Multifamily Financing for Foreign Nationals
Explore one of the more popular financing options available for foreign investors.
It's no secret that even with the state of the world’s economy in the middle of the covid-19 pandemic, the United States is still a highly sought after place for foreign investors to diversify their investment portfolios with secure, long-term investments. Multifamily and commercial real estate are particularly popular investment vehicles for foreign nationals because of their stability. Sadly, even with the ever-growing pool of foreign national investors in some of our strongest primary markets, there are only a few financing options that really suit foreign investors in the multifamily and commercial markets.
CMBS financing is one such option and is popularly used among Canadian and South American foreign investors. While the qualifications are more strict for a foreign investor than they are for a local entity, CMBS loans are still an attractive financing solution for a foreign national. In order to qualify for CMBS financing, the general requirements for a foreign national guarantor are:
Minimum loan amount $1,000,000.
Guarantors must have a collective net worth of at least two times the loan amount.
Guarantors must have liquidity greater than or equal to 18 months principal and interest payments post-closing.
Guarantors must maintain at least one U.S. bank account maintaining a balance of at least 5% of the loan amount.
The borrower must be a U.S. LLC or other U.S. based entity.
Guarantors must own additional US real estate assets other than subject property and demonstrate an understanding of US business and real estate practices.
Once the criteria above is met, foreign investors can enjoy the benefits of CMBS financing. Some sample terms are as follows:
Sample Terms For Foreign National Multifamily and Commercial Property Loans
Amount - $1 million and up
Term - 5, 7, and 10-year loan terms
Amortization - 30 years
Maximum LTV -80% (depending on property, and market)
Minimum DSCR -1.25 x’s