Okay. So we are here with Scott Dillingham of LensCity in Canada, and Scott is a mortgage broker, dual licensed in The US and in Canada. And a big part of his business is helping Canadians finance their US real estate investments. His team are closing for one of my clients right now on a property in Kansas City. It's been a real pleasure working with them.
David Garnder:But we got our heads together and thought it would be a good idea to spend twenty, twenty five minutes just talking through the loan product that's available specifically for Canadians and also some of my UK clients. There's a lot of crossover who are buying rental properties in The US. What kind of terms are available? And trying to bust some of the myths, and the misconceptions that might be flying around with regard to financing. So, Scott, was that a fairly accurate representation of who you are and what you do?
Scott Dillingham:Absolutely. Absolutely. 100%. Thank you so much for the introduction.
David Garnder:No worries. So the product that we use is a DSCR loan. It's something I'm very, very familiar with myself. It stands for debt service coverage ratio, and it's effectively a rental property loan where the lender's looking at the income generating potential or capacity of the property in relation to the debt service costs rather than underwriting the loan based on the borrower's income and credit. Is that kind of a a back of the napkin fairly accurate description of the loan product that we're using?
Scott Dillingham:Yes. Yes. You nailed it. There's a few others as well if you get into the commercial stuff. But on, you know, eight units or less, that's the product.
Scott Dillingham:And one thing you mentioned, right, you mentioned we're in Canada, and and you've got UK clients, but this literally applies to every owner. It doesn't really matter where you're from as long as it's not like a sanctioned country where there's sanctions against them from The US. But if you're from a non sanctioned country, you can purchase, and everything we're gonna discuss here will apply.
David Garnder:Yeah. Okay. Perfect. So, yeah, I mean, I've come across people from non Hague countries, and that can be a few extra hoops to jump through when it comes to things like signing. They have to go to a US embassy.
David Garnder:Notaries and apostles can be a little bit different. But do you wanna give me an idea of kind of the terms that are available for foreigners? Because what what I find when I'm having initial conversations, we do a a, like, a ten minute fact finding call with people that are interested in buying rentals in The US. And often, you know, they've been on bigger pockets or one of the other forums, and, you know, they've been told you can get an 80% loan to value DSCR loan at 6%. And it's not necessarily the case when it comes to foreigners.
David Garnder:The terms are a little different. Do you wanna talk me through one the main differences to clear that up for people?
Scott Dillingham:Yeah. Yeah. So there's a couple restrictions. There's the loan to value restrictions. So you nailed it.
Scott Dillingham:Usually on purchases, if we're just talking about DSCR loans, it's 25% down. But keep in mind, that lender does require the minimum property value to be one fifty. Right? So if the property value is below that, then we have other lenders that are at 30% loan to value. Yeah.
Scott Dillingham:And then no. That's not a purchase. Refinancing, the loan to values are different. Usually, for a foreigner, the max is 70% on a refi, but most will do it at 65. Now we have some tricks to leverage that, but a lot of clients say, okay.
Scott Dillingham:Well, what's my rate? Right? And so like you said at the beginning, we have to run the debt service coverage ratio. We see how strong the property is, and that will help to determine the rate. But the other thing like you mentioned was where where you can be designed to close.
Scott Dillingham:So we have a few lenders that support RON, which RON stands for Remote Online Notary. Okay? So these lenders that have this generally have a little bit higher price on the rate, but you can sign anywhere in the world and it's completely remote. So we take all these things into consideration when we're speaking to a client. Right?
Scott Dillingham:If we know there's no way they're gonna be able to get on US soil, why would we try to use a lender that only supports that? Do you know what I mean? Yeah. So we we optimize that. Yeah, I mean,
David Garnder:a really good example of that is the client you're closing for us right now. He was given the option. Right? He lives in Ottawa, so he's close. He's about an hour's drive away from The US border.
David Garnder:So it was a case of you you can get a rate at 7% and sign on US soil, or you can get a rate at 7.125%, I think it was, and and you can close remotely. But, I mean, I I've done this a lot, and what I ended up doing with my property was have a corporate resolution for my LLC and an authorized signatory. But that's not necessarily always in line with what a lender expects as well. Right? So this is where I think the value of working with someone like yourself who's experienced specifically with nonresidents is Yeah.
David Garnder:So valuable. I mean, I speak without fail. This has happened this week. Without fail, I speak to someone from either The UK or Canada, and they don't know they didn't know that they couldn't, get a loan at less than a $100,000 without paying a ridiculously high rate. So they've gone out
Scott Dillingham:and they
David Garnder:bought all these kind of much cheaper properties. They've renovated it and great. But then they've come to the refinance element, and they thought they were gonna get an 80% loan to value refinance at 6%, and that's not quite how it works. So Yeah. Putting a financing strategy together that aligns with your residency, what you're buying, and your long term goal.
David Garnder:It all goes into the mix. And I think this is a part of it that people don't pay enough attention to early on in terms of understanding the financing that's available, the terms they're likely to get so they can create a pro form a that actually is going to be fairly accurate rather than thinking, oh, you know, I'm going to buy this $120,000 property and leverage it at 80% loan to value. You're probably not. In reality, your purchase price really to start getting good terms, in my experience, and I don't know whether you'll agree with this, it's probably about a $150,000 purchase price and upwards. Right?
David Garnder:Yeah. Below that, and you start to see much higher loan origination fees, and you start to see much higher cash reserve requirements, and you start to see higher rates as well. That's been my experience anyway.
Scott Dillingham:Yeah. I think you're right.
David Garnder:Yeah. I I think clearing some of that stuff up before people start buying properties or, you know, spending money or borrowing money from a hard money lender, which, you know, I spoke to a Canadian guy. He's bought a couple of houses and borrowed hard money, and he's come to the refi element, and he can't do it. So really, the terms are, first of all, find a good property that's generating enough rental income to cover the mortgage payment. Right?
David Garnder:That's number one.
Scott Dillingham:Yep.
David Garnder:And and then you're gonna be realistically I mean, I've been putting all of my pro formas together based on a 70% loan to value, but you're saying 75% is not impossible?
Scott Dillingham:Yeah. Yeah. And and we always say up to, so it's best to speak to myself or somebody on the team so that we'll we'll literally price that property. So before a client even puts an offer and that's the beautiful thing about what you guys offer. Right?
Scott Dillingham:Like, you have an inventory of stuff. So you've kind of pre vetted it. So it's it's nice and easy. But ultimately, yeah, like, we'll price that property so the investor knows the loan to value, the rate, and everything. And that's what's different.
Scott Dillingham:A lot of times when people get preapproved, they get a rate and they can use it on whatever property. But for this product, that's not how it works. This property or sorry, this program, the property holds the rate because it holds the numbers of what the income and expenses are. Right? So the next door neighboring property, I had one actually.
Scott Dillingham:One of my very first loans I did, it was this guy was buying two condos in Florida. They were in part of the same condo complex, but they were across the street from each other in two separate buildings. And the ZIP code was different on them, and the one was priced a quarter point higher than the other one even though everything else was the same. Just because slightly different. So even that had an impact.
Scott Dillingham:Now we did discover that the one side of the street was deemed slightly higher flood zone risk, so that's actually why the rate was a little bit higher. But literally, neighboring properties could have different rates. So it's always good to check the property and and have us review it for with the client.
David Garnder:Yeah. Exactly. I I think this goes back to what we said earlier. It starts with the property. This is why we carry an inventory of property we've already run the numbers on.
David Garnder:So by the time if I'm speaking to one of my clients, they're interested in buying something, we're not going out there and scrolling on Zillow looking for a good deal. We have a a small inventory of deals that we know have got a good DSCR ratio. We know they're gonna qualify for financing. The precise rate's gonna vary based on the the vagaries of that particular property, you know, its location and all of that kind of stuff. And that's another element as well, I think, that's worth mentioning is you're gonna get a different rate in different states, right, in in a lot of cases.
David Garnder:So we got a a quote yesterday for one of my UK clients that's buying in Cleveland. The rate's a little bit higher because they can't put a prepayment penalty on it. Yep. So they're paying a slightly higher interest rate, whereas the property that we're we're sort of comparing that to in Kansas City had a a much lower rate, but had a five year prepayment penalty, a five year step down. So all of this goes into the mix, and this is why it's so important to work with a lender or broker who understands it.
David Garnder:Because I you know, I've been doing this for ten years, and the vast majority of US mortgage brokers have access to foreign national loan programs, but they don't understand the process, and they don't understand the extra hoops that one might have to jump through in terms of signing and notaries and apostles and all that kind of stuff. And also, you know, approaching it just psychologically from a a nonresident's perspective, it's a little more intimidating when you're buying property in another country. Yeah. And there's a lack of knowledge of terminology and the process as well. So, you know, I I think working with somebody who specializes in that and it's not just The US you do.
David Garnder:Right? You've got you cut you have loan coverage for Canadians that are buying in Mexico as well as well as obviously Canada.
Scott Dillingham:Yeah. Yeah. Well, not even just Canadians. Same thing. Right?
Scott Dillingham:So if you had someone from UK that wanted to buy in Mexico, it's the same kind of program. Mexico loans, they're a bit harder. They do look at your income, so they're gonna wanna see employment income. Right? Where in The US, it's not.
Scott Dillingham:It's literally just the property. Yeah. But, yeah, we cover Canada, US and Mexico. We are looking for other areas, but we wanna make sure they're hotspots. Like, we don't wanna just, you know, set up financing in all these countries, and then, you know, we don't Yeah.
David Garnder:Nobody Nobody. If there's no appetite, nobody's spying there. It's kind of a waste of your time. Yeah. So one of the other things I I made some notes, and I should have really read
Scott Dillingham:them, shouldn't I? That's okay.
David Garnder:Common misconceptions, something that we come across a fair bit, especially with this seems to be with our Canadian clients is some of them think that their Canadian credit score is going to impact the terms that they get in The US? And and like we said, it's not the case, is it?
Scott Dillingham:I'm gonna say 99 out of a 100, it's not the case. We do have those odd lenders that will use the Canadian credit score because in The States, they use Equifax, and that's what we use in Canada as well. But there's very few lenders that have this program. And even if they will use your credit score, if they've got a higher rate than a lender that's not using it, you know, it doesn't matter. Right?
Scott Dillingham:So I'm gonna say, yeah, it doesn't matter your credit score. But that can be good too because if you have a weak credit score in Canada, you can still do this.
David Garnder:Yeah. Exactly. And this is the thing. You can have no credit, not great income. Like, we I a lot of the investors that I deal with have sketchy provable income because they're business owners.
David Garnder:They're self employed. You know, they make a lot of deductions, so they don't have a high taxable income. So getting qualified on a conventional loan even in their own country can be quite challenging. Certainly, in The UK, there's been a massive tightening in sort of lending criteria and proof of income and all this kind of stuff. So it it it can be quite difficult and intimidating, but the DSCR loan in The US for a foreigner is actually a really easy product to qualify for provided you can prove who you are and you've got a good quality property.
David Garnder:And in fact, it's a fairly good barometer of whether you're making a decent investment or not. Right? If you can get an approval and get financed, if a lender's prepared to lend against the property, then it's probably not gonna fall down tomorrow, and it's probably, you know, a fairly decent deal. It's a it's a good filter in most cases.
Scott Dillingham:Right? Absolutely. And just to touch on that, right, into the other point earlier about, you know, if you could be remote and sign or not, that's another thing that we look for is the down payment. Right? So we do need sixty days worth of down payment, but some lenders want these funds to be seasoned in The States.
Scott Dillingham:So that's the terminology they use. So seasons means Yeah. You know, we can provide proof that they're in The States. Some are okay with it coming from Canada, UK, China, like, wherever. Right?
Scott Dillingham:But you need to know this upfront, and that's why I think it's really good like you said because a lot of US brokers have this product. But if they don't know all the details and it's funny they don't because it's not their clientele. Right? They're used to working with Americans. So it's they miss these nuances, but even that's one of them is the down payment.
Scott Dillingham:Right? So if you have a deal, right? Because I've seen your deals and you guys get awesome deals. So let's say you put one on your website, we need a thirty day closing. If their funds are in Canada and not in The States seasoned and that lender needs sixty days, right, that borrower can't buy that property or we have to get an extension.
Scott Dillingham:So just like literally optimizing all of those things is something that we we look for.
David Garnder:Yeah. Exactly. The lender that you choose might dictate the kind of property that they can buy or or what specific property they can buy. Right? Because all of this goes into the mix.
David Garnder:And, again, it all circles back to what we said, you know, speak to someone who knows what they're talking about before you go making big decisions, especially big money decisions. Right?
Scott Dillingham:Yep.
David Garnder:So one of the things that I wanted to just touch on is the refinancing element. So I I mean, most of my clients are buying. I do get inquiries from people who already own, and they're looking to refinance. As you know, Chris has probably speak to a couple of those guys now. But something that I've experienced over time is the requirements for refinancing.
David Garnder:There can be seasoning requirements there as well. Right? Mhmm. As I understand it. And also, I've seen lenders, and I don't know whether you've experienced this, value or appraise the property based on cost basis instead of on appraised value for a refinance, which can really kind of throw a spanner in the works if you're expecting to pull all or some of your money out, and the property might have an appraised value of 250,000, but the cost basis might be 200,000.
David Garnder:Can you just explain a little bit about how that works and clear that up?
Scott Dillingham:Yeah. So that is actually a lender requirement. So lenders will say to us, you can order appraisals through these platforms. Right? It could be NANO, which is Nationwide Appraisal Network, NOS, appraisal nation.
Scott Dillingham:Right? There's all these different ones, and they all have different criteria. So depending on the lender, we might be forced to order an appraisal based on their specs, and that specific lender might ask to get it appraised based on cost or the appraisal value. Right? So it that is really from the lender that is is sourcing that requirement.
Scott Dillingham:And, actually, I I have some tips on how to maximize your refinancing if if you want me to dive into it here.
David Garnder:Yeah. Yeah. For sure. 100% for me. Certainly.
David Garnder:Yeah.
Scott Dillingham:Yeah. So we we discussed just briefly, but refinancing is between 65 to 70% loan to value. Right? So what are the tricks that we'll do, especially if we know the investor is wanting to renovate the property and refinance it? We'll tap into a fix and flip loan.
Scott Dillingham:Now a lot of Canadians and other investors when I speak to, they're like, well, I don't want to sell it. I want to keep it. But it's still the same loan. You don't have to sell it necessarily. But in the lender's eyes, you're getting rid of it.
Scott Dillingham:Right? So they're giving you the loan temporarily, then you're paying them off and you're moving somewhere else. So we can use a fix and flip. So under the fix and flip loans, you generally get higher loan to values anywhere from 30% down to as little as 10% down, okay, of the purchase price, and then they fund a 100% of the renovations. Yeah.
Scott Dillingham:So based on that, you're at a higher LTV in the beginning. So that's how we kind of structure it for the investors. So we'll we'll tell them, look, you're not gonna necessarily get your money out at the end, but I can help you to put less money in in the beginning. Right? And it is based on experience.
Scott Dillingham:So then we'll do the fix and flip loan. Now what we do when it's done is we'll do a transfer. So with a transfer, we can go to 75% loan to value. Right? So we're taking it, the debt from the one lender
David Garnder:Right.
Scott Dillingham:And we're bringing it over and we can cap, like, the lender fees and closing costs onto the loan amount as well. So you're getting a little more than 75% loan to value. But that's kind of the way that will suggest an investor gets max leverage if they're buying this property knowing that they're going to put money in and refinance it. Otherwise, if it's something that you've owned for a year or two, three, whatever, if it's a long term hold already, then you will be stuck at the 65 to 70% depending on the lender.
David Garnder:Okay. So it could potentially be more advantageous even if you've got the cash to go out and buy your fix and flip. Taking into account the longer term plan with refinancing, it can actually be sensible to borrow the money for that because it's gonna aid you with terms when it comes to refinancing.
Scott Dillingham:That's right.
David Garnder:Interesting. So, yeah, all of the fix and for or burr deals, if you like, that I've done were 8080% of purchase, 100% of rehab. Nice. Unless obviously How many
Scott Dillingham:have you done?
David Garnder:Oh, Brewer deals probably more than 60.
Scott Dillingham:Okay.
David Garnder:Most most of those were private lenders, not hard money lenders, though. So sort of mom and pop investors investing with their retirement accounts and such.
Scott Dillingham:Okay. Well, because you've done 60, and this is just for your knowledge, yeah, you should be able to get 87 and a half to 90% of your purchase price with with with great rates because you've done that many too. As of today, we're recording this September. You should be able to get around 8.99 on that for a fix to flip loan.
David Garnder:That that's pretty good. I think the last one we did last year was at 12%. So that's Yeah.
Scott Dillingham:If you send me a property yeah. If you send me a property after the show, I'll I'll get you a term sheet so you can see exactly. You'll see the exact rate, the fee, and the loan to value.
David Garnder:Yeah. We're looking at one in Toledo at the moment, actually. The the Okay. For me to do a a fix and flip now, the stars really have to align because we we were burned so badly with contractors and poor quality work and that kind of stuff that we've got one contractor we'll work with. And unless a deal comes up when he's available, then I'm not doing it.
David Garnder:Yeah. Just because as you well know as an investor yourself, finding good people to fill the slots is the challenge.
Scott Dillingham:Right? Plenty of properties. Yeah.
David Garnder:Yeah. Loads of properties. There's there's millions and millions of properties, but finding good people to perform the functions that you need. You've got competency capacity, and capability is is the challenging part. But there's two more things I wanna cover real quick.
David Garnder:Number one is interest rates because I speak to people from The UK where mortgage rates are a little bit lower, and I tell them, well, you know, we're writing loans at the minute at 7%. They think that's high, but it's relative. Right? Because properties are generating way more cash flow than UK rentals. So it's all relative.
David Garnder:But most folk that know a little bit about mortgages in The US know that interest rates to mortgages are not tied to federal interest rates as such, more to the ten year treasury yield, but that's a little different when it comes to DSCR loans because they're tied to the overnight financing rate, right, which is the shorter term risk free borrowing rate with the lenders spread on top. So Yep. We're seeing you know, we've just seen the Fed drop interest rates, and I think that was already priced into mortgages, to be honest, about a week in advance by the looks
Scott Dillingham:of things.
David Garnder:So I don't see we're gonna you know, mortgage rates are gonna fall off a cliff in The US anytime soon. But it seems to me that DSCR loan rates are a little more stable than than sort of conventional mortgage rates. Would that be true to say, or am I missing something?
Scott Dillingham:I think so. We get emails daily of rate went up, you know, point zero zero five basis points, rate went down. So it's it's very minute increases or decreases that happen daily. So, yeah, it's it's not drastic. And the other thing is is it very much is relative.
Scott Dillingham:The things that you know, you touched on it. Right? A five year prepayment period. For those listening that have no idea what that means, that means your loan is open after five years. Now your client that had to accept that higher rate and get to zero prepay, that means he has a fully open or she has a fully open loan.
Scott Dillingham:So Yeah. Tomorrow, if they technically wanted to, right, they could refinance and get a different rate Penalty free. So in The States by default, you can refinance after five years where I don't know how it works in UK, but in Canada, you pick a five year term and then it renews and but you have to pick another term. Right? So if you break your loan during that term, unless it's at the renewal period, there's big penalties.
Scott Dillingham:So even though the rates might seem higher, the fact that you're not having those penalties, you can get interest only loans. You can get forty year amortizations instead of just thirty. Right? So you you can do these things to increase the cash flow of your property. So it's it's really not much.
Scott Dillingham:Right? If the deal makes sense and you can still profit, it's worth it.
David Garnder:Yeah. Exactly. And and I think that's worth touching on as well because in The UK, for example, when I have my, you know, quick ten minute fact finding call and we talk about the financing product, and I'm telling people it's a thirty year fixed interest rate, It'd be blows people's minds because in The UK, it's it's all variable rates. You can have a fixed rate for a period. Like, most of them are the equivalent to an ARM mortgage where it's a short fixed rate, and then it's changing every year or every six months or sometimes even monthly in The UK.
David Garnder:Whereas in The States, your rate is fixed. If you want to if you choose a thirty year fixed rate loan, it's fixed for thirty years. Right? So if rates go up to 12% and you've got a rate at six and a half or seven and half, whatever it is, that's what you're paying. It doesn't change.
David Garnder:Right?
Scott Dillingham:Yeah. Absolutely. And that's beautiful. I don't know about UK, but Canada, our rates almost tripled over the past few years. Now they're starting to come down now, but for those Canadians coming up for renewal, right, even myself on my investment properties, my mortgage payments went up.
Scott Dillingham:Where in The States, you would've just stayed the whole time. Right? So it Yeah. It gives you that cushion that people don't anticipate needing, but it comes in handy.
David Garnder:Yeah. And also, means if you're buying a rental property and it's maybe got a couple of $100 in positive cash flow on day one, in five years' time, you've put the rent up a couple of times by, you know, you're you're up to $304,100 dollars a month in positive cash flow because your cash flow expands. And whilst your costs increase as well, generally, rent tends to outpace inflation or it has done, you know, historically. So the process. I I think it's worth touching on the process.
David Garnder:For me, working with you guys has has been an absolute dream. We submit the property, and you guys, within a day, come back and say, these are the terms. Provided the information we've provided with you, the purchase price, the rents, the property taxes, the insurance, all of those numbers stack. And when they during the underwriting process, they're all verified, then we get the rate within a day. Right?
Scott Dillingham:Yeah. Absolutely. We have some lenders where we can price instantaneously on their portal. Right? But we have some lenders where it's like, fill out this form or email us the details, and we'll get back to you.
Scott Dillingham:So that's why sometimes it takes a day. But if you yeah. If it's ever a rush, we can get something instantaneously for you. But, yeah, that's the process. We price the loan.
Scott Dillingham:We price the property, and then we let the borrower know once we've identified the best lender, we can then let them know what's needed because every lender has their own kind of niche. Like, we even have one lender, and this is crazy because we talked about sixty days worth of seasoning for your down payment. We have one lender that doesn't even care. They don't even wanna see that. Right?
Scott Dillingham:So just depending on who the lender is and what's going on, right, we'll we'll need different documents.
David Garnder:This is a problem for people who go out there and try and work direct with a lender. They've got one one company they're dealing with, and they've got their way of working, and that might not align with what you're buying, what terms you need, all that kind of stuff. So you've got whole of market access, and you can pick the lender that's gonna be most appropriate for that specific client. Yep. So the process is really simple.
David Garnder:We're going through the process with you guys right now. We get the preapproval for the property. We then go and get that property under contract with the client. That's part of what we do here. And then there's the underwriting process.
David Garnder:And normally, in a conventional loan, the underwriting process is they want credit. They want income proof, they want proof of assets, and and all of that fun stuff. With this, it's a little different. They want the title to the property. They want the rental agreements, lease, rent roll, property management agreement, insurance quote, and you guys will order an appraisal.
David Garnder:Right? And and this is a really good example. The deal we're doing right now, we have that property under contract for a $176,500. The appraisal went out and said, no. It's a $163,000.
David Garnder:So we were able to negotiate that price drop with the seller in that case, and and this client's ending up with a a property for way less than he got under contract, which is great. But that's kind of the the hard stop, I guess, in the underwriting process. As long as the rent and the property taxes and the title and and the insurance measure up and the appraisal comes in well, then you're good to go. Right?
Scott Dillingham:Yeah. You got a deal. And, honestly, the worst case is your down payment will increase. That's really the worst case. Do you know what I mean?
Scott Dillingham:Like, it's not it's not like, unless the property is, like, to the studs and it wasn't disclosed to the lender because that's a problem. Right? Under this program, they're they're looking for minimal deferred maintenance. They don't want it to be, like, to the studs. But Yeah.
Scott Dillingham:The worst case is, yep. You know, the numbers didn't jive. So instead of the 25 down like we told you about, we're gonna need 27 and a half or, you know, whatever the case may be. And then so Yeah. That's really what happens, but you usually, they they they work out.
Scott Dillingham:Right? Because when someone's working with a a strong company like you who's doing the full due diligence and all the underwriting and all that stuff, there's minimal margin of error. Of course, there could always be error because the information you receive might be incorrect. Right? But it minimizes it.
Scott Dillingham:So the investor can feel confident in knowing, you know, they're they're getting the best financing and the best property too.
David Garnder:Yeah. I like, I we all know the real estate space is just awash with chances and, you know, hustlers and and whatnot. And I say it all the time. If you're at even if you're an in The US citizen and you're out of state, you know, there's plenty of people out there that will take advantage and try you sell you something that's not in the condition they said it was or is not Yeah. Gonna value up at the price that you're paying.
David Garnder:You know, see it all of the time, and I think that's a big part of the value that we add because we take that away from the client, and we we step in between them and the seller and make sure all of those things stack up. But, yeah, the process is super simple. We find the right property. We get the preapproval. The underwriting process maybe thirty days at the top end.
David Garnder:Would that would that be about right?
Scott Dillingham:Generally, yeah. Like, from, like, start to to funding, roughly thirty days. I think the fastest we did a regular DSCR loan was eleven days. Flips, we can do faster depending on the lender because some of them are hard money lenders, so they've got money in the bank and, you know, they don't care so much, so it's whatever. But but yeah.
Scott Dillingham:So I I think three to four weeks is ideal because that gives you the opportunity to shop around with multiple lenders. Because if you come in with a two week closing, there's only a few lenders that can do that. Right? So that now when we're trying to get the best price or match up the criteria based on where you can sign and all these other things, right, it's it's just limited.
David Garnder:Yeah. Got it. Got it. Alright. Brilliant.
David Garnder:Is there anything else you think based on your experience dealing with your clients, any kind of misconceptions misconceptions or or or myths that are worth mentioning now to try and clear up for people?
Scott Dillingham:Well, I don't know if there's myths or misconceptions, but I would definitely say buy in an entity. We have Yeah. I don't know if it's a problem for UK based citizens, but in Canada, some of the big banks operate in The States. So they'll promote buying in your personal name because that's that's the only way that they can set this up, and it creates a lot of exposure to liability for the investor.
David Garnder:Yeah. Huge.
Scott Dillingham:So, you know, be careful of that. Like, yeah, the financing might be easy, but you're just the risks are huge, so I would I would always try to buy in an entity. And I do think the banks over time will open that up. It's just, you know, they're getting started into The States and, you know, programs are limited. But, you know, the more tenure they have there, right, the more that's gonna open up.
Scott Dillingham:But, yeah, I always get the entities. You gotta speak to a professional on that. And then I think also don't trust your bank when it comes to wiring the funds. There's foreign exchange companies that we've seen them save thousands of dollars for our clients on the down payment. Right?
Scott Dillingham:So tap into that. And then I think, like, the last thing is HGTV. I don't know if you ever seen that, David, but people, watch HGTV around here, and they think that they can just do everything. Right? And, I encourage you not to get into those renovations and into those nuances and to partner with experts like yourselves that have the correct teams so things get done properly.
Scott Dillingham:Spend a little bit of money on renovations. Don't just, oh, this is easy. It only cost me $10, and it's, like, $25 later. Like yeah. So that's those are the tips
David Garnder:I would suggest. Absolutely. I mean, just to expand on that entity part of it. I mean, I got sued because a tenant that had a dog that they weren't supposed to have, a big Cane Corso dog, ran out on the street and bit a member of the public. And that member of the public decided they were gonna try and sue me because I owned the property that that dog ran out of.
David Garnder:Now that obviously came to nothing. It was frivolous. They were just hunting for insurance. But if I'd have owned that property in my personal name and they'd have won a judgment against me for a million bucks, all of my global worldwide assets would have been at risk. I mean, you know, whether they'd have been able to chase them down from overseas is another matter.
David Garnder:However, owning in an entity, absolutely essential for for overseas people and US people. But the biggest mistake I see Canadians make is using, an LLC when that might, in their specific circumstances, cause a double taxation issue. So as you know, we there's a big part of what we do is helping people form the right kind of entity and open a US bank account, which we can do really, really quickly. And for Canadians, usually, an LP, a limited partnership, is often, not always, and you gotta be careful not to give kind of blanket advice because everybody's different. Right?
David Garnder:And an LLC can work for some people just fine. But in most cases, an LP with an LLC that manages the LP in The US is considered passed through by both the CRA and the IRS. So it eliminates that double taxation issue. But, obviously, you know, I when I you know, before we started dealing with any Canadians, I searched on the Internet out there for some advice. Right?
David Garnder:And there are 10 different answers out there as to what you could what you should do and how you should structure them. So it's really gonna depend on your own personal circumstances, what kind of tax goals you're planning for. You can even stick a foreign corporation into the process somewhere to work to help with estate taxes. But, again, speaking to somebody who knows and who's been through the process is absolutely essential. Don't just don't get your investment advice off TikTok, I think, is what I'm trying to
Scott Dillingham:That's fair. Try to get
David Garnder:to get at where everybody says just, you know, form an LLC, and then you'll pay no no US taxes. Yeah. So that's not it's not true. It's not the case. You know?
David Garnder:It's horses for courses, and there is the right solution for everybody, but it might be just a little bit different for for different folks from different places. Yeah. So, yeah, I I think that's a a really important point to raise. And and, also, another thing on that is important to note is that if you're a nonresident alien and you're forming a US entity, let's say an LLC or an LP, a big part of that process is you're gonna want an EIN number, which is an employer identification number. The tax number for that entity.
David Garnder:And if you're a foreigner, that can take up to eight weeks. So if you haven't got that in place, you're gonna struggle to close because the lender's gonna want the EIN number. Right? And the title company is gonna want the EIN number when they're anyone dealing with money in The States is gonna want the tax identification number. We have an expedited process, and the the folks that we work with get that immediately.
David Garnder:So they use a a slightly different process so they can get the EIN number instantly for that foreign client, and it comes with an EIN letter in the client's name, not in their name, which is really, really handy. But, yeah, if you go out there and go it alone, go solo, and set up your US entity, do it well in advance. Otherwise, you'll find the deal you want, and you're not gonna be able to buy it because you're not gonna have all of your paperwork in order. So, you know, you can you know, we can help people with our InvestoKit. I know you do something similar as well.
David Garnder:So you've got a ready to go entity that they can just they can either purchase or, you know, we can have someone set up for them. So, yeah, I think that's a a really important point. Get your entity sorted first. We actually do that after they've got the property under contract because our process is so quick. So they don't we're not kinda sort of hanging around.
David Garnder:But, yeah, I see that all the time. You know, people say, no. I'm gonna go do it myself because I'll save a couple of $100. Sure. It's gonna be a problem.
David Garnder:Yeah. But listen, Scott, thank you so much. Is there anything you think we've not covered that might be
Scott Dillingham:No. I mean, I think we've covered a lot. I think, I'll share with your audience, and I I do have to run actually, unfortunately. But I'll share with your audience No worries. Our cash flow calculator, and I'll give that to you.
Scott Dillingham:So for anybody that gets signs up for access to to view this full video, right, they'll have that, and it shows the thirty year and the forty year. So when they're underwriting their properties, they can compare and pick what amortization makes sense. Right? Because sometimes 30 doesn't cash flow, so 40 will. So I can share that with you as well, but I think we've really covered a a lot.
Scott Dillingham:I think this is a a field where somebody could learn and learn and learn for a whole year. Right? But then now you've not taken action.
David Garnder:I'm learning every day.
Scott Dillingham:There's so much to it. Right? So I think, you know, you don't you don't wanna have this stop your growth and acquire you know, stop yourself from acquiring properties because you're spending too much time learning. Right? So I think take action, partner with the best people, the best team like like yourself, and, obviously, we'd love to help with the financing.
Scott Dillingham:And, yeah, we'll just do whatever we can to make this journey as easy as possible.
David Garnder:Perfect. Well, listen. Thanks very much. Just to summarize, if someone's looking at mortgages as a non US citizen, it's lendcity.ca to reach Scott. Just to summarize the terms, you'll likely be looking at 75% loan to value.
David Garnder:You will likely be looking at a thirty year fixed interest rate, and you're not gonna have to provide US credit or prove your income, but get your entity set up ahead of time or work with someone like Scott or myself who can provide you with something that's ready made, and focus on the property. Find a good deal first. Right?
Scott Dillingham:That's it.
David Garnder:Good stuff. Alright, man. Well, listen. Thanks very much for the time. I really appreciate it.
David Garnder:I think this has been really useful, and I'll speak to you soon.
Scott Dillingham:Thanks so much, Steven. Take care.
David Garnder:Take care. Bye bye.
Scott Dillingham:Bye.