Foreign investment in South Florida real estate has been a tremendous boost to the local economy in the past several years, and now it appears that banks are becoming more accommodating to these international buyers of local real estate, particularly housing -- and especially luxury single family homes.
For several years, foreign buyers of Miami real estate either had to deal with their lenders in their home countries or bring cash to the closing table. For many foreign buyers, particularly those from Latin America, cash buys of condos and other Miami real estate was not that strange: in their local economies, cash buys are much more commonplace than they have been in the United States.
For more details, check out our earlier posts on growing number of foreign cash buys of homes in South Florida including:
U.S. Banks Opening Lending to International Buyers of Residential Real Estate
In 2013, it appears that American lenders are discovering a profit niche in offering mortgages to foreigners who are interested in buying U.S. real estate. Among them, First Choice Bank, Citi, and Deutsche Bank.
True, these lenders are dipping their toes into this market: they are limiting the properties they'll consider to luxury homes (high dollar buys) and they're tending to go with borrowers with whom they've had a past banking relationship.
Addressing the risk involved in loaning significant sums to foreign borrowers, these mortgages also face additional requirements, things like requiring up to half the purchase price as a down payment on the deal and requiring the borrower to open an account at the lending bank where a minimum balance equal to one or two years' mortgages payments must be maintained.
South Florida Residential Real Estate Target of Foreign Real Estate Buyers
According to the National Association of Realtors in their Research Division's report "Profile of International Home Buyers in Florida 2012," the most popular places for international real estate investment in Florida are:
Miami / Miami Beach
Orlando - Kissimmee
Brandenton - Sarasota - Venice
Cape Coral - Fort Myers
Tampa - St. Petersburg - Clearwater.
Their report also revealed that 82% of these foreign buys of Florida real estate were cash transactions. European and Latin American buyers tend to buy higher priced homes and condos; Canadians buy a lot of Florida property, but they tend to buy more reasonably priced properties (between $150-200,000).
This month, the Miami Association of Realtors released numbers regarding foreign buyers of Miami real estate, and in the Miami area, 90% of international buyers of Miami residential property was in cash last year.
What will happen as these foreign buyers with the ability to buy properties in cash have the opportunity to purchase Florida real estate with an American mortgage? One can assume that the number of foreign sales of residential real estate will jump - and this is good news for Florida's economic future.