In my last article, I extolled the virtues of our 30-year fixed rate financing program for U.S. real estate investment. I pointed out the hard money predators, the shady ARMs (adjustable rate mortgages), the tricky balloon payment trap, and other “landmines” when it comes to the lending industry preying on unsuspecting investors. As the ONLY U.S. COMPANY THAT INTERNALLY UNDERWRITES 30-YEAR FIXED RATE LOANS FOR FOREIGN INVESTORS, I feel it an obligation to provide insights into the benefits that Atlas has to offer.
Prices are going crazy right now in our primary market. I am paying 50%-100% more for raw acquisitions right now than I was 18 months ago. It’s hard to even find a project house or fixer- upper in the cities where we prefer to be. Values have gone up substantially, and we are thrilled to see the market so robust and growing. We are even more thrilled to offer foreign buyers the opportunity to take advantage of this situation.
So now let’s look at the most obvious benefits that obtaining a long term fixed rate loan can provide when considering U.S. real estate investment, or anywhere else for that matter. We will also explore the benefits for existing property owners using our EXCLUSIVE U.S. REFINANCING PROGRAM and how this tool can help you achieve even higher benchmarks.
BUILD A PORTFOLIO INSTEAD OF “BUY A HOUSE”-
Most investors that we encounter typically have allocated 60k or 100k for real estate investments. I don’t know why, but those seem to be the two magic numbers. Now, we do not carry any 60k properties. Cheap properties tend to be in lousy neighborhoods, attract crappy tenants, and have a high turnover rate. They also are much more susceptible to theft and vandalism. 100k properties (depending on who you are dealing with) have a high success rate, attract and keep good renters, and if, by chance, the kids leave their bikes out overnight, they will be there in the morning. The difference with Atlas is that with average down payments of 30k-35k, the 60k buyer can dig deeper and spend 70k and get TWO properties. The 100k buyer can dig a little deeper and get THREE properties.
One factor will always remain a constant. Tenants, and people in general, run into problems. Life happens. Today is the 5th of September and we have already received a few phone calls from tenants that are going to be late with their rents (with a $100.00 late fee as a penalty, I might add). Life happens. When you have ONE asset and the Dad loses his job and can’t make rent, cash flow is ZERO. When you have the same 100k-120k in THREE houses, and Dad loses his job, you still have cash flow from the other two properties. It goes back to the “all of your eggs in one basket” theory, and U.S. real estate investment, like anything else, is not immune to that theory.
LOWER INITIAL INVESTMENT-
Any U.S. real estate investment carries an inherent risk or the potential for disappointment in either asset quality or performance. I would sure hate to find out that my property, or properties, are underperforming had I paid full cash price when I purchased the asset. With financing, the initial down payment is a fraction of the amount when compared with a full price cash acquisition. If a property does end up shy of expectations, it is better to find out with a down payment at stake instead of full market value sucked out of your retirement savings.
REFINANCE AND DIVERSIFY YOUR HOLDINGS-
I speak with a lot of investors who already own U.S. real estate every week, and perhaps the biggest thing we have to offer is our “cash out refinance program”. But before I go further, I should point out that this program is designed to assist in building up additional assets for a portfolio. We don’t provide this service to fund a mid-life crises or send little Jimmie or Jane to college. We designed this program so that folks with all of their equity tied up in a single asset could tap into that equity and obtain additional assets and so all of the items above would work in their favor. And best of all, the same rate and terms apply to our refinance program that are currently part of our new purchase financing program. Why have one asset in another market when you can diversify, buy more assets, spread the risk across a number of properties and cash in on the capital appreciation? If we’re advising on U.S. real estate investment, diversification is one of our top recommendations.