Foreign Partner

[Daniel Mills]

Hello,

I live in Japan but I own several US properties (I am a US citizen). A good friend and I are thinking to partner up to buy more properties in the US. He lives in Japan but owns several properties in New Zealand where he is from. 

Our plan is for me to get the loans and then split the costs (he will pay more because I am getting the loan). We are wondering what the best way to do this is and to set up the partnership. Any suggestions?

[Jean G.]

Daniel,

if you're looking to get conventional financing in your name but still form an LLC with your partner, you may consider the following recipe. You will not be able to take conventional financing straight with an LLC, and if you transfer the property to an LLC after closing, you could trigger the due on sale clause.

- buy and close the property in your personal name (without your partner)

- transfer the property into a grantor trust or land trust (this is allowed and will not trigger the due on sale clause)

- assign the beneficial interest from the trust to the LLC

If your partner is contributing any of the downpayment, it gets more tricky. A conventional lender will want to see the downpayment seasoned for 60 days (ie it needs to be sitting for 60 days in your account) before you apply for the loan.

Of course my suggestion is for educational purpose only, and you should consult your own attorney since I am not an attorney.

Jean