Archive for July, 2011

Green card or credit card? by OPP Asia

By Teressa Francis | July 29th, 2011 0 Comments

Despite its free and open image, the United States can be a very bureaucratic place to move into as an overseas property investor. If you want to live there, the green card process is notoriously long and problematic. However, as OPP’s American correspondent Cindy Fauth explains, there is another option … if your client is prepared to invest beyond the property itself … in creating jobs and wealth. This is how it works.

The United States is known as the land of opportunity … a nation forged with an entrepreneurial can-do spirit. It has long attracted global business investors from around the world. In a recent survey of investors by the Association of Foreign Investors in Real Estate (AFIRE), its real estate market was overwhelmingly ranked as the number one choice for investment and viewed as the best opportunity for price appreciation.

But, at the same time, overseas property investors can also be faced with a range of complexities in purchasing and using the U.S. residence they have decided to buy.

Immigration, tax, currency and financing issues all play an increasingly important role for global investors looking to move into the US residential property sector. The home of the free can be surprisingly bureaucratic.

The EB-5 visa has emerged as one important tool for those willing to invest in the U.S. as a means of obtaining U.S. residency status. Your clients need to know about it and how it works … but it is not a simple programme. Any real estate agent with clients interested in investing in the U.S. will benefit from a solid understanding of what the EB-5 is all about.

The Path to U.S. Residency

Known informally as the investment or entrepreneurial visa, the EB-5 encourages foreign nationals to invest specified amounts of money, typically $500,000 or $1,000,000, in commercial enterprises or development projects that create jobs for U.S. workers.

In return, they receive conditional permanent residency. While other types of visas may have waiting periods or long delays in processing, the EB-5 has no waiting period after approval.

The US government is authorized to grant 10,000 EB-5s per year, but has never met its quota.

There are many scenarios under which the EB-5 might be the right answer to an international investor’s visa-related residency issues. For example:

  • Individuals, couples and families that prefer to live and raise their children in the U.S.A;
  • Foreign nationals on long waiting lists for other visas;
  • Entrepreneurs who want to start a U.S. business;
  • Affluent buyers looking for a second home in the U.S. and more flexibility to use it.

Two Paths to Residency

Today there are two ways to apply for the EB-5 visa:

  1. Under the original program as an individual investor/entrepreneur; or
  2. Under the Regional Centre Pilot Program, contributing to an investment pool.

Individual EB-5 requirements:

  • Invest at least $1,000,000 in a new commercial enterprise, an existing business reorganised as a new enterprise, the expansion of an existing business, or a troubled business; lowered to $500,000 if the investment is in a Targeted Employment Area.
  • Set up a new business, create 10 jobs for U.S. workers, not including the immigrant and his or her family;
  • Help a troubled business, maintain the pre-investment level of jobs for at least two years;
  • Directly manage the business or formulate business policy.

Regional Centre EB-5 requirements:

  • Invest at least $1,000,000 or $500,000 into an investment pool funding a new commercial enterprise or troubled business within or affiliated with a Regional Centre, depending on the TEA status of the region;
  • Create at least 10 new full-time jobs either directly or indirectly through capital investment;
  • The investor becomes a limited partner in the venture, freeing him or her to live anywhere in the U.S.

Qualified advisors are important

Under either path, the U.S. Citizenship and Immigration Services (USCIS) requires extensive documentation to be submitted with the visa application on the commitment of required funding, lawful source of funds, and viability of the business plan and job projections.

An immigration attorney specializing in EB-5 law and a financial advisor can help an investor navigate the complex process.

An EB-5 attorney can provide a list of well- established Regional Centres into which to inquire about investments, and provide guidance on legal matters. A financial advisor can examine the fit of the investments to the applicant’s needs.

“There are two kinds of risks in the EB-5,” says Ron Klasko, immigration attorney and founding partner with Klasko, Rulon, Stock and Seltzer LLP in Philadelphia, and Chairman of the EB-5 Committee of the American Immigration Lawyers Association (AILA).

“As immigration attorneys, we deal with issues of immigration risk. We insist that investors have their own financial advisors conduct due diligence on the Regional Centre and the project to address the financial risk.”

Once the EB-5 visa is granted, the individual and his family become conditional permanent residents. After two years the visa holder must petition for removal of conditional status by submitting proof that the original requirements for the visa were met.

The role of Regional Centres

EB-5 investors who are not interested in starting and managing their own business can invest in projects associated with a government-approved Regional Centre. Regional Centres exist in almost every state. (See Regional Centre map.) And, as defined by the USCIS, a Regional Centre is any USCIS-approved public or private economic unit involved with the promotion of economic growth, improved regional productivity, job creation, and increased domestic capital investment in a specific geographic area.

Most Regional Centres are in Targeted Employment Areas with $500,000 investment requirements. Their activities include:

  • Looking for local projects that can benefit from foreign investment and will meet USCIS requirements for job creation;
  • Marketing projects in their geographic region to foreign investors;

The benefits of Regional Centres to EB-5 applicants include:

  • Projects associated with Regional Centres have less restrictive job creation requirements, and jobs created indirectly count toward the quota;
  • Much of the business documentation required for the application is provided by the Regional Centre;
  • Most projects are structured as limited partnerships, meaning investors can live anywhere in the U.S. and meet USCIS requirements for management.

Partly because Regional Centre EB-5 requirements are less restrictive and somewhat easier to meet, Regional Centre investors now account for more than 90% of EB-5 applications.

There are currently over 100 Regional Centres in the U.S.A, with many more applications in the pipeline.

Regional Centres must meet ongoing reporting requirements to maintain their designation. If they fail to do so, they are dropped by USCIS. For an updated list, go to uscis.gov and enter Immigrant Investor Regional Centres in the search box.

For most immigrants, the road to permanent residency via the green card can be long and complicated. However, there is a shortcut for those with significant financial resources—the EB-5 visa.

Make sure you are well educated on this topic so you can help your clients pursue their goal of investing in the United States.

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Intero Insider: What We Can Learn from the Man Who Bought a Home for $16

By Gino Blefari | July 26th, 2011 0 Comments

Have you seen the recent news story in which a man purchased a $330,000 home in Texas for $16? No, that’s not a typo – he “bought” a perfectly nice house for sixteen bucks. And it’s a true story, not fiction. What is going on here?

Here’s what happened: Like many nice neighborhoods across America, Flower Mound, Texas, experienced home foreclosures in recent years. And because of a tumultuous couple of years in the lending industry, the mortgage company that owned this particular house in Flower Mound meanwhile went out of business.

Kenneth Robinson somehow caught wind of this, and moved into the house in June. According to the story, he simply went to the Denton County Courthouse and filled out a form. Due to a Texas law called “adverse possession,” he was granted rights to the house for a $16 administration fee. Now, that’s a deal!

This isn’t just an interesting story, though. I wanted to discuss here because it’s a perfect example of the “silver lining” or “diamond in the rough” kind of markets we’re seeing right now – to the point where logic can’t always describe it. Foreclosure investing is a tough and risky business that can pay off big when done right.

While the average person can’t really expect the stars to align quite like they did for Mr. Robinson, there are ways to really take advantage of the opportunity that’s out there right now. What can we learn from Robinson?

Know your market
Mr. Robinson’s edge seems to have been his keen eye for what was happening in the neighborhood. He realized this home was abandoned and he discovered it was owned by a bank that was no longer in business.

Be persistent
Robinson’s other big strength was that he persisted in researching the laws around taking possession of a property. He could’ve just figured “why bother?” when there was no owner to buy it from. But instead, he dug and he acted on the knowledge he gained.

As an investor, I’d caution not to delude yourself into thinking you’ll stumble across a similar situation any time soon. But take the lessons to heart and realize that sometimes it really is all about knowing how and when to act on that big opportunity when it lands at your feet. Persistence outscores luck any day of the week.

Interesting times indeed! Check out the full details of Robinson’s story here.

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A U.S. Debt Crisis?

By Rick Soukoulis | July 25th, 2011 0 Comments

Just about everyone has at least seen the headlines about the problems in Greece. The government ran massive deficits for years, and like someone who maxes out on all his credit cards and can’t use them anymore, Greece has come to the point where they’re struggling to borrow more money to go even further into debt.

International lenders such as the World Bank have told them “No more credit till you cut spending”, and people who’d be affected by spending cuts, or who think they will, are seen regularly rioting in the streets.

I was in Greece very recently, and I saw something very interesting about the riots.  Things would be pretty calm until the news cameras and TV stations would show up, and suddenly, rioters appeared out of nowhere and started, well, rioting.  When the newsmen had enough footage and packed up and left, so would the rioters.

I’m not certain what to make of this, but it left me a bit cynical.

Still, the question remains, could this happen here in the United States?

There’s no question that our spending is out of control. The deficit is the equivalent of a family which earns $50,000 and spends $88,000.  That is sustainable only as long as someone lends us the money, and I think you know who lends us the most.

It’s the Chinese!  They now own well over $1 trillion in U.S. Treasuries, and if they one day come to believe that our debt load is too high, that will be ugly.

Interest rates on Treasuries would climb to a level reflective of our high debt and lowered credit rating.

Could mortgages move from 4.5% to 5.5%?  The reality is that they’d probably go a heck of a lot higher, maybe even to 8-9%.  And I don’t need to tell you what that would do to an already fragile housing market.

A crisis is a terrible thing to waste, and our President has a wonderful opportunity to use this crisis as a rationale for a dramatic re-ordering of our spending. Whether he’s playing chicken with the Republicans in Congress or not, it may be 20 years from now when people try to find the one, true point in time when we started a slide into economic decline. And when they do they will point to the government’s collective unwillingness to do what needed to be done.

Saving entitlements, fighting for increased revenues, standing up for the middle class will all be irrelevant if we become another Greece. History is filled with empires that decline because of over-reaching and trying to do things they could no longer afford.


Intero Insider: Is the Uptick in Home Remodeling a Good Thing?

By Gino Blefari | July 19th, 2011 0 Comments

Here’s some positive housing market news out this week: home remodeling hit its highest level in May since 2004, when the service reporting the numbers first started tracking it. Are we surprised? We shouldn’t be.

Home remodeling was up 22% in May from the same month a year ago, according to BuildFax. If the economy is still in a slump, many are still without jobs and consumers are facing rising prices on gas, food and other goods, why are more people spending money to remodel their homes? Two aspects of our housing market can explain this phenomenon:

  1. Foreclosure homes aplenty – Many times, homes that are foreclosed will sit abandoned for awhile or may have suffered from lack of care from owners who were sinking in debt. Buyers who grabbed these properties are likely fixing them up either to live in or re-sell.
  2. Why sell when you can remodel? It may be a good time to buy in most markets, but unfortunately, that also means it’s not the greatest time to sell in those same markets. For move-up buyers, this means potentially selling at a loss. Hey, why sell and move up when you can just take that money and fix up your current place?  Remodeling is also a bit more budget-friendly in some cases than moving, which can be rather expensive.

The next question that’s begging to be asked: Is this necessarily a good thing for the housing market? I say yes. For one thing, it’s creating at least some job creation in the construction industry. And it’s getting consumer spending flowing. It’s also adding value to homes that may be on the market four or five years from now instead of this year. And, perhaps most importantly, it’s potentially reviving foreclosed homes to make them attractive to buyers.

So remodeling is on the upswing indeed. It may not be the pill that saves the day, but it’s a sign that things are moving up. It’s also a sign that deep down inside, Americans still value their homes as much as they did before this recession. Nothing’s really changed that – and nothing ever will.

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Intero and Western Bancorp voted the Best Real Estate and Mortgage Company in the Silicon Valley

By Teressa Francis | July 13th, 2011 0 Comments

The results are in and Intero Real Estate Services, Inc. and WesternBancorp were voted the Best Real Estate Company and Best Mortgage Company in Silicon Valley in the 2011 San Jose Mercury News Reader’s Choice Awards.

For Intero this marks our second time we’ve been honored with award. Thank you for voting we appreciate your votes – and your trust.

<a href=”http://interofranchise.com/wp-content/uploads/2011/07/best-of-logo_1.png”><img class=”alignright size-full wp-image-501″ title=”best of logo_1″ src=”http://interofranchise.com/wp-content/uploads/2011/07/best-of-logo_1.png” alt=”" width=”266″ height=”247″ /></a>
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Intero Insider: Free Money for Underwater Homeowners

By Gino Blefari | July 12th, 2011 0 Comments

More help is out right now from the federal government for a small portion of the millions of homeowners who have fallen behind on mortgage payments. What is it this time? In a nutshell, free money. But struggling homeowners need to act fast as they’re only accepting applications until July 22.

The Emergency Homeowners Loan program is a $1 billion program that offers loans up to $50,000 to homeowners who have lost their jobs. The kicker? For those who qualify, the loans don’t have to be repaid.

How it works:

The program – operated by the Department of Housing and Urban Development and the nonprofit housing group NeighborWorks America – is making loans with better terms than anything a local bank can offer. The loans are interest-free, and payments go directly to the lender to cover a portion of a borrower’s monthly mortgage.

Borrowers can get assistance for up to two years. Once assistance ends, 20% of the loan is forgiven with each passing year. So qualified borrowers who stay in their homes for at least five years after the assistance period don’t have to pay this money back – as long as they don’t fall behind on their mortgage again.

What’s the big catch? We know there’s always one that seems to derail the intent of these programs to help millions of homeowners out of bad situations.

Well, for one thing, if borrowers decide to sell their home before the entire loan is forgiven, they’ll have to pay the remaining amount back. Some say that this potentially creates an even worse situation for these borrowers as they’re further in debt than they were before taking the loan.

Also, if borrowers fall behind on their mortgage payments and either sell or refinance, they’ll also have to pay back the remainder of the loan. Because of this, some critics have already said that taking these loans may actually put some homeowners more in debt and make their situations worse.

Another catch? HUD says these loans will only be made available to 30,000 people. That’s a pretty small portion of the millions who face foreclosure due to missed mortgage payments. To be eligible, a borrower needs to have experienced income loss from either losing a job, a medical condition or some other economic problem. Details are available at this link: http://ehlp.nw.org/.

If you or someone you know is facing foreclosure, it’s worth checking out whether you can get assistance from this program. But, first make sure you have a long-term plan for staying in your home.

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Intero Real Estate Services Appoints Charmaine Wang to Director of Sales & Marketing, APAC of Intero Hong Kong

By Teressa Francis | July 7th, 2011 0 Comments

Wang will help attract investors from China and across the Pacific region to U.S. properties

Cupertino, California – (July 7, 2011) – Intero Real Estate Services, Inc. has appointed Charmaine Wang to Director of Sales and Marketing, APAC of Intero Hong Kong.

Under the leadership of John Thompson, Executive Vice President & Managing Officer of Intero Hong Kong, Charmaine Wang will bring investors from China and across the Pacific region to U.S. properties.

In addition to her success as a top 5% agent with Intero, Charmaine Wang had a successful career in sales and marketing in various Silicon Valley companies. Ms. Wang was born and raised in Shanghai. She received her BSEE and MBA from Santa Clara University.

After joining Intero, Charmaine serviced Bay Area clients as well as many investors from China with the highest standard. Her deep understanding of Chinese culture and extensive hands-on U.S. real estate practice makes her a welcome figure in representing China investors.

The continued growth of Asia’s economies, high asset prices, particularly in real estate, and rising currencies relative to the US dollar, have made Asians significant buyers of US real estate. According to The 2011 NAR Profile of International Home Buying Activity, the international market for U.S. residential property approaches $82 billion on an annual basis, of which more than $7 billion comes directly from China.

The Intero brand’s strength in the US, particularly in California, where many Asians choose to buy given its geographical proximity to Asia, established Chinese community, favorable climate, and economic, educational and work opportunities, make it the ideal partner to provide quality real estate investment opportunities to China investors.

“Intero was born in Silicon Valley, which is a crossroads of innovation for the entire Pacific Rim,” said Executive Vice President & Managing Officer of Intero Hong Kong John Thompson. “This transition is a natural move for us and one we are uniquely equipped to execute successfully.”

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Commercial Real Estate Market Insight with Steve Becerra

By Teressa Francis | July 7th, 2011 0 Comments

This Intero Insider-Video Series brings you Steve Becerra, one of the top real estate agents at Intero Real Estate Services from the Saratoga office. Steve has been in the business for over 20 years and is an expert on the commercial real estate market, owning his own brokerage business for 10 years. Steve speaks with Intero COO Tom Tognoli and shares his knowledge about the current condition of the commercial market both locally and globally as well as giving us his insight about what to expect in the future.

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Intero Insider: Are Falling Home Prices Saving Marriages?

By Gino Blefari | July 5th, 2011 0 Comments

You’ll often hear people in the real estate business talk about how most home sales are triggered by life events: marriage, divorce, babies, job relocation. These are the standard igniters. But how do situations change when the housing market is slow?

In a situation like divorce, the general truth is that economic hardship and financial stress tend to be a chief cause. So you’d think that during the recession and housing slowdown that divorce is on the rise. But you’d be wrong.

I stumbled across a discussion of a new economics paper last week that finds the opposite – that economic turmoil today is keeping couples together, and that low house prices are the reason. Although it may seem like low house prices would enable couples to break up and buy on their own more easily than when the market is hot and prices are high, it seems that couples instead would rather stay in their unhappy marriages than sell their homes at a loss.

For those couples whose home values may have fallen below their mortgages, selling may not be an option if the bank won’t approve a short sale. But, even if that’s not the case, the research notes what economists call “loss aversion,” an emotional barrier to selling at a loss. It seems we humans for the most part can’t get over that.

Just how much did the recession and drop in house prices pull down the divorce rate? The research found that a 10% decrease in home prices pulled down the divorce rate of college-educated households from 11.6% to 8.22%.

What exactly does this mean? Well, it’s interesting data to understand when examining the dynamics of the housing market, what affects it and how it affects other parts of the economy and everyday life. For some couples, who knows – maybe the extra years they spend together because of avoiding a loss on their home sale will actually help them reconcile. Or, maybe it makes it worse.

I think a big takeaway from this is that it shows the emotional component of the housing market that can’t always be predicted. Data and forecasts are great; they’re helpful to understanding the various factors and impact of economic events. But, sometimes in housing there is good old human emotion that comes in and throws all the data and forecasts for a loop.

If you’re interested in learning more about this research, check out “House Prices and Marital Stability,” by Martin Farnham, Lucie Schmidt and Purvi Sevak, which appeared in the American Economic Review, Vol. 101(3)

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Every Nickel Counts! The Intero Foundation beneficiary of the Whole Foods Nickel for Non-profits campaign

By Teressa Francis | July 1st, 2011 0 Comments

Save a bag and support The Intero Foundation

During the upcoming months of July, August, and September the Intero Foundation, a non-profit organization funded, promoted and governed by Intero Real Estate Services, Inc. agents is being featured by the Whole Foods Market on Blossom Hill Road, in their Nickels for Non-profits campaign.

Nickels for Non-Profits is the Whole Foods community giving program which features a local non-profit for three months. Every time a customer reuses a shopping bag, a nickel is donated to the chosen local non-profit. The goal of the program is to reduce the use of new bags while increasing funding for a local non-profit.

The Blossom Hill Whole Foods store chose The Intero Foundation as a beneficiary of the five cent bag refund program because they felt the Intero Foundation could reach the most number of people to promote the event and bring people to the Blossom Hill store and also because of the great work the foundation does for kids. Customers who shop at this location and bring their reusable shopping bags for groceries at checkout will be asked by a Whole Foods checker if they would like to donate five cents to the Intero Foundation or receive a five cent credit between July 4, 2011 and September 24, 2011.

In addition, the Intero Foundation volunteer Realtors will be at a table near the entrance several Saturdays each month promoting the Foundation, and handing out reusable grocery bags as well as information about the Intero Foundation.

Thank you for re-using your shopping bags, honoring the environment and supporting both The Intero Foundation and your local Whole Foods Market!

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