Access to finance for foreign investors - How difficult is it?

[ScottyB]

Hi Folks,



I have been a member of the forum for a few months now.



I have been holding off investing waiting on my residency decision for Australia, the good news is i have secured it and am now in a position to start buying property again now that my tax situation is clear.



I am an Ex UK resident and my plan is as follows:



1 - Purchase Australian Property through a Self Managed Super Fund (Australian Pension) which allows property to be purchased once i have moved my UK Pension over to give me a nice amount to start with.



2 - Continue to maintain my UK portfolio which has nice CF+ figures and current interest rates on my finance of 2% (Base rate plus 1.5%)



3 - I would really like to purchase property in Canada to diversify using the ACRE system (I am going to buy it anyway regardless of the answers to this question as i feel it is a solid base and system for anywhere in the world)



Some additional info to help any Finance or Mortgage members answer my question.



I already have a "Credit History" in Canada. I have a Canadian Bank Account with HSBC Premier which includes a credit card (Always paid off in full every month) and i have HSBC International with Global View which will show my Australian Wages going in every month in AUD (The company i work for is Canadian so they opened an International Account for me for when i am in Toronto on business)



What sort of investment options are open to me as a foreign investor?



What sort of LTV's should i expect? (95% LTV's in oz are not uncommon)



I have an excellent income with very low overheads 500k+ income with 16k Disposable after tax every month (47% tax in oz!!!) to use as deposits for property.



Do any members have experience in securing finance for overseas investors like me, or can they put me in contact with their brokers etc to discuss options?



I have to be honest i am looking at a nice mix of Capital Gain and Cash Flow properties again to diversify and if 20% and 30% deposits are needed i may as well buy in Australia as we have so many states with different phases of the market it is like having 6 or 7 countries to choose from with readily available LTV's.



I want to be proactive in adding to my portfolio and the better LTV's i can get the better.



Regards



Scott

 

[Thomas Beyer]

65-70% LTV or 30-35% down is what you should expect in Canada as a non-resident, as even HSBC has tightened their underwriting rules, although of course with this income and HSBC world wide standing you might get 20-25% down only. The law in Canada stipulates 20% down for investment properties. You can find cash-flowing real estate in Australia with only 5% down ? What sort of property is that ie at what price do you buy with what kind of rents ?

 

[ScottyB]

[quote user=ThomasBeyer]65-70% LTV or 30-35% down is what you should expect in Canada as a non-resident, as even HSBC has tightened their underwriting rules, although of course with this income and HSBC world wide standing you might get 20-25% down only. The law in Canada stipulates 20% down for investment properties. You can find cash-flowing real estate in Australia with only 5% down ? What sort of property is that ie at what price do you buy with what kind of rents ?


Hi Tom,



Thanks for your reply.



In Australia you have 2 seperate scenario's:



1 - When buying through your SMSF (Pension) you can have 2 types of set up either an individual trustee and you will get 72% LTV or as a corporate trustee 80% LTV



2 - Scenario 2 is buying outwith pension as a normal investor, you can get 95% LTV easily with Lenders Mortgage Insurance required.



The tax scenario in Oz favours investors you are able to claim depreciation on your property over 40 years there are 2 types of right offs, see the following link for a brief breakdown of the 2 types



http://www.apimagazine.com.au/api-online/property-investor-tips/dont-forget-to-claim-depreciation



Also if negatively geared there are tax advantages in your routine pay as they are offset against income.



Most people push for breakeven or ever so slightly negative gearing depending on their income and lean towards Capital Growth strategies.



Rents are rising especially in the thriving areas like WA where there is a resources boom. Over a few years a property quickly becomes CF+



You can also set up hybrid trusts that allow you to protect the assets from litigation and still take advantage of the depreciation and individual tax advantages.



My plan is to go for larger deposits so that properties are CF+ from day 1 and have these in my wifes name so that any profit is not taxed at 47%. She will be able to earn 18k per year in profits before having to pay tax.



Regards



Scott