Japanese Financial Institutions Offering Loans for Property Investment in the United States

In recent years, overseas property investment is drawing attention, but especially the detached house market in the United States is becoming active since the COVID-19 pandemic.
People who are interested in the property investment in the United States may be considering to invest in them with a housing loan.
However, it is challenging for a non-resident to get a loan in the United States by local financial institutions.
In this article, we will introduce the three Japanese banks, ORIX Bank, Tokyo Star Bank, and SBJ Bank for people who are considering the property investment in the United States.
It will reveal the features, and the merit and demerit of each bank's loan, so please read until the end.

ORIX Bank/Japanese Financial Institutions Offering Loans for Property Investment in the United States

The mortgage loan offered by ORIX Bank can use the fund for overseas property purchase by taking the property in Japan as security.
The main features are listed below.

●The property subject to investment: The area is not limited
●The amount of money you can borrow: 10,000,000JPY to 200,000,000JPY
●The loan period: the maximum of 35 years
●The loan interest: Changeable Interest Rate Type (3.675％/Year), 3 Fixed Years Special Interest Rate Type (3.3％/Year), 5 Years Fixed Special Interest Rate Type (3.5％/Year)

Merit

There are two merits of using ORIX bank's loan.

●No limit on the location
●You can choose either "fixed" or "changeable" interest rate.

The greatest feature of the loan is that there is no limit on the area you invest.
It is appealing that you can choose the location of the property you are investing since the United States is a big country.
In addition, there are two choices of interest rate available for you, the changeable interest rate or the fixed years special interest rate.
It is easier to make a plan as you can set the maximum loan period of 35 years.

Demerit

The two downsides of using the ORIX Bank are listed below.

●You can only take a property in Japan as a security.
●There are conditions for applicants

The main downside of this loan is that the location of a collateral property is limited.
In ORIX Bank, you cannot take a property in the United States as a security, but only a property in Japan.
The location of a property you can take as a security is limited as below

●Capital Region（Tokyo・Kanagawa・Chiba・Saitama）
●Kinki Region（Osaka・Hyogo・Kyoto・Shiga・Nara・Wakayama）
●Nagoya City・Fukuoka City

For the other conditions of a collateral other than the location, the exclusive area of an apartment must be over 40㎡, and the land area of a detached house must be over 60㎡.
Moreover, there are qualifications for the applicants such as age, annual income, and tenure, so it does not mean everyone can apply.

Tokyo Star Bank: Japanese Financial Institutions Offering Loans for Property Investment in the United States

”Hawaii Real Estate Security Loan" by Tokyo Star Bank is a loan that you can take a property located in the southern shore area in Oahu Island as a security, and invest in the leasing property in the same area.
The main features of the loan is listed below.

●The property subject to investment: a capital fund for a leasing property located in the southern shore of Oahu Island, Hawaii
●The amount of money you can borrow: From 10 million yen to 300 million yen
●The loan period: More than 1 year and less than 5 years (annual basis, an extension at the due date is generally possible)
●The loan interest: 2.8% of fixed interest rate/year (guarantee fee is included)

Merit

There are two merits of using the Tokyo Star Bank's loan.

●Low interest rate
●You can give your purchasing property as a collateral.

The best merit of using the Tokyo Star Bank is the low interest rate.
Moreover, you can borrow money without the risk of exchange fluctuations due to the fixed interest rate.
It is easier to make a forecast for a fund investment as the monthly repayment is fixed.
In addition, you can give the purchasing property in Hawaii as a collateral, so it is a merit that you can borrow money without setting your Japanese property as security.
It is possible to utilize the fund for the next 2nd and 3rd purchase by using the property in Hawaii as a security.

Demerit

There are two demerits of using the loan of Tokyo Start Bank.

●The borrowing period is short.
●There are many high priced properties.

The major demerit is the short borrowing period.
As it is mentioned above, the borrowing period is more than one year but less than five years, and it is relatively short compared to the other banks' offer.
Generally, it is possible to extend the borrowing period at the due date, but if by any chance you have to return the loan within five years, the increase of the monthly repayment could be the downside.
Also, you cannot expect the high gross cap rate for the income of the leasing property as many of the real estates in Hawaii are high-priced.
Although, the value of the real estates in Hawaii has been stable, it is important to make the financial plan beforehand.

Japanese financial institutions that can provide loans for real estate investment in the U.S.: SBJ Bank

SBJ Bank's "Overseas Real Estate (Honolulu, Hawaii) Purchase Loan" is a loan secured by real estate located in the Honolulu, Hawaii area and allows investors to invest in property in the same area.
The main features of the "Overseas Real Estate (Honolulu, Hawaii) Purchase Loan" are as follows

●Property to be invested in: Funds for the purchase of overseas real estate (limited to Honolulu, Hawaii, U.S.A.)
●Loan amount: 10 million yen to 200 million yen (in 100,000 yen increments) (in yen)
●Loan period: 1 year to 35 years (within the guarantee period of the guarantee company)
●Borrowing rate: 2.80% per annum (floating interest rate, including guarantee fee)

Merit

The merits of obtaining financing from SBJ Bank are as follows:

●Real estate to be purchased can be pledged as collateral
●Repayment can be set over a long period of time

Unlike ORIX Bank's loan, SBJ Bank's loan does not require domestic real estate as collateral because the investment can be made using the real estate in the state of Hawaii where the loan is purchased.
This makes it easy for even beginners in real estate investment to apply.
Another major advantage is that the loan comes with group credit life insurance, and the repayment period can be set to a maximum of 35 years.
By setting a longer repayment period, the monthly repayment burden can be reduced, and as a result, it will be easier to generate a profit in terms of monthly income and expenditure.

Demerits

There are two disadvantages to using SBJ Bank loans:

●Areas available for investment are small.
●Many properties are expensive

The disadvantage is that the area in which you can invest is limited to Honolulu, Hawaii.
If the area in which you can invest is limited, you will not be able to compare yields and other factors for each area, and the range of properties you can choose from will be limited.
In addition, real estate in Honolulu, Hawaii is expensive, even by global standards.
Therefore, another disadvantage is that a certain level of financial strength is required to invest.
And since high property prices are likely to result in low yields, it is advisable to consider investment efficiency in mind.

In Conclusion

For those who are considering investing in U.S. real estate, we have introduced Japanese financial institutions "ORIX Bank," "Tokyo Star Bank," and "SBJ Bank" that can be used for U.S. real estate investment.
When investing in U.S. real estate, many people generally utilize loans to invest.
However, using a loan at a local bank would require a high level of screening hurdles and a lot of time and effort.
Therefore, we recommend that you start investing in U.S. real estate by taking out a loan at a domestic (Japanese)financial institution.
On the other hand, the conditions for loans from domestic financial institutions that can be used for U.S. real estate investment vary from financial institution to financial institution, such as the areas in which you can invest, collateral, and so on.
In addition to the banks introduced in this article, there are several other financial institutions that can be used for overseas real estate investment, so please feel free to contact us if you are not sure.
We hope you will consider investing in real estate in the U.S. using this article as a reference.