According to the U-Haul report, South Carolina is projected to be the fastest-growing and most desired state for migration in 2024. Known for its rich history, beautiful coastline, and Southern charm, South Carolina is rapidly becoming a top destination for real estate investors. The state's economy has been growing steadily, and its mix of affordable property prices, scenic landscapes, and a favorable tax climate make it an attractive option for foreign investors. In this guide, we’ll explore what makes South Carolina unique and how you can leverage DSCR investment property loans to capitalize on the state’s rapid growth.
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.
DSCR loans, also known as debt-service coverage ratio loans, are an option for international real estate investors looking to simplify the financing process.
DSCR loans prioritize a property's rental income rather than the borrower's personal financial situation, making them an ideal option for investors without U.S. income or credit history. Unlike conventional mortgages, DSCR loans are classified as non-qualified mortgages (non-QM) because they provide flexible solutions for borrowers who may not meet the criteria for conventional mortgages.
When evaluating your loan options to purchase a rental property, it’s important to understand the benefits. The three primary benefits of DSCR loans include:
When applying for a real estate investment loan in South Carolina as a foreign national, it's crucial to understand that lenders may have different requirements. Here’s what you need to know about most lenders compared to Waltz:
Most lenders: Most U.S. lenders prefer income earned in the country because it's easier to verify. Foreign income, on the other hand, needs extra paperwork like translated bank statements and salary proof. Even with all the required documents, approval can be challenging or take an extended amount of time.
Waltz: We understand that income sources can differ. Whether your earnings are from the U.S. or abroad, we accept various forms of proof, such as foreign bank statements, pay slips, and rental income reports. We also consider your property's rental potential to provide a complete review.
Most lenders: Foreign investors are typically required to make larger down payments, often ranging from 30% to 50% of the property's value. In addition to the higher down payment, some lenders may also ask for additional cash reserves, further increasing the upfront costs. These requirements are put in place to mitigate the perceived risk of lending to international buyers.
Waltz: Waltz offers more flexible terms, allowing qualified borrowers to secure a loan with as little as 25% as a down payment. Additionally, reserve requirements and loan terms vary by individual. This flexibility helps make the loan process more accessible for many investors.
Most lenders: A valid passport and visa are usually required. Many lenders also require investors to establish a U.S.-based LLC, which involves filing legal business documents.
Waltz: We keep the process straightforward. A passport is all that’s needed for identification. If an LLC is required, our Investor Toolkit provides easy-to-follow steps for setting one up and obtaining an Employer Identification Number (EIN).
Most lenders: Lenders typically rely on U.S. credit scores, which can make securing financing difficult for foreign investors who lack a U.S. credit history—despite having strong credit in their home country.
Waltz: Rather than requiring a U.S. credit score, we take a more comprehensive approach. We consider your home country’s credit history along with other financial information to provide a fair and thorough evaluation of your eligibility.
Find out how international investors have benefited from working with Waltz.
Throughout the state of South Carolina, you’ll find a variety of property types. Each has its own strengths and weaknesses, making them suitable for different investment strategies. Here are some common property types you might consider:
Investing in South Carolina's residential real estate market offers several compelling advantages:
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:
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.
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.
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.
This up-and-coming city is known for its thriving arts and culture scene, beautiful parks, and a growing tech industry.
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 top 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.
South Carolina presents unique factors to consider when investing in real estate. Here are some additional considerations beyond natural disasters and market variations:
Refinancing an investment property generally involves replacing your current mortgage with a new one, whether to secure a lower interest rate or unlock capital for future projects. The typical refinancing process includes the following steps:
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.
A cash-out refinance allows you to refinance your current mortgage for more than what you owe, using the difference in cash. Essentially, you replace your existing loan with a new one for a higher amount, and the extra funds are paid out to you. This is a powerful financial tool that can help you access your property's equity and use the funds for a variety of purposes.
Real estate investment opportunities are abundant, with a variety of markets ranging from expanding rental areas to properties in desirable locations. At Waltz, we simplify the process of securing a DSCR loan. Here's an overview of how it works:
1. Find a profitable investment
Look for locations that align with your investment strategy, then find a cash flowing rental property.
2. Gather essential documents
Prepare important documents such as a valid passport, proof of income (like foreign bank statements or business financials), and property information. Lenders may also request proof of assets or a credit report from your home country.
3. Select a lender experienced with foreign nationals
Work with a lender who understands challenges such as verifying foreign income and managing the absence of a U.S. credit history. Waltz specializes in DSCR loans for international clients and is here to assist you throughout the process.
4. Set up an LLC and U.S. bank account
To qualify for a DSCR loan, most lenders will require you to set up an LLC in the U.S. You’ll also need a U.S. bank account for financial transactions. If you don't have an Employer Identification Number (EIN) yet, this process can take time. However, with our Investor Kit, you can quickly set up an LLC and U.S. bank account—saving you from lengthy delays.
5. Submit your loan application
Before submitting your loan application, it's helpful to speak with an account executive who can answer any questions and guide you through the process. They’ll help streamline the application, ensuring you have all the necessary property details, financial documents, and proof of the property’s income potential. Once you've gathered everything, submitting your application should be 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
After completing due diligence and securing loan approval, you're ready to close the deal. Review and sign the required documents—remote signing is often available for international buyers. Once the funds are transferred, the property is officially yours!
