Posted by Richard on January 23, 2002 at 17:45:23:
Hi AJ and Graywolf thank you for your usefule reply:
I know that the interestrate from the fed may be lower in the US. But here in Europe, you get mortgage intersrates for as low as 5 % here. And if you manage to hedge the currency risk it you could be about the same rate you pay in the staates.
But the main point would be, that you could
use your established credit rating in Europe to finance the deals in the united staates.
But do you know where to find physically people who could be possible partners ?
First I thought about visiting a meeting in one of the listed real estate clubs . But I heard, that there are only not very sophisticated investors attending.
(nothing against learning, dont missunderstand)
Do you have any club or convention you would recommend.
(I am very mobil and not limited by the distance)
US Real Estate for Wealthbuilders from Europe - Posted by Richard
Posted by Richard on January 19, 2002 at 09:42:43:
I am an 27 year old Investor - Wealthbuilder from Vienna / AUSTRIA in would like to invest in US Real Estate. But during my last visit in the staates I recongniced:
1.) that the mortgage interest rates are much higher then in Europe.
2.) That as a foreinger you dont get 85% financing, because you dont have a credit history.
I need to know if you know a.) a european Bank which finances US Real Estate Projekts or b.) if you can recommend me a bank which has experience dealing with european private investors (and makes it easier for foreigners) ?
Re: US Real Estate for Wealthbuilders from Europe - Posted by Graywolf
Posted by Graywolf on January 19, 2002 at 21:21:28:
I must say that I agree whole heartly with the author of the previous post signed A.J. The major concerns would in fact be currency risk exposure unless you had a US partner that worked through a properly structured corporate entity. This would eliminate any potential legal problems for an individual partner. A well advised corporation would probably be your best bet and would be much easier to finance. I hope you find this information helpful.
First, let me say that I do not have a direct answer to your questions, just a few thoughts.
While it is true that European interest rates are lower than rates in the US, many European loans are structured to be paid off and refinanced in 5 years (usually 15 max), and therefore should carry a lower rate compared to a 30-year fixed loan, which is common in the States. Having said that, rates are what they are. An attempt to do interest rate arbitrage (borrowing in Europe secured by assets in the US) forces you to accept the currency risk exposure, which can be quite substantial.
A couple of points to consider:
Investment properties in the States will produce cash flow in US dollars (obviously). If you borrow in Europe, if possible, you should consider a dollar-denominated loan to match currencies between your income and expenses. Otherwise, you are subject to the currency risk.
To accomplish your objectives in another manner, you might also look for a partner who is a US citizen.
AJ
Re: US Real Estate for Wealthbuilders from Europe - Posted by Richard
Posted by Richard on January 23, 2002 at 17:46:26:
Hi AJ and Graywolf thank you for your usefule reply:
I know that the interestrate from the fed may be lower in the US. But here in Europe, you get mortgage intersrates for as low as 5 % here. And if you manage to hedge the currency risk it you could be about the same rate you pay in the staates.
But the main point would be, that you could
use your established credit rating in Europe to finance the deals in the united staates.
But do you know where to find physically people who could be possible partners ?
First I thought about visiting a meeting in one of the listed real estate clubs . But I heard, that there are only not very sophisticated investors attending.
(nothing against learning, dont missunderstand)
Do you have any club or convention you would recommend.
(I am very mobil and not limited by the distance)