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Global Investors Podcast
GI16: Obtaining U.S Real Estate Financing as a Foreign Investor with Eric Tran & Milica Krstic
October 9, 2019
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GI16: Obtaining U.S Real Estate Financing as a Foreign Investor with Eric Tran & Milica Krstic

Eric Tran is managing parner of Universal Commercial Capital. A private lender with 25 years of experience in real estate and private Lending. He is a member of the American Association of Private Lenders. Loves working with investors, brokers, realtors and closing deals fast.

Milica has a master’s in political science, and a journalist by profession. She works with Eric Tran as a Sales Executive at Universal Commercial Capital and is originally from Serbia.

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Transcript:

Announcer: Welcome to the Global Investors Podcast, a show that focuses on helping foreign investors enter the lucrative US real estate market. Host, Charles Carrillo, combined decades of real estate investing experience with a professional background in international banking to interview experts in all areas of US real estate investing. Now here’s your host, Charles Carrillo.

Charles: Welcome to another episode of the Global Investors Podcast. I’m your host Charles Carrillo. Today we have Eric Tran & Milli Krstic. Eric is the managing partner of Universal Commercial Capital, a private lender with 25 years of experience in real estate and private lending. He is a member of the American Association of Private Lenders, loves working with US and international investors, alike brokers, realtors and closing deals fast. Milli has a masters in political science and a journalist by profession. She works with Eric as a sales executive at Universal Commercial Capital and is originally from Serbia. So thank you very much for both of you being on the show today.

Milli: Thank you.

Eric: Hi, Pal

Eric: So I want to see a get a little background before I know, when Eric has 25 years of experience with working with private lending. And I wanted to ge a little, a professional background for both of you, before starting and before starting to work with a Universal Commercial Capital. So Milli

Milli: Well, I am a generalist by profession. I used to work as journalist and now I’m in a real estate business with Eric and Universal Commercial Capital. It’s a great opportunity for me to learn new things, to work with very interesting people and just to open myself to new experiences.

Charles: Oh, great, great. And Eric, what was your, what was your professional experience before starting Universal Commercial Capital?

Eric: Well, child easier the first time I taught by my style, so I didn’t know where to start. But like I’ve been in the real estate financing for over 25 years. Work mainly in the private lending sector. Private lending means whatever loans the banks decline we come in. And we structure a lot of deal, either commercial, residential construction, newbee construction.

Charles: Okay, great. And your firm focuses a lot on financing for US real estate for foreign investors. And what percentage of kind of like, do you do a lot more international investors or is it a lot more US investors that you guys work with?

Eric: Actually, we do about 30% of our volume for international investor, but, for an international investor, we usually a bigger deal. They come here, they buy like property over a millions to meal. This morning I was working on the deal in LA for like 10 millions. But like volume wise it’s about 30% of obese.

Charles: Okay. So it’s a pretty sizable portion of what you guys do. That’s great. And so it’s all, it’s usually larger deals and it’s not like smaller properties. Are they doing new construction at all or is it just already built, say a commercial properties? Commercial, multifamily,

Eric: Both. Crew construction, a residential property, in a San we do both.

Charles: Nice. Okay, great. For an international investor that comes to you guys to work with you. And I know Millie’s more on the sales side of this. What, what is normally required for them from the boar or to be approved for one of these loans? Of course, in addition to your down payment, like documents entity and stuff like that.

Eric: Yeah. Ciao. When you talk about international borrower, what does it mean? Does it mean that from a foreign country, do they have social security number? No. Do they have tax return? No. So what we require is nothing except the down payment. And what we want to see is the down payment has to be in the US banking institution for two months in the banking instead for two months. We don’t even ask about the source of the money. So our, we ask for it, the down payment plus the closing cost two months in the bank in the US or a legit banking institution from all the countries we are okay to PO.

Charles: Wow. So it’s very, it’s very easy to, to work with you guys. That’s great. Now do a lot of ’em. Do a lot of your foreign investors have US entities set up to invest or do they usually do it through their own name?

Eric: A 70% who set up an LLC and into entity, you know, to put the loan under 30% still use their own name. Normally people that use their own name that their own personal property, not investment for investment property, commercial, they always set up an LLC or a special purpose entity to handle.

Charles: Okay, great. That’s awesome. Now do you guys service all 50 States?

Eric: Uh, we do like almost all 50 state, except we don’t do Oregon, we don’t do Arizona and we don’t do Neva because those three States require you to have a physical location in the state in order to originate any real estate loan.

Charles: Okay. Okay. Yeah, that makes sense. And what type of terms do you see? Like, so for that loan you were working on today, that was $10 million and what kind of normal terms you see on like that? Is it, how, how long does it usually amateurize over and how does that kind of that financing term work on that?

Eric: Do you know what we, we treat our foreign national customer the same as UST design. So whatever we offer to people in here, we offer to international borrower no difference, 30 years amortization, for like investor sometime they don’t need that long and amortization, they just need to get in, do something with the property sale for no profit. So we offered a one year, three years or five year time to those people. But like whoever looking for a long term financing, we can always offer a twenty years amortization, no, same as everyone else in this country.

Charles: Well that’s great. And the down payment is normally what amount you usually see safer if they’re coming in to buy multifamily five plus commercial properties, five units plus commercial properties. What do you usually see for a down payment required for that?

Eric: Yeah, we see a lot of advertisement like up to 80% loan to value on the 20% to be on the safe side. For commercial, I would say at least 35% now what did and on the state on the rental income, because we base our own a mile mainly on the rental income, but I rarely see anything over 70% LTV just because the rental income is not there to support the loan amount.

Charles: Yeah, yeah. Well that’s, that’s very, that’s what you’d get for a US person being a, you know, with a social security number and everything investing in going to a regular bank anyway. So that’s, that’s great. And to be able to do it without having, you know, the social, no credit history and no US tax returns I buy. It makes it so easy to work with investors. What type of, what are the locations that are for international investors coming in like States? Do you see most that you have that are interested in investing.

Eric: We know what, at thought international investor? There are regions, Asia, South America, Europe, Asian, mainly California. Just because no fly English done grossest for all. Isao American, mainly Brazilian or European, mainly England, German, Florida. New York is a state, but more so and Florida. Florida is very popular with Sao American and European.

Charles: Yeah, that’s, that’s for sure. Yeah. They’re coming in here and droves to buy property. What, so if a new investor comes to you guys, they reach out and um, and wherever they’re located, say they’re in Europe and um, what is the first steps that you take with that new investor? Potential new investor, new borrower to get them ready to purchase a property.

Eric: Okay. Like I say, all we need from them is an hour payment. So first thing we asked is where’s the now payment in a European bank in a us bank and, and, and, and last, the first thing we ask, and if they say their money’s in a year, Europe or Asia ban, we say, do you have any problem transferring the money to the U S banking institution? And second, second question. We all were asked, say it is your first time, second time investing in the us. Because a lot of time, you know, we base our approval decision on the borrow expo variances. Somebody from [inaudible] Asia, China or from Brazil who come in here and buy a 20 unit apartment. We were asked, do you have any experiential running an apartment if they don’t, might be a problem. So those are the questions we talked to outside of funding the beginning. I have one client from China, you know, who come to me who want to borrow 15 meal for a construction loan to build a multifamily apartment. I ask him, do you have any extra variances, uh, doing this thing in the us? You say no, but I hired the vast general contract, uh, in the country to build it for me. And, and I ask him if you don’t have any extra or in, in the U S do you think you can manage and supervise that general contractor to do a good job for you? So mainly we asked about that money and I liquidity and the expo range, knowing what they plan to do in the U S real estate market.

Charles: Hmm. Oh, that, that makes, that makes a perfect, um, perfect sense. What, what mistakes do you see when you have new investors that come in and, um, what, what do you see that could be a problem that other than, you know, they, they’ve come in if it’s lack of experience, if it’s lack of reserves on the lack of capitalization, um, like you were just saying that that might be lack of experience on that, that buyer that wants to, or the builder that I want to build a $15 million complex. So what do you see for mistakes normally from foreign investors coming into the States?

Eric: The mission like is, you know what they, they use the expo rinses, uh, in their own country and they think it will be the same in the us. But a lot of times things can be different. Europe can be different, but us, us can be different from Asia. So, so their, their thinking is more or as uh, with like their own country, but in the us than can be different. So that’s where the auto diminish that coming from. Okay. Yeah. Yeah. Totally. Another mistake is seen foreign for foreign intentional. They don’t have that much experience in the country. So they tend to lie, overpay for the property. And that’s when we come in, you know? No, and a lot of foreign investors when they come to us, not because they need a loan, but we today are more or less like an run. You know, we, we are their first line of defense. Uh, do I get this property with the right price? We did tell them in front them because our Mondays on the light to social, a lot of our clients, they come to us not as a lender, not to have a loan, but more or less for an insurance policy. Um, for like any exposure, either valuation or legal exposures. That’s what I see.

Charles: That makes sense. Because it’s always, um, people always say, well, I had a great deal, but I couldn’t get it financed. Well, you didn’t have, you didn’t have a great deal then. You know what I mean? So it’s, it’s great to always pass it by an underwriter and then they can put it through their process and they’re probably gonna be, hopefully they’ll most likely be a little bit more conservative than you are and make sure that Hey, you have the liquidity after you closed the reserves, you have a team in place that can actually manage this because you have no experience or your, you know, 12 times 12 time zones away or something. I mean, you’re just not going to be able to have the hands on. So

Eric: I’m going to leave. We want to save like a 12 month reserve in the bang [inaudible] and explorations, you know, uh, we, we, we want them to hire a professional management company.

Charles: Yeah. How’d that boots on the ground so they can handle any type of issues that, that might happen. So, um, are you able to assist your foreign investors with putting them in line with arts 13 CPA and attorney, stuff like that?

Eric: Yes, we all, we have a tape with those because fast at Tony property manager MUN real tall real estate Asian. Uh, we have, uh, not a team but a network, not that we work together.

Charles: Oh, that’s awesome. And so you guys are based in Europe, Vietnam, Brazil, China, Philippines, India. I mean you guys are in a, a number of different markets. Is this where you, uh, consistently get business from a lot of investors coming from those areas to actively invest in the United States?

Eric: Right those country a is where we got our business, but the big gas market is still China and coming up strongly. Brazil, India and Vietnam.

Eric: Okay.

Eric: China has been a major player in the foreign, uh, market in the U S.

Charles: When you speak to new investors, and obviously it differs between how much money someone has, that’s an investing, but what is their normal goal other than, is it capital preservation in it, you know, as the main, as the main goal when they come to the United States? Or is it mainly returns? Um, what do you, what do you usually hear from your investors?

Eric: Gaffney told preservation, safe place, you know, to pack that money because people from China, from Vietnam, from Brazil, at that level, normally the return is Manda and hired and the old country, but not, not the European In Europe the return in a duet is [inaudible]. So from Asia, from South America is Marshall on the capital preservation side, but Europe they come to the us just because the yield is higher, the return is higher.

Charles: Yeah. Yeah, I can, yeah, I can do. I definitely see that it’s, it’s very, very expensive and a lot of those areas and there’s not much, the cap rates are so compressed. Um, right now you guys, everything’s funded by private investors, is that correct? Your whole, your whole firm is a private investors, is that correct?

Eric: All right. A private investigator. All faculty office.

Charles: Okay. Oh, okay. So you haven’t, you have investors, you actually entertain investors that come in that might want to just be on the debt part of, of the real estate transaction and not really on the equity investing part. You, you can, you can invite those investors in just to loan money on other projects.

Eric: Right. You know, we do like 80% on the deck park, one 20 bucks and sometimes you know, we bring the investor in also as an equity partner but like we are mainly a an expat player on the capital stack.

Charles: Okay. Now, um, I want to, if you guys want to explain a little bit more about universal commercial capital, I know we went through a lot of foreign, there’s and you guys have tons of resources on your website with webinars. If, um, if you guys want to explain more about how that works and what services you can provide and information on your website before we list all that stuff down in the, uh, the notes of the podcast.

Eric: Um, maybe Todd you want to add this question or do you want me to,

Milli: yes, I, I want to answer this question where on our website you can see all kinds of loans that you can get from us. We have a commercial loan, hard money loan, a fix and flip loan. You all also can see there what are the terms and um, you can see our contracts so you can contact us for any additional information, but our website is very good and there you can just see who we are and what universal commercial Capitol is offering to you.

Charles: Okay. Well that’s great. Yeah. What I will do is I will put all that information in the, uh, in the bottom of the podcast notes and then also on the bottom, the YouTube video notes and then people can reach out to you and if they have any questions or want to move forward, then we’ll have them go in as universal commercial capital.com correct?

Eric: Yes. Great, thank you.

Charles: Well, thank you very much. I appreciate you guys coming on. It’s great. I know, uh, Eric’s leaving, uh, flying internationally tonight, so it’s great that I got you beforehand. And, um, I look forward to connecting with you guys soon in the future.

Eric: Right. And before we hang up, uh, Neely tie, why don’t you say a few words, uh, to chow and to our audiences?

Milli: Oh, well I want to invite, uh, everybody who’s interested in the real estate business to visit our website. Also, you can find us on LinkedIn and bigger pockets platform. Um, any information you need, just don’t hesitate to ask because we are very open to work with you and you would like the terms. I’m sure you would like the terms.

Charles: Okay. Okay. Thank you. [inaudible] thank you Charles. Well, thank you. Thank you very much.

Milli: Thank you Charles. And I’m looking forward to talk to you again.

Charles: Yes, we’ll, we’ll, I’ll definitely connect in the future and um, we’ll uh, we’ll get all that information put in the bottom of the notes and if there’s any other questions people can reach out to you directly. Thank you. Okay, thank you. Bye bye. Bye. Nice meeting you too. Yeah.

Announcer: Thank you for listening to the Global Investor Podcast. If you’d like to show, be sure to subscribe on iTunes or Google play to get new weekly episodes. For more resources and to receive our newsletter, please visit globalinvestorpodcast.com and don’t forget to join us next week for another episode.

Announcer: Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Harborside Partners incorporated exclusively.

Links and Contact Information Mentioned In The Episode:

  • Universal Commercial Capital : https://universalcommercialcapital.com/
  • Toll-Free: 888-334-9039
  • [email protected]

About Eric Tran and Milica Krstic

Eric Tran is managing partner of Universal Commercial Capital. A private lender with 25 years of experience in real estate and private Lending. He is a member of the American Association of Private Lenders. Loves working with investors, brokers, realtors and closing deals fast.

Milica has a master’s in political science, and a journalist by profession. She works with Eric Tran as a Sales Executive at Universal Commercial Capital and is originally from Serbia.

Universal Commercial Capital is a U.S. based, private money lender. A trusted resource in real estate mortgage lending, Universal Commercial Capital is known for its flexible, common-sense underwriting and efficient, hassle-free loan programs. A private lender specializing in Commercial, Hard Money and Not so Hard Money loan programs (see our website for more details). We offer fast closings, great rates, and an experienced team. Brokers and agents working with us are protected and earn more, as we charge less and keep borrowers yours forever.

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