Managing U.S. Property from Abroad

Hi, everybody, this is Robert Chadwick with America Mortgages. Thank you for joining another one of our webinar series. This time it will be on property management in the US. We will be joined by Phil Gerathy. Phil is the CEO and managing director of Austplan, which is very similar to us, a foreign national and expat-focused property management company in the US. What that means is their main focus is providing US real estate or property management in particular for foreigners that are investing globally. So, Phil, maybe you need to turn your camera on and welcome.

Thank you, Robert.

Yeah, thank you for joining us once again. We appreciate it. Why don't you kind of introduce yourself and give us an idea of what you do, and what Austplan does, then I'll share your website, and then we can go through the slides and you can talk a little bit more in detail.

Thank you. So, my name is Phil Gerathy. I'm the CEO and managing director of Austplan Management. We are an international property management company specializing in the United States. So we manage properties on behalf of expat US citizens, as well as citizens of several other countries. Our specialty is unique. If we could start the slides of the website, Robert.

There we go. So one of the unique factors of Austplan management as a management company is to demonstrate to owners of properties that we are absolutely in their corner, that their properties are being professionally managed, and that even though they may be living in Singapore or Hong Kong or China or wherever, they can go to bed in the evening confident that their property has been managed by a company with over 50 years of property management experience throughout the United States. So we're actually in most major states — Washington state, California, Texas, Florida, New York, New Jersey, Michigan. So we are, if you like, in the major areas or states of the US that offer great value for money for investment properties.

And the total number of assets under management last year in 2023 was over $100 million of assets under management. That will certainly increase again this year as we are constantly receiving referrals from our clients to manage additional properties on behalf of those folks and additional people.

Thanks, Phil. For us, because our clients are only foreign nationals and expats, the biggest concern is always: if I buy this property and I'm able to obtain financing, how am I going to manage it? So I'll start the slides now and you can discuss how seamless this is, and how easy and hassle-free you at Austplan make this.

Austplan Management was started 16 years ago and has been in business constantly since then, and has grown exponentially throughout the United States. Whilst obtaining mortgage finance is relatively easy for expat investors, one of the key issues that comes up regularly is: how do I know my property is being managed professionally, in a way that I'm confident my return on investment is going to be generated, that I can contact people anytime I would like, and I can go to bed at night knowing that my asset is growing in value?

Austplan is a seamless, one-stop service management company. We're a little unique in this space. Most other management companies just specialize in management — obtaining a tenant, putting them into the property, collecting the rent and distributing it. We cover a whole range of issues. Before your property closes, we provide a full rental and market analysis, we attempt to find a tenant before the closing, sign a lease agreement, and complete a detailed walkthrough to make sure the property is in excellent condition. After the close, that's when the real work starts.

We provide the accounting and financial support, the hands-on management, and then the value-added services kick in. If you want to sell the property down the track, our role is to analyze the market, provide any renovations or repairs necessary to bring it back to first-class condition, prepare your tax return, put it on the market and sell it for you. It is a seamless process within our organization.

Many of these items are free and provided as part of the service — the free walkthrough before closing; obtaining HOA approval for tenants where required; researching the rental market to obtain the maximum rent. Ongoing management means constant contact with both the tenant and the owner, dealing with lease extensions and obtaining rental increases year on year.

As a professional manager we provide hands-on management from both an accounting and a maintenance viewpoint. We ensure the tenant complies with the lease, provide regular maintenance and inspections (usually every six months), and handle renovations and emergency repairs quickly — the last thing you as the owner want to worry about. We audit all repair costs and you give the approval.

If necessary we can arrange an LLC — if that's how you'd prefer to hold it, or if the mortgage lender would prefer an LLC. Our in-house accountant provides profit-and-loss statements every month, emailed to you, and completes your tax return at the end of the financial year. We hold every tenant's security deposit in a dedicated account, reconciled monthly, and use it to cover unpaid rent or work needed after a tenant vacates. We can arrange an ITIN so you can manage your tax liability — in the early years we're generally aiming for a tax loss while you're still cash-flow positive.

It's about balancing the relationship between the owner — always our number-one priority — and the tenant. We represent you at any homeowners' association meetings and arrange your property insurance with reputable companies, managing any claim end-to-end. We provide regular market reports, usually every year, so you can see your capital growth moving in the right direction.

The one thing several property managers fall down on is communication. Because we have offices in China, Australia, Southeast Asia and the United States, it doesn't matter what time zone you live in — there's always somebody you can talk to by telephone, email, WhatsApp or whatever platform you use. On the rare occasion we have to evict a tenant, we represent you in court; you don't have to come to the United States.

Some clients like to transfer titles — to a sibling, son or daughter — and we facilitate that. Legal advice is charged by the attorney, but as the manager we don't charge anything at all to coordinate that whole process. That's our competitive advantage over most other management companies. We have combined over 30 years of real estate investment experience and are in our 16th year of property management.

Some examples of areas we manage: Irvine, California, just south of Los Angeles, around the Great Park — a huge community where we manage many properties. Frisco in the Dallas–Fort Worth metroplex, one of the fastest-growing cities in the United States. And the greater Miami area, where we manage numerous properties, mostly north of the city.

We started the business in Southfield, Michigan back in 2008 and still have an office there. We have offices in Irvine, California; McKinney, Texas; Shanghai, China; and Australia for our Australian clients, of which we have numerous. Thank you, Robert.

Thanks, Phil — super informative as always. One of the biggest concerns for first-time US property investors, wherever they are, is the property-management portion. We partnered with Phil's company because, much like us, their primary focus is foreigners and US expats owning and managing US real estate. Whether a borrower lives in Berlin or Brisbane, as long as they have a property-management company, buying US real estate should be almost as easy as buying something in their own country.

My name is Robert Chadwick, one of the co-founders of America Mortgages. We are 100% focused on foreign nationals and US expats — all of our clients are living and working abroad but obtaining a US mortgage, whether for purchase or refinance. None of our mortgages require US credit. If you're a US expat it's great if you have US credit, but many expats have been abroad for years and no longer maintain it — that's still absolutely possible.

It's advantageous to have a credit report from your home country, but if there's no credit-reporting agency in your country, that's not a problem either. No assets under management are required — unlike certain major banks, we don't require you to park a sum in a US bank account. Foreign income is allowed; regardless of where you earn it, we treat it the same. We lend in all 50 states. A foreign national can get up to 75% financing on a purchase and up to 70% cash-out on a refinance.

If you're a US expat we try to make it exactly as if you walked into a US bank — up to 80% financing. Once you submit documentation we can get loan approval within 72 hours, and you'll receive a pre-approval letter to submit with your offer. Closing times in the US average 30 to 45 days, and you can sign your closing documents in most countries.

We have at least four different ways you can sign your closing documents in the country you live in, without ever traveling to the US. We offer 30-year fixed mortgages regardless of the borrower's age — it comes down to anti-discrimination: whether you're 19 or 99, a 30-year amortization is available. We also have a fixed ten-year interest-only program that converts into a 30-year fixed after the ten years, so you know exactly what you're paying over the life of the loan — a really good way to calculate passive income.

Our most popular programs qualify on the rental income of the property rather than your personal earned income — if you're buying an investment property, it should qualify on the cash flow of the property. Something we're very proud of: 97% of our loan applications are approved, and when a loan isn't approved it's usually property-related, not the borrower. We offer 24/7 service with 30 loan officers across twelve countries, so we speak your language and are in your time zone.

On the rental-coverage program no personal income is required, no US credit or residency is required, loan amounts run from $150,000 to $3 million, and 30-year fixed and interest-only are available. With 75% financing, a $200,000 property needs only a $50,000 down payment — which makes building a portfolio obtainable for almost anybody. We order an appraisal that also analyzes the market rent; as long as that rent covers principal, interest, taxes and insurance, the loan qualifies, normally on a one-to-one basis.

If you'd rather use income (AM Investor Plus, for a potentially better rate), we don't ask for tax returns. If you're employed we want a letter from your employer on letterhead; if self-employed, from your accountant — stating two years of income and current year-to-date. We provide the template. We then work off a debt-to-income ratio no greater than 43% of gross income: if your pretax income is $10,000 a month and your mortgage payment is $4,300 or less, the loan qualifies.

For private-bank and high-net-worth clients we have specific programs that don't require personal income — we take a two-month average of your investment portfolio (stocks, bonds, crypto, cash) and use it to qualify, with no encumbrance on the portfolio after closing. We can do residential loan amounts as high as $100 million. And we recently launched a student program that works like rental coverage: if your child attends a US university and you'd prefer they don't live in the dorm, you can qualify on the property's rental income and even add the student to the loan to start building US credit.

First question: a friend of mine had an investment property in the US but communication was a problem. Can I be assured of ease of communication? Phil, that's you.

This is a key issue and it comes up regularly. We have offices in Southeast Asia, Australia and the United States — it doesn't matter what time zone you're in, somebody is available to talk to you. For Asian clients that might be WeChat; if not WeChat, WhatsApp; if not WhatsApp, telephone or email. But somebody will physically talk to you. So that's not an issue at all.

The main question we get is: how do I get started? I live in Singapore, Hong Kong, Shanghai or Sydney, but I want a property in Dallas — what do I do? The answer is you talk to us. We'll get you started, show you how to begin, deliver the investment property and then manage it for you professionally.

And to add to that — in my opinion, and most investors' opinion, the most important thing is to get pre-approved for a mortgage first. There's no cost to get pre-approved and it's very quick, normally less than a couple of days. Once you have that letter you can tell Phil your requirements and he can help you source and manage the property.

Can I sell the property and buy a new one straight away? Absolutely. The US has unique advantages that can help you avoid capital-gains tax — it's called a 1031 exchange, and I'm happy to put you in touch with one of our accountant partners. There are no restrictions on the number of properties you can own. Rather than selling, a lot of people refinance after a year or two, pull the equity out and use it to buy another property — a great way to build a portfolio without cooling measures or stamp duties.

The property-management fee is based on gross rent per month. For a single property our standard fee is 8% of gross monthly rent; for multiple properties we negotiate, usually between 5% and 8% depending on the quantum. We don't charge any fee for hands-on or day-to-day management, and if a property is not tenanted we don't charge a management fee at all — only once a tenant has moved in.

Our goal at America Mortgages is to partner with companies like Austplan, and with CPAs and attorneys who specialize in foreign nationals and US expats. The goal of any investment property is to not pay tax on the rental income earned — and in the US, foreigner or citizen, you get the same tax advantages. You can often show a loss that carries forward to mitigate capital gains. I don't give tax advice, but the US is one of the best tax locations for international investment property.

Last question: can you process a loan for a foreign national under my LLC registered in Delaware instead of my individual name? Yes — holding title in an LLC is very common. There has to be a borrower, so as the individual you're responsible for the loan, but for ownership, for reasons from tax to security, you can hold the title under the LLC.

We do a full internal site visit once every six months — sometimes more frequently depending on the tenant or a finicky homeowners' association. On repairs, in each state and city we have a panel of tradespeople. When something needs doing, the tenant raises it in the tenant portal, which triggers a maintenance request; if the cost is above $300 we notify the owner for approval, and below $300 we generally proceed and it appears on the month-end profit-and-loss statement.

Do you help manage short-term rentals such as Airbnb? At this point, no — homeowners' associations generally prohibit Airbnb through their covenants, and short-term management is a day-to-day exercise where tenant quality can be questionable. That said, we're exploring it with one client on some townhomes.

Can you manage large multifamily or apartment buildings? Yes — we manage six-, ten- and twelve-plexes, and we're negotiating an apartment building in Brooklyn with around 400 units. Large buildings require on-site rather than off-site management, and the management fee usually comes back to around 5% gross.

Since interest-only rates are high, why go for a fixed rate over five or ten years? What makes the US unique is long-duration mortgages regardless of the borrower's age. Most people choose a 30-year fixed because we do expect rates to come down and you can refinance when they do — our loan officers are here for the whole journey, not just one transaction. If you intend to exit in five years, a five-year fixed may be better; but the surety of a 30-year mortgage is only available in the US.

For an indicative sense from today's market: a US citizen is around 7% on a 30-year fixed, and an expat or foreign national is normally about three-quarters of a point to 1% higher — which, for foreigners with no US credit, is quite good by global standards. (Rates were as quoted on the webinar date; they are not a live quote — always confirm current pricing with a loan officer.)

My parting words: if you're an existing US property owner and you'd like a professional, extremely competitive property manager, talk to me. And if you're not, and you're asking "where do I start?" — talk to Austplan Management and talk to America Mortgages.

Thank you, Phil. We'll have another webinar in about two weeks, and we're going to announce some exciting new loan programs. Thank you again, everybody.