[Note: To follow is an excerpt of an interview with Roman Bodnarchuk, an online real estate marketing guru and founder of N5R.com, and Kent Anderson, RealSource Equity Services and Kevin Peay, RealSource Director of New Business Development. To listen to, or download the show archive MP3, go to www.IncomePropertyInvestmentTalk.com/082708.]

Mosca: International buyers recognize that real estate in the United States is an excellent investment. International real estate purchases in this country continue to be a significant share of business for commercial and residential real estate agents and brokers across the country. According to the 2008 National Association of Realtors profile of international home buying activity, between 150,000 and 190,000 homes were sold to foreign nationals from May 2007 to May 2008. This year Canada replaced Mexico as the country with the largest share of foreign buyers with the percentage of Canadian buyers doubling to 23 1/2 percent from 11 percent last year. Those are impressive numbers aren’t they?

Bodnarchuk: They are incredibly impressive and they will be accelerating. The Canadian dollar has been on a rampage now for eight consecutive years and the value is virtually at par with the U.S. dollar. Just in the past 18 months, it’s up 20 percent. Plus, they are not feeling the impact of the increased gas prices; they are not feeling the impact of the higher food prices. The real estate market in Canada has been on a 10-year rage, so right now they are at the 10-year high of this bull market. Canadians feel very, very wealthy. Their stock market is at an all-time high, the gold is at an all-time high, oil is at an all-time high, and this is all good for the Canadian market which is a resource-based market. Canadian real estate investors are asking themselves, “do I want to put more money on the top of a 10-year real estate bull market or should I look south at the U.S. market where I can buy at an over inflated currency level and at a discount.” It’s a trend and it is escalating.

Mosca: The most popular states right now with international buyers are Florida, California, Texas, Arizona, New York, Washington, and Nevada. Those are nice places to go and purchase investment property?

Bodnarchuk: Any Canadian market that has a direct flight to your city, there is a high probability that you can get Canadian buyers there. More and more Canadians, because they have so much equity built up in their real estate, their stock market is on fire, and because their investments have done well, they tend to be more and more cash buyers. The Royal Bank of Canada has been very aggressive in the U.S. with a division called RBC Assured that can now finance Canadians to buy U.S. properties. They can get them financed within a couple of days based on their Canadian credit, based on their Canadian assets and Canadians have no problem paying 20 or 25 percent down, it’s what they are accustomed to. The Royal Bank of Canada sees them as a better credit risk than American investors. This has never happened before. In fact, if Canadians ever tried to buy American real estate, they had a hard time getting financed. That’s all changed now.

Mosca: Why the U.S.?

Bodnarchuk: America is a gold standard. Emerging markets and the world have always looked to the U.S. as a leader. Everyone knows the U.S. is going to rebound. It’s simply a matter of time. International investors are using the currency leverage against the American dollar as a short-term arbitrage situation, and that is why we have such an influx of international buyers and Canadian buyers, the latter being the biggest American ally and whose economy depends on the U.S. economy. I almost look at Canada as a neighboring state that is similar and has always been friendly to Americans. Canadians are so excited about this opportunity and know it’s not going to last long. They know that the Canadian currency cannot sustain this level. They know the U.S. currency cannot stay where it is. They understand it’s a short-term opportunity.

Mosca: We have talked about financing in Canada and now I want to learn about financing that is available here in the U.S. (Stan Hanks, RealSource Commercial joins the program). We keep hearing, reading, listening, and being told over and over and over that there’s no money out there. Stan, has that been your experience?

Hanks: Let’s talk about real deals. I was on the phone with one of my key correspondent lenders about a student housing project here in Utah. We were able to secure a $1.4 million loan and the borrower can pick between a rate of 6.25, 6.66, or 6.7 on a 3, 5, or 7-year loan. The money is out there. It took me about seven different lenders to finally find the one that would do this deal. That’s what’s different. You have to work a little harder. You have to find somebody like us who have correspondent relationships and can package a loan to look its best and wind your way through what we are currently going through. By no means should anyone think that they can not get a loan. We are closing two multifamily projects today and it hasn’t been easy, but we’re going to close them. We also have financing available for Canadian investors as well. There are obviously banks in Canada willing to lend into the United States but similarly there are lenders here in the U.S. that will lend to foreign nationals. There are opportunities out there whether you are a U.S. or international investor.

Bodnarchuk: Stan, we’ve got some European buyers from the U.K. or from Ireland who would love your experience on getting them financing. We’ve seen in some cases they have had to put 50 percent down. Has that been your experience?

Hanks: That has not been our experience. We take one of two approaches. One approach, if they're buying on their own, is to have two levels of U.S. entities prior to getting to the borrower. That was required by one of our lenders. The second approach is to invest in one our tenant in common projects. For example, if an international investor is one of 20 different individuals that have bought a property, our lenders feel fairly comfortable with the other 19 U.S. citizens. That's an alternative that is working quite well for our international clients.

Mosca: Roman, it’s great to hear from folks who understand their business and listening to you it's obvious that you understand Canadian buyers coming into this country and how to market those properties effectively for your customers and clients.

Bodnarchuk: We’ve spent 10 years on this. We have projects in 10 countries and 30 cities so we’ve done it the hard way. We found a lot of real estate purchasers today come and view the property and the emotions kick in. There is a lot to be said when marketing investment properties to think about the emotional aspects. Whether buyers admit it or not, that is one of the main reasons they buy. The other thing we’ve learned doing this for the last 10 years is women are probably the most important decision-makers when it comes to real estate. In 92 percent of the cases, they are the main influence.

Mosca: Kent, is that something you’re finding with tenant in common (TIC) investors?

Anderson: In fact, just yesterday that was definitely the case. Our TIC program has several advantages and distinctions. One is that they are prepackaged. Financing is just one of the items that’s already prepackaged into the deal. It makes it a lot easier for the clients to have the financing in place, and to have all the due diligence completed for them. Another key feature for our clients is that can simply invest a dollar amount that makes sense to them and the sponsors’ requirements, and get access to higher quality properties.

Bodnarchuk: People are looking for more of a turnkey investment. The tenant in common solves a lot of issues like not having all the stress and the worries.

Anderson: That’s one of the biggest features of a tenant in common program. You don’t have to be involved in all the day-to-day of managing that property. You can turn it over to the experts to take care of that but, at the end of the day, you own your own property. The owners of that project still control the property by their vote. They control it but they don't have to be involved in all of that day-to-day stuff.

Mosca: Roman, in dealing with real estate brokers and agents around the globe, do you think they’re aware of the fact that they can opine on and recommend tenant in common investment opportunities and collect a commission on that?

Bodnarchuk: I don’t think they do. Over the past 10 years we’ve been involved in about $4 billion of transactions. Education needs to get done. Getting e-mail out and doing meetings at the different firms is the best way to get that information out (if you are a real estate agent or broker and would like to know more about TIC commissions and fees, you go to www.incomepropertyinvestmenttalk.com, and click on the video of Blaine Walker).

Peay: It’s fun to see professionals come in and seek education on how they can add additional resources and income. We are seeing a lot of brokers and professionals have an interest in this. It's been fun to help them understand what’s available to them.

Bodnarchuk: Some in America have a myopic view of who their potential buyers or customers are. We need to look out to the rest of the world. America is not a very difficult place to sell right now. I think Americans are the most negative about America but the rest of the world still views America as really the gold standard in terms of investment in the economy.

Mosca: What are your golden nuggets for today?

Anderson: Investors who bring their money to the United States should conduct due diligence on the provider to make certain they have the capacity to get deals done. Check their track record, number of deals done and their experience.

Peay: There are opportunities for brokers and real estate professionals to earn additional income by putting clients in the right place at the right time, in a shorter time period. We’ve been doing this with brokers nationwide for nearly 20 years. The golden nugget is that there is an opportunity to receive more income and to make it a perpetual stream.

Bodnarchuk: The world has become very, very small because of the Internet. People need to think beyond America, especially Canadians. They love American properties. That’s the opportunity we have right now.

Published: September 18, 2008

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Peter L. Mosca is president and founder of BAK Communications, Inc. He has over 22 years of communications and media consulting experience, serving a variety of nonprofit organizations, including the CCIM Institute and the REALTOR Association on all three levels – national, state and local. He is the Spokesperson Trainer for the CCIM's Jay Levine Academy and trains hundreds of residential REALTORS nationwide to be effective industry spokespeople. He is consistently ranked as "excellent" by about 90% of those who attend his presentations. While his principal consulting focuses are public speaking and media relations development and content delivery and management, Peter is also the host of the Voice America Network's weekly radio program, "Income Property Investment Talk," a one-hour program that brings the powerhouses of commercial and residential real estate to property investors every Wednesday at 11 a.m. EST. Peter is married 17 years to his wife Barbara. They have two children: Ashley, 15 and Kelli, 12. Hence, the name BAK Communications, Inc.