Q&A: Managing U.S. Property from Abroad

During our recent webinar titled “Managing U.S. Property from Abroad,” hosted by Phil Gerathy (PG), Managing Director at Austplan Management Inc, and featuring America Mortgages’ CEO Robert Chadwick (RC), they addressed numerous questions regarding property management in the U.S. and financing options for investors. For those who missed the webinar, the recording is available here.

Phil Gerathy and Robert Chadwick have dedicated time to provide detailed responses to the questions received, with remarks edited for clarity and brevity.

Remarks have been edited for clarity and brevity.

Q: A friend of mine had an investment property in the U.S.; however, communication was a problem. Can I be assured of ease in communication?

PG: Yes, ease of communication is ensured. Offices are available in Southeast Asia, Australia, and the United States, with staff reachable via various means, including WeChat, WhatsApp, telephone, and email, regardless of time zones.

Q: This may sound like a basic question, but how can you assure me I won’t have to worry about my property?

PG: Assurance comes from 16 years of experience and a reliable infrastructure. The team at America Mortgages and Austplan Management knows how to deliver peace of mind through effective communication and proven referrals.

Q: What question do foreign investment property buyers ask the most?

RC: The most common question concerns how to get started. Many potential investors living abroad wonder how to begin the process of acquiring property in the U.S.

Q: Could you provide an overview of your service fees, including approximate figures?

Please contact us for specific chargers for services.

Q: How exactly do you deploy people all over the U.S.? For instance, if I buy property in San Francisco but you don’t have a presence there, you mentioned having someone in Los Angeles. Can you explain how this works?

PG: In locations without a resident office, the closest individual is called upon to handle the property. Infrastructure for property management can be established remotely from the head office in Dallas, Texas.

Q: I am ready to go, but my wife is extremely risk-averse. Do you have reference/referrals of happy clients that we could communicate with (for both the mortgage and the property management service)?

RC: References or referrals of satisfied clients are available upon request. Both America Mortgages and Austplan Management can provide contacts for potential clients to communicate with.

Q: Can you do 30-year variable rates?

RC: Yes, 30-year variable rates are offered.

Q: Which states do you manage properties in?

PG: Properties are managed in various states across the U.S., including west coast states, Texas, Florida, New York, New Jersey, Michigan, and Washington state.

Q: Can I visit your team in Dubai?

RC: Yes, arrangements can be made to meet with team members in Dubai.

Q: Are there any issues with purchasing a couple of low-value properties that would total a similar amount to a 200k loan?

RC: Yes, there are potential loan programs that could accommodate the purchase of multiple low-value properties totalling a similar amount to a $200,000 loan. We would need to discuss your specific situation with one of our loan officers to determine the best options available to you. If this is something you’re interested in pursuing, we can explore the possibilities and tailor a solution to meet your needs.

Q: Do you offer HELOC for foreign nationals wanting to purchase in the U.S.?

RC: HELOCs, which is a home equity line of credit or a second mortgage, are not available for foreign nationals, but options may exist for U.S. expats.

Q: American citizen living overseas 20+ years with no U.S. credit anymore.. Which program would apply to me? U.S. expat or foreign investor?

RC: American citizens living abroad can qualify using credit from the country they reside in. You can potentially qualify as U.S. expats after re-establishing your U.S. credit, which may offer better pricing, and can later refinance into a U.S. citizen rate.

Q: Firstly, thank you for the presentation. Just wondering about the deal for tenants. What is the standard renovation deal for tenants? Two years, or if I have intentions to move to the US in the short term, can I request my property before the end of the term? And can I sell my property to buy a new one?

PG: The standard lease period ranges from either one or two years. It’s 50-50. Some people will sign a one-year lease and then extend, and that process means that we get involved in the negotiation to increase the rent in the second year, some tenants will sign a two-year lease where we’ll lock in a rate, but that’s higher than what it would be if it was a one year lease. Rarely, do we get much past a two-year lease, but we do have several people that will stay on and we have tenants that have been in houses for three and four years. We just continually renew the lease and adjust the rent.

Q: Should I get an IPA before I buy this property?

A: Yes, it’s advisable to obtain a pre-approval before purchasing a property to understand current rates, mortgage payments, and ensure readiness to make an offer. Pre-approval is typically required before entering into a purchase agreement.

Q: Approximate rates for these programs at the moment?

RC: For US citizens, current rates for a 30-year fixed mortgage are around 7%. For expats or foreign nationals, rates are typically 0.75% to 1% higher.

Q: Application fees?

RC: There are no application fees charged for completing the mortgage application process. Pre-approval can be obtained within 72 hours, and fees are only paid at the close of the transaction, typically around 2% of the loan amount.

Q: I have 21 condos, all in the Fort Lauderdale area. Nine different complexes. What is the cost of property management for each/all units?

PG: Property management fees are typically based on the gross monthly rent and can range from 5% to 8%, depending on factors such as the number of properties owned.

Q: How can I help my kids build a credit score if I only buy one property?

RC: It’s going to depend on how you structure the loan. But if that is a requirement for the loan, children can be added to the loan as long as they obtain an ITIN (Individual Taxpayer Identification Number) to start building credit.

Q: Are we able to speak to a few current long-term customers on their experience using you as their property manager?

PG: Yes, references from current long-term customers can be provided upon request to confirm the quality of service provided.

Q: What’s Austplan’s fees for property management?

PG: We don’t charge any fees for hands-on or day-to-day management of the property. We charge one fee, and that’s a monthly management fee based on the gross rent that we receive. If the property is not tenanted, we don’t charge the management fee. We only charge a management fee once the tenant has been located and has moved in. Property management fees typically start at 8% of the gross monthly rent for a single property and can be negotiated down to around 6% for multiple properties.

Q: Can New York offices manage or sublet management properties in Philadelphia?

PG: Yes, properties in different cities can be managed from a central office, with local personnel handling on-site maintenance and specific city-related issues.

Q: How often do you make regular site visits to properties under your management?

PG: Site visits are typically conducted every six months, with additional visits as needed based on tenant or homeowner association requirements.

Q: What is the average amount of expenses paid before the property has positive cash flow? Management, taxes, insurance, maintenance, and other costs?

PG: Excluding interest on borrowings, properties can achieve positive cash flow from the second month of a tenant moving in.

Q: Since the current interest-only mortgage rates are high, why would I want to go for a fixed rate over five or ten years? How do I take advantage of these drops in two to three years?

RC: Fixed-rate mortgages offer stability and predictability in payments over the long term, providing peace of mind. While rates may drop in the future, fixed-rate mortgages ensure consistent payments and protection against potential rate increases.

Q: Do you help manage short-term rentals such as Airbnb?

PG: Currently, short-term rental management, such as Airbnb, is not offered due to homeowner association restrictions and concerns about day-to-day management. However, exploratory efforts are being made for certain property types.

Q: Can you manage large multifamily or apartments with a lot of units? If so, what is the maximum number of units, and how would that work with the rates?

PG: Yes, large multifamily properties with numerous units can be managed, with on-site management often required for larger buildings. Rates typically start at around 5% of gross rent for large properties.

Q: Are management fees tax deductible?

PG: Yes, management fees are typically tax-deductible expenses, along with other property-related costs, helping to reduce tax liability.

Q: How do you manage repairs and repair costs?

PG: Repairs and maintenance are managed through a panel of qualified tradespeople, with tenants initiating maintenance requests through a management platform. Repairs over a certain threshold are approved by property owners.

Q: Can you manage properties in Austin, Texas, Atlanta, Georgia, Nashville, Tennessee, Charlotte, and Raleigh, North Carolina, Indianapolis, Indiana, and three cities in Florida?

PG: Yes, properties in various cities and states can be managed remotely, with local personnel handling on-site management and specific city/state requirements.

Q: What are the costs of refinancing a property to a lower rate?

RC: Refinancing costs depend on current rates, loan terms, and specific state requirements. These costs include brokerage fees, title insurance, appraisal fees, and other related expenses.

Q: Phil, are you based in Brisbane?

RC: Yes, Phil is based in Brisbane, Australia, but travels frequently to various offices in the United States for business purposes.

Q: Do you process a loan for a foreign national under my LLC, registered in Delaware instead of under my individual name?

RC: Yes, loans can be processed for foreign nationals under an LLC, with the individual being responsible for the loan while the property ownership can be held by the LLC.

Schedule a call with our U.S. Mortgage Specialist.