Scott Dillingham: 00:21

Welcome to the Wisdom Lifestyle Money Show. I'm your host, Scott Dillingham. Today, I'm doing a live stream, and I'm gonna show you guys the US lending. So for those that don't know, we, are a lender in Canada, but we can also lend to Canadians or any other foreign buyer of pretty much any country globally in the United States. So I made this presentation.

Scott Dillingham: 00:44

It is geared towards Canadians, but, again, we can lend to any foreign buyer who is interested in purchasing investment properties in the states. K. So we'll get this going. So the beauty of what we have here is we are a one stop shop. So we do residential and commercial lending in Canada and the states.

Scott Dillingham: 01:06

K. So we've got you covered there. The beauty of that I'll get into further, but just know that this is very important. Benefits. Right?

Scott Dillingham: 01:16

So we can lower the fees of your lending if we're working with you in both countries. It's much easier to access equity. So with one application, we can work with the different lenders. We act as your guide too. And in our whole team, we are investors.

Scott Dillingham: 01:33

So that's the beauty of this too, is that we understand what you're trying to do. K. Now I'm gonna show you a couple of deals that came across our desk, just to show you the the vast amount of different lending options we have. So this was a 4,650,000 purchase, of an office space in Ohio. Okay?

Scott Dillingham: 01:57

So I have the email here from the lender. So now this particular property, and I wanna be honest, commercial is tighter. It's harder than residential. But this specific lender was willing to offer 2,250,000, to the client to purchase this with a 7% interest rate, which is very good, actually, and a 25 year amortization. And that's without a US partner.

Scott Dillingham: 02:23

So I think that's very important. There's a lot of commercial investors that I speak to that wanna go in the states think that you need a US partner. Obviously, having US partner is gonna sweeten the deal. Right? You're gonna get a higher loan to value with a potentially lower rate, but not everybody has a US partner.

Scott Dillingham: 02:40

So my recommendation is just get get the lending now if you have the capacity to do so. And then as you have that experience, the lenders are willing to lend you more over there. So then we can always refinance and and redo the original mortgage in the first place. So, again, if you buy, take a little bit of a beating rate because the, loan to value is quite low, but you get the property. Now you've got the experience you're in the market.

Scott Dillingham: 03:07

So when you buy property 2, you're gonna have much better terms. So, again, once that deal completes, then we can go back and redo the first mortgage. So that's kind of the strategy there for a lot of the commercial. But we do everything. Right?

Scott Dillingham: 03:20

So this is an 8 unit. So it's actually 2 fourplex properties side by side. We are working on this now. Now I wanna show you some of the rates. It's actually a bit outdated too.

Scott Dillingham: 03:33

So, originally when I was speaking to this buyer, the rate being offered, it's at the very bottom for those that are watching was 8.2% over a 30 year term. Okay? And then the 3rd column on the right is showing the buy down amount. So in the states, you can buy down your interest rate, and we actually have a strategy where we can have the seller do this for you. So you're not paying out of pocket.

Scott Dillingham: 04:00

But the buy down rate was 7.25 at the time. We have it with lender right now at 6 point 375. So we've added a ton of different lenders, and, we shop around for all of our clients. So the US lender and, again, guys, these are US lenders I'm speaking of here. It's now at 6.375 for the same deal.

Scott Dillingham: 04:23

So, obviously, that's awesome for the clients. But even when, you know, we're doing single family properties. So we're doing a condo in Florida. You could tell us it's Florida from the palm trees. K?

Scott Dillingham: 04:34

Now this was an Airbnb one, so in this particular case, you know, started at 8.25. The buy down rate is 7.25, and it needed 9,000 to buy down. And, again, I'm gonna touch on that, shortly, the buy down. It's very important to know. So financing in the states is easy.

Scott Dillingham: 04:56

A lot of Canadians think it's hard. Those that speak to their banks, it's still just as hard as applying in Canada. The challenge with the bank's financing is that is meant for your cottage, your second property. Right? They want these things in the personal name.

Scott Dillingham: 05:13

They look at your Canadian debt to income ratios to qualify you. So if that's the product you're looking for and you wanna buy, please go to your bank because you're gonna get much better options. But the thing is the banks, they don't let you currently, set up in in the entities from the lenders that we've spoken to. And the other challenge is they don't want rental properties. So our product is specifically geared towards real estate investors.

Scott Dillingham: 05:41

K. So here's how easy it is. You don't need a US visa, which a lot of people think you do. You don't need a US partner. You can do this alone.

Scott Dillingham: 05:49

We don't need to show Canadian income or even American income for that matter. It's based on the property. Now I will say this. We do have some lenders that if we can prove your income, then potentially you can get lower interest rates. But if you don't wanna prove it and it's just based on the cash flow of the property, no problem at all.

Scott Dillingham: 06:09

So again, that goes to point number 4. So it's a 100% based on the income of the property, and you can purchase unlimited rental properties. K. So there's a few things that you must know. So your term is your amortization.

Scott Dillingham: 06:25

So in Canada, when you pick a 5 year term, it renews, and then you renew into another term. In the states, they don't do that. So your amortization is a term. So generally speaking, investors are getting a 30 year term or a 40 year term, which is available over there, which is nice because you get stronger cash flow with the 40 year. Okay?

Scott Dillingham: 06:48

You can also specify when your mortgage is open or closed. So by default, from all the lenders, you're usually open between 3 to 5 years. Most of them that we have access to, you're open after 5, and that's by default. So that means you keep your mortgage with this lender for 5 years. And then anytime after that, you can break the mortgage, and there's no penalty.

Scott Dillingham: 07:11

K? So that's really cool. But you can specify right away how quickly you want your mortgage to be open. So the 5 year being open after 5 years is gonna give you the very best rates, but you can choose an open after 4, open after 3, 2, 1, or open from day 1. So if it's a property, you know, you're gonna renovate and turn it over, and then you wanna refinance it, you're gonna wanna go open free from day 1.

Scott Dillingham: 07:36

So that is absolutely an option for any property. K? So the lenders use a debt coverage ratio to qualify you. So we input the property's rental income, the purchase price, the mortgage amount with the mortgage payment, and then we subtract hazard insurance, so home insurance, but over there, they call it hazard insurance. Now if the property has an HOA fee, meaning homeowners association fee, kinda like a condo fee over here, we we subtract that as well, and then we get what's called your debt coverage ratio.

Scott Dillingham: 08:13

So if the debt coverage ratio was 1, that means all the property's income covers all the property's expenses. So we can move forward with that. In fact, we can even move forward with negative DCRs. I don't encourage that for an investor. I think you wanna buy with cash flow in mind.

Scott Dillingham: 08:29

And in the states, you can. Right? I know in Canada, you can too, and I I love Canada. I still invest here. But, this is just additional options for you.

Scott Dillingham: 08:40

K? So here's some residential options. So you can go with the 30 or the 40 year term, like I mentioned. Rates range from 7a half to 9 as low as the 6.375. Okay?

Scott Dillingham: 08:56

So the 7.5 to 9, again, that is the regular retail pricing. The reason it would go to 9 is if, say, you wanted fully open and you were buying, let's say, in New York. Because New York, there's a bit of a premium on the rate with most of the lenders. So that would cost you more, but then those figures are with no buy down. Okay.

Scott Dillingham: 09:16

So I haven't even touched on that yet, and I will touch on that shortly, again, on how the seller can pay to get you a lower rate. The minimum mortgage amount is 75,000. So this is a bit tough for, local people I know and local investors because we live in Windsor, and Detroit's right across. Right? So we're a border city.

Scott Dillingham: 09:39

So in Detroit, you can find homes that are much less than this. But the thing is that's the lender's minimum lending. So really you gotta be buying something around 110 or higher to be able to tap into this type of lending. Down payments start between 25 to 30% of the purchase price. You can buy 1 to 8 units under this program.

Scott Dillingham: 10:02

I will be making another episode within the next week touching more on the commercial. Actually, I'm gonna do multiple episodes about commercial because there's different commercial classes like multifamily and office and industrial. So I'm actually gonna have an episode on each one diving into these things so you can learn. The total fees, which is also commission ranges from 2 to 3%. K.

Scott Dillingham: 10:25

That's very standard and very common for this lending that's that's open there. Okay? So, again, with the term, you can do 30 years principal and interest, or you can select interest only. Same thing with the 40 year. Okay?

Scott Dillingham: 10:40

Again, I touched on, but by default, it's open after 5 years, And and, again, you can make it open right away or a 1, 2, 3, 4 years. Variables are available. The variable is a bit different. So in Canada, right, you choose variable and rate from day 1, it adjusts. In the states, though, you get a lock in period where it doesn't change for that period.

Scott Dillingham: 11:03

And then generally speaking, every 6 months, they'll review the market and adjust your rate accordingly after that lock in period. So it's a bit different, but it's still a great product, and it is available. Okay. So for rates. So here's how to get the very, very best rates.

Scott Dillingham: 11:19

So you want the debt coverage ratio to be over 1.25%. If it's under, you can still get an attractive rate, but there's gonna be a bit of a premium. Again, down payment start at 25, but generally speaking, if you're doing 40 or more, you will get better rates. We have actually a few lenders that at 30, it's the same, like, 30% down. They're giving you the same rate as if you had 40% down.

Scott Dillingham: 11:44

So we've got a couple of those lenders. So the stronger the credit in the states, the better the rate. Now the reason for that is Canadians, you don't have to have a credit or any foreign buyer for that matter. They're gonna price you as if your credit score is 680. K?

Scott Dillingham: 12:02

So what happens is if you build a US credit, they will use that score instead, and, again, that can help you to get better rates. Lending amounts of 1.50 or greater also equals better rates, and your location can affect rates like I touched on with New York. Right? New York's higher in price, than, say, Texas. Right?

Scott Dillingham: 12:29

They they have a bit of a premium, so it is what it is. So mortgage size, again, some of this, I've touched on, but the minimum lending amount is 75,000. The minimum at a lot of lenders is a 100,000. Okay? So keep that in mind.

Scott Dillingham: 12:44

So if you do buy and you're trying to get something as low as 75, I put on here with 1 lender, we've actually onboarded with with more lenders since I I made this presentation. It's it's maybe about 2 2 to 3 weeks old. That's why the rate on the on the 8 unit dropped as well because things have come down a bit. But, so now we have 3 lenders that can go a minimum of 75, but you're not accessing all of the lenders. Right?

Scott Dillingham: 13:13

So there's less likelihood that we can shop around for you. So there's fewer lenders. But at a 100,000 or above, that's kind of the minimum of all lenders, so then we can really shop around for you. And the rate tiers, so at a 100,000, here's your rate, 125, here's your rate, and again, at above 150, here's your rate. And it gets lower again the higher the mortgage amount is.

Scott Dillingham: 13:37

Now the lenders, they do avoid properties with deferred maintenance. So that is the catch to this program. Right? You're from Canada or any other country. Right?

Scott Dillingham: 13:46

You could be from Japan and wanna wanna tap into this type of lending, and it's available for you. But if you're from a foreign country, they're not very keen on deferred maintenance properties because how can you fix that? How can you see that it has the deferred maintenance when you live so far away? Now, obviously, some people are gonna be like, oh, well, I have a property manager, but we all know that not all property managers are created equal. Right?

Scott Dillingham: 14:12

So the lenders are just very this is a risk for them. Now we do have flipping products where they don't care about that. So generally speaking, the lenders I'm speaking about right now are more of the buy and hold lenders. Okay? So the buy and hold lenders don't like the deferred maintenance.

Scott Dillingham: 14:30

Now flipping lenders love it. That's what they're in the business for. So if you wanna buy a property that needs this type of effort and work into it, then what we'll do is we'll use the flipping lender as lender 1, get you all set up, and then we'll convert you to a buy and hold much like we would in Canada too because the major banks, they don't like properties with a lot of deferred maintenance in Canada either. Okay. And then again, blanket mortgages are available.

Scott Dillingham: 14:54

So we can do complete portfolio loans, which is pretty cool. And a portfolio loan for, for those that are unaware is you can literally buy a group of 30 properties. So here's the purchase price, 30 properties. Let's go. Right?

Scott Dillingham: 15:06

We can do that, in the states. So down payments, again, minimum is 25 down, 30 to get the best rates. 90% of the lenders want the 30% down, so I would I would set that as your target. You must prove 60 day history of funds. In Canada, it's 90 days.

Scott Dillingham: 15:27

Okay. So the fact that it's 60 days over there is a little bit easier, but they have to be held in a US account 30 days prior to closing. So keep that in mind because you don't wanna get yourself in trouble. Okay. Now for units.

Scott Dillingham: 15:44

So most of the lenders are only doing 1 to 4. There's only a handful that we have that'll go up to 8. Actually, we just onboarded with 1 today who will go up to 9. So we're we're getting the details about that before we start promoting it. But, there's again, most lenders want 1 to 4 units.

Scott Dillingham: 16:04

Okay. So broker comp slash fees. Okay. So you're gonna pay 2 to 3%, which is the average commission in the states for this type of product. Okay.

Scott Dillingham: 16:16

Now some of the lenders that we have, we can add these fees to the lending amount, so you're not necessarily paying them out of pocket. Okay? Now some lenders have no fee at all, so you have to be careful as an investor because I've priced these for our clients, and it's not good. So so if you're going to accept a higher rate with no fee, you end up the breakeven's probably a year, maybe a year and a half. And then after that, you're overpaying year over year over year because you've accepted a much higher interest rate, which is generally 1 to 2% higher.

Scott Dillingham: 16:50

So it's always better in every scenario that I've ever run to pay the fee upfront to get the very best rate that you can right out of the gate. Okay? And then you wanna get the seller to pay the fee. So, again, I'm gonna touch on that in just a second here. So how can you get the seller to pay the fee and to buy down your rates?

Scott Dillingham: 17:11

K. So in the states, we can do what's called a seller credit. In Canada, technically, you can do it, but what happens is in Canada, the lenders rebate the purchase price. So let's say you bought a home for 300,000 and you had a $20,000 seller credit. In Canada, the lenders will say, okay.

Scott Dillingham: 17:32

Well, your purchase price is only 2.80 then. And so they'll finance 2.80. Right? So if you're doing 5% down or 20% down, it's based on that 280. Where in the states, you can actually increase the purchase price and have the seller give you credits.

Scott Dillingham: 17:49

So, literally, you can finance the fees if you want. But then those seller credits that I was telling you about where you can pay cash to lower your mortgage rate, that can come from the seller. So it's like cash on closing from the seller. So it's super cool. I encourage everybody who's making a purchase over there to ask for a seller credit, and I've run the numbers for every one of our clients.

Scott Dillingham: 18:15

It is always better to have a seller credit cash on closing rate and lower your mortgage rate than it is to take that same dollar amount from the seller and lower the purchase price. So let's stick to that 300,000 purchase price with a 20 k credit. Okay. Let's just say, if you're gonna take 20,000 off the purchase price, you might save 20 to $30 a month on your payment. But if you can lower your rate 1% or even 1 and a half percent because of the seller credit, you're saving a 100, maybe a $150 a month on the payment.

Scott Dillingham: 18:50

So it's a much bigger difference. But then you're also saving 1,000 of dollars of interest over the life of the mortgage. So it's just a way better option. So if the seller is not willing to give you a lower purchase price and a seller credit, then get a seller credit. And if they say no, because there's so much competition, they're not selling it below a certain price, then offer them a higher purchase price with the seller credit.

Scott Dillingham: 19:19

Okay? So, again, it could be used to buy down, rates. It can go towards the bucket for the the fees, and closing costs, that type of thing. And, again, I touched on it, but seller credit is better than the lower purchase price. K?

Scott Dillingham: 19:35

So here is the process. So I am not an accountant, and I recommend that you speak to 1. But from my clients, they have told me that it is better for them to set up an entity in the states to purchase. Most of the lenders want you to buy in an entity. We do have some that we can close in their personal name.

Scott Dillingham: 19:56

So we can do both. Okay? But I'm being told there's no double taxation, and there's other benefits. Right? There's liability protection and different things like that.

Scott Dillingham: 20:04

But, again, not my specialty. I do the lending, speak to your accountant, see what's best for you. But generally speaking, that's step 1, is determining the structure. And by the way, I can introduce you to all of our connections. The link to contact me is gonna be in the show notes of this show, where you can book a strategy call with my team.

Scott Dillingham: 20:27

We will share all of our contacts with you to help make this journey a success for you. Okay? Now after the entities, the bank account. Right? Because you need to show the money in a bank account before closing.

Scott Dillingham: 20:38

You also need a spot where you can collect the rents. Okay? So gotta get the bank account. And generally speaking, you need the entity first. It's it's easier to get the entity and set up a bank account than set up a bank account in the states in your personal name.

Scott Dillingham: 20:52

Both are possible. I'm just saying again from what I've been told from from the bankers, and I've went through this whole process myself, setting up the entity, setting up the US bank account. And I could tell you it's pretty seamless, having the entity set up. K. And then there's either the done for you path or there's the do it yourself path.

Scott Dillingham: 21:17

So we work with the group called SHARE. And SHARE, they hold your hand. They can actually help you set up the entity, work with you on getting the bank accounts. They even find the properties, install property management for you, fully renovate them. So it's like a turnkey solution.

Scott Dillingham: 21:38

Okay? I will introduce you to all of my contacts there if you wanna chat with them and see if it makes the most sense for you to do that. Okay? Now they do specifically focus on single family properties. Their pitch is 5 to 7 caps.

Scott Dillingham: 21:54

That's what I see them advertise. And, it is available. Now they will work with you if you have a specific location or something that you really like. They will try to organize that for you and and find some type of off market deal and orchestrate that for you. So really great contacts, but then there's also the do it yourself method.

Scott Dillingham: 22:15

Now the do it yourself method, I can still, same with my team, refer you to professionals, you know, realtors, things like that that we know. But that's up to you. Right? You'd have to interview them, see what makes the most sense, who you wanna work with if there's a connection. And if there isn't, obviously, move forward at that point.

Scott Dillingham: 22:33

And then lastly, once you find the property, you review the terms, we fill out any forms and supply any documents the lenders need, and then we close. Okay. So I am oversimplifying. There is multiple steps within each one of these steps, but it's not hard either. It's just it's probably cumbersome the very first time because there's gonna be terminology and things you've never heard of.

Scott Dillingham: 22:59

Everything's different over there. Like the one lender today, they asked for an LOE, for the customer. In Canada, that means letter of employment. Over there, it was letter of explanation. So they wanted the investor to explain how they were moving out of their current home and how they're renting it out, because this program is specifically for investors.

Scott Dillingham: 23:22

So we're gonna get that. But so, anyways, there there can be confusion. Right? Because they're using a lot of the acronyms that we use, but over here, they need different things and over there. So, again, we can act as your guide.

Scott Dillingham: 23:33

We'll help you through all of that. Okay. So here are some of the new products. So we've got, fix and flips for foreign buyers. So that was something we really struggled with when we first started in the states.

Scott Dillingham: 23:46

Most lenders do not wanna work with foreign buyers, but we got them. K. We have lines of credit for experienced flippers. So super cool product where you can get a line of credit that is worth up to 3 to 4 times your project's value. So then you could do multiple flips at a time.

Scott Dillingham: 24:07

So super cool. Obviously, there's terms and conditions. So if that's a product you're interested in, again, book a strategy call with someone on my team, we'll offer you a free strategy call. Commercial flips. We have liners where we can flip up to 8 units, and just yeah.

Scott Dillingham: 24:25

It's incredible. Right? It's not just single family homes. And we're adding more lenders weekly. It almost feels like daily because we we're just adding so much.

Scott Dillingham: 24:33

And the reason we're adding so many different lenders is we just wanna have the most diverse, best priced product for any foreign buyer that wants to buy in the states. That is specifically our niche. And what we found is investors that go to a broker in the states, that broker will have a product or 2 for the Canadian or any other foreigner to move forward. But they're in America. They're used to working with Americans.

Scott Dillingham: 25:07

So for us, we're used to work with foreign buyers because this is where we're at. So I find our lender pool is very, very diverse, compared to a broker that's boots on the ground in the states. Now, obviously, if you're, in America and you're trying to buy your own home to move into, that would be where a US broker has the edge above us because we were not getting into the homeowner space over there. We're not. It's just we're doing investors only.

Scott Dillingham: 25:39

So keep that in mind, as you shop around. The hottest markets are Ohio, Florida, and Texas from our clients that have purchased. There's so many others. Like, today, we're literally submitting a deal today in Tennessee. Right?

Scott Dillingham: 25:58

So we we have clients that buy everywhere. But that, if I was to add all the properties up that everyone's buying, those are the 3 hot spots. Again, if you wanna speak to a realtor, get market fundamentals, just like anything that you would do over here. Okay? So literally take everything that I'm saying with a grain of salt and research everything for yourself to make sure you're making the most educated decision.

Scott Dillingham: 26:22

K? So I think that that is it. So that is the end of the presentation. So if you're interested in investing in the states and you're looking for more options, just know there are options out there. It's very easy to get started.

Scott Dillingham: 26:42

It's really not complicated. We're more than willing to help. So we have 2 things. Obviously, in the show notes, again, I already mentioned it, but you can book a strategy call with my team, and then we can answer any questions that you have related to this. But also there's a link to the investors hub.

Scott Dillingham: 26:58

I recommend everybody just join that. We have all these different webinars where we're covering this. In fact, at the time of this recording, it's it's close to the end of May. Early June, we have, a lady there who helps Canadians, set up visas so they can actually have a visa and live in the states through real estate investing. So we're just doing all kinds of really cool things.

Scott Dillingham: 27:23

The hub is free, guys. Just join it. You can access all these events. You can find off market properties. If you're a realtor, you can post your properties in there as well.

Scott Dillingham: 27:35

We do filter them, to a point. We we wanna make sure there's not just junk. So, you know, as an investor, just know they they are being filtered, which is awesome. But we have, Canadian real estate investing course. The US one's gonna be launching very, very shortly.

Scott Dillingham: 27:52

It's a really cool place to hang out. So, anyways, I hope you enjoy today's show, and I look forward to chatting with you guys shortly.