage?

America Mortgages can help you obtain a U.S. mortgage. As a company, our only focus is providing U.S. mortgage financing for non-U.S. residents and U.S. expats. If you’re interested in learning more, reach out to us at [email protected] or visit our website at www.americamortgages.com. 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.

FAQs

How can Mexican citizens establish a credit history in the U.S.?

Mexican citizens can establish a credit history in the U.S. by obtaining a secured credit card, opening a bank account, and making timely payments on any U.S. bills or loans.

Are there specific lenders that cater to Mexican nationals in the U.S.?

Yes, America Mortgages provides U.S. mortgages for foreign nationals, including Mexicans. 

What impact do exchange rate fluctuations have on U.S. mortgage repayments for Mexicans?

Exchange rate fluctuations can affect the cost of mortgage repayments if the borrower’s income is in pesos while the mortgage is in dollars. It’s important to consider these fluctuations when planning repayments.

Is a Social Security Number required for Mexicans to get a mortgage in the U.S.?

A Social Security Number is not required, but having one or an ITIN (Individual Taxpayer Identification Number) can simplify the process. America Mortgages does not require an investor to have either to obtain a U.S. mortgage.

What is the minimum down payment required for Mexican citizens to secure a U.S. mortgage?

The minimum down payment for foreign nationals, including Mexicans, is 25% of the property’s purchase price.

Can Mexicans refinance their U.S. mortgage?

Yes, Mexican citizens can refinance their U.S. mortgages, provided they meet America Mortgages’ requirements and demonstrate their ability to repay the loan.

www.americamortgages.com

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

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

04:44
Robert Chadwick
Hi, everybody, this is Robert Chadwick with America Mortgages. Thank you for joining us for this latest webinar. This is a fascinating webinar and it’s often requested dealing with U.S. taxes. Thomas, if you could join us on camera, that would be fantastic. with us today, we have one of our preferred partners, which is Thomas Carden of American Tax Advisers. Thomas is not only a CPA but also a tax attorney. And much like us, where we only focus on providing U.S. mortgages to foreign nationals and expats, that is his job as well when it comes to our taxes.

05:33
Robert Chadwick
So Thomas, with that, if you could introduce yourself and your company and what we’ll do, or the process of the webinar you can go through your slides, explain the process I will go through after that, and we will talk about our mortgages and the process of getting U.S. mortgages a foreign national or an expat. And then for everybody listening and joining the webinar, we will have a question and answer. So as we go, if you have questions, you can drop them into the question and answer box. Also as a reminder, in the chat box, there is a link to set up an appointment or arrange an appointment with either a loan officer with America Mortgages, and this is a 24/7 schedule, or to be able to speak with Thomas or one of his team members. So, Thomas, thank you for joining.

06:27
Robert Chadwick
I really appreciate it, as always. Perhaps you can give us a brief about you and your company and then we can start the slides again.

06:36
Thomas Carden
My name is Thomas Carden. I’m the director of American National Tax Advisors. I think we’re one of Southeast Asia’s largest U.S. tax-specific firms. We work primarily with U.S. expats and foreign nationals who have investments back in the United States. So whether U.S. citizen who has rental properties in the United States or you’re a non-US citizen or resident alien, you can still buy property there. The laws are the exact same for you. There’s no discrimination. And we help handle the tax strategies all the way up to tax planning and the actual tax returns as well. So we’re a full-service shop dedicated to helping people deal with U.S. tax issues with it.

07:20
Robert Chadwick
Fantastic. So let me get your slides. Apologies.

07:24
Thomas Carden
While you’re doing that, Robert, I’ll give a little bit of an example of wealth that can be built up in real estate using the tax advantages.

07:31
Robert Chadwick
Absolutely.

07:32
Thomas Carden
Sam Zell passed away in the last couple of years. He became fabulously successful in buying rental real estate and started off many decades ago with one small apartment building that he converted into university dorm rooms. In 2007, he sold his corporate rental real estate, mostly office towers, for $39 billion. At that time, it was the largest leveraged buyout by the Blackstone group in history. Do this. And he started off by buying one property, using that to leverage to buy more properties. Continuing to grow, and continuing to grow. Continuing to go. One of the biggest, most successful track records of building wealth in history has been through U.S. rental real estate. A lot of people think that the tax advantages aren’t there, but the rental real estate is exactly the exact opposite. It’s meant to build housing.

08:27
Thomas Carden
So there are a lot of tax advantages and tax credits you get for doing this. And we’ll go through and discuss that in detail.

08:33
Robert Chadwick
Yeah.

08:35
Thomas Carden
Way to build wealth.

08:36
Robert Chadwick
I think you’re absolutely right. And I think the U.S. specifically has a very bad rep when it comes to taxes. But when it comes to this type of taxes, and working with experts like yourself, it is the exact opposite, especially if you look at global investment.

08:49
Thomas Carden
Yeah, yeah. And we’ll go through all the tips with that.

08:53
Robert Chadwick
Let me start the slides and we’ll go from there.

08:59
Thomas Carden
Okay. Sharing.

09:01
Robert Chadwick
Double-click to just tell me when you need me to go to the next slide, Thomas.

09:07
Thomas Carden
Actually, I’m not seeing the slides at this particular moment. I said Robert had started screen sharing. Double-click to enter full-screen mode.

09:17
Robert Chadwick
Can you not see the slides?

09:18
Thomas Carden
And then I’m in a black one. Is anybody else seeing slides or is it just me? Yeah, I’m not. I’m just getting a blank screen here of black, Robert. Again, it says that Robert has started screen sharing. Are you, are you looking at your screen now, Robert, on your screen?

09:43
Robert Chadwick
Try again here. 1 second.

09:45
Thomas Carden
No problem at all.

09:48
Robert Chadwick
Can you see that?

09:49
Thomas Carden
There we go. Perfect.

09:50
Robert Chadwick
Perfect.

09:50
Thomas Carden
Okay, so this is my title, my firm. Our website is aitaxadvisers.com. Let me go ahead and move to the next slide. Okay. Through this, we’re gonna go through several different parts of this. U.S. taxation and rental income, taking advantage of deductible expenses, and depreciation. In the end, we’ll give you a little more detail about who we are and how we can help you and give you a consultation if you need one. Nonresident aliens. Now, because this is an international presentation, I’m going to do a feature, a fair amount of information on nonresident aliens. To this. But there are a lot of these things that do pertain to U.S. citizens as well.

10:33
Thomas Carden
Okay, as a John, as a general rule, a non-U.S. person who rents out his or her home is subject to a 30% withholding tax imposed on the gross amount of each rental payment. But, and this is a large but the foreign owner earning rental income can easily have the 30% holding up withholding obligation removed. The foreign owner must only pay tax on net rental income on the U.S. tax return. And that’s a very important part because you’re gonna get a lot of credits and advantages that should very rarely actually show net positive tax on a U.S. tax return. Next slide. Now there are a myriad of different things you can take off as a deduction from that gross rental income. So that 30% tax is not based upon your gross rent, it’s based upon your net rent.

11:25
Thomas Carden
Property management fees are going to be the big one, especially if you’re owning. When you’re living overseas outside the United States, you’re going to have a property management company. Those fees are 100% deductible. Advertising and marketing. Should you choose to run ads in the local paper or Facebook that you’re paying for, advertising and marketing are absolutely free and that includes using a service that will do the advertising and marketing for you as well. Leasing commissions. Should you pay a real estate agent or anyone else for a commission to get a lease? Totally deductible. Repairs and maintenance. This is a big one. So anything you’re repairing so the doorknob breaks, that’s the thing. If a door needs cracks or something if a facade needs to be repainted because of a scratch or any type of thing like that. Totally percent covered.

12:16
Thomas Carden
The pipes break. You’ve got that as a deduction expense. Utilities. Now some people have, and some landlords pay the utilities. Some people have, some landlords have the tenant pay the utilities, but the landlord is paying the utilities. Again, it’s a deduction off of that gross rent, thus reducing that 30% down and down property taxes. So you’re going to pay, when any local jurisdiction in the United States, you’re going to pay some type of property tax. Those are deductible. And then insurance, obviously you’re going to have insurance on the property. Those fees each and every year are a nice deduction for you. Next slide. Mortgage interest, this is, this gets to be really important down the line on this. Your mortgage interest on a rental property is 100% deductible against the income on that rental property.

13:07
Thomas Carden
Now, using that later on as a strategy becomes very important because by refinancing your mortgage at a later date, you can take out, cash out of your rental property and have no taxation on that adjusted loan for this. We’ll go back to that later on. Legal and professional fees, even your tax prep are devoted to that. That rental unit is deductible. License and permits. Should you choose to build a pool or put a fence up where you need a permit and a license, those are deductible homeowner association dues, deductible capital improvements, and depreciation. Now this is going to be really important here because depreciation varies heavily from a repair. Okay. Depreciation is any structure that has a lifespan, generally more than a year. And it would generally be an improvement.

14:05
Thomas Carden
So if you have a base piece of land, the first thing you would depreciate is if you put a house on it, you would depreciate the house over 30 years. And that means the 30th of that house gets used as a deduction each and every year off your tax return. So if you build a $300,000 house, you get a $10,000 expense each year against your rental income on that property that comes to it, now, should you go in at some point and buy an existing property and put a new roof on? A new roof will have an extended lifespan because it’s not a repair, this is a new roof on the property. You would be able to depreciate that roof over so many years.

14:45
Thomas Carden
Should you put in a new washer and dryer, you’re going to have about five years to expense that thing out. What this does is depreciation. And the mortgage interest allows you to be cash flow positive, but tax flow negative. And that’s a real key to this because of all these types of expenses. And a depreciation is kind of paid upfront money and expense. You get the expense over this, over the period of time. By using depreciation, you can be, again, cash flow positive, but tax flow negative. Now, here’s a big one for people owning property in the United States. Your travel to inspect the property is a deduction against that rental property.

15:29
Thomas Carden
So should you choose to go in and see that property once a year to inspect it is a deduction off of that gross income through this with us, there’s also some stuff called pass-through deductions where other types of expenses can be passed through as well to you. Next slide, please. We’re going to go through the depreciation here. Okay. In real estate terms, rental property depreciation is a basic accounting principle that effectively allows you to deduct the cost of a large asset with a useful life of one year or more or a longer period. In effect, rental depreciation, thanks to phantom expenses, can help product tax advantages by offering you means to move into a lower tax bracket to do away completely with any income tax bills you might face. Now remember that 30% tax you had on the end of it?

16:21
Thomas Carden
We’ve already taken all the other expenses away with this including the mortgage interest off this. But when you factor in that you have one 30th of the house being deducted each year, you’re probably going to break even from a tax standpoint to even potentially lose money. Now here’s the other thing. If you are a U.S. citizen, you’re able to take a loss on your rental income in excess of this a passive advantage. So you can take $25,000 a year against your regular income, and you’ll say your salary as long as you’re below certain minimums, it’s about $125,000 a year before that phase-out begins. But you can actually take your $125,000 income and move that down to $100,000. So not only do you save tax off the rental income when your cash flow is positive, guess what?

17:12
Thomas Carden
Your salary gets less taxed with this as well. So that’s one of the biggest advantages. And why lots and lots of Americans are middle-income earners on rental properties because they greatly reduce their tax on their salary as well. It’s one of the biggest reasons why to own one or two rental properties if you’re a U.S. citizen in the United States. Let’s go to the next slide. Okay. Oh, sorry, we’ve shortened this one a little bit. Okay. We’ll go through a couple more items on this stuff too. So rental property gives you so many different advantages on what you can do with this. It’s tremendous. And what Sam Zell was doing was, and this is the real strategy to this. Sam Zell bought one apartment building.

17:59
Thomas Carden
He was able to go in and he converted it to dorm rooms and he started renting it out. Oddly, he figured out the Schick ideal time for college students was very simple, almost like a loft style. So he put that into his first building, and he started becoming cash flow positive on this property. And guess what? After a few years, he builds equity in that property. Now, that equity is very important because you can do two things with that equity. You can choose to pull that equity out and take cash out to this. In fact, generally, after about five to seven years, you’ve got the property in a high enough increase because of a, generally an 8% to a 10% increase, you could pull all your original money out in the value of that you put in that property. But guess what?

18:47
Thomas Carden
You still own the investment. It allows you to do that. But if you don’t want or need that cash at that particular time, you’re able to use that equity as a down payment towards the next property by refinancing and using more leverage. Robert can probably explain that a little better to you later on by doing this, but it allows you to start building those properties one by one based on your initial investment. And here’s the wacky thing about rental real estate from a purpose of this. You really don’t want the rent to break more cash flow positive to you, especially in the first five to six years. And let me explain the math on this, okay?

19:30
Thomas Carden
If you buy one property for $250,000 you have no mortgage, and you’re making an 8% yield, it’s going to be less than $25,000 a year of income to you, okay? And that could potentially be cash flow positive or taxfill positive because you have no mortgage interest. However, let’s say you go and buy four rental properties for a million dollars with your $250,000. You now have a million dollars of property. So prior to that, the first property where you’ve only bought one, at $250,000, you might get an eight to 10% appreciation each year. But when you use leverage and you buy four properties, and you’re getting an eight to 10% increase each year in the value of the property, suddenly you’re making $100,000 a year instead of slightly less than $24,000 to $25,000.

20:21
Thomas Carden
So if you look at real estate as a long-term growth in this, and you let the debt be covered by the rental real estate, you are negative, cash flow positive. But you are building wealth at an incredible rate with this, where else you’re going to get an investment, you put in $250,000 and get $100,000 a year growth. It’s really rental real estate with it. There’s a whole lot of options on this. Now, one of the things we do each year for America Mortgages clients. If you contact us through email in the last slide, as our contact details on this, we’ll give you a free half-hour consultation. Talk about your specific tax issues. That’s about a $300 value for you.

21:05
Thomas Carden
And we can go through your specific tax issues that’ll help you cover this in a real way. And we can also go through, there’s already a great one on setting up an LLC. We can help you do estate planning on this. We can help you minimize those taxes depending on how you set up and where you’re from. You can also even look at tax treaties and get even more efficiency in your home country, depending upon the country you live in. There are a lot of tax advantages in these processes that will help you save some money and help you grow your wealth. And that’s the whole idea. Use this to grow your wealth.

21:39
Robert Chadwick
Thank you, Thomas. Super interesting as always. I know the slide was actually quite short, but I’m assuming, like we have with other webinars with you, we’ll have a lot of questions. I think the question’s already starting to build in the chat, but just to, I guess, discuss what you were just talking about, the depreciation that you can take to offset the income, whether you’re being, whether you’re a U.S. citizen or a foreign national, how does that work specifically?

22:17
Thomas Carden
Okay, well, one of the second rules of real estate is, well, the first rule of rental real estate is to buy rental real estate. The second rule is never to sell rental real estate. The United States has some interesting things about this because if effectively, the idea in the U.S. tax code is that the house, the building structure itself, will go to a zero value over, say, 30 years. Okay? So if you put a $300,000 house, the tax code effectively says that the value at the end of 30 years will be zero. So each and every year on that $300,000 house, you’ll get a $10,000 deductible expense against that house.

22:57
Thomas Carden
Now, we all know that a house 30 years from now is probably going to be worth more money because the replacement cost of labor and all those kinds of things and materials go up and up. But the tax code does not do that in any real way. So it gives you an expense off that property. Now, this is the reason why you never actually want to sell rental real estate, because when you do sell, you would have to recapture that depreciation off of the rental property. But what you don’t do is you never sell. What you do is you go back to America Mortgages, you’d get a new mortgage, pull your cash out, still own the rental property, and allow it to grow. Now for some reason, maybe the neighborhood is deteriorating, and the house is becoming too much maintenance.

23:41
Thomas Carden
You can do what’s called a like-kind exchange and move from one rental real estate property to another rental real estate property and have no tax consequences on moving from one to another. You can also buy a more expensive property with the new mortgage to this, and continue your mortgage that way with it. So as long as you never sell a rental real estate property or you just exchange from one to another, you get very large tax advantages. And like I said, you can buy more tax property, and more rental properties over a period of time. You can take your cash out should you choose. I’m over-leveraged now. I have too many rental real estate properties that don’t want to buy anymore.

24:21
Thomas Carden
You allow them to become cash flow positive and you can begin to pull your money out just by refinancing mortgages on a regular basis. This has been a strategy that has worked over the decades. Google Sam Zell’s story and you can really see how this works very well. It’s a way to build tremendous wealth.

24:41
Robert Chadwick
I also think that and correct me if I’m wrong, or anybody can correct me in the chat, but besides the fact the U.S. has no stamp duties, the ability to minimize or even, sometimes mitigate capital gains tax, which is certainly something that everybody has to deal with in the U.S., whether they’re foreign, national or expat, can be done with effective tax planning, either through a 1031 exchange like you just explained, or even carrying any tax loss forward and deducting.

25:15
Thomas Carden
The code is meant to be if used properly, is meant to be in a way that’s set up to beneficial to landlords and they’re very landlord friendly. Now, some states will vary depending on their individual policies of tenants and stuff, but from a federal government standpoint, it’s very friendly. They want landlords to be able to increase the supply of houses in the United States. There’s still a critical shortage, as both you and I know, Robert, housing in the United States. So the tax code has always been very friendly in providing more housing supply. And the way to do that is to make the tax code friendly. If you tax something less, you’re going to get more of it.

25:59
Thomas Carden
And that’s why these codes are set up and structured in such a way that you can pull money in, you can pull money out when you need to, you can put money in, you can buy more rental units, and you can begin to build your structure over this. I’m 54 now and I wish I’d bought three rental properties when I was about 24 because it would probably be 50 rental properties now by just constantly rolling these things over to this over and over again. And you know, the rental yields right now vary between your areas to this. But around 8% rental yields, you can cover your mortgage, you can cover all the expenses, you can cover the insurance, all those things with this, and then that property will grow at about 28% to 10% over a year.

26:44
Thomas Carden
Over years by historical track records. Now, again, you put $50,000 into a house and get a mortgage on that house. Your rental yield is not based, the yield on that increase in the property is not based on your $50,000. It’s based upon the $250,000 you put into it, a 10% yield. If you get a good yield going on that growth of that, the sale of the property, house value, you’re making $25,000 a year in net worth increase. You’re not going to find that anywhere else with it.

27:16
Robert Chadwick
Absolutely agree. I think. Sorry, go ahead.

27:19
Thomas Carden
The rent should cover the debt service and expenses. Let the value of the property work for you.

27:25
Robert Chadwick
Now, I think, especially as we talk to a lot of clients who may not be curious about buying a U.S. property and obtaining a mortgage, a lot of this has to do with educating them on the fact that taxes in the U.S. are actually very favorable when it comes to owning investment properties. So I’ll go through my slides now and then as we go forward, we can talk a little bit more about the taxes and questions and answers and so forth.

27:58
Thomas Carden
Sure.

28:00
Robert Chadwick
Hopefully, I can share my screen properly this time. Can you see the slides?

28:08
Thomas Carden
I’m still black here, unfortunately. I think you need to swap off to where you’re seeing your senior self.

28:22
Robert Chadwick
A little bit of technical issues. Apologies. So again, thank you everybody for joining. We will go over what we can do when it comes to U.S. mortgage-providing foreign nationals and expats. Again, 100% of our clients are living and working abroad, but obtaining a U.S. mortgage, whether it is for a purchase or for a refinance or cash out. So, in the general overview, no U.S. credit is required. We prefer if you have a credit report from your home country however, we do realize that there are some countries that do not have credit reporting agencies and we can actually work around this.

29:13
Robert Chadwick
But if you are, say, in Canada, for example, and you have a credit reporting agency, or even in Europe or wherever it may be, if you can provide your current credit report, then we will use that in lieu of U.S. credit. No AUM is required, as we do a lot of work with private banks. The issue with private banks is they obviously don’t want to lose AUM. So all of our loans are what’s considered dry funding, meaning that you do not need to open up a bank account with any type of bank that’s going to be providing the mortgage. We allow foreign-earned income. Doesn’t matter what currency. It’s accepted just as if you were earning your income in U.S. dollars. Loan programs in all 50 states, which is absolutely fantastic, really open your options.

30:12
Robert Chadwick
If you’re a foreign national, you can get up to 75% loan to value on a purchase, and 70% on a refi. And if you’re an U.S. expat, we try to make it exactly like you’re living and working in the U.S. and walking into a bank, and you can get 80% on this type of property. Normally, once you submit your paperwork, and we have a very slick platform that we just launched that allows you to take the application online and upload all the documents securely, once we have that, it takes us approximately, I would say 72 hours, often sooner, to be able to issue you a loan approval and a pre-approval letter. Once you have that pre-approval letter, then you can actually go shopping. If you do not have this letter, most realtors or sellers of the properties will not accept your offer.

31:09
Robert Chadwick
So it’s very important before you do anything, that you actually get pre-approved for a loan. On average, closing times are 30 to 45 days, which is fairly quick. That is for a standard conventional mortgage. We do have loan programs. In the event that you need liquidity very quickly, that we can close in a week, you can sign your closing documents in most countries, so there is no need to travel to the U.S. And there’s a variety of ways to close your documents, from online signings to visiting the embassy, to even signing at a local notary. If the country that you’re in is part of the Hague Convention, they can just get an apostille stamp. We have 30-year mortgages, regardless of the borrower’s age.

32:04
Robert Chadwick
I know this is a very unique thing to the U.S., and it actually is another reason why U.S. real estate investing is by far the best market absolutely in the world. I don’t care if you’re 19 or 99. In the U.S., you cannot discriminate against anything, marriage, status, sex, whatever it may be. And age is one of them as well. So the U.S. allows that if you’re 19 or 99, you should still have the same mortgage options. So age restrictions do not matter. A 30-year amortization, and we even have 40-year amortizations, will allow you to be able to maximize your yield by stretching the loan out over the longest period of time. We even have a ten-year interest-only program.

32:56
Robert Chadwick
This is absolutely fantastic because what it does is it allows you to pay only the interest for a ten-year period but at a fixed rate. And after that ten-year period, you would expect that rate to readjust to whatever the prevailing rates are. However, it stays at the same rate that you fixed ten years ago, but now you’re just paying principal and interest, so you have a total of a 40-year tenure. If you’re looking to maximize yield, this is the loan I would suggest every single time we do common-sense underwriting. And what does that mean? Well, if you were going to buy an apartment building, you surely would not qualify on your personal income. And your personal income obviously has nothing to do with the rental income. And this is how we look at investment properties.

33:51
Robert Chadwick
So in most cases, you’re going to qualify on the cash flow of the property and not your personal income. If you’re self-employed and or maybe don’t show what your true income serviceability is of debt. This is a perfect loan because as long as the property cash flows, the loan qualifies. And I’ll go into that in a little bit more detail. We are super proud that 97% of our loan applications are approved. And this is because our loan officers and I truly believe this is the best. They are all over the world. They focus only on providing U.S. mortgages to foreign nationals and expats. This is all we do. There is literally nobody that does this any better. And not only are you not having to stay up, say, at 03:00 a.m.

34:46
Robert Chadwick
To talk to somebody in New York about your mortgage, you are working on your time, and the loan officer or whoever is dealing with you on our side will actually be the one staying up at 03:00 a.m. to deal with this. So it’s a really simple, easy way to do the process. So I’ll go through the loan programs really quick and then we’ll do our question and answer. So this is by far our most popular loan program. And this is what we discussed. This is called the AM rental coverage plan. What this means is you do not need to provide your personal income. You’re going to qualify on the subject’s property’s rental income. We have loan amounts on these loans as on these programs, as low as 100,000 U.S., and all the way up to 3 million.

35:40
Robert Chadwick
Again, 30-year fixed and interest only, regardless of age. And if you look at how you qualify for these loans below, it is an example. So when we get the appraisal or the valuation report, we will also request one for the rental, and that is the amount that you will use to qualify. So in this example, if the rent is $2,400 and the mortgage, which includes the principal, taxes, and interest, is $2,400, the loan qualifies. It’s a dollar for dollar in the event, say, the rent is coming. In short, it does not mean that the loan does not qualify. It just merely means that you may have to put a little bit more than 25% down.

36:35
Robert Chadwick
So either way, and this is sort of how we get this 97% approval rate, either way, we can normally get your loan over the line, and again, 30 to 45-day closings, no U.S. credit or residency required. So am Student Plus, if any of you have children who are attending university in the U.S., such as myself, you realize that normally the first year they have to live in the dorm. After that, of course, they can live outside of campus. As Thomas had explained, purchasing these properties around campus is absolutely a fantastic way to be able to not only have constant rent but to be able to even maximize what you would be able to get, maybe further away from campus. So in this particular case, the student is the tenant of the property, and that’s how we look at it.

37:37
Robert Chadwick
So again, this is another loan where that does not qualify on your personal income, but it qualifies off of the projected rental income of the property. And if your child is 18 and says they intend to stay in the U.S. and we can add them to the loan, it is absolutely a fantastic way for them to start to build their U.S. credit. And as you know, if you intend on living in the U.S. and doing anything, having credit is paramount. It’s absolutely important. And this is a good way to put your child straight in the right direction. On this loan program, there is a minimum loan of $150,000 and we can go up to 3 million. And again, it’s a very similar example to the rental coverage loan that we looked at earlier. The AM investor plus.

38:34
Robert Chadwick
Okay, this is actually a hybrid of a loan program. So as an example, perhaps you start out with doing the rental coverage loan, but on this particular loan, say you don’t qualify or the property doesn’t qualify on cash flow, you can actually qualify using your income. But because we’re doing loans for clients all over the world, certainly it would be very difficult to go through everybody’s tax returns. So what we do is we use an income letter. If you’re employed, we want a letter from your employer on the letterhead stating two years of income and the current year to date. If you’re self-employed, the same thing, but it’s from your accountant and we have a template for this which makes it very easy to follow. So you will qualify on that as the income rather than providing your tax returns.

40:10
Robert Chadwick
Again, loan amounts on this particular program are 150,000 and up, but we can still do up to 75% financing. If you look at the example below, it shows how you would have to qualify. We go off of your gross personal income, not after taxes, before taxes. And we need to get at least a 43% debt-to-income ratio, which I’m sure everybody, if they are real estate investors, do understand that in their home country, this is a very similar way to do this.

40:48
Robert Chadwick
if you are a U.S. expat. Again, as I said earlier, we try to make this loan program as if you were living and working in the U.S. and you just walked into your local bank. We have the exact same rates as you would be able to get. You need to provide two years of your U.S. tax returns. There is no requirement to have a W-2. So if you work for a foreign company that does not issue a W-2, that is no problem as long as you’re still filing taxes. We want you to have at least a 680 credit score in order to really get the best opportunities with these programs. And again, loan amounts as low as $150,000. This also qualifies on a 43% debt-to-income ratio. So again, we go off of your gross income on your tax returns.

41:41
Robert Chadwick
And as long as we are looking at a debt the housing and whatever debt may be for credit cards or so forth, as long as that is below 43%, the loan should qualify if you are a high net worth individual. And when we started this company, our initial, I guess our initial business model was working with private banks. So these programs were super effective and actually quite easy for high net-worth individuals to qualify for. As you know, if you have a high net worth or you’re working with high net worth individuals, they could have very complex and very complicated tax returns, multiple jurisdictions, structures, etcetera. With this loan program, they can actually qualify on their liquid assets. And this would be tax, this would be cash in the bank, stocks, bonds, and even crypto.

42:45
Robert Chadwick
What we would do is we would take a two-month average of those accounts. We would divide it by the fixed period of the loan, and that would be the income to qualify. So if you look at the slide below, it gives you a very simple explanation of it. So, in this account, if somebody has a portfolio of, say, $5 million, we would divide it over a five-year period, and that would be the fixed portion of the loan, but the amortized portion would actually be 30 years, but the rate would be fixed for five years. But that would give us an average income of $83,000. And as long as that mortgage payment is below that $83,000, the loan would qualify. The best part about this loan program is there is no encumbrance on the portfolio that you use to qualify.

43:40
Robert Chadwick
So if you use, say, a stock portfolio or bonds, and you used it to qualify, the day after the loan closes, you can trade it, you can sell it, you can do whatever you want. Fantastic program for high net worth individuals. So we have offices basically around the world, but our main office, obviously, is in the U.S., and we’re in the Asia banking capital of the world, Singapore, which I think gives us a lot of advantages and opportunities. So with that, I will open this up to questions with Thomas and me. So, Thomas, what I will do is I will read the question, and then if it is based for you…

44:27
Thomas Carden
I have to give the legal clarification that I’m only talking to these in generalities. I’m not your tax advisor until you hire us. So I can answer general questions. But if you’ve got a very specific question about your tax situation you need to come hire us and discuss it. But we’ll discuss generalities now and give you guys as much help as we can, yeah, absolutely.

44:48
Robert Chadwick
I think most of the questions, as we seem to always have, are acceptable.

44:53
Thomas Carden
Oh, yeah. That’s why there’s a little bit of legal clarification because sometimes people will take something because I just don’t have enough information about your personal situation to give you full legal advice at this particular moment. If you do need that, give us a call and we’re glad to help you out.

45:08
Robert Chadwick
Sounds good. With that said in the chat, there is a link to set something up with either America Mortgages or with Thomas and his team at American tax advisors. American international tax advisors.

45:22
Thomas Carden
Yep.

45:23
Robert Chadwick
Okay, so first question. Will there be a recording? Absolutely. Just like all of our webinars, it probably takes a week to come out of post-production, but it will be emailed to everybody that has either signed up and attended or even if you have not attended, it will also be available. And we have a lot of webinars available on our YouTube. If you have any questions regarding almost anything U.S. real estate related, and even an old interview with Thomas, that’s all available on our YouTube. America mortgages. Next question. This would be for you, Thomas. Do you charge an hourly rate on tax consultations?

46:10
Thomas Carden
Yes, we can either do a half hour or a full hour. Generally, our rate is 450 for a full hour. However, if you email us, Chris taxadvisors.com, my practice manager, you get a free half-hour consultation just because of our relationship with America Mortgages. So that should give you all the incentive in the world to give us a call with it because it’s a $225 value that we give you because you’re coming in through America Mortgages as a referral.

46:38
Robert Chadwick
That’s fantastic. Thank you for that, Thomas. And so I think everybody, if they do, I highly recommend Thomas and his services. I think everybody that we have referred to you has been more than pleased. More than pleased. Next question. Is this assuming the property is owned by an individual as compared to an LLC? Very good question. So last week we actually had a webinar from a company that sets up LLCs, and you can actually even go to our website and you can set up an LLC through our website using this partner. But in general, you should be able to purchase a property in an LLC. And if people are not familiar with an LLC, and maybe, Thomas, you can cover a bit of this as well.

47:32
Robert Chadwick
But it’s just a fantastic way to not only maybe optimize some sort of tax advantages, but to be able to mitigate any liabilities that you may have within the property. For us, we are an actual mortgage bank, we require you to do the transaction with an LLC. But if you do not, there are options. And Thomas, I don’t know if you want to kind of just briefly talk about an LLC.

48:02
Thomas Carden
But yeah, I mean, LLC stands for limited liability company. Okay. And one of the biggest advantages of it is it is exactly that. It limits your liability. Now, people for various flavors, and depending upon your situation, some people will do this as a C corporation, some people will do this as an S corporation, a limited liability corporation. And there are a myriad of different flavors and tax strategies depending upon how you do this. If you just want to own one property, the cost may not be there. But if you’re planning on building an empire of this over a period of years, a company structure is generally better and more cost-efficient for you. And that’s really where in your specific situations, come talk to us.

48:46
Thomas Carden
We can give you the flavors that you want to go through and strategies for how you approach this. But generally, a limited liability company is generally the best for this. And that limited liability company doesn’t have to be U.S.-owned. It can be owned by another company overseas. In fact, here’s a little bit of a trick for you. If you’re living over, if you are not a U.S. citizen or tax resident, you set up a foreign company, say, in Singapore, that owns a U.S. company. Now, when you want to go sell your properties out, if you can find another investor who wants to buy the Singapore company, they’re buying that shares in that Singapore company. And guess what? You’ve never sold the property in the U.S. You don’t have any U.S. tax liability.

49:27
Thomas Carden
You’re selling it based on whatever tax rates are in Singapore. Because you’re selling a Singapore investment company with this globally. That’s a way to begin to minimize your tax globally and handle this. Also, when you’re coming into different company structures, you don’t have any estate tax issues because it’s not tied to an individual. It can be tied to a company with a limited lifespan. It’s a way to minimize the potential estate tax on these properties as well.

49:55
Robert Chadwick
Fantastic advice. Thanks, Thomas. Next question. Are there any specific states that offer more favorable tax conditions for non-U.S. citizen investors? Very good question.

50:08
Thomas Carden
Well, this is one of the great things about the U.S. Even at the state level, it’s non-discriminatory. Discriminatory. So you have, as a non-U.S. citizen going in and buying a rental property, you are treated the same as a guy who lives in California, Texas, or Nevada to this. There’s no difference on how you’re treated tax wise enough. Now, if you’re overseas, you may not be aware that the states have their own tax codes and there’s 50 of them. To this, you have two different layers of tax. You have federal tax and you have state tax. Now, several states like Washington state, Texas and Florida have no state tax whatsoever. Highly like buying rental property in Texas. Very landlord friendly as well. But you just don’t have any income tax that you have to deal with in Texas as well.

50:55
Thomas Carden
So when you’re looking at rental properties, you know this go state by state. I can tell you that one of the least landlord friendly states is California and also one of the highest tax states as well through this. But when you’re looking at that state by state, you should look at which is the most tax friendly for you through this. It’s a very big part of this because it can change your yield dramatically.

51:21
Robert Chadwick
Thank you. Next question. How do I manage taxes if I own multiple U.S. properties?

51:28
Thomas Carden
The biggest issue of this is you need to segregate the expenses in your accounting system by property. When you’re doing this books, if you’re hiring a plumber and you have, say, five houses, you would segregate that expense off to one particular rental property with us. That way, that schedule e, where all this gets reported on tracks to that particular house. So it’s literally each house sort of becomes its own little business entity from an accounting standpoint. And that’s reported through your tax structure with it. And you can sit there and generally when we do, because we do 1040 non resident returns with rental properties, we do a bunch of them. Okay. And one of the advantages of that is we’ll sit there and walk you through to this.

52:14
Thomas Carden
And when we’re preparing your tax return, generally we’re going to sit there and give you tax tips as well and say, hey, you want to do this, you want to refinance, you want to plan and strategize. And that process tends to happen about each year you’re doing a tax return with this. And so as you move forward each year, you get a little bit of tax tips when you’re preparing your tax returns. That’s one thing a high quality tax firm will do for you, is help you manage that on that yearly process as you’re doing your tax return.

52:41
Robert Chadwick
Thank you, Thomas. Next question. As a foreigner using an LLC, what we have to first do tax returns for the U.S. LLC and then pay U.S. taxes. If any taxes under a double taxation treaty deal with our native country tax system. In quotes “Australia”. Is this correct?

53:04
Thomas Carden
Okay. Yes. You have to do the U.S. tax return in the calendar year after the rent is received. Okay. That will be the exact same with it. Now, because we’ve got so many different nationalities here, there are different tax treaties that will give advantages on particular things. It may say that any rental income can only be taxed at 5% or 10% or 7% in the United States and then the remainder it is taxed in your home country. Each tax treaty is different than that. However, that’s generally on your net income you receive with this, you generally, in rental property, never want to receive net taxable income. With this. It always calculates out to a negative, should calculate it out to a negative number. By using depreciation and financing and leverage, you’re able to minimize that tax flow in the U.S. So with proper planning, you shouldn’t have any tax at all.

54:08
Robert Chadwick
Fantastic. Nobody likes to pay taxes.

54:11
Thomas Carden
Amen. Amen.

54:14
Robert Chadwick
Next question. You mentioned LLC. If it was a Wyoming LLC is set up to buy a property in a different state, say Texas. What are the tax implications in each state? Are there required filings in both states?

54:35
Thomas Carden
Yes. Although you’re in two states, that it’s fairly minimal with it, and that’s one of the advantages of picking tax advantage states with LLC situations. You’re going to be fairly minimal in each of those two states and that will vary wildly based upon all the states you’re in with it because again, personal income is not taxable in some states, and other states it is you’re going to have to go by a state by state basis on that. But with the two states you talked about, you’re about as minimal reporting as you’re going to get.

55:05
Robert Chadwick
And from my understanding, and again, correct me if I’m wrong, you’re only paying tax in the state where you’re earning the income, not where the LLC is registered.

55:14
Thomas Carden
Generally, yes. Again, that can vary by LLC, state by state, but you generally want to go Nevada, Wyoming or Delaware and minimize that reporting when you set up the LLCs.

55:27
Robert Chadwick
Perfect. Next question is New York City. Manhattan condos the worst kind of investment in terms of value and costs. Hence, looking elsewhere in the U.S., which U.S. bank should I open with? A B-1, B-2 Visa. Any suggestions? I plan to visit Arizona after New York in August. Let me touch on this a little bit, because it’s a little bit of a… New York is a pet peeve for me. But maybe you have some suggestions as well. I think unless you’re looking to buy a trophy asset, New York is not a good, well, Manhattan anyway, is not a good place because I just don’t see, you see a good rental yield. Taxes are very high.

56:14
Robert Chadwick
And even though we say the U.S. has no stamp duties in Manhattan, there’s a mortgage recording tax, which, if I’m not mistaken, is 1.5%. And then there’s a mansion tax, which also California has, which is 1%. So you’re basically paying a 2.5% stamp duty on a probably overpriced property that you’re not going to get much yield on. Maybe capital appreciation. I don’t know, Thomas, maybe you can kind of expand on this a bit.

56:43
Thomas Carden
I would add California into this mix as well. And both of these states are very heavily bureaucratic. They are very aggressive at going after any dollar they can get in potential tax revenue with it. And overly bureaucratic and not landlord friendly at all to this. You get a bad tenant in these states and you can just YouTube bad tenant stories and they’ll tend to be in California, New York, because their laws are very friendly towards tendency. We don’t have to pay anything with this and squatting laws and all sorts of issues with this. There are places in states that are growing traditionally in the south of the United States, and that includes places like Nevada, Las Vegas, Texas, again, is very friendly. Georgia, South Carolina. South Carolina right now is booming.

57:35
Thomas Carden
I’ve been truthfully been online looking at rental properties around York, South Carolina, because there’s a lot of manufacturing moving into that area. If you look at where the trends of where manufacturing and the people who will need these kinds of jobs are going, that’s into the south and into the southwest. Look at those trends, because New York, it’s got a long way to go before it clears up its landlord issues. And California is the same way.

58:02
Robert Chadwick
I absolutely agree, and I think that has a lot to do with the fact that people are moving out of these states, moving into more business friendly states. Next question. How many months of salary statements or pay slips do you need on average? Well, this actually works out quite well for you. If you’re a U.S. expat and you’re qualifying off your U.S. taxes, then we’ll need to see two months of your salary statements. But if you are a foreign national or, say, a U.S. citizen and you want to qualify only on the rental agency income of the property, that is not required at all. We’re not going to ask for any personal income. You’re just going to qualify on the rental income of the property. Next question.

58:47
Robert Chadwick
Should I preserve my Hong Kong based income, that is, salary, for example, not necessarily equities, assets or cash assets? I think the question is basically saying, should I buy equities or keep cash in maybe a high yield account, or should I buy real estate? And I think we both know the answer to this.

59:21
Thomas Carden
Any type of portfolio should be varied across the board with it. You should have stuff, multiple nations, especially more and more of a global situation to this. If Hong Kong tanks for some reason, the U.S. may be strengthened to this, generally the U.S., especially for immigration issues. Should you have to go somewhere if you’re an investor in that country, and I’m not going to guarantee it’s not an immigration advisor, but having invested in that country helps your status if you want to try to get into the United States. That’s just a general concept. So if you do have several of these, you’ve lowered your risk for that. And again, one of the nice things about this is the way the yield works. Ideally, the rental payments cover the debt service, they cover the insurance.

01:00:10
Thomas Carden
And so this thing comes out slightly cash flow positive, but tax flow negative. But the valuation on that house increases on annual basis by about 8% to 10%. Historically, over a longer period of time with it, that’s just almost set in stone. And if you look at areas that are growing again, like Texas or South Carolina, you’re going to have a lot of jobs moving in and the property values and those states will generally increase at an even faster rate. So you’re putting $100,000 investment in and say you buy a $500,000 house with us. That capital appreciation of that value of the house is at eight to 10% isn’t based upon your hundred thousand dollar investment. It’s based upon the $500,000 value of the house.

01:00:56
Thomas Carden
Guess what, guys. That’s a 40 to a $50,000 net capital increase in your net worth each year based upon $100,000 investment. You’re not going to find that in a whole lot of other places. That’s the strength of rental real estate.

01:01:12
Robert Chadwick
I absolutely agree, and I think that’s something that a lot of people don’t think about because especially if you’re getting leverage in a mortgage, the yield you’re getting is the yield that you’ve borrowed the money on. Exactly so you certainly, if you’ve done this wisely and you have the proper tax advice and the proper mortgage, you’re certainly going to see a significantly higher yield. And I think in general, having U.S. dollar exposure in owning U.S. real estate for that reason is quite good. It’s still a fairly liquid asset, depending on what you want to sell it as. Next question. I’m a freelance entrepreneur without regular income. Can I qualify for a mortgage? This is super common with us. It doesn’t matter to us if you’re self employed or you’re employed.

01:02:06
Robert Chadwick
If you’re qualifying off of the rental income of the property, your personal cash flow is not a concern. It’s the cash flow of the property that we want to see. So absolutely, there are no issues if you are self employed and perhaps do not show what your true serviceability is. Next question. Are there any restrictions on the types of properties eligible for investment loans? No. In general, I mean, certainly some countries do have restrictions on certain types of assets that they can buy. I believe in Texas, farmland is not an option if you hold certain passports. But for us, when it comes to providing a mortgage, we can do everything from residential all the way to commercial, and size is not an issue. So certainly our own mortgage bank, we can only do up to one and a half million.

01:03:08
Robert Chadwick
But if you have a property that’s worth 100 million, we have done these transactions and we can facilitate. Next question. Can America mortgages help connect foreign investors with local real estate agents? This is an excellent question, much like partnering with Thomas’s group and other groups similar. We also partner with realtors that we have worked with in the past or realtors that we have vetted. So if you get pre approved for a loan and you’re unsure of where to buy a property, you can talk to Thomas and discuss what has maybe the best tax advantages. And then once you figure out which state that you want, we can put you in touch with a realtor that we have worked with in the past that also understands working with foreign investors.

01:04:02
Robert Chadwick
And you may think that this is not a big deal, but it absolutely is a big deal because just coordinating time differences, et cetera, it can be a little bit of a challenge. But if we’re working with the same partners all the time, it makes things just much easier. Next question.

01:04:21
Thomas Carden
Hold one moment. Robert, you need to add in property managers as well. I know you guys work with some very good property managers because at times you can have a realtor agency who is your property manager as well but you can also hire separate property managers. And I know America Mortgages works with some very good property managers, especially when you’re overseas. It’s a very important thing. And Robert has worked with and found very good quality property managers because that’s a very important skill. And it’s part of the services that they offer. They can refer you to those guys.

01:04:53
Robert Chadwick
Thank you, Thomas. And it’s actually a free service, too. We, we offer to anybody. We want to make sure that the entire process is as smooth as possible, not just from the mortgage prospect or perspective, but all the way through while you’re owning the property. Next question. In am investor plus, do you also consider rental income from the property as the am investor option? Wow, that’s a very good question. Yes, we can. So although you certainly should be able to carry the debt based on the income that you’re providing in the letter, if it is potentially short, we can possibly look at whatever the rental income is being generated from that property as well. Next question. In the U.S.A, do we pay you a fee? In our country, we don’t.

01:05:49
Robert Chadwick
In fact, we get paid by the bank or taking, by taking the business to them. So, yeah, in the U.S., a mortgage broker is compensated by points. And if you think about the process behind this, it absolutely makes sense. Points or a percentage of the loan, which is normally 2% of the loan amount, not the property value, because we work for you as the client and not work for the bank. We don’t take any money from the banks. We charge the client the 2% one time fee. But what that ensures is we’re going to make sure that you have the best loan programs available, regardless of what bank it is. You go to one bank, they’re going to only have that program. We have over 150 different lenders. Besides the fact we’re actually a direct mortgage bank ourselves. Next question. Can you take care both U.S. and Canada cross border taxation?

01:06:59
Thomas Carden
Yes, we actually, that’s really our specialty is cross border taxation. We work everywhere from canadian clients. We have european clients, some in South America, Australia, New Zealand, a fair amount of clients. Our primary headquarters is located out of Bangkok. We tend to specialize everywhere from Saudi Arabia all the way up through Japan. But yeah, we have clients and deal with issues, U.S. tax issues all over the world where actually there’s an online magazine about expatriates that rated us one of the top ten firms globally for doing this. And one of the things that we try to specialize in very specifically is mid market clients. We’re not well do high net worth clients, but we try to help the average person out there handle their U.S. tax issues, whether that be a U.S. citizen living overseas or somebody with U.S. investments to this.

01:07:50
Thomas Carden
So yeah, we’ve got a team of 29 right now and I have to add about twelve people to that in the next twelve months. That shows our kind of growth curve in this. We’re a full service firm. And like I said, one of the advantages of this, because we’ve got a great relationship with America Mortgages. Highly, highly recommended you guys choose Robert, every time. But you know, for, because of the referrals in this situation. And if you’ve got questions, just give us a call. Mention America Mortgages. You got a free half hour consultation, no charge whatsoever.

01:08:23
Robert Chadwick
And again the link is in the chat so you can click on it and make an appointment while we’re online. Next question. I meant today’s tax talk is about LLCs or individuals. Sorry about the confusion on that. Thomas. I think you expand on that. Can this is both applying to individuals and to LLCs?

01:08:45
Thomas Carden
Yeah, both of these things work. I mean the tax code in general in the United States is friendly towards both businesses owning rental properties in the U.S. I mean, I think Blackstone and you’re hearing more and more about these different private equity groups going in and commercially buying rental real estate in the United States houses. And they’re buying these things in mass at one point, although I think that’s calmed down just a little bit recently. The reason they’re doing that is because the same type of tax benefits work towards businesses and large companies, investment companies, as well as towards individuals. I mean, when Sam Zell sold the company for $37 billion, he was using the same basic tax strategies that are available to individuals. It doesn’t discriminate. Now, there are flavors of how this works in that you’re in your tax planning.

01:09:36
Thomas Carden
Depending upon where you are in the world, you may want to own this in a company overseas. You may want to own this in a U.S. LLC. You may want to own this as an individual in times with us. And that’s where part of that half hour consultation and even potentially more when we can help you build a tax strategy that can help you with 400 rental units if you want to, or we can help you with one that if you want to buy one rental property in the United States, there’s varieties and structures on how you deal with all of that. And that’s really where we get into the specifics of your particular tax situation and more importantly, what your goals are with the rental property.

01:10:15
Robert Chadwick
Thank you, Thomas. Alastair, I see your question. Thank you very much. I look forward to your email and it’s great to see you again. Next question. No, I think it was a misunderstanding. Australia will just treat this as an investment in a foreign company, then either keep the money in the U.S. LLC or bring back the income as a dividend. So the question is U.S. LLC tax return first and then native tax return.

01:10:45
Thomas Carden
That’s, that’s exactly how it will flow every time with it. The U.S. tax return will be done first and it’s possible. And again, I have to look at the tax treaty on the Australia that sometimes rental real estate will have very specific tax rates that are available to it. But yes, the U.S. tax return would be done first and then it would flow to Australia. And that’s the basis of any type of bilateral tax surety with it. We actually do have on our specialist. One of our specialists is a former PwC expat tax specialist who worked for several years in Sydney. So I have an Australian U.S. tax expert on hand, although he has left for the day because we’re just about 06:00 p.m. Here in Bangkok. But we can help you, actually help you that. Give us a call and we can go through that specifically if you want to with it. No problem.

01:11:33
Robert Chadwick
Fantastic, Gaz, thank you for the compliment and we’re glad that you were able to join and see some value in the webinar. Next question. What do you make of Miami as a place for investment? Well, I mean, I’ll sort of touch on that. And then, Thomas, you can and expand, but I think we’re both Florida fans.

01:11:53
Thomas Carden
I’m a Florida native.

01:11:54
Robert Chadwick
Oh, there you go. But I think anything in Florida is a great investment. I think Miami is a fantastic city, a very vibrant. I think as long as you can get a good value in what you’re buying, I think it’s fantastic.

01:12:12
Thomas Carden
And I’m from Florida. Love Florida. There’s a lot of flooding at this particular moment. God bless those people in Florida right now or back there. One of the big issues right now in Florida is having a little bit of an insurance crisis just due to storms. And the way the insurance system works in the U.S., being state based. So it’s actually from a rental yields, it’s fabulous from a landlord standpoint. They’re very pro landlord in this, but the insurance cost is a little bit high. What you’re going to find anywhere you get closer to the water in the United States, that can be possible hurricane, you’re going to have some issues. Beachfront property, the prop, the prices are going up just because of base of insurance, of cost and ownership to it. Now generally, the rents will cover that.

01:12:57
Thomas Carden
But that’s one of the more complex things about Florida right now, specifically property insurance on that’s going to be a little stiffer. The more you go inland say northern South Carolina, which sounds strange, north south, but. Or Texas, Houston, there’s a little bit there. But San Antonio, Austin is booming. You’re going to have really great and your insurance rates in Texas are going to be a fraction of what they are in Florida. Not that I bad mouth my home state. I love it. I go back in a few months to visit my family there.

01:13:29
Robert Chadwick
I tend to agree. I think you should always, especially when you’re doing investments, look at the entire investment and so forth. Next question appears to be our last question, thanks everybody. It says, what do you mean you are a mortgage bank yourself? Are you a lender or a mortgage broker yourself? So we are both, we are a direct lender in the U.S. So we have our own loan programs and we are underwriting and funding the transactions. However, we also do realize that we are dealing with sometimes very complex transactions or transactions that are beyond our ability to fund. And for that case, we are also a broker. So that allows us to do everything from residential to commercial transactions. So I think that’s it. Thomas, again, thank you very much.

01:14:23
Thomas Carden
Thank you very much.

01:14:25
Robert Chadwick
I don’t know if you have any final. .

01:14:28
Thomas Carden
I just actually want to say one thing and give you guys a compliment. American mortgages, I’ve been doing the expat tax business for a lot of years and prior to you guys coming on stream and really focusing on this area, getting a mortgage when you are overseas on anything as an American citizen was just a minefield of paperwork. I would have to go to the embassy, get things certified that I signed on for the clients, provide millions of documents that seemingly made no sense whatsoever and half the time they were being turned down. With American mortgages, if you’re overseas, has done a great service to people who want to invest in the U.S. and rental property. Do not underestimate how valuable the services that these guys are doing to this.

01:15:12
Thomas Carden
And I when they called and started talking to me a couple years ago now it was immediately how valuable that they were going to be for my clients. So you know, while they help refer a lot of your clients to us, we also send a lot of clients to America Mortgages too. And truthfully, as I said, I’ve been looking at property in the rental property in the United States and I’m obviously not going to go to anybody else in America Mortgages. It’s a great service and it will really help you build your wealth over time.

01:15:41
Robert Chadwick
Thomas, thank you very much. That’s very kind of you to say. And again, it’s the same as we feel dealing with American International Tax Advisers as well. So with that, thank you everybody for joining. I really appreciate your time and Thomas’s time as well. As always, we try to do these webinars at least twice a month and if you have questions, you can go on to the chat and you can make an appointment with both Thomas or one of our loan officers. So again, thank you very much. We appreciate everybody. Appreciate your time. Thank you.

01:16:18
Thomas Carden
Thank you.

01:16:19
Robert Chadwick
Thanks, Thomas.


Disclaimer: This transcript is AI-generated, so kindly pardon any transcription or grammatical errors that may be present.

Robert Chadwick
CEO, America Mortgages
SG: +65 8430.1541
(Direct/WhatsApp) | U.S.:+1 830.564.3290
Email:[email protected]

Thomas Carden
Managing Director, AITAX
Website: www.aitaxadvisers.com

How to Open a U.S. Bank Account while Living Overseas

US Mortgage Overseas | International Mortgage USA

Are you living overseas and thinking about opening a U.S. bank account without moving to the States? You’ve come to the right place. 

Not many people know this, but the U.S. allows foreign nationals with a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN) to open a bank account in the U.S. Yes, you read that right. You don’t need to move to the U.S.; you can open the account remotely. 

In this article, we will take you through the process of opening a U.S. bank account for those who don’t have an SSN or ITIN, as well as non-U.S. residents who, along with some key factors that you must keep in mind while banking in the U.S.

Why Open a U.S. Bank Account?

So you are thinking about opening a U.S. bank account while living overseas. It is a smart move. After all, opening a U.S. bank account has some great advantages, especially if you are looking to enter the real estate market in the U.S.

  • With a U.S. bank account, you won’t incur any international transfer fees or exchange rate fluctuations. 
  • The doors of investment opportunity open up—especially the ones in the real estate sector.
  • You get access to a wide range of financial services and credit facilities, which are unavailable otherwise. 

Documents Required for Opening a U.S. Bank Account for Non-Citizens

But before you go ahead, note down the list of documents required when opening a U.S. bank account. The specific requirements vary, but, most will ask for the following list:

  • Copy of your valid passport.
  • Driver’s licence or national ID card.
  • A utility bill, lease agreement, or bank statement from your home country to verify your address.
  • If you don’t have an SSN, some banks may require an ITIN.
  • Completed application form provided by the bank.

What is the process for opening a bank account in the U.S. as a non-citizen or a non-resident foreign national?

If you’re looking to open a U.S. bank account as a non-resident, here’s some good news! Some international banks help you open an account. Here’s what you need to know:

  1. Working in the U.S.: If you’ve spent a significant amount of time working in the U.S.
  2. Existing Customer: If you’re already a customer of the international bank in your home country or another country where the bank operates.
  3. Property in the U.S.: If you’re buying property in the U.S. or already own a home here.

If you tick any of these boxes, you might be able to open a U.S. bank account as a non-resident. This is a great first step in managing your financial commitments in the U.S. without actually having to live there!

  1. Find banks that offer accounts to non-U.S. residents without an SSN.
  2. Gather all the necessary documents.
  3. Fill out the application form, submit documents and pay online.
  4. The bank will review your application and documents.
  5. Once your application is approved, you will receive your account details. Some banks send a debit card to your overseas address.

Banks That Cater to Foreign Residents

Several U.S. banks that help open an account for foreign residents without an SSN:

  • HSBC: Known worldwide for its international banking services, HSBC offers accounts to non-U.S. residents.
  • Citibank: They provide a range of services for international clients.
  • Wells Fargo: Open an account as a non-resident with an ITIN.
  • Wise: A great option to open a bank account and send money to the U.S. as a non-citizen.

Now, there are two kinds of accounts that one can open – Checking & Savings. Here’s what each of them means:

A checking account is ideal for day-to-day transactions. These accounts don’t have any limits on withdrawals & they offer minimal interest. 

A savings account, as the name suggests, is ideal for saving money over time. They have limited withdrawals and incur a good interest rate on your stored money. 

What Are Checking Account Fees in the U.S.?

If you’re a foreign national opening a checking account in the U.S., here are some common fees to look out for:

  1. Monthly Maintenance Fee: Many banks charge a monthly account maintenance fee of up to $15 per month. 
  2. Overdraft Fee: This fee is incurred when you spend more than what’s in your account and is usually up to $35 per transaction. 
  3. ATM Fee: If you use another bank’s  ATM that could cost you $3 to $5 per transaction. 
  4. Foreign Transaction Fees: When you use your debit card abroad or withdraw money from an international ATM, you incur a fee per transaction. 

Ready to open your U.S. bank account and explore the financial benefits that come with it? While opening a bank account is a great start, we say take it further! At America Mortgages, we specialize in helping non-resident foreign nationals like you secure mortgages for U.S. real estate. Reach out to us at [email protected] or schedule a meeting with us using our 24/7 calendar link.

America Mortgages Simplifies U.S. Home Buying for Parents of International Students Studying in the U.S.

Q&A: 3 Tax-Smart Strategies for U.S. Real Estate Investing

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Thomas Carden, Managing Director of AITAX, and Robert Chadwick, CEO of America Mortgages, discussed how strategic tax planning can enhance rental income, reduce liabilities, and boost cash flow. This webinar covered U.S. tax strategies for overseas investors, practical tips for reducing tax liabilities, and ways to improve cash flow. For those who couldn’t attend, the recording is now accessible here.

Thomas Carden (TC) and Robert Chadwick (RC) answered a variety of questions, providing clear and concise responses to help investors make informed decisions, with remarks edited for clarity and brevity.

1. Do you charge an hourly rate for tax consultation sessions?

  • TC: Yes, we offer either a half-hour or a full-hour session. Generally, the rate is $450 for a full hour. However, if you email us at [email protected], you can get a free half-hour consultation due to our relationship with America Mortgages, which is a $225 value.

2. Is this assuming the property is owned by an individual compared to through an LLC?

  • RC: Very good question. We recently had a webinar on setting up LLCs, which can be done through our website. Generally, purchasing property through an LLC can provide tax advantages and mitigate liabilities. However, the specifics depend on individual circumstances and goals.

3. Are there any specific states that offer more favorable tax conditions for non-U.S. citizen investors?

  • TC: Yes. Some states like Washington, Texas, and Florida have no state tax, which can be advantageous for rental property investments. States have their own tax codes, so it’s important to consider both state and federal tax implications. For example, Texas is landlord-friendly and has no state income tax.

4. How do I manage taxes if I own multiple U.S. properties?

  • TC: You need to segregate the expenses for each property in your accounting system. Each property should be treated as its own business entity for tax purposes, with individual expenses tracked separately. This helps in accurate reporting on Schedule E for each property during tax filings.

5. As a foreigner using an LLC, don’t we first have to file a tax return for the U.S. LLC, then pay U.S. tax if any, and then deal with our native country’s tax system (Australia) under the double taxation treaty? Correct?

  • TC: Yes, you need to file a U.S. tax return for the LLC in the calendar year after receiving rent. Tax treaties vary, but generally, you minimize U.S. taxable income through depreciation and financing. Proper planning should help you avoid paying U.S. taxes, as the rental income can be structured to show a negative net income.

6. Are New York City, Manhattan condos the worst kind of investments in terms of value and costs? Hence looking elsewhere in the U.S. Which U.S. bank should I open with on a B1/B2 visa? Any suggestions? I plan to visit Arizona after New York in August.

  • TC: Unless you’re looking to buy a trophy asset, Manhattan is not a good place due to low rental yields and high taxes. There’s also a mortgage recording tax (1.5%) and a mansion tax (1%) in Manhattan, essentially a 2.5% stamp duty on overpriced properties. As for banks, specific suggestions weren’t given, but you should consider opening an account with a bank that operates nationally and has experience dealing with foreign investors.

7. How many months of salary statements or payslips do you need on average?

  • TC: If you are a U.S. expat qualifying off your U.S. taxes, two months of salary statements are needed. For foreign nationals or U.S. citizens qualifying on rental income, personal income statements are not required; you only need to qualify based on the rental income of the property.

8. Should I preserve my Hong Kong-based income, such as salary, rather than necessarily equities or cash assets?

  • A diversified portfolio across multiple nations is recommended to mitigate risks. Investing in U.S. real estate can offer tax advantages and potentially aid in immigration status. The rental payments should ideally cover debt service and other expenses, with the property value appreciating annually, providing a solid investment yield.

9. I’m a freelance entrepreneur without regular income. Can I qualify for a mortgage?

  • RC: Yes, qualifying off the rental income of the property is common. Personal cash flow is not a concern; what matters is the cash flow of the property itself. So, being self-employed or having irregular income does not prevent you from qualifying for a mortgage.

10. Are there any restrictions on the types of properties eligible for investment loans?

  • TC: Generally, no significant restrictions exist, though some states may have specific rules (e.g., Texas may restrict farmland purchases for certain passport holders). America Mortgages can handle various property types, from residential to commercial, with size not being an issue.

11. Can America Mortgages help connect foreign investors with local real estate agents?

  • RC: Yes, America Mortgages partners with vetted realtors and can connect pre-approved clients with agents who understand working with foreign investors. This helps in coordinating time differences and ensuring smooth transactions.

12. In the AM Investor+ program, do you also consider rental income from the property, the same as the AM Investor option?

  • RC: Yes, rental income from the property can be considered, especially if the provided income is potentially short, ensuring you can cover the debt.

13. In the USA, do we pay you a fee? In our country, we don’t; in fact, we get paid by the bank for bringing business to them!

  • RC: In the U.S., mortgage brokers are compensated by points, usually 2% of the loan amount, not the property value. This ensures that brokers work for you, the client, to find the best loan programs available, unlike bank-specific loan officers.

14. Can you handle both U.S. and Canada cross-border taxation?

  • TC: Yes, cross-border taxation is a specialty, handling clients from various countries including Canada. The firm has experience dealing with U.S. tax issues worldwide and offers a free half-hour consultation for those referred by American Mortgages.

15. Is today’s tax talk about LLCs or individuals?

  • TC: Yes, the tax code in the U.S. is friendly to both businesses (LLCs) and individuals owning rental properties. The same tax benefits apply to both entities. Specific tax strategies can be tailored based on individual goals and circumstances.

16. No, I think it was a misunderstanding. Australia will treat this as an investment in a foreign company. Then either keep the money in that U.S. LLC or bring back the income as a dividend. So, the question is, U.S. LLC tax return first? And then the native tax return?

  • TC: The U.S. tax return must be done first, and then it flows to Australia. Depending on the tax treaty, there may be specific tax rates for rental real estate. The firm has an expert in U.S.-Australia tax matters for detailed assistance.

17. What do you make of Miami as a place for investment? Fort Lauderdale, Orlando, West Palm Beach, Miami City Centre.

  • TC: Miami and Florida, in general, are considered great investment locations. Miami is vibrant with good value properties. However, current insurance costs due to storm risks are high, especially for properties close to the water. Inland areas like northern South Carolina or Texas may have lower insurance costs and are also booming investment spots.

18. What do you mean you are a mortgage bank yourself? Are you a lender?

  • RC: The firm is both a direct lender and a mortgage broker. They have their own loan programs and can underwrite and fund transactions. They also act as brokers for more complex transactions beyond their direct funding capabilities, covering residential to commercial transactions.

www.americamortgages.com

Canadian Building Contractor Secures U.S. Financing for Fix-and-Flip Expansion

American Mortgage Lenders | Home Loan in America

The Client

Our client was a Canadian self-employed building contractor living in Vancouver, BC. He was a very experienced home flipper in Canada and the U.S. In the U.S., he was forced to pay cash due to the inaccessibility of “Fix and Flip” loans for non-U.S. citizens. He wanted to expand his U.S. presence but needed proper financing to do this.

How We Helped

Our America Mortgages loan officer based in Canada structured our AM Fix-and-Flip loan, which allowed the client to qualify to expand his business in the U.S. He had more than 10 Fix-and-Flip completed in the U.S., all with cash. With his ability to get financing for the Fix-and-Flip purchase, he switched to a long-term hold focus of fix n hold. 

Our America Mortgages loan officer worked with the client from acquisition and renovation financing to refinancing to a long-term mortgage based only on the income of the rental property to qualify. 

Loan Details

NationalityProperty ValueLoan AmountARVRate
Canadian Citizen$312,000$294,00080%10.50%/8.00%
TermAddressProperty TypePurposeLoan Type
Fix-and-Flip/30-Year FixedSeattle, WAApartment/CondoPurchaseResidential

Why and How to use an LLC for U.S. Real Estate Investing Transcript

Why and How to use an LLC for U.S. Real Estate Investing Transcript

04:16
Robert Chadwick
Hi everybody, this is Robert Chadwick with America Mortgages. Thank you for joining us for another webinar. We’re very excited to be joined today by Bobby Casey of Business Anywhere. If you’re familiar with Business Anywhere, they are one of the premier companies that assist with setting up an LLC amongst other things. But for our purposes in this webinar, we’ll be discussing what an LLC means, how to establish it, and the benefits of an LLC as a foreign investor or U.S. expat investor obtaining a mortgage or purchasing a property in the U.S. What Casey will cover will be a variety of things. After Casey presents, I will go over our normal standard process on how to obtain a mortgage as a foreign national and U.S. expat, and then we will have a question and answer session towards the end. So Casey, thank you for joining us. We appreciate it. Maybe you can introduce yourself and your company and then we can go from there.

06:07
Bobby Casey
Sure. Well, thanks, Robert, for having me today. Also, I appreciate having a chance to talk to your audience. Well, it should be interesting for anyone interested in investing in real estate in the U.S., whether you are us citizen living abroad as an expat, or maybe living nomadic, or if you are a non-U.S. person interested in investing in the U.S. market. So just a quick background about myself. I’m an international tax lawyer. predominantly what I’ve been doing for 20-plus years is tax, asset protection, and location consulting for location-independent entrepreneurs around the world. Several years ago, we basically decided to build a software platform to automate a lot of things when it comes to company formation, company compliance, annual renewals, that sort of thing.

07:10
Bobby Casey
And basically, we spun it off as a company and that’s kind of how Business Anywhere got launched. And what we do, we are a registered agent and company formation service. We do company formation and registered agents in all 50 states in the U.S. We also do remote online notary. We do company compliance and we have a virtual mailbox product. For any of you looking for a mailing address in the U.S., the virtual mailbox is kind of a must-have thing for expats and permanent travelers. So I know, I had to get one a long time ago when I moved out of the U.S. and it became kind of a necessary tool. So that’s what we do.

07:57
Robert Chadwick
Awesome. So I will start your slides and then when you want to move to the next, just let me know and we’ll go from there.

08:35
Bobby Casey
Yeah, that’s the first slide. I guess that’s really just an intro slide. So anyway, today we’re going to be talking about forming an LLC for your U.S. real estate investments. As I said a little bit in the intro, this should be important for you if you are a U.S. citizen or U.S. person for tax purposes, like a green card holder, but living abroad as an expat or living a kind of digital nomad life. It should also be really relevant for you if you are a non-US person investing in the U.S. and needing structures for that. I don’t want to go into too much detail on real estate, but I am also a real estate investor and I was raised in a construction and investing household. I started buying my first properties, I think when I was 20 or 21.

09:27
Bobby Casey
So I’m quite familiar with this. I’ve got thousands and thousands of clients in this space. So quite familiar with it, both from the tax consulting side and asset protection planning, and also now from the company structuring side. So certainly you’re on this webinar because you are interested in investing in real estate. It is and can be a very lucrative opportunity. The U.S. is a place where you can get rich investing in real estate. A lot of it from the tax benefits you get and the ability to leverage capital to invest in more properties. It makes it very attractive, especially for foreign nationals who haven’t been investing in the U.S. market in the past. Like if you’re from Europe, it’s very difficult to leverage properties against properties to get loans, or at least it’s much more difficult than it is in the U.S.

10:21
Bobby Casey
It does make it a pretty lucrative opportunity if you are trying to increase your portfolio size and build your wealth in real estate. Forming a U.S. LLC does provide numerous advantages. I don’t want to get into it on this slide too much. We’re going to get into it in depth on the next slides, but we will explore the reasons why an LLC for almost everyone is the optimal structure for your U.S. real estate investments. Next slide, please. So why register an LLC to buy U.S. property? In this slide, we’re going to be talking about the legal framework, some ownership flexibility, and the credibility and professionalism of using an LLC for your real estate investments. So an LLC is a hybrid entity. in the U.S., it was first created back in the early seventies.

11:21
Bobby Casey
Wyoming was the first state to implement an LLC, and it was a hybrid structure. Basically, it’s a hybrid kind of a cross between a corporation and a partnership, which effectively gives you the best of both worlds. You get the liability protection from a corporation, while you get the simplicity and flexibility of operating a partnership. Having an LLC makes it really simple for you, with all the flexibility of how you structure ownership, how you structure management, and how you structure out payments to members and managers. And in an LLC, the owners are called members. Just for clarity, in a corporation, shareholders and an LLC, are called members. For example, you might have a managing member who may only own if you have a partnership.

12:19
Bobby Casey
You might have a managing member who may only contribute 10% to the equity of the investment. However, he or she might be getting a larger share of the profits because of their management role. Well, you have a lot of flexibility there because you can actually give in your partnership agreement and your operating agreement, you can actually choose to give them a larger share of the profits to compensate for that. So it makes it really simple to have a lot of flexibility in the structure itself. The legal framework of an LLC makes it a lot simpler than dealing with corporations. For example, if you want to add a member to the LLC, you remove a member, add a manager, and remove a manager. It’s really simple. You just do an amendment to the operating agreement.

13:10
Bobby Casey
You might have to do a membership interest assignment if you’re transferring ownership of that partnership or that LLC to another person. But it’s all paperwork that you do in the back end, nothing really needs to be filed with the secretary of state to do that. Whereas in some states, if you have a corporation, you have to record minutes on any changes you make, and oftentimes you even have to record the changes in the share structure with the secretary of state, making it much more complicated, and more costly to do that. So an LLC makes this super easy, and super flexible.

13:46
Bobby Casey
And then on the credibility and professionalism side, it’s a little bit of a, an obvious point, but if I go buy a property, let’s say I’m looking at a shopping center or an apartment building or something like that, let’s say it’s a million dollars or $2 million, and I walk into the bank and I say, “I want to borrow a property,” or “I want to borrow a million dollars to buy this property,” Me going in as Bobby has a lot less credibility than me going in as Bobby LLC. It shows an air of credibility and professionalism that banks are going to respect. It also makes it a lot easier for you to get credit lines, which in turn makes it easier for you to add leverage and more quickly grow your real estate portfolio.

14:36
Bobby Casey
To me, it just makes you much more attractive to partners, lenders, and even tenants. It just looks so much better. And we’ll get into the liability issues in a second, but that key can’t be overstated. Next slide, please. So in my opinion, this is probably the most important slide. So if you’re not taking notes, and you want to take a little bit of notes, this is the one you want to pay attention to. Having an LLC gives you tremendous asset protection benefits. So we’re going to be talking about liability, limited liability, separation assets, and risk management. I have one more slide where we’re going to be talking about risk mitigation. That’s a slightly separate topic on that slide. In this one, we’re going to stick with these three topics.

15:23
Bobby Casey
Basically, having your properties in an LLC allows you to separate the ownership of the property from your personal assets. So, for example, maybe you own some other things, like maybe you have a private business, you own maybe a house or two, an investment portfolio, your 401K, that sort of thing. And over here, you’ve got some real estate. Well, I can give you an example. I had a client come to me, I guess, three or four years ago. He owned ten rental houses in Texas. He owned them all in his own name, which, by the way, is a horrible, horrible decision. I can’t stress that enough. Never own real estate in your own name. Every single human being that walks into your property is a potential liability that walks in there and you have no control over it.

16:12
Bobby Casey
When it is a rental property, you don’t know who your tenants are going to invite over, their friends, or their family. And in this example, my client came to me to help him fix the situation, which we couldn’t fix because it had already happened. But it illustrates the point. He owned ten properties in his own name and he actually had one of his tenants. This is like a tenant’s worst nightmare. But he had one of the tenants in one of the houses actually build a meth lab in the kitchen, and they blew the house up, blew the kitchen up, and killed somebody. Terrible situation. But because he didn’t own any of his properties in an LLC, it exposed him personally to the entire liability and he ended up losing everything, because as you can see here, number two, the separation of assets.

17:04
Bobby Casey
Not only did he not own his rental house in an LLC, but he owned all of his rental houses and his personal home in his own name. And by not separating the assets, he exposed everything he owned to that litigation event. So it was a horrible risk management plan to own everything in his own name. So just to kind of flip that and give you a better idea of what he should have done. What he should have done in that scenario was he should have had one LLC for each individual property. So property one, LLC one, property two, LLC two, property three, LLC three, and so on and so forth. And in that scenario, what would have happened is, let’s say property one was the one where somebody got killed.

17:54
Bobby Casey
Property one would have been, all the liability would have been limited to the assets of Property one because the owner’s family would have sued the owner of Property one, which would have been LLC one, and then LLC one’s assets would have been at risk. He certainly would lose that property. But properties two through nine, plus his personal residence and other assets, would have been completely separated. So he would have completely segregated those assets and limited its liability. So it is a huge thing you absolutely have to own. I mean, if you’re a serious real estate investor, you’re crazy to buy property in your own name. Let’s move forward to the next slide because I get into this a bit deeper in the risk management slate.

18:44
Bobby Casey
So I’m going to briefly hit on tax benefits, as I understood from our previous conversation before the presentation began, you’re going to have a pretty good presentation next week on tax benefits for real estate investment in the U.S. So I’m not going to hit too deep on this because you’re going to have that webinar next week that’s going to go into much more depth on that topic. But I just want to hit on these. We’re just going to scratch the surface and hit on the high spot so you understand how LLCs work, an LLC by default. Now, you can choose a different tax election, but for real estate, you really want the default tax status of an LLC, and that is pass-through. So if you’re a single-member LLC, that LLC is treated as a disregarded entity for tax purposes.

19:35
Bobby Casey
And if, as you earn income from that LLC, that income will be on the schedule C of your personal tax return. So if you’re a us person for tax purposes, you’re going to file a 1040 and you’ll have a Schedule C to reflect the income or loss. If you had a tax loss on there, it’ll be on the schedule C of your tax return. If you are a non-U.S. person, then you’re going to file a 1040 NR. NR stands for non-resident and it’ll be on the schedule C of your 1040 NR. But it passes directly through to your tax. So an LLC in this regard is tax-neutral. You don’t get any direct tax benefits from owning a property in an LLC.

20:16
Bobby Casey
You don’t avoid certain taxes in certain ways because they pass through to you and the taxation is based on your personal situation. And as an owner of a property, let’s say you own a, I don’t know, a 50-unit apartment building or some rental houses in Kansas or something like that, the taxation is going to be based on your personal tax situation, and the location of those properties. So, passing through taxation is ideal because some people think, okay, maybe I should put my properties in a corporation. Well, that’s not really ideal. Number one is a C corporation, which is the default status of a corporation. A C corporation is taxed at the federal level and at the state level. If there’s a state corporate tax, currently the federal corporate tax rate is 21%.

21:07
Bobby Casey
And then state tax ranges anywhere from zero up to, I think the highest now in the U.S. is around 14%. So you would have a state tax on the income of your property, and then if you paid yourself a dividend, you personally would have dividend tax on that. So you can end up with double taxation through a corporation, which is not ideal. And then some people also think they should do an S corp, which technically there is no such entity as an S corp. There is a corporation with an S tax election when you file IRS form 2553 to elect a different tax status. But generally, that’s not what you want in real estate. It is because then you end up having to get the tax advantages you have to pay a salary and that sort of thing.

21:50
Robert Chadwick
So let’s stick with LLC’s default tax election. Whether you are an individual and it passes through to your schedule C or you are a partnership. So if you have two or more partners or members in the LLC, then you file a 1065 partnership return and then each partner issued a K-1 to reflect that profit or loss deductions and depreciations. Again, I’m sure your webinar next week is going to go into a lot of depth on the deductions, and I’m sure they will discuss also accelerated depreciation schedules to cut your profit, especially in the first few years, the only thing I’ll mention about taking these deductions through an LLC.

22:35
Bobby Casey
One benefit of having it through an LLC is you can be considered a real estate professional now that it’s run through a company and you do get maximum advantage of taking these deductions, whereas owning property individually unless you can prove you are an actual real estate professional, you have limitations on some of the deductions you can take and then state-specific tax advantages. There could be incentives and benefits depending on where you’re investing in the property, and so there could be some advantages there depending on where you register the LLC. We’re going to get into mitigating litigation risk with an LLC. I have a couple of really key points we want to talk about on this slide.

23:24
Bobby Casey
So starting out with legal safeguards, we talked a little bit about this with just having the liability protection or that umbrella, so to speak, of having your properties held in an LLC, keeping it away from you. But there are also some additional legal safeguards. For example, generally speaking for property ownership, we recommend Wyoming LLCs because they have some very clear statutes that do a great job of protecting the assets of single-member LLCs particularly. I don’t want to get into too much detail. We could do an entire presentation exactly on that one topic. But if you want to look this up, just Google search charging order protection Wyoming and there are unlimited blogs. We probably have a blog on our website about that as well. But there are unlimited blogs where you can read about charging order protection in Wyoming particularly.

24:21
Bobby Casey
But it’s safe to say there’s actually only one other state that has the same level of legal safeguards as Wyoming for single-member LLCs. One other quick note I will mention, because a lot of people seem to think Florida LLCs are really ideal structures here as well, especially non-people. For whatever reason, Florida seems to be. I don’t know, maybe somebody wrote some blogs about Florida being great. I want to make a quick point. If you are doing a single-member LLC for investing in real estate, I highly encourage you to not use Florida LLCs because Florida has a lot of case history with single-member LLCs. They will bypass the entity itself. Like if you personally get sued, they can actually take the assets within the LLC to satisfy a judgment. So Wyoming, you can’t do that. Florida, you can.

25:19
Robert Chadwick
Florida, if you have multiple members, two or more members, no problem with Florida. But for single-member LLCs, I generally avoid Florida insurance considerations. I get a lot of pushback on the asset protection benefits of LLCs because people say, well, Bobby, why don’t you just have liability insurance to cover everything, and then you don’t really have to worry about all these entity structures and complex planning and risk mitigation and all that. Well, my answer to that is, go read an insurance contract and go read the fine print. And when you read the hundreds of loopholes in there, you’ll realize that an insurance adjuster’s entire job is to not pay out on your claim.

26:06
Bobby Casey
That is literally their job is to find a loophole in the fine print of an insurance contract and rewrite those contracts for future use to create loopholes that give them ways of not paying on your claim. So the example I gave earlier with the guy that had ten properties in Texas, they did not pay out on his claim because selling meth from a residential property is an illegal activity, and they had a loophole in there that said they do not cover risks associated with illegal activity in the property. Of course, like most of us, we don’t read line by line on these contracts and we just think, oh, well, I’ll just make the claim and it’ll be fine. I’m just saying it’s not a great idea to rest solely on your insurance to protect you from any litigation risk.

26:58
Bobby Casey
Having that LLC in place that shields you and your personal assets and also shields that property from your other properties is a tremendous benefit. And I look at it a little bit also like an insurance policy, because, I mean, you’re going to pay every year to maintain it, but it’s going to be cheaper than a liability insurance policy that’s going to cover you for a wrongful death case. And lastly, on this risk mitigation slide, we’ll discuss the operating agreement. For those of you not familiar, an operating agreement, kind of in layman’s terms, is effectively, it’s the contract between you and your own business. It basically spells out the guidelines, how to make decisions when you make certain decisions, and how to deal with disputes.

27:50
Bobby Casey
It also deals with how to prevent conflicts between members, what management roles are, what members’ roles are, and what happens if members have a personal lawsuit and you have a creditor coming after a member’s interest in an LLC. So having a properly drafted operating agreement with asset protection in mind is critically important, especially if you’re holding valuable assets in that entity. Next slide, please, sir. And this will be our last slide here before my contact information. So I’m wrapping this up. So optimizing the structure of your real estate investments. We’ll be discussing strategic planning, multi-entity strategy, and professional guidance here. And this kind of, it all kind of goes together here, but effectively, I’ll just give you some ideas. I briefly hit on it before, but if you’re buying properties, generally speaking, you want to have one property, one LLC.

28:52
Bobby Casey
Now, I get some pushback here from people maybe somebody’s buying low-value houses for $50,000 apiece in the middle of nowhere Kentucky. I get it. Spending all that money on an LLC and maintaining it every year for one low-value property that rents for, let’s say, $500 a month starts to get a bit tedious. If you are in that scenario where you’re buying lower-value properties, from a liability standpoint, you should always have one property, one LLC. But from a cost savings standpoint, you could maybe group them together, two, maybe three properties into one LLC just for a cost savings. But again, just understand, that if you have three rental houses in one LLC and you have a litigation event with one of those properties, you have now exposed all three of those properties to that liability.

29:50
Bobby Casey
And if you are hit with a judgment, they can come after all three of those properties. Now, if you had 30 properties and ten LLCs, you have now segregated that risk and separated those three from the other 27 properties. So it’s still an effective strategy, but just for cost minimization, if you’re in low-value properties like that, maybe you want to consider that. So that’s one strategy to consider. Another thing to consider is a lot of people say, won’t it be, so complicated? If I’ve got ten properties with ten LLCs, I file my taxes, and I’ve got ten items on my schedule C. It’s just so much.

30:29
Bobby Casey
One thing you can do to kind of minimize that is you create one LLC as your hold company, and then the hold company will be the owner or the sole member of the LLC, one LLC, two LLCs, or three down the line. That way all the income or loss, if you’re, if you have a tax loss, all of it flows through to Holdco, and then you only have the income or loss from Holdco ending up on your personal income tax return. So it does simplify that a little bit. Yes, you do add one additional entity there. But some people like having the holding company in place because it also allows them to more freely move money across properties so they can move money up. Let’s say you sell property five.

31:19
Bobby Casey
So property five sells, the funds flow up to LLC five, and then you flow the money up to the hold company, and then the hold company can redeploy that and invest it into a new property. So that is one strategy if you have multiple properties. Another strategy. Let me hit on this topic real quick. I briefly hit on it before. I generally recommend anytime you’re holding resident or any real estate, I’m sorry if you’re owning real estate, to own it in a Wyoming LLC, again, you can do other LLCs. I have no skin in the game. I couldn’t care less which state you pick. But generally speaking, Wyoming has better statutes for asset protection and a very long history. They are the first state that creates LLCs and is very pro-business friendly.

32:07
Bobby Casey
So they have a lot of history and statutes protecting the assets in an LLC. Now, a lot of pushback I do get. So if you go talk to your CPA or maybe your local business attorney or your local family attorney, they might say, look, for example, let’s say you live in South Carolina and they might tell you, well, sorry, but you need to register your LLC in South Carolina. That is not true unless the business operates in South Carolina. And what I mean by that, is if you just own, let’s say you just own an apartment building, that prop, that building can be owned by an LLC literally in any state, Wyoming or otherwise. Any other state, actually any other country. We could register a BVI company for you to own that property in South Carolina if you wanted.

33:00
Bobby Casey
It doesn’t matter the ownership of it. What matters is the operational activity in the state. So an example of this would be if you owned an apartment building, let’s say you own a large apartment building with 500 units, and with that, of course, you’re going to have some operating activity. You’re going to have on-site property management. You’re going to have a handyman or more than one grounds maintenance, plumbers, all this stuff. You’re going to have employees to manage that property. Well, if you have employees, you end up having what’s called nexus in that state. So you will need to be registered in the state where those employees live. However, the strategy I would employ would be to own the property itself in a Wyoming LLC.

33:46
Bobby Casey
And in this scenario, just as an example, then I would register a South Carolina LLC to serve as the property management business. And that’s the company that hires your property management, your groundskeepers, and so on and so forth. So that would be the strategy I would employ. And the same could be said if you own, let’s say 20 rental houses and you decided to manage your own properties I would create an in-state LLC for the property management function, but I would have each of those properties owned by a Wyoming LLC. I hope that’s clear. And then professional guidance. You always want to get professional guidance from your real estate attorneys, your CPAs, investment advisors, that sort of thing. It is important for your structure. So with that, I am done.

34:32
Bobby Casey
You can hit the next slide, which is just my contact details, actually. It’s just kind of our advertisement, I guess. But just quickly, I mentioned in the intro, that we do company formation in all 50 states. Registered agent service, virtual mailbox. We do all of your company compliance. We are the only registered agent and company formation service out there that automates your annual report filings every year. As long as you’re a client in good standing with us, your things get filed automatically every year. I don’t know if any of you’ve had LLCs before, where you’ve gotten the notice and missed it or the email went into your spam or whatever, and then you realize three months later your LLC is in default status and you have late fees and reinstatement fees and that sort of thing.

35:20
Bobby Casey
So that doesn’t happen with us because it’s automated. So if you need any help with that sort of thing, let us know. And then I guess that’s my advertisement slide. My next slide, Robert. If you can hit. It’s just our contact details, so let me know if we can help you guys.

35:42
Robert Chadwick
Bobby, super interesting stuff, and I’ll say, as a. As a real estate investor myself, I honestly was not aware that you could have an LLC in a separate state from where the property is owned.

35:57
Bobby Casey
almost nobody knows that, to be honest. Most people get really bad advice on that. They go to their local business attorney or their local CPA. And because that lawyer, we’ll use South Carolina as an example, because that lawyer is in South Carolina, that’s what he knows. So, lawyers, and CPAs, are the most conservative people on the planet, and they. They give the narrowest advice they can with the only. The things they know. And so that’s why you get that type of advice from a CPA in South Carolina or a lawyer in South Carolina, but that’s not accurate. It’s only about where the operational activity happens, and almost nobody understands that.

36:39
Robert Chadwick
Yeah, I mean, I’ll personally say I did not understand it as well. And I’ve been doing real estate for 20-plus years. One more question. What’s the cost to establish an LLC?

36:53
Bobby Casey
So we have various options on our website. It depends on what you need to do. I mean, the basic fee, we charge is $37 plus the state fee to register an LLC, the state fee in whatever that state is. But then there are various options on top of that. If you want us to do certain things, do you want us to do your EIN application and file your ss four? Do you want us to file your 2553? Do you want us to draft a custom operating agreement for you? And so on and so forth. So it can range anywhere from 37 plus estate fees up to a few hundred bucks, I think. And it depends on the state because some states have really expensive fees too. Like Delaware is quite expensive, California is quite expensive. So it depends on the state fees a lot.

37:46
Robert Chadwick
So you had brought up something as well, the EIN number. Obviously, there are a lot of people who will establish an LLC for the purpose of purchasing a property, but they have to wait for that EIN number to be established. Is there any way to speed that along or how long does that take? Do you have any insight on this? I know you’re dealing with the IRS, but it’d be good professional advice on it.

38:15
Bobby Casey
This is probably the sorest spot in our company, EIN applications for non-U.S. people. If you’re a U.S. person and you have a Social Security number, we can get your EIN. Unless there’s an issue, which rarely there is, but occasionally it happens. But if you have a Social Security number, we usually get in numbers the same day or the next day. It’s usually quite fast. If you are a non-U.S. person and do not have a Social Security number, it is an extremely tedious process. I can tell you, unless you’ve done a thousand of these things, it is not something you want to do yourself because it’s a paper form that you have to do, and you have to either mail it in or fax it to the IRS. There are multiple things on that form that you can answer incorrectly.

39:05
Bobby Casey
And the worst thing is if you miss a checkbox or you don’t answer the right thing in the right box in the right way, and then you fax it over to the IRS, they won’t answer you. They just, won’t do anything about it. And you might think, okay, I’ve got to wait four weeks for this EIN to come back to me, but you will literally never hear from the IRS. They’re never going to respond to you and tell you made a mistake on the form. They just see the mistake and they’re like, it’s wrong. They throw it away. It is the wildest thing ever. I bet in all the years I’ve been doing this, I think maybe we’ve gotten a letter back from the IRS less than ten times telling us there was a mistake.

39:51
Bobby Casey
And to refile it less than ten times, I can tell you that is a fraction of a fraction of a percent of the SS board forms we filed. So right now, generally speaking, it’s taking us about two weeks to get the EIN letter back from the IRS. It can take up to twelve weeks. I can also tell you, be very glad you are not doing this. A couple of years ago, let’s call it peak COVID, because during that time, basically, they closed the office for about six months and did EIN applications. And by close it, I mean they literally sent everybody home and nobody worked for six months. And so it did not happen for non-U.S. people. It didn’t happen for six months.

40:40
Bobby Casey
And when they came back to work, they had such a backlog, it took six to eight months to get one done back then. This is back in 2020 and 2021. In 2022, it started getting a little bit better and then progressively it’s gotten a little bit better. Now we’re down to, on average, two to three weeks to get them back. So if you’re a non-U.S. person creating an LLC, and you know you need that in, plan ahead as much as you can. Generally speaking, if you know you’ve got a deal to be made and you’re making, you’re purchasing the property, you don’t necessarily need the EIN to make the deal. You need the EIN to open the bank account to eventually get paid money into your account. But you can do that as you progress.

41:28
Bobby Casey
I wouldn’t throw a deal away just because I’m waiting on my EIN, I would basically just ask or figure out other ways or take checks or something like that and just hold the money in that way until the EIN is issued. Because you can’t open a bank account without an EIN in the us. And for those listening that don’t know, EIN stands for employer identification number. That is the tax ID number for your LLC.

41:55
Robert Chadwick
Actually. I’ll say if you can get these within two to three weeks, that’s fantastic. So certainly it’s not.

42:03
Bobby Casey
Yeah, it’s not always like that. I mean, we’ve literally done this. It’s crazy. For example, we might send in ten or 15SS, 4S, or EIN applications in one day, and at the same time in the same facts, right? And then we’ll get one of them back a week later, we’ll get one back two weeks later, we’ll get three more back two and a half weeks later, we’ll get a couple more back in four weeks. I’m talking about the same batch. We send them in the same batch and they never come back at the same timeframe, which is wild to me because I know with the IRS, the way their faxing system works, it’s kind of like a support ticket.

42:45
Bobby Casey
When they receive a fax in that one fax, it creates a support ticket for an IRS agent that deals with that issue. But that one ticket goes to one agent. So that one fax comes in, let’s say with twelve applications in it goes to one person. But why that one person doesn’t do all twelve of them at one time?

43:11
Robert Chadwick
Yeah, government efficiency, right?

43:13
Bobby Casey
Yeah. We actually got a bad review on Trustpilot or Google or something like that. We got a bad review because it took the guy eight weeks to get his EIN back and he thought it was us. He wrote us a scathing with everything that happened on our end in perfect timing, but the EIN took eight weeks to get back and he wrote us a really one-star scathing review. You know, as if we can control what the IRS does. But whatever, it’s the nature of the business. It doesn’t always go perfectly.

43:47
Robert Chadwick
Okay, so I will start my presentation now. And then after the presentation, I’m sure everybody has a lot of questions for Bobby as well as I do. And then if you could, I can see there are already 17 questions in the Q and A, but you can start loading your questions up and we’ll hit them as we go. So with that, I shall start. Okay, so as everybody is aware, we are a global mortgage provider. We focus primarily on providing U.S. mortgages to foreign nationals and expats. We are by far the industry leader in this. And because 100% of our clients are either foreign nationals or U.S. expats, I honestly feel, and I’ve been doing this for a very long time, that nobody does this type of lending better. So before I start in the chat, you’ll see a link to arrange an appointment or a time with either one of our loan officers. Our loan officers, as we’ll go through the slides, are based all over the world and speak a variety of languages. You can click on it and you can schedule an appointment.

45:20
Robert Chadwick
There’s also a link if you’d like to schedule an appointment with Bobby and his team and discuss how you can benefit from an LLC. So, in the general overview of our U.S. mortgages, no U.S. credit is required. I know a lot of people have this idea, especially if you’re an international investor and maybe you’re investing in the UK. Or even Australia, a lot of times they want you to have some exposure in those countries. In the U.S., there is no requirement. It’s fantastic if you have a credit report from your home country, but we’re also aware that there are some countries that do not have a credit reporting agency and that is something that we can work around as well. We do a lot of work with private banks and private banks, as most of you are aware.

46:12
Robert Chadwick
Normally, they’re able to give you a U.S. mortgage, which is very rare in general, but they will require you to put up AUM or assets under management. All of the loans that we offer are considered dry funding, meaning there is no requirement to open up a bank account with that particular lender or that finance company that we work with or even ourselves. We are a direct lender in the U.S. foreign income is allowed. So if you’re earning your money in euros or whatever it may be, that is not an issue with us. We have loan programs in all 50 states. If you’re a foreign national, you can get up to 75% loan to value. If you are a U.S. expat, you can get up to 80% loan to value and that’s on a purchase.

47:10
Robert Chadwick
If you are looking to refinance, then it’s just reduced slightly to 70%. We have a very simple process and we have a really fantastic platform that allows you to take the application and securely upload all your documents. Normally, once we receive everything, give us about 72 hours to issue you a pre-approval. Or if you have the complete package, say it’s either refinance or if you have a purchase agreement. It takes us about 72 hours to get an actual conditional loan approval, which if you’re familiar with U.S. lending, is lightning fast. Normal closing times are 30 to 45 days, which is very standard in the U.S. We factor in the extra time depending on where you’re located. But normally we can do a transaction very quickly.

48:09
Robert Chadwick
One of the fantastic things about America Mortgages is because we only focus on foreign nationals and expats, you can sign your loan documents in the country where you are located. There is no need or no reason unless you know, you particularly want to pick up the keys for your house to travel to the U.S. And there’s a variety of ways to sign, whether it’s on a video call or going to the embassy. It really just depends on what works best for you. And in most countries, as soon as we start talking to you, we’re already aware of how you will sign your closing documents. Our loans are available for purchase, refinance, and cash-out or equity release. So anything that you want to do, real estate related, we certainly can do it.

49:01
Robert Chadwick
And this goes for both residential all the way up to commercial. One thing that is very unique for the U.S. is there is no discrimination when it comes to age of the borrower to obtain a mortgage. This means that whether you’re 19 or 99, you are still able to obtain the longest amortization period available. So if you’re 19 or 99, you still have a 30-year fixed mortgage. There’s no discrimination against it. So it’s an amazing way, especially if you’re a global real estate investor, to be able to maximize your yield with the longest amortization possible. In order to help you maximize your yield, we actually have a program that is a ten-year fixed interest only. And then after that ten-year period, you would expect that loan to readjust to whatever the prevailing rate is at that time.

50:04
Robert Chadwick
However, that loan rate stays at the same rate. But now you’re just paying principal and interest. So you have a total of a 40-year tenure. If you want to be able to get maximum yield, that’s the loan that you want to go for. A lot of our loans are based on common sense underwriting. And I’ll go through this as we go through the loan programs. But we can qualify for a loan based on the rental income of the property. And if you think about it absolutely makes sense because if you’re going to buy a building, for example, you’re certainly not going to qualify on your personal income. You’re going to qualify on the cash flow of the property. And that’s how we look at the individual rental properties. We qualify them on the cash flow of the property.

50:54
Robert Chadwick
It just makes sense. 97% of our loan applications are approved, something we are very proud of. And we have loan officers in twelve different countries working 24/7 so regardless of where you are in the world, you do not have to stay up at three in the morning to talk to some loan officer in New York. You are working in your time zone and often speaking your language. So I’ll go over our loan programs quite quickly, and if there are questions, you can drop them into the chat and then we can go forward from there. So this is by far our most popular loan program. This is called the AM rental coverage plus. With this, there is no personal income required, meaning you do not have to provide your tax returns, your end-of-year statement, etcetera.

51:49
Robert Chadwick
Because we’re doing loans across the world, from Shanghai to Sydney to anywhere, if we had to go through tax returns, it would be an administrative and an underwriting nightmare. So what we do is, as I explained earlier, we qualify the property or the borrower on the income generated from the property. And if you look at the bottom, you can see an example of this. So, as an example, if the income is $2,400 and how we get that amount, or that number is when we order the appraisal or the valuation, we request an appraisal evaluation on the rent, and that number is the number that is used to qualify for the loan. So when we say the mortgage payment, we’re talking about the total mortgage payment, which is the taxes, the insurance, and then the mortgage payment.

52:51
Robert Chadwick
Sometimes we can adjust it based on a principal and interest, or sometimes it can be an interest only. But those three things together make up your mortgage payment, and as long as the rent covers that, then the loan qualifies. And just as an example, if the rent does not cover the full amount, it does not mean that the loan is not approved. All it means is the LTV will be reduced slightly. So it’s a fantastic way to do it. We can go down this, we need to adjust this slide because we had just lowered our loan amount to $100,000 with a 75% loan to value. What that means, is Bobby had sort of talked about this a little bit earlier. Literally, anybody can build a portfolio in the U.S. by far, it is absolutely the best way to create wealth.

53:44
Robert Chadwick
30-year fixed. Again, regardless of age and interest only programs are available. This is a very popular loan program, especially if you have students, have children who are going to school abroad in the U.S. A lot of times, or previously, up until this program, you would have to qualify based on your income, your personal income, and you would have to be able to service your debt in your home country, as well as servicing the debt in the U.S. where your child was living, and you would purchase the property as a second home often, especially if maybe you were self-employed and you’re not showing your true debt serviceability, it was difficult. So this program allows you to qualify, just as our rental coverage loan qualifies.

54:35
Robert Chadwick
So you qualify on the rental income of the property, even though your child will be attending university and living in that property while going to school. It’s a fantastic way to do it. And if the child is 18, which is most likely the case, we can add them onto the loan, which will help them build some U.S. credit. The AM investor plus. For example, the rents do not cover the mortgage payment for whatever reason. Maybe you’re buying something that you’re expecting, some real capital appreciation, or maybe it’s a place that you’ve always wanted to buy a property. There could be a variety of reasons. In the event that, say, the rent doesn’t qualify, again, it doesn’t mean that you cannot get the loan. We have a loan program that will qualify on your personal income.

55:33
Robert Chadwick
And again, because we’re doing loans around the world, we realize if were to take tax returns, it would be unreasonable. So how we qualify, and we have a template for this, is you will qualify on two years of income in your current year to date in a letter. And that letter, if you’re self-employed, will be from your accountant. If you’re employed, it’s going to be from your employer. Very simple, very easy to get, and it works exactly the same as providing all of your income. And I know most of you are probably watching this and thinking, why don’t they have this where I live? And I think you will find that this is absolutely the easiest and the simplest type of mortgage to get.

56:19
Robert Chadwick
Again, you qualify for a loan amount as low as $100,000. 30-year fixed interest only up to 75% financing foreigners. How this works, if you look at the bottom, we would take whatever is listed in your letter, your gross personal income, and we need to have that at least at a 43% debt-to-income ratio. The debt-to-income ratio is calculated only on the debt in the U.S. So if you’re a global investor, most likely you will have only the mortgage for the property. If you are a U.S. expat and say you’ve gone to one of the big banks, you get halfway through the process, and then they say, oh you’re earning your dollars in euros or pounds or whatever it may be. I’m sorry, we can’t help you.

57:17
Robert Chadwick
We probably get one-third of our business this way. They’re going almost through the transaction. They get to the third week, and then this comes out, and then they come to us and scramble. What we try to do as a U.S. expat is make the loan process just like you were living and working in the U.S., except you do not need a W-2, and foreign income is absolutely allowed. So you would qualify just as you were living and working in the U.S. and walking into a local bank. Certainly, you still need to maintain your credit and have a good credit score. And again, loan amounts on this particular loan program are at $150,000 up.

58:04
Robert Chadwick
If you look at how this qualifies, we take your two years of tax returns and debt in the U.S., and we again have to come to at least a 43% debt-to-income ratio. So, with high net-worth clients, we deal a lot globally with private banks. We realize that a lot of high-net-worth individuals have very complicated tax returns, multiple jurisdictions, and various businesses, maybe they don’t show exactly what they can service in debt. So we have a program that qualifies them on their assets, their liquid assets, not their hard assets. So if it’s like cash, it could be even crypto bonds, stocks, these types of things. We will take two months of these statements, and we will use the average of that based on the fixed portion of the loan.

59:05
Robert Chadwick
And if you look below, this is a very easy way to explain this. So, if you take a portfolio of, say, $5 million and the fixed period of the loan, even though amortized over 30, the fixed period is, say, for five years. So we’ll divide that $5 million over 60 months, which is five years, and we’ll come up with an average income, and that would be used to qualify. So, as you can see, in this case, it’s not a very large portfolio, but it’s significant, and it gives the client or the borrower $80,000 or a little above income to qualify for the mortgage. So that’s the entire presentation. This is our contact information. This is a scale scan code that makes it easier. Again, we have loan officers all over the world.

59:58
Robert Chadwick
There is a link in the chat where you can schedule an appointment to speak to one of our loan officers, or you can schedule an appointment to speak with Bobby Casey and his team. So with that, we will start the question and answers. Bobby, if you want to come back on we can go from here.

01:00:21
Bobby Casey
All righty. There we go.

01:00:23
Robert Chadwick
Okay. So what I’ll do is I will read the questions out and then if it’s for you, I’ll ask you to answer them. If it’s for me, then there may even be some that both of us are answering. Okay, so the first question is, can you help with opening bank accounts for an LLC?

01:00:44
Bobby Casey
Yeah, we actually do have one of our banking partners. It’s an online bank and you can actually open it right there in the platform. And they do accept foreign nationals.

01:00:56
Robert Chadwick
That’s fantastic, because I think, as you’re likely aware, foreigners setting up our bank accounts is often not an easy feat.

01:01:05
Bobby Casey
It’s not easy, it’s doable. But if you want a brick-and-mortar account like Wells Fargo or Bank of America, foreign nationals can do it. They just have to come up here in person at the bank. We have an online bank platform that they don’t have to appear in person. It’s all done and verified online.

01:01:26
Robert Chadwick
Okay. And before. Before we finished the questions, I was a little bit incorrect when I was talking about the link in the chat. The link in the chat for Bobby, you can actually set up an LLC right on that link. So I guess it’s using your platform. So fantastic. Can an LLC be owned by an offshore SPV like a BVI or a UK Co to purchase property? I’ll let you answer this and then I’ll talk about the mortgage portion of that.

01:01:56
Bobby Casey
yeah, I can’t answer from the mortgage side if it’s a viable option, but there is zero limitation on who can own a U.S. LLC. So, yes. A BVI limited company or SVC can own it. No, no problem.

01:02:14
Robert Chadwick
We actually get this question often because I believe tax advisors in home countries often want to use a tax blocker. Unfortunately, for a mortgage, the members of the LLC or members of the LLC need to be also the borrower for the property. So if there is another entity that owns the LLC, unfortunately, it does not work for a mortgage. Next question. What state is the best state for an LLC for real estate investment? I’m going to take a guess on this one, but I’m going to say Wyoming.

01:02:53
Bobby Casey
Nailed it. Yep, definitely. Definitely Wyoming.

01:02:58
Robert Chadwick
Okay. And I think. Yeah, sorry, go ahead.

01:03:02
Bobby Casey
I was just going to make one comparison because I get this question a lot. Why not Delaware? Because Delaware is always a common question for llcs. And I’ll make a few comments about Delaware. In 95% of the cases, Delaware is generally not a good option. Especially in this scenario, it’s not a good option. Delaware is a good option if you’re raising money you need to go get large credit lines, or you’re dealing with large funding sources. Seven, eight, nine-figure funding sources. Because Delaware has its own court system called the Chancery court system, which deals exclusively with business disputes. And because they have that court system, it makes it more attractive to investors like VCs or large funding sources.

01:04:02
Bobby Casey
It makes it attractive to the people giving you money because if you ever default on your loan, it’s easier for them to take you to court in Delaware. So if you are one of those people who needs to raise large sums of money for your project, then yes, maybe Delaware might make sense. Otherwise, avoid Delaware because it is a hassle. They’re expensive. They take forever to get done. When we register Delaware LLCs, we only do them with expedited filings because a standard filing in Delaware takes two to four weeks. Nobody wants to wait two to four weeks for the state to do anything.

01:04:48
Bobby Casey
But that’s not exactly a clear picture of how long it takes to get a Delaware LLC created, because even though we do expedited filing, it’s done within 24 hours, assuming no problems and there are no issues with the name or whatever, happens within 24 hours. The issue is Delaware doesn’t give you those documents electronically. They mail them to you, and I don’t know how they do it, but they use the slowest process possible on earth to mail them to you. I think they use carrier pigeons or something, but it takes two to three weeks before we get that document in our hands and upload it into your dashboard so that you have your documents. So even though it’s technically formed in one day, you can’t do anything with it for two to three weeks because you can’t do anything without your filing documents. And also, Delaware is expensive. If you are even one day late on renewing your entity and filing your annual report, it’s a $200 fine. Like, there are all kinds of problems with Delaware. So I avoid Delaware unless you are going after those larger funding sources or investors.

01:05:58
Robert Chadwick
Super interesting. Okay, next question. In my very recent experience, lenders do not want to provide HELOCs on properties owned by LLCs I had to transfer into my personal name. Any suggestions on how to secure Heloc with an LLC? Unfortunately, we do not provide HELOC loans for our clients, so I wouldn’t be able to answer that. Bobby, I don’t know if you have any feedback on tax or legal basis.

01:06:35
Bobby Casey
I’m not a professional in the lender lending business. I can tell you I’ve seen lenders that do HELOCs on commercial property. Well, they call it a commercial loan because it’s in an LLC’s name. I mean, it could be a single-family home in an LLC, but they consider it a commercial loan. I have seen lenders that do that, so it is possible, but that’s not my area of expertise. I couldn’t even tell you the name of a lender that does that, but I’ve seen it.

01:07:03
Robert Chadwick
Okay, perfect. Can a non-U.S. resident register an LLC in the U.S.? Do I need to visit the U.S. to do that?

01:07:12
Bobby Casey
Yes and no. anybody from a non-sanctioned country can register an LLC in the U.S. That is a very small list of sanctioned countries where we cannot register a company for you. For example, right now, Russia is a sanctioned country, but we can still register LLCs for Russians if they have a residential address outside of Russia. So we register LLCs for Russians all the time who live in places like Dubai Singapore or Thailand or there are tons of Russians, in Turkey that live there, and as long as they have an address outside of Russia, no problem. So it’s not necessarily about the person itself in that scenario. It’s about where they live. So there’s really no issue and there’s no need to appear in person. Everything’s done electronically. You mentioned we have our link.

01:08:10
Bobby Casey
I guess it’s up in the chat or on your site. I’m not exactly sure where it is, but anybody literally can go through that process and fill in the blanks it takes. Like, even if you went through and watched all of our videos and did every single step and watched every single video in our process, it might take you 20 minutes to register your company.

01:08:33
Robert Chadwick
So can I own multiple properties in an LLC? In one LLC? I believe we talked about that a little bit.

01:08:39
Bobby Casey
The answer is yes, you can. It’s just really not a good idea. As we discussed in the slide, you’re just. You’re just aggregating that risk under one LLC and exposing everything to one litigation event right there.

01:08:55
Robert Chadwick
Okay. Any complications on transferring individual ownership to an LLC, for instance, with an existing mortgage. So for the mortgage, it shouldn’t be an issue. But I mean, I don’t know if it is with an LLC being an issue.

01:09:15
Bobby Casey
You mean if I understand the question correctly, it’s as if I own a property deeded into my name, can I transfer that property into an LLC?

01:09:24
Robert Chadwick
That seems to be what the question is, yeah.

01:09:26
Bobby Casey
Okay. So from a legal standpoint, no problem at all. You just go file a quick claim deed and indeed the property over into, from your name into the LLC’s name. Super easy to do. We drafted quick claim deeds for people all the time. For people that don’t know the difference, a general warranty deed, and a quick claim deed are different things. For example, if I’m buying a house from Robert, I don’t want to do a quick claim deed because I want to make sure the title research was done and there are no unforeseen liabilities on there. So I wouldn’t do a quit claim deed because that kind of foregoes that process. I would want to buy it using a general warranty deed.

01:10:08
Bobby Casey
But if I’m transferring it from my name to an LLC that I own, a quick claim deed is cheap and easy to do, and I’m not concerned about any other liabilities on the property because it went from me to me. So I would just file a quick claim deed. With that said, I can’t answer about your mortgage company. Some mortgage companies have what’s called due-on-sale clauses, where if you change ownership of the property from your name into a company, they might restrict that. You’d have to look at your mortgage lender to see if they had due-on-sale clauses. Even the lenders I’ve seen that had due on sale clauses generally don’t really care anyway as long as you keep paying your mortgage, because all they really care about is they get their mortgage payment.

01:10:57
Bobby Casey
They already have the first position, or I guess technically second, behind your property tax. But other than that, they generally have the first position on your property anyway. And they have a personal guarantee from you, so they don’t really care who owns it at that point. But you might want to look at, if you’re with a different lender, you might want to look to see if there’s a due on sale clause in your mortgage contract.

01:11:19
Robert Chadwick
Okay, next question. Do you need to buy a property in the same state your LLC is registered in, or are there advantages to doing so? So I think this is something that we talked about even before the presentation. But if you want touch on it quickly again.

01:11:36
Bobby Casey
Basically, as I mentioned before, generally speaking, for properties, because you have a significant asset and the protections of a Wyoming LLC, I generally recommend, owning real estate to have that property in a Wyoming LLC. You can absolutely own property in a different state in a Wyoming LLC, no problem. We do it all the time. I’ve personally done it with dozens of properties where I’ve owned properties in different states. In a Wyoming LLC. I just did one in California the other day, like two weeks ago. Zero problem whatsoever. Again, the issue is, do you have operational activity in that business? Meaning do you have an office or employees and that sort of thing? Because if you have employees, you need a state tax ID number in that state.

01:12:26
Bobby Casey
You need a company registered to do business in that state because you gotta withhold payroll tax on them, and you basically need to do it. And that’s the whole point of segregating that asset. A little bit off-topic, but still kind of sort of in this topic, I also recommend holding basically any of your valuable assets in an LLC. Like, personally, I own my investment portfolio in an LLC. I don’t even have a brokerage account in my own name. I would never hold any valuable asset in my own name. I don’t even own cars in my own name.

01:13:03
Robert Chadwick
Interesting. So, okay, next question. If I have one building with four units, should I create four separate LLCs?

01:13:14
Bobby Casey
So I guess that depends on what you mean by four units. Is this like, so I, since we can’t go back and forth with the person asking the query, if it’s an apartment, like a fourplex with four units in one deeded property, then you would do one LLC to own that one deeded property. But if you’re talking about you on a condo building that has four separate deeded units, then I would probably, if you can, and if they’re valuable enough, I would put each one in a separate LLC. I hope that’s clear.

01:13:52
Robert Chadwick
Okay, good. If you already created an LLC in a different state, can you switch it to Wyoming?

01:13:59
Bobby Casey
Yeah. You can domesticate an LLC in Wyoming. It’s. It cost a little bit more. Like, we do this fairly often, but it costs a little bit more. By the way, we do this fairly often, but it’s not on our website. You would have to send us an email for that. It costs a little bit more because we have to contact your home state. Let’s say you had a South Carolina LLC. We would have to contact the South Carolina secretary of state and get a certified copy of your articles of organization. And then there are some costs associated with that and FedEx fees, etc. So there are some additional costs to that because then we have to file the domestic articles of domestication in the state of Wyoming. So it is doable.

01:14:42
Bobby Casey
It’s a little bit of a process and takes a little bit of time. It’s not nearly as quick as just filing a new one. So you’d have to think about that. Like if it were me let’s say I had an older South Carolina LLC that’s been dormant and I haven’t used it in a long time and now I’m going to go buy a property. Honestly, it’s just easier to file a new LLC than to move that existing one unless you had maybe some credit lines or some loans out or something like that with some history associated with that LLC. If you have that then yeah, it makes sense to domesticate it and keep that LLC history.

01:15:20
Robert Chadwick
Okay, next question. Difference between a Wyoming and a Delaware LLC for owning real estate. I think you covered that a little bit.

01:15:29
Bobby Casey
I just hit that a minute ago. Delaware is generally not a good idea just because of the complications unless you’re raising large funding sources. Wyoming is much easier, much cheaper, much simpler. It’ll create less headaches for you. That’s done quicker. So when we file Wyoming LLCs, with us, you have an expedited choice, but with us, once we do the filing, it’s one day to get it done, whereas, it’s an electronic delivery, Delaware it’s one day, but then it’s a paper delivery that takes two to three weeks to show up. So I don’t really see any advantage for real estate using Delaware, like I said, other than raising large funding sources.

01:16:11
Robert Chadwick
Okay, next question. I am from the UK and I set up a California LLC which holds the property. I want to add another property. Should I set up a new LLC per property? I believe yes.

01:16:26
Bobby Casey
So first of all, I’m going to make the assumption that the property is in California because otherwise, that is just crazy to register an LLC in California. And in fact, you can have that California property owned by a Wyoming LLC. Now the one complication with California is if it is an income-producing property, you’re going to have to recognize that income and pay a California state tax return. So in that scenario, it could make your life a little easier to have that LLC registered in California. Now keep in mind, that California is an anomaly. They’re literally the only state that creates this problem. Of all 50 states, California is the only one that does that.

01:17:23
Bobby Casey
So if you have investment property in California and you’re recognizing the income in that California LLC, then it’s probably better to have the property in California. It’s expensive. You have to pay that $800 a year franchise tax plus the annual report fees and everything. But if you don’t, they’re going to hit you with some fines and penalties if you have income as that property. So anyway, it’s a complicated issue with California. If you are buying a second property, my recommendation is to create a second LLC, you could create a Wyoming LLC to own the property if you want. But if you’re recognizing direct income in the property that’s located in California, you probably want to do a California LLC.

01:18:13
Bobby Casey
I will add one caveat to that if you are interested in privacy because I didn’t even discuss privacy in the presentation, but a lot of people are interested in that. In some states, like Wyoming and a few others, Delaware is another one. You can register an LLC without disclosing the members’ or managers’ names to the secretary of state, meaning your personal information is nowhere in the public record. If you do it correctly. Let me clarify. If you know what you’re doing and it’s done correctly, your information is nowhere in public record. So what we just did actually with another client two weeks ago is we created a Wyoming LLC to buy the property in California because she did not want her name on public record in California as owning that property.

01:19:03
Bobby Casey
If we registered a California LLC, her name would be on public record because you can’t file an LLC in California without giving a human’s name associated with the entity. So what we did is we created a Wyoming LLC and registered it to do business in the state of California, keeping her name out of public record. So that could be an option for you too if you are interested in privacy.

01:19:30
Robert Chadwick
Okay, next question. Can you recommend a tax advisor who can advise on how owning U.S. LLCs impact foreign tax reporting? So for us, just like with Bobby, we have partners that specialize in specific areas and we do have a partner, and coincidentally, next Thursday, the 13 June at 06:00 p.m., we will be having a webinar with him as well. So you can get some information on that. But Bobby, I’m not sure if that’s part of your LLC process, if you assist with the taxes or not.

01:20:13
Bobby Casey
I am a tax attack, an international tax lawyer, but I don’t really, I don’t do tax filings. We don’t touch any of that stuff in my consulting business. Outside of this, like with my tax consulting clients, we do advise them on structure and how to optimize for tax, but we don’t do tax filing. So even in that scenario, I would hand them off to another CPA who could deal with the structure we implemented for the client. So what I was actually going to say, is if you asked me, I would join your webinar next week.

01:20:48
Robert Chadwick
Thanks. Yeah, actually, the webinar next week, it’s another guy as interesting as yourself, but this guy just focuses on doing taxes, U.S. taxes, foreign nationals, and expats. That’s his entire business. So, yeah. So next Thursday, 06:30 p.m. Singapore time, you can sign up on the link below as well in the chat. Next question, does anyone have to file in both tax jurisdictions, place of the LLC and place of the property? For example, Wyoming LLC with a Manhattan apartment needs to file in both Wyoming and New York because of costs, obviously.

01:21:34
Bobby Casey
Was the question about filing taxes?

01:21:37
Robert Chadwick
Yeah. It’s basically the way I’m reading it is if I own a property in New York that’s owned by a Wyoming LLC, am I going to get doubly taxed? Am I going to have to file in both states tax facts?

01:21:50
Robert Chadwick
Okay. No, you would not. You would only file in New York where the property is located. So remember, an LLC is a pass-through entity. It is completely tax-neutral. The taxation is going to be based on the income generation itself. And in that scenario, if you own a Fifth Avenue property in Manhattan and you own it in a Wyoming LLC’s name, no problem owning, but your taxes will be federal in New York state there. And you wouldn’t file anything in Wyoming because you don’t have any assets in Wyoming.

01:22:24
Bobby Casey
Yeah, that’s fantastic. Well, and also Wyoming doesn’t have a state tax, so that’s, but that’s kind of a moot point because you, even if they did have a state tax, like even if you were in, even if you had an Illinois LLC that owned a New York property, you still wouldn’t file an Illinois state tax return on that property because there’s no income generation that happened in the state of Illinois.

01:22:46
Robert Chadwick
Got it. Does an LLC make the asset fall outside of the very low inheritance threshold for heirs? That’s a very good question.

01:22:59
Bobby Casey
No. Let’s say you had a million-dollar property in the LLC, and you’re the sole member of that LLC. You just, you’re the member of an LLC with a million-dollar value. It doesn’t change your asset value for estate planning purposes.

01:23:19
Robert Chadwick
One question, though, on something similar to that, say you have multiple members of the LLC and one of them passes away. How does that impact how they would look at inheritance tax? I know, might be a little bit out of the realm of your scope, but if you have any idea.

01:23:38
Bobby Casey
So I wasn’t going to mention this, but I also own a trust company, so I’m going to leave that aside. So I do know quite a bit about trust and inheritance and that sort of thing. That’s another company that we own. But basically, let’s say you had an LLC with four members. Each member owned 25%, equal members, and that LLC owned a property worth a million dollars. And member four dies. Well, first of all, you have to consider his estate plan. Did he have a living trust in place, or a will, or an asset protection trust, or something like that? You have to consider what his estate plan was. You also need to consider how your operating agreement was written in the event that you have a member die or exit.

01:24:27
Bobby Casey
I mean, that generally should be discussed, at least marginally in the operating agreement itself about what happens in the event of a member leaving the partnership. Basically, at the time of his death, you would basically have to do a property evaluation to find out the value of the property. You would have that assessment done. That person owns 25%. The property is worth a million dollars. Part of his estate would be a 25% membership interest in an LLC, with his equity being $250,000 value. So that would be factored into his estate plan, but it wouldn’t affect the partnership at all unless he didn’t have a good estate plan in place. And now you have 19 grandkids fighting over one membership interest in an LLC. So that’s an excellent reason to have an estate plan in place to avoid infighting within your family when you kick the bucket.

01:25:38
Robert Chadwick
Next question. Are there special mortgage products for non-U.S. citizens who are self-employed? Can you give me some details? For us, there are a couple of ways. Being self-employed or being employed for our mortgages really is not a factor. If you’re using the loan program, which qualifies on the rental income of the property because you don’t have to provide any personal income. If you choose to do the income letter way, then as long as your accountant can verify what your income is, we don’t really care. We don’t differentiate if somebody is employed or self-employed. Next question. Is now the right time to invest in U.S. real estate? What should we be looking for? This is an excellent question and we get this a lot.

01:26:36
Robert Chadwick
So obviously everybody knows interest rates are higher than what they were during COVID. I think still, historically they’re still reasonable. But what this has meant is there’s a huge portion of property owners that are sitting on mortgages with very low interest rates and they’re just choosing not to sell. And there’s also a variety of reasons why there’s just an inventory shortage in the U.S. So there’s this demand, but there isn’t this demand, at least in my opinion, for owner-occupied borrowers. This means that if you’re a real estate investor, most of our sophisticated real estate investors are actually jumping into the market now because they’re not competing with other buyers for the same property and not artificially driving the property price up just based on multiple people wanting the same property. So it is by far the best time to buy.

01:27:35
Robert Chadwick
I think while interest rates are high, you can always refinance, but you’re not always going to be able to get the best purchase. Casey, I don’t know if you have any add to that, but that’s what we’re telling everybody. And I think all of our sophisticated investors and seasoned investors are kind of jumping into the market now.

01:27:58
Bobby Casey
No, I wouldn’t consider myself a real estate expert or a real estate economist, so this is not my area of expertise.

01:28:07
Robert Chadwick
Okay, perfect. Currency exchange risk. Can America Mortgages help with this? Again, we try to find partners that we vet and make sure that they’re well-established and work with foreign nationals. So there is a company that’s available on our website that will help with not only moving funds over at hopefully the best FX rate, but also if you want to set up mortgage payments using their facility, you can lock in an exchange rate for quite a long period of time. So at least if there’s any fluctuation in the country that you’re in, you can be fairly consistent about what you’re paying every month. Next question. I’m not a U.S. citizen. How do I improve my creditworthiness to get better mortgage terms? Very good question. We do not require foreign borrowers to have a U.S. credit score.

01:29:15
Robert Chadwick
Our whole business is on foreign nationals and expat lending. So for us, it really wouldn’t matter if you’re a foreign national and you have us credit, there is a certain threshold that we automatically give you a credit score, which is actually quite decent credit in the U.S. What are the tax advantages foreign investors in us real estate? I know you’re not a tax advisor, Bobby, so I’ll just say from our personal experience in dealing with the partners that we have, and correct me if I’m wrong, Bobby, but I believe, especially if you’re using an LLC, you have the same tax advantages as a us citizen would have, and the same tax benefits or deductions. It’s probably one of the only countries in the world where this is available.

01:30:08
Robert Chadwick
And I think one of the things that is really important to point out, there is no buyer stamp duty like they are in most countries. I think New York and California have luxury taxes when you purchase a property. But in general, the fact that you’re not getting hit with this additional tax or stamp duty just to be able to invest in a country is one of the fantastic benefits of the U.S.

01:30:44
Bobby Casey
So tax benefits of investing in property in the U.S., the real estate tax code, let’s say, is really written in favor of incentivizing real estate investors. For example, you can do accelerated depreciation on the internal items. I’m not sure, you’re not sure if you’re familiar with this from a tax perspective, but let’s say I buy a commercial property, like an office building, for example, I can go have an assessment done, and they can itemize the things inside there, like light fixtures and doorknobs and appliances, and they can create an accelerated depreciation schedule of that. That allows me to depreciate those individual assets on a faster scale. So in the U.S., you depreciate commercial property over 39 years, residential over 27.

01:31:42
Bobby Casey
So if you had a commercial property, you would normally, let’s say you bought it for a million bucks. If you don’t do an accelerated depreciation schedule. I’m kind of simplifying here, but you would depreciate that million bucks over 39 years. But if you can go in and find $100,000 worth of appliances and equipment and fixtures and so on and so forth, that can be depreciated over five years, well, you can depreciate that $100,000 over five years. Giving you even a tax loss over those first five years, creating a huge tax benefit for you over the first five years.

01:32:19
Bobby Casey
And then what I know a lot of people do, and I’ve done this as well, is by the time you kind of burn through your accelerated depreciation schedule and you’re getting to the point where you might be tax profitable, you can do a 1031 exchange where you can basically roll the profits of the property forward to another property and basically avoid paying capital gains tax on the sale of that property. So I know a lot of people, and that’s a really good strategy for people to do every few years. And you can keep building your assets. I mean, it’s not tax-free per se, but it’s tax-deferred. You’re basically kicking the can down the road on that capital gains tax, but you can do it indefinitely.

01:33:01
Bobby Casey
And then you can kind of implement that into an estate planning strategy where if you put the property into a properly structured, irrevocable trust, then if you just keep rolling the properties forward, you can avoid any estate tax owed on the real estate portfolio itself. There are huge tax advantages to investing in our properties that really just are not available in other countries. They just don’t have the tax incentives on it like they do in the U.S.

01:33:36
Robert Chadwick
Yeah, thanks for that, Casey. And I think really, especially global investors, if they’re not in the U.S. already, people have a better bad, I guess, impression or expectation of the U.S. taxes. And it’s actually just the opposite when you look at most countries.

01:33:56
Bobby Casey
Yeah, there’s a lot of loopholes, but that also means there’s a lot of loopholes to take advantage of if you do things the right way and have the right advisors.

01:34:07
Robert Chadwick
I agree. Next question. Can I complete the entire mortgage process while abroad or do I have to go to the U.S.? Very good question. And no, you do not have to travel to the U.S. You can do everything from your home country from the initial application to closing the signing documents. Next question. Does the letter has to show the gross income or net? Good. Another good question. We go off of the gross income. So whatever the taxes are in your home country, all we care about is how much you’ve made gross for that two-year period in your current year to date. Next question. So local debt does not matter, only gross. U.S. mortgage payments, 43%. Also, what about the 10%, for example, for the Australian employers to pay on top of the gross which goes into the retirement fund?

01:35:06
Robert Chadwick
I’m familiar with the I believe it’s the superannuation fund in Australia for things like that. It really just depends on how your accountant calculates it because we’re not going off your tax returns. We’re going off either a letter from your employer or a letter from your accountant. So that letter is on the gross. I don’t believe that they would include anything that would be for future use because those funds would not be available to you today. But again, it depends on how your employer or your accountant structures a letter. Next question. What is the max loan to value foreign nationals? It is 75% for a purchase and 70% for a cash-out refi. Next question. How does the mortgage loan interest rate look for foreign nationals? I am holding a J-1 visa in the U.S. and a visiting professor.

01:36:08
Robert Chadwick
Will I be considered a U.S. expat? Very good question. So if you’re living and working in the U.S. on a proper visa and you have our credit, then certainly you should be able to qualify just as what a U.S. citizen would qualify for. If you are truly a foreign national where you’re not living and working in the U.S., the easiest way to explain it is foreign national rates are about a 1% premium to what a U.S. citizen would pay. And again, I think if you look at it over the global standard, this is actually very good pricing when it comes to foreign national loans. What is the typical mortgage rate? Well, it’s based on a lot of things. Based on the loan to value. It’s based on if you’re a U.S. citizen or a foreign national.

01:37:08
Robert Chadwick
But again, I would take whatever the us citizen rate is, it’s about 1% higher than that. What is the optimal entity structure for Canadians to own real estate in the U.S. and not be double taxed in Canada, where an LLC is seen differently than in the U.S.?

01:37:29
Bobby Casey
That is a great question. I have a lot of Canadian clients, and this is basically an exemption to the rule that we just discussed in the presentation. Canadians have a weird situation, because in Canada, the CRA, or the Canadian Revenue Authority, their version of the IRS, the CRA treats a U.S. LLC as a Canadian corporation. So if they had a U.S. LLC, they would. They would have to file it in the U.S., and then they would have to file a tax return in Canada, treating it like a Canadian corporation. So the workaround for that is I would still buy the property in a U.S. LLC.

01:38:18
Bobby Casey
I guess I should say assuming you don’t want the profit to flow back to you in Canada, you wanted to leave it in the U.S. tax-deferred to grow your wealth, which is what most of my Canadian clients that do real estate do. So that’s my framework for answering this. What I would do is I would have the property owned by the Wyoming LLC and then I would create a Wyoming C Corp as your holding company to own the Wyoming LLC. You will have corporate tax owed at the federal level because there is no corporate tax with a Wyoming C Corp. However, because of the tax benefits that I briefly mentioned and what you’ll learn more about next week with the tax expert, I guess he’s a CPA.

01:39:08
Bobby Casey
You’ll find that generally speaking, especially if you’re taking advantage of accelerated depreciation, you’re probably not going to have a tax liability anyway. Because the U.S. corporation is its own taxable entity, you as a Canadian shareholder of a us corporation, do not have to recognize the profits of that corporation. The profits stop at the corporate level there. Now if you choose to pay yourself a dividend from that corporation, you will pay Canadian tax on the dividend you distribute after yourself. But the ownership structure, in my opinion, should be a Wyoming LLC owned by a Canadian C corporation. And then if you have multiple properties, I said Canadian C Corporation. I’m sorry, Wyoming C Corporation owns Wyoming LlL. If you have multiple properties, you’d have Wyoming LLC, one LLC, two, three, four, and so on. And all of them would be owned by Wyoming C Corporation.

01:40:08
Robert Chadwick
Okay, thank you, Bobby. Next question, Is any recording available after the session? Thanks. And greetings from Singapore. Yes. So not only will all of the attendees get a recording, but it’ll probably take about a week to go through editing, but it’ll be available on various channels, on our YouTube, on our website, et cetera, and probably on Bobby’s as well. Next question. For mortgages that are qualified based on rental income, do you want to see a person as that LLC partner or more complex nested entities as supported as well? I’m not sure I understand the question 100%, but for us, a simple LLC is fine for owning the property we prefer. Actually, there are more options to do a mortgage in an LLC than there are to do as an individual. Next question. Does it matter where you have a virtual mailbox?

01:41:27
Bobby Casey
Somebody’s been on my website then. No, not really. It doesn’t make a difference with Business Anywhere. We have a couple of dozen virtual mailbox locations. People have various reasons for wanting them in different places, there could be a reason for having one in a certain location. So it could matter based on your personal situation. For example, let’s say you were a California resident and now you want to move to Thailand, or maybe you want to be a digital nomad and you want to leave California.

01:42:05
Bobby Casey
Well, from a tax standpoint, California, if you move abroad from California, but you still have a connection to California, like you still have a California driver’s license, you still have an address, you get mail there, maybe your bank account or your credit card statements or whatever are still addressed to a California address. California is going to consider you a state resident for tax purposes, whether you’re physically there or not, just because you have the perception of the connection to California, whereas at the federal level, you can take advantage of the foreign earned income exclusion or the foreign tax credit. California doesn’t care about that.

01:42:45
Bobby Casey
So if you were a California resident wanting to exit the U.S. and move abroad, ideally what you would want is a virtual mailbox in a zero-tax state like South Dakota or Florida or Wyoming or Texas or something like that. So that you could show California that you’ve all of those connecting factors. You’ve exited California for that purpose. So now you have a mailing address and we’ll just use South Dakota as an example. You have a mailing address in South Dakota, your bank statements now go to South Dakota, and you’ve moved your driver’s license, for example, to South Dakota. And voter registration, that’s another one they consider. So there could be reasons, but who knows? That’s a pretty generalized question.

01:43:33
Bobby Casey
So hopefully, at least I gave a little bit of context for maybe a reason you might want to have it in a particular place, but for the purpose of just getting mailed? Then no, that doesn’t really make a difference.

01:43:45
Robert Chadwick
Thank you, Bobby. Next question. Can the LLC carry different businesses, like property investment, financial trading, or even, say, design consulting?

01:43:59
Bobby Casey
Under one entity? Can it? Yes. Should you? Never in a million years should you do that. You should never commingle assets with, first of all, you should never, as I mentioned before, you should always separate individual assets into individual LLCs for at least with real estate from a liability standpoint, because you have that slip and fall incident or some idiot decides to build a meth lab in your rental house kitchen. You don’t want to aggregate that risk across all of the other assets in that LLC, number one. So from a liability standpoint, it’s a bad idea.

01:44:37
Bobby Casey
Number two, you don’t want to have, for example, your brokerage account in the same LLC with your real estate investments because again, you have that liability issue with every single human being that steps foot on that property and you have no idea who they’re going to be. If it’s a rental property, even worse, if it’s a commercial property like you own a strip mall or an apartment building or something like that, every single person exponentially raises your liability there. And if that LLC gets sued for some litigation event, you have just exposed your liquid asset portfolio, your brokerage account, to that liability. Like, personally, I keep my brokerage account in a separate LLC that owns nothing other than my liquid investments. That’s it.

01:45:20
Bobby Casey
So I don’t even have a liability within that LLC because, I mean, my stocks and bonds don’t burn houses down, right? My stocks and bonds don’t cause wrongful death. And like, I don’t have any liability associated with that. But my rental properties do. My rental properties create that problem. And then also from a business standpoint, I would never want to own my operating business in the same entity that has investable assets. Because from the same liability perspective, if your business gets sued and you lose that lawsuit and get a judgment, they can go after your brokerage account. That’s one reason. From an accounting standpoint, you don’t want to have combined bookkeeping and accounting for your business with your brokerage account or your rental properties and that sort of thing for multiple reasons.

01:46:15
Bobby Casey
You might have a really great portfolio that’s making great money, and now your business is losing money. But if you’re combining them into one bookkeeping, it might be a little bit hard to know which one’s making money, and which one’s losing money. It might give you a false sense of security in your business when maybe the business is the one burning cash.

01:46:33
Robert Chadwick
Also, if you plan to sell your business at any point in the future and your buyer is going to come in and wants, generally speaking, three to five years of accounting records of your business, well, if you just had your rental property and your brokerage account in the same LLC, they’re going to ask you to go restate three to five years worth of bookkeeping records to get them a clean set of books because they’re not buying your brokerage account or your rental property. So it just creates a mess that you don’t really want to see. And for what purpose? To save yourself a couple hundred bucks a year? I mean, it seems like kind of a, seems kind of like a silly point to save a couple hundred bucks a year.

01:47:19
Robert Chadwick
I absolutely agree. Next question. Are Wyoming LLCs as beneficial as you have been discussing if I reside in the U.S.?

01:47:31
Bobby Casey
Yes. 100%.

01:47:33
Robert Chadwick
Yep. Okay, next question. As a non-U.S. resident, can I transfer the monthly rental income from the LLC bank account to my personal bank account for personal use/investments?

01:47:47
Bobby Casey
Sure. I mean, that’s just a profit distribution. You’re, you’re, that’s just a, I mean you’re making a profit distribution or you’re paying yourself a “salary” from the LLC. No problem. That’s the whole point, right? That’s the whole point. We want, we want to get this money. I mean, sure. As a business owner, I like to play the game of business, right? It’s like playing Monopoly but with real money. I like to play the game of business, but I also go, I like to go to a steakhouse and eat a wagyu steak once in a while too. And that costs money.

01:48:24
Robert Chadwick
Okay, this is the final question and then we will wrap this up. Does America Mortgages place a lien on the property to secure against the mortgage? Yes, absolutely. So any mortgage that you will obtain in the U.S. will have some sort of charge or lien, which normally has to be in first position. So I think that is it. Bobby, thank you very much. Super, super informative. Really enjoyed your presentation. And again there is a link in the chat that you can either make an appointment to talk to Bobby or actually even open an LLC directly from that link. Bobby, do you have any last words that you’d like to state before we end?

01:49:13
Bobby Casey
Yeah, it was a good webinar, actually. I learned quite a bit from your presentation as well. There are a few things that I know as foreign nationals and expats, getting mortgages for our property is pretty, can be really difficult. I know if you walk into Wells Fargo and say, “I live abroad, but I want a mortgage in the U.S.,” they’re going to shoo you out the door. And it seemed like a great product because I do know, you probably know this better than me, it was either 2020 or 2021. There was some legislation change making it much more difficult for self-employment, self-employed people to get traditional mortgages in the U.S. Do you know it was March 2020 or 2021?

01:50:03
Robert Chadwick
Yeah, I don’t specifically, but again, because of the way that we qualify the mortgages, for us, if it’s an investment property, it doesn’t matter.

01:50:13
Bobby Casey
Yeah, that was my point. So you make it much easier now than getting a traditional mortgage. I’ve gone the investor mortgage route before too and paying 100 basis points over the standard rate and it’s worth it.

01:50:28
Robert Chadwick
Absolutely.

01:50:30
Bobby Casey
So anyway, thanks for having me. I enjoyed it.

01:50:33
Robert Chadwick
Yeah, I appreciate it. And again, everybody will receive a copy of this entire webinar in the mailbox about it’ll probably take about a week. Next Thursday, Tax-Smart strategies with Thomas Carden who is our tax partner. Thursday 6:30, June 13th Singapore time. We look forward to seeing everybody there. There is a link that you can sign up in the chat. Thank you again, Bobby, and thank you everybody for attending wherever you may be. And we look forward to working with you. Thanks, Bobby.

01:51:11
Bobby Casey
Take care.


Disclaimer: This transcript is AI-generated, so kindly pardon any transcription or grammatical errors that may be present.

Robert Chadwick
CEO, America Mortgages
SG: +65 8430.1541
(Direct/WhatsApp) | U.S.: +1 830.564.3290
Email: [email protected]

Bobby Casey
Managing Director, Business Anywhere
To create an LLC with Business Anywhere, click on the link below:
https://businessanywhere.io/business-registration/?sscid=61k8_3pmka&

Q&A: Why and How to Use an LLC for U.S. Real Estate Investing

LLC | U.S. Real Estate Investing

Bobby Casey, Managing Director of Business Anywhere, and Robert Chadwick explored the strategic benefits of LLC formation for U.S. real estate investments. This webinar highlighted the importance of registering an LLC for property purchases, discussed Business Anywhere’s simplified setup process, and provided effective strategies for mitigating litigation risks. For those who couldn’t attend, the recording is now accessible here.

Bobby Casey (BC) and Robert Chadwick (RC) addressed a range of inquiries, providing insightful responses tailored to assist investors in making informed decisions, with remarks edited for clarity and brevity.

1. Can you help with opening a bank account for the LLC?

  • BC: Yes, we can assist with opening a bank account for an LLC through our online banking partner, which accepts foreign nationals and doesn’t require an in-person visit.

2. Can the LLC be owned by an offshore SPV like BVI or UKCO to purchase property?

  • BC: Legally, yes, a U.S. LLC can be owned by an offshore SPV such as a BVI or UK company. However, for mortgage purposes, the members of the LLC must be the same as the borrowers. (If an offshore entity owns an LLC it is not suitable for mortgage financing)

3. Which state is the best for forming an LLC for real estate investment?

  • BC: Wyoming is recommended for forming an LLC for real estate investment due to its favorable laws, low costs, and privacy benefits.

4. Do I need to form an LLC in the same state where the property is located?

  • BC: No, you can form an LLC in a different state, such as Wyoming, and still own property in another state. However, you may need to register the LLC as a foreign entity in the state where the property is located.

5. In my recent experience, lenders don’t provide HELOCs on LLC-owned properties. How can I secure a HELOC?

  • BC: HELOCs on LLC-owned properties are rare. You may need to transfer the property to your personal name to secure a HELOC. Some lenders might offer HELOCs on LLC-owned properties under commercial loan terms.

6. Can a non-U.S. resident register an LLC in the U.S. without visiting?

  • BC: Yes, non-U.S. residents can register an LLC in the U.S. without visiting. Everything can be done online.

7. Can I own multiple properties under one LLC?

  • BC: Yes, you can own multiple properties under one LLC, but it is not recommended due to risk aggregation. It’s better to use separate LLCs for each property to limit liability.

8. Any complications in transferring individual ownership to an LLC, especially with an existing mortgage?

  • BC: Transferring individual ownership of a property to an LLC, even with an existing mortgage, is legally straightforward. You can use a quitclaim deed to transfer the property. However, check your mortgage agreement for any “due on sale clauses.” These clauses could allow your lender to demand immediate repayment of the mortgage if ownership is transferred. While many lenders don’t enforce these clauses if mortgage payments are current, it’s essential to verify your specific lender’s policies before proceeding.

9. Do I need to buy property in the same state where my LLC is registered?

  • BC: No, you can buy property in a different state from where your LLC is registered. However, you may need to register the LLC as a foreign entity in the state where the property is located.

10. Should I create separate LLCs for each unit in a building with 4 units?

  • BC: If the units are deeded separately, it’s better to use separate LLCs. If it’s a single deeded property, one LLC can be used.

11. If I’ve already created an LLC in a different state, can I switch it to Wyoming?

  • BC: Yes, you can domesticate your LLC to Wyoming, but it involves some costs and a process to obtain certified documents from the original state.

12. What’s the difference between a Wyoming and Delaware LLC for owning real estate?

  • BC: Wyoming is preferred due to lower costs, faster processing, and better privacy compared to Delaware. Delaware is more suitable for raising large funding due to its Chancery court system.

13. I’m from the U.K. and have a California LLC holding one property. Should I set up a new LLC per property?

  • BC: If you have a California LLC holding one property and you’re considering acquiring another property, setting up a new LLC per property is generally recommended. This approach can provide better liability protection and simplify management. However, consider the state-specific tax and compliance requirements, especially in California. If privacy is a concern, you might explore forming LLCs in states like Wyoming, which offers more privacy options while managing the properties in California.

14. Can you recommend a tax advisor for advice on foreign tax reporting with a U.S. LLC?

  • BC: If you’re looking for a tax advisor who can advise on how owning a U.S. LLC impacts foreign tax reporting, America Mortgages has a tax partner who specializes in this area. They can provide tailored guidance on tax implications and help you navigate any complexities related to foreign tax reporting with your U.S. LLC.

15. Do I need to file taxes in both the state where my LLC is registered and where the property is located?

  • BC: You only need to file taxes in the state where the property is located. The LLC’s state of registration does not impose additional tax obligations.

16. Does LLC make the assets fall outside of the very low inheritance threshold for heirs?

  • BC: No, owning an asset through an LLC does not change its value for estate planning purposes. For example, if you own a million-dollar property in an LLC, your estate’s value remains based on the property’s worth. However, the structure of the LLC and the estate plan of its members can affect inheritance tax implications, especially if a member passes away. It’s crucial to have a well-defined operating agreement and a clear estate plan to handle such scenarios smoothly and avoid family disputes.

17. Are there special mortgage products for non-U.S. citizens who are self-employed?

  • RC: Yes, there are ways to secure mortgages for non-U.S. citizens who are self-employed. The qualification process typically focuses on rental income from the property being purchased, which can be used without needing to provide personal income documentation. Alternatively, if personal income verification is required, applicants can provide income letters verified by their accountant. The distinction between being employed or self-employed does not affect mortgage eligibility under these programs.

18. Is now the right time to invest in U.S. real estate? What factors should I consider?

  • RC: Yes, now is considered a favorable time to invest in U.S. real estate. Interest rates, although higher compared to COVID-era lows, are still historically reasonable. Many property owners are holding onto properties with low-interest mortgages, causing a shortage of available inventory. This lack of supply reduces competition among buyers, especially for real estate investors, who are finding fewer bidding wars and less price inflation. As a result, seasoned investors are currently active in the market, seeing it as a prime opportunity to purchase properties without the pressures of excessive demand.

19. Can America Mortgages assist with currency exchange risks?

  • RC: Yes, America Mortgages collaborates with a vetted partner to assist with currency exchange risks. This partner not only facilitates transferring funds at favorable FX rates but also offers options to lock in exchange rates for extended periods, ensuring consistency in mortgage payments despite currency fluctuations. This service is beneficial for international clients seeking stability in their financial commitments related to U.S. real estate investments.

20. How can non-U.S. citizens improve creditworthiness for better mortgage terms?

  • RC: At America Mortgages, we focus on lending to foreign nationals and expats. We do not require foreign borrowers to have a U.S. credit score. Instead, we evaluate your creditworthiness based on other factors, ensuring that you can still qualify for competitive mortgage terms comparable to those available to U.S. citizens.

21. What tax advantages exist for foreign investors in U.S. real estate?

  • RC & BC: Foreign investors in U.S. real estate can benefit from significant tax advantages, especially when utilizing an LLC structure. Similar to U.S. citizens, foreign investors can enjoy tax benefits and deductions, which are rare in other countries. For instance, the absence of buyer stamp duties in most U.S. states is a notable advantage. Additionally, U.S. tax laws incentivize real estate investments through features like accelerated depreciation. This allows investors to depreciate internal items of properties faster, reducing taxable income in the short term. Moreover, strategies such as 1031 exchanges enable investors to defer capital gains taxes by reinvesting profits into new properties indefinitely. These tax advantages make investing in U.S. real estate particularly attractive for foreign nationals looking to optimize their investment returns.

22. Can I complete the entire mortgage process while abroad, or must I visit the U.S.?

  • RC: You do not need to travel to the U.S. The entire mortgage process, from the initial application to closing and signing documents, can be completed from your home country.

23. Does the income letter need to show gross income or net income?

  • RC: The income letter should show gross income. Whatever the taxes are in your home country, all we care about is how much you’ve made gross for those two-year periods in your current year to date.

24. Does local debt matter, or only gross U.S. mortgage payments within 43% of income?

  • RC: The qualification for mortgage payments is based on gross income, not considering local debts. Regarding additional contributions like the Australian superannuation fund, it depends on how your accountant structures the letter. Typically, we consider gross income for the two-year period and current year to date in determining eligibility.

25. What is the maximum Loan-to-Value (LTV) ratio for foreign nationals?

  • RC: The maximum loan-to-value ratios are 75% for purchases and 70% for cash-out refinancing. Rates are influenced by factors such as credit history, loan amount, and lender terms.

26. What are typical mortgage interest rates for foreign nationals?

  • RC: Mortgage rates for foreign nationals are approximately 1% higher than the rates for U.S. citizens.

27. Will holding a J1 visa in the U.S. classify me as a U.S. expat for mortgage purposes?

  • RC: If you are living and working in the U.S. on a proper visa and have U.S. credit, you can qualify similarly to a U.S. citizen. Generally, foreign national rates are about 1% higher than U.S. citizen rates.

28. What is the optimal entity structure for Canadians to own U.S. real estate without double taxation?

  • BC: Canadians should consider owning U.S. property through a Wyoming LLC and establishing a Wyoming C Corporation as the holding company. This structure aims to mitigate potential double taxation issues by allowing profits to be retained within the U.S., thus managing tax liabilities efficiently in both the U.S. and Canada.

29. Is there a recording available after this session?

  • RC: Yes, a recording of the session will be available. It will be shared on various channels, including YouTube and the company’s website, after editing.

30. For mortgages based on rental income qualification, can nested entities besides individuals be LLC partners?

  • RC: For mortgages that qualify based on rental income, we generally prefer a straightforward LLC structure for property ownership. This approach offers more options for obtaining a mortgage compared to individual ownership.

31. Does the location of a virtual mailbox matter?

  • BC: No, it doesn’t significantly matter where you have a virtual mailbox for general business purposes. However, your choice could be relevant based on personal circumstances, such as tax implications if you’re moving from a high-tax state like California to a state with lower or no income tax, like South Dakota or Florida. This change in address can help establish residency status for tax purposes.

32. Can an LLC engage in various businesses like property investment, financial trading, or consulting?

  • BC: While it is possible, it is not advisable to mix different business types within one LLC due to liability and accounting complexities. It’s better to separate assets and business activities into different LLCs.

33. Are Wyoming LLCs as advantageous if I reside in the USA?

  • BC: Yes, Wyoming LLCs are still advantageous for their strong privacy laws and lack of state income tax, even if you reside in the USA.

34. As a non-U.S. resident, can I transfer monthly rental income from an LLC account to my personal bank for personal use/investment?

  • BC: Yes, as a non-U.S. resident, you can transfer monthly rental income from your LLC bank account to your personal bank account for personal use or investments. This is considered profit distribution or a salary from the LLC, and it is permissible for business owners to access their earnings in this manner.

35. Does America Mortgages place a lien on the property to secure their mortgage?

  • RC: Yes, America Mortgages does place a lien on the property to secure the mortgage. Typically, any mortgage obtained in the U.S. will involve placing a lien, usually in first position, on the property to secure the loan.