Ohio is the birthplace of the Wright Brothers, who made history with the first powered flight. Just as the Wright Brothers changed the course of history, Ohio is now positioning itself as a key player in the real estate world. International investors are flocking to Ohio for its strong economic growth, affordable property prices compared to other U.S. markets, and booming cities.
In this article, we’ll cover everything you need to know about investing in Ohio real estate as a foreign national—from the best markets to explore, to available property types, and how to navigate DSCR loans to grow your portfolio.
We are providing the following discussion to you for informational purposes only. All investments, including real estate, involve risk, and we encourage you to invest carefully. The information in this article is not intended to replace or serve as a substitute for any legal, real estate, tax, or other professional advice or service. You should consult with a professional in the respective legal, tax, accounting, real estate, or other professional area before making any decisions or entering into any contracts relating to a rental property.
Real estate investors from around the world are taking advantage of a unique loan called a debt-service-coverage-ratio (DSCR) loan. Let’s explore why these are becoming popular with rental property investors.
DSCR loans focus on a property's income potential instead of the borrower's personal debt-to-income ratio or credit score. The loan uses the DSCR metric, which is calculated by dividing the property’s annual rental income by its annual mortgage payments, to ensure the property generates enough income to cover the mortgage. This makes DSCR loans ideal for real estate investors who want to qualify based on a property's income potential.
As an international investor, there are a variety of benefits to using DSCR loans compared to other loan options. Some of the top reasons include:
Start the application process here.
While each lender has its own set of rules and requirements, there are often similarities between them. Here's what sets Waltz apart for foreign nationals compared to most other lenders.
Most Lenders: Most lenders find it easier to verify U.S.-based income, as they are more familiar with local sources, while foreign income may raise concerns and require thorough documentation. For those willing to work with foreign income, lenders typically request detailed proof of steady income, such as U.S. bank statements, pay stubs, tax returns, rental income statements, and other financial records.
Waltz: We specialize in foreign national loans and simplify income verification by reviewing both U.S. and home-country documentation, such as bank records and pay stubs. While we consider your personal income, the property's potential income is the main factor in our evaluation, ensuring a smoother approval process.
Most Lenders: Oftentimes, lenders require higher down payments for international investors due to perceived risks. It’s common for them to ask for down payments ranging from 30% to 50%, along with six months of reserve funds in your bank account.
Waltz: The required down payment for our loans varies depending on the buyer’s situation. We evaluate each case individually, so some buyers may qualify for a down payment as low as 25%, though 30% is typically the standard. We’re flexible with reserve requirements, and these may vary based on the borrower’s specific circumstances.
Most Lenders: Typically, lenders will ask for your passport and visa. For loans on investment properties, they often require the loan to be made to a U.S.-based LLC, with you as the personal guarantor. In such cases, they may also ask for the LLC's operating agreement.
Waltz: Establishing proof of identity (KYC) is a standard practice for investment loans. To verify your identity, all we require is a valid passport, which can be from your home country. If you don’t yet have an LLC, we can help! With our Investor Toolkit, you'll receive an LLC along with an Employer Identification Number (EIN)—and it’s ready in just minutes.
Most lenders: Credit scores are a crucial factor when applying for a loan, with some lenders accepting scores as low as 640. However, international borrowers often face challenges due to the reliance on FICO scores, and without a U.S. credit history, lenders may hesitate to approve your loan—even if your credit is strong in your home country.
Waltz: We understand that as a non-U.S. citizen, you may not have a U.S. credit score, which is why we don’t require one for foreign national applicants. Instead, we assess your creditworthiness by reviewing your credit history from your home country.
Learn more about how international real estate investors find success with Waltz.
Choosing the right type of property is crucial for maximizing rental income and minimizing risks, as different property types vary in demand and profitability. It also impacts loan requirements, management effort, and long-term stability for your investment portfolio.
Ohio has become a top destination for international investors seeking to enter the U.S. real estate market due to its robust economy, diverse housing options, and favorable investment environment. Here are a few reasons why real estate investors are drawn to Ohio:
Ohio is often overshadowed by coastal states when it comes to international investing. However, this Midwestern state is home to a diverse economy, affordable housing market, and strong rental demand. Here are some Ohio cities to consider:
Ohio's capital city is experiencing rapid growth, driven by a thriving tech scene and a growing population. Its strong job market and diverse economy make it a solid investment choice.
Known for its historic charm and riverfront views, Cincinnati offers a mix of urban living and suburban tranquility. The city is home to several Fortune 500 companies, and its steady job market and affordable housing options make it a hotspot for investors.
Despite its past challenges, Cleveland has undergone a revitalization, with investments in its downtown area and cultural amenities. Cleveland was recently named America’s second-best city to start a career, and the city’s affordability and strong rental demand make it an interesting prospect.
As a manufacturing hub with a lower cost of living compared to other Ohio cities, Toledo presents opportunities for investors seeking stable rental income.
Ohio can provide the right investor with the perfect mix of affordability, Midwestern charm, and potential for high rental returns. However, there are a few things to be aware of before you commit to an Ohio mortgage. These include:
For foreign nationals living and investing in Ohio, refinancing your real estate investments in locations like Columbus, Cleveland, and Cincinnati means carefully replacing your current mortgage with a new one. This means taking out a mortgage to use the equity in your properties to fund new investments. This is why Waltz offers comprehensive and effective solutions to ease this process as we understand its crucial importance to Ohio real estate investors! The refinancing process for foreign nationals generally involves:
This option is appealing to foreign investors interested in Ohio real estate, as it allows you to modify the terms of your existing mortgage, potentially securing a more favorable deal on your investment property loan.
Cash-out refinancing allows you to access the equity in your property—enabling you to borrow more than the current mortgage balance, based on the original equity. The additional funds can be used for various purposes, including home improvements, debt consolidation, or a down payment on another property. This provides cash at closing, and opening up new investment opportunities.
Learn more about refinancing.
Securing a DSCR mortgage as a non-U.S. resident in Ohio might seem challenging, but with Waltz, it’s easier than you think. Just follow these seven steps:
1. Find a profitable investment
Begin by selecting a property with strong rental potential. Focus on locations that align with your investment goals, whether in urban, suburban, or scenic areas, ensuring the property fits your financial criteria and offers good long-term prospects for rental income.
2. Gather essential documents
Prepare important documents such as a valid passport, proof of income (like bank statements or business financials from your home country), and details about the property.
3. Select a lender experienced with foreign nationals
Look for a lender who understands the needs of foreign investors. They should be familiar with challenges like verifying foreign income and handling the lack of a U.S. credit history. Waltz specializes in foreign national loans and can guide you through this process.
4. Set up an LLC and U.S. bank account
LLCs are a requirement for DSCR loans, and most lenders will also require a U.S. bank account2 for financial transactions. If you don’t have an Employer Identification Number (EIN), setting up both can take time. However, with our Investor Toolkit, you can quickly establish an LLC and U.S. bank account, saving you from lengthy delays.
5. Submit your loan application
During the application process, an account executive will guide you, ensuring you have all the necessary property details, financial documents, and proof of income potential. This helps streamline the process, making your application quick and straightforward.
6. Perform due diligence
This step includes inspecting the property, getting an appraisal, and fulfilling any additional document requests from the lender to verify the property’s condition and value. You’ll also want to review your term sheet!
7. Complete the purchase process
Once your loan is approved and due diligence is complete, finalize the transaction by signing the required paperwork—sometimes virtually if you're outside the U.S. Then, transfer the funds to close the deal, and you'll own a rental property!
