Foreign National Mortgages: A Guide to Real Estate Investing in South Carolina

Optimize Your Real Estate Investment in South Carolina with Waltz

Are SC investment properties on your mind? You’ve come to the right place! Waltz empowers foreign nationals to unlock the potential of South Carolina’s real estate market. We provide specialized financial solutions designed to meet the unique needs of international investors. Our mortgage products feature competitive interest rates, flexible terms, and access to equity for future investment opportunities. Whether you’re seeking to diversify your global portfolio or capitalize on South Carolina's thriving real estate landscape, Waltz provides foreign national mortgages that align with your investment goals and set you up for success. Keep reading to learn more about buying a second home in South Carolina.

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.

What are Foreign National Mortgages?

When you’re not an American resident, securing financing for a U.S. property can be difficult. Foreign national mortgages are an ideal solution for international investors interested in buying property in South Carolina.

At Waltz, we simplify the U.S. real estate financing process for foreign nationals. We have a deep understanding of the South Carolina market and the mortgage expertise you need to confidently invest in this thriving state. Let us guide you through the intricacies of U.S. real estate financing and unlock the potential of your South Carolina investment.

Benefits of Investing in South Carolina Real Estate for Foreign Nationals

South Caroline offers a long list of benefits for foreign nationals who want to invest in US real estate. One of South Carolina’s biggest advantages is its growing economy. Over the last year, the state’s GDP grew by 2.7%, reaching $271.8 billion. This sizable increase is due to several factors, including a diverse economy with strong fundamentals in manufacturing, tourism, agriculture, and more.

Investing in South Carolina real estate also holds an advantage over other states as it is affordable compared to many other American states. Zillow reports that the median home value in South Carolina is $300,746. This is significantly lower than the national median of $412,300, making it an attractive option for investors looking to maximize their returns.

Another advantage for foreign nationals investing in South Carolina is the state's favorable regulatory climate. South Carolina offers a variety of incentives and programs to attract international investment. The South Carolina Department of Commerce offers services and assistance to international investors, such as navigating the state's regulatory requirements and obtaining potential tax breaks.

Here are a few more reasons why South Carolina is a smart place to buy investment property:

South Carolina attracts a lot of top-tier talent. Major companies like Boeing, BMW, Michelin, and Volvo have significant operations in the state, particularly in thriving areas like Charleston, Columbia, Greenville, and Spartanburg. This steady influx of professionals creates a strong demand for rental housing.
There is no state income tax in South Carolina. This means that real estate investors can keep more of their generated rental income in their pockets.

South Carolina is popular with tourists. Tourism generates $29 billion for the state, with millions of people visiting South Carolina’s beautiful beaches and historic cities. This benefits real estate investors by driving property appreciation and fostering positive economic development.

Specific Considerations for Mortgages in South Carolina

South Carolina presents unique factors to consider when investing in real estate. Here are some additional considerations beyond natural disasters and market variations:

Historic Preservation: Many areas in South Carolina, particularly in Charleston and other historic cities, have strict historic preservation regulations. These regulations can impact renovation costs and potential property value increases.
Flood Insurance: Due to South Carolina's coastal location and potential for flooding, flood insurance is often required for properties located in flood-prone areas. The good news is that, despite these risks, South Carolina’s average flood insurance cost is $798 annually, which is about 10% lower than the national average.
Property Taxes: Property tax rates in South Carolina can vary depending on the county and municipality. It's essential to research property tax rates in your desired area to understand the potential costs associated with owning real estate.
HOA Fees: Many residential communities in South Carolina are governed by homeowners' associations (HOAs). HOA fees can add to the monthly costs of owning property and may restrict certain activities or modifications.‍
Coastal Erosion: Coastal erosion is a significant concern in many areas of South Carolina. Properties located near the coast may be at risk of erosion, which can impact property values and require costly mitigation measures.

Which South Carolina Cities Offer Strong Investment Potential?

South Carolina offers real estate investors appealing opportunities, thanks to its scenic beaches, charming historic towns, and expanding economy. Here are some of the state's top investment markets:

Charleston: The Holy City attracts 7 million tourists each year, who are drawn to Charleston’s historic architecture, vibrant culture, and stunning waterfront. Charleston is also a great place to own property because property values have consistently appreciated since the 1980s.
Myrtle Beach: As a major tourist destination, Myrtle Beach boasts beautiful beaches, golf courses, and diverse entertainment options. This high demand for rental homes makes it an attractive option for foreign investors.
Columbia: As the state capital, Columbia boasts a growing economy, a diverse job market, a lower cost of living compared to coastal cities, and a high demand for rentals, with 54% of households in the city being renters.‍
Greenville: This up-and-coming city is known for its thriving arts and culture scene, beautiful parks, and a growing tech industry.‍
Hilton Head Island: This barrier island is a popular vacation spot, known for its beautiful beaches, golf courses, and upscale amenities. It’s considered one of the most stunning in America, with Travel and Leisure naming it the #1 beach in South Carolina. The area's strong tourism makes it a prime investment opportunity for foreign investors, offering both short- and long-term rental potential.

Types of Mortgages Available for Foreign Nationals Investing in Real Estate in South Carolina

Foreign nationals can access a variety of mortgage products in South Carolina, each with its own benefits:

DSCR Loan: Debt service coverage ratio (DSCR) loans make it easier for foreign investors to buy US rental properties. Unlike traditional mortgages that heavily rely on a borrower's personal income and credit, DSCR loans focus on the property's ability to generate income. By focusing on the property's income-generating potential rather than the investor's personal finances, DSCR loans eliminate the traditional hurdles often faced by international buyers. Waltz specializes in DSCR loans for foreign investors. Contact us to get started.
Non-Resident Conventional Loan: These loans offer competitive rates but typically require a higher down payment (often 30% or more) and may not require a U.S. credit history.
ITIN Loan (for certain non-residents): This program allows qualified borrowers to use an Individual Taxpayer Identification Number (ITIN) instead of a Social Security number. It often has down payment requirements around 30% and may have specific requirements for employment and income verification.
Jumbo Loan (for high-value properties): Jumbo loans are for mortgages that exceed $766,000, and sometimes over $1 million. These programs are more exclusive and cater to foreign investors with substantial assets and strong financial profiles.
Hard Money Loan: This is a short-term option from private lenders. It can be useful for quick closings but comes with higher interest rates and stricter terms.
Fixed-Rate Mortgages: These are the most common type of mortgage, offering a fixed interest rate for the entire loan term (typically 15 or 30 years). This provides stability and predictability in monthly payments.
Adjustable-Rate Mortgages (ARMs): ARMs offer lower initial interest rates, but the rate can adjust periodically based on a specific index. They can be a good option for borrowers who plan to sell or refinance the property before the interest rate adjusts significantly.
Interest Only Mortgages: With an interest-only mortgage, you only pay the interest on the loan for a specified period. The principal balance remains unchanged. This can result in lower monthly payments, but you're not building equity in the property during this time and the entire principal balance is due at the end of the interest-only period.
‍Balloon Mortgages: A balloon mortgage is a short-term loan with a large final payment due at the end of the term. The monthly payments during the loan term are typically lower than a traditional mortgage, but the balloon payment can be substantial.

Process of Refinancing for Foreign Nationals in South Carolina

Refinancing your South Carolina investment property means carefully replacing your current mortgage with a new one. This entails taking out a mortgage to use the equity in their residences to fund new investments.

Waltz offers comprehensive and effective solutions to ease this process for foreign nationals with a South Carolina investment property. Our knowledge ensures that you may securely and successfully optimize your South Carolina investment rentals.

The refinancing process for foreign nationals generally involves:

Determining your property's current market value
Exploring different loan terms and interest rates to find the best deal
Preparing financial documents, including income verification and property ownership proof
Completing the application process
Once approved, finalizing the refinancing transaction

Exploring Refinancing Options for Foreign National Mortgages in South Carolina

Rate-and-term refinance

This option can be quite interesting for foreigners interested in buying property in South Carolina because it allows you to adjust the terms of your current mortgage— with the potential that it can result in a better deal on your house loan. Please note that even if you refinance an existing loan at a lower interest rate, your total finance charges may be higher over the life of your loan.

Cash-out refinance

At Waltz, we proudly offer this option to South Carolina foreign investors as it allows you to access your property's equity— allowing you to borrow more than the current mortgage balance (based on the original equity).

For those interested in South Carolina investment properties, the additional funds can be utilized for various personal objectives, such as home upgrades, debt consolidation, or a down payment on another property. This provides you with cash at closing for a range of needs, broadening your investment opportunities while leveraging the best foreign national mortgages South Carolina has to offer.

Tax Considerations for Foreign Nationals with South Carolina Real Estate Investments

Seeking advice from a tax expert is always a smart move. Please note, this does not constitute legal or tax advice. Understanding the tax implications of owning South Carolina real estate is essential for foreign investors. Key tax considerations include:

Property Taxes: South Carolina imposes a 6% property tax on secondary or investment properties.
Income Tax: Fortunately for foreign investors, South Carolina does not leverage a state income tax. This means that you get to keep more of your rental income if you buy a property in South Carolina.
Federal Income Tax: Rental income from your South Carolina property is also subject to federal income tax.
Foreign Investment in Real Property Tax Act (FIRPTA): If you sell your South Carolina property, you may be subject to FIRPTA withholding, which requires a portion of the sale proceeds to be withheld for potential U.S. capital gains taxes.

Transfer Tax: South Carolina imposes a transfer tax on the sale of real estate, which is typically shared between the buyer and seller. The current transfer tax rate in South Carolina is $1.85 per $500 in property value.