Clever gearing is key to unlocking the full potential of any capital you invest in overseas property, helping you to turn a small profit or yield into a substantial one.
Article written by The Overseas Guides Company
As a non-resident all-cash investor in the USA, using a traditional lender is unlikely to be the most suitable solution for obtaining an investment loan – depending on your circumstances, bridging finance available from an independent finance firm could feasibly be the better option.
Unsurprisingly, there are bridging finance firms in the US that work closely with the property companies to cater specifically for overseas investors, packaging attractive investment opportunities with loans structured to the individual investor’s needs. Being independent and non-traditional means these firms can have a loan available within 30 days.
Here is a typical example of how bridging finance could help you maximise an $80,000 investment in the US buy-to-let hot spot of Memphis, by enabling you to leverage and purchase two turn-key properties instead of one. More examples are available at OverseasInvestorGuide.com.
OPTION 1: Purchasing a single turn-key property outright
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Purchase price: |
$80,000 |
OPTION 2: Purchasing two turn-key properties with bridging finance
Bridging finance in this instance is a 10-year fully amortizing loan at 12%, with the first 3 years at 6.75%.
Property 1
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Purchase price: |
$80,000 |
Property 2
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Purchase price: |
$80,000 $3,212 |
By year 11, after the finance has been repaid, with both properties:
Cash-flow annually: $17,559
Annual return: 21.95%
Portfolio value: $160,000 (excluding any appreciation)
If you are buying property in the USA (click for free Buying Guide), for lifestyle or investment, and will need to transfer Sterling to a dollar account to pay for your purchase, consider using Smart Currency Exchange, as they consistently offer better exchange rates than banks. For more information on this, visit the Currency Zone or download Smart’s free report here.