Hard Money Loans: More Flexible Than Banks. Loans to Foreign Nationals (Part 2)

Hard Money Loans: More Flexible Than Banks. Loans to Foreign Nationals (Part 2)

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One of the advantages of hard money loans is that the private money lenders who underwrite them are not bound by the same rigid federal restrictions that govern banks and other institutional lenders such as life insurance companies. This series of blogs will explore the types of out-of-the-box  loans in which private money lenders (such as Montegra Capital) specialize and illustrate how hard money loans can be a crucial tool for the savvy commercial real estate investor. There are eight common types of loans that private capital lenders will underwrite when banks won’t, which will be explored in detail over eight blogs: Cash-Out Bridge Loans, Loans to Foreign Nationals, Marijuana-Tenanted Properties, Note-Purchase Loans, Non-Recourse Loans, Vacant Land Loans, Tight Timeframe Lending, and Beyond the Typical Requirements.

Loans to Foreign Nationals?

Private money lenders are not only used by borrowers whose credit and/or cash flow do not qualify them for bank financing on their commercial real estate. Hard Money lenders also provide commercial real estate loans for borrowers who can’t qualify for conventional mortgages for other reasons:  one example is a real estate investor who cannot provide evidence of U.S. income or evidence of U.S. assets. Foreign nationals who want to begin investing in the U.S. commercial real estate market may find it difficult to break into the market, but this type of hard money loan can assist them to acquire commercial or investment purpose residential real estate in this country whether or not they are U.S. citizens or even whether or not they have green card status.

What is the EB-5 Program?

The EB-5 visa program was created by the federal government to encourage foreign investment in America. In short, this visa program allows foreign nationals to apply for permanent residency in exchange for creating business opportunities and jobs by purchasing and developing American real estate properties and projects. This rapidly expanding program has increased the incentives of investing in and developing commercial real estate for foreign nationals, and the availability of hard money loans to foreign nationals helps to support the EB-5 visa program and promote increased investments in the American commercial real estate market.

How Do Loans to Foreign Nationals Work?

Loans to foreign nationals are underwritten using the same asset-based lending guidelines that apply to other hard money loans. The application process does not require that foreign borrowers be U.S. citizens, have a green card, or provide proof of U.S. income or U.S. tax returns. Instead, the loan amount is determined by the value of the property that secures it and the approval process focuses on the property’s income-producing potential. These loans can be used to purchase single-family, condo, or duplex to four-plex residential properties that are solely for investment purposes as well as commercial income properties such as multifamily, office, industrial, warehouse, or mixed-use and commercially zoned land that is already entitled.

Foreign national loans are just one example of the flexibility and willingness of private capital lenders to work with their borrowers to find creative, outside-the-bank lending solutions to high-risk financing problems when conventional lenders often just say no. Check out the next blog in this series, Marijuana-Tenanted Properties, for another example of how hard money loans can work for you.

For more information about Montegra’s foreign national loan program, contact us at 303-377-4181 or loans@montegra.com.