Custom Mortgage Strategies For Maximizing Global Real Estate Returns

Imagine trying to drive somewhere new without having a GPS.

That’s what navigating American mortgages can feel like for international real estate investors. Depending on your situation and investment goals, one option could be far better than another. 

The truth is that there’s no one size fits all solution to real estate investing. Your real estate market, local tax situation, interest rate, currency exchange, and the like can impact your approach.

Needless to say, you need to customize your mortgage and real estate strategy to match your situation. Let’s explore different strategies and factors you need to consider as you create your investment goals.

Monetary Arbitrage*

Arbitrage is the practice of buying something at a low price in one place and selling it at a higher price in another place to make a profit. It takes advantage of price differences or certain advantages in one place versus another.

As a foreigner investing in U.S. real estate, you can do this in a variety of ways:

• Understanding the risks of currency fluctuations. While the U.S. dollar remains stable, currencies in other countries may not.
• Implementing hedging strategies to protect against exchange rate volatility. For example, having money in a U.S. bank account or appreciating assets like real estate.
• Borrowing at a low-interest-rate compared to your home country.

Optimize Your Loan Structure for Tax Efficiency*

Did you know that there are ways to make your loan more favorable for tax purposes? Some examples include:

• Exploring interest deductibility in different jurisdictions.
• Utilizing offshore lending structures where it may be beneficial.
• Balancing loan terms with local tax regulations‍.

Multi-Currency Mortgage Strategies*

For investors with a diverse global portfolio, multi-currency mortgages can offer significant advantages such as:

• Matching loan currencies to rental income currencies.
• Reducing currency conversion costs.
• Spreading currency risk across multiple denominations.

Partner with Local Experts

There are distinct advantages to working with a local real estate agent and lender. For example:

• Knowing the best areas to buy rental properties.
• Understanding and navigating local lending practices, which often vary by state.
• Finding a mortgage that meets your investment needs.

Customize Your Mortgage  Repayment Structure

There are several strategies you can work with your lender on to adjust your repayment terms. ‍As you explore options, keep the following in mind:

• Interest-only periods for cash flow management.
• Stepped repayment plans aligned with projected rental income growth.
• Balloon payment options for short-term investment horizons.

Leverage Collateral

Known as cross-collateralization, ‍this strategy involves using multiple properties to secure better overall lending terms. This can be done by:

• Leveraging equity in existing properties to finance new acquisitions.
• Balancing risk across a portfolio of properties.
• Potentially accessing higher loan-to-value (LTV) ratios or better interest rates.

Mix-and-Match Financing Options

Combining different types of financing can create a more robust and flexible investment structure:

• Mixing traditional mortgages with money from a cash-out refinance.
• Incorporating equity partners for more significant investments.
• Using bridge loans for quick acquisitions followed by long-term refinancing.

Refinance Options: Your Ultimate Tool

Understanding refinancing options before you even get a mortgage enables you to keep the end in mind. For example:‍

• Planning for potential interest rate changes.
• Aligning refinancing opportunities with property value appreciation.
• Structuring initial loans to minimize prepayment penalties.

‍Risk Mitigation Through Loan Diversification*

Spreading mortgage risk across multiple lenders and loan types can enhance portfolio stability:‍

• Combining fixed and variable rate loans.
• Diversifying across different lenders and jurisdictions.
• Balancing recourse and non-recourse loans.

Customize Your Mortgage to Meet Your Needs

Waltz was founded by foreign real estate investors with your unique needs in mind. Based on your investment approach, our team can help you find loan options and terms that work best for you. 

Let us be your GPS navigation throughout the investment process from start to finish.

‍

^{*We care about you and want all of your real estate investments to be successful. And while we are excited to share this information with you, this Article does not replace your need to consult with legal, real estate, tax, and financial advisors in your home country and the United States. All investments, including real estate, involve risk, so please invest carefully.}