Foreign investor guide?

Question

I have some leads that live abroad, in Israel, and I would like to help them buy properties that we hold as rentals.

Is there a definitive guide or book to how to run these foreigner transactions successfully? Bonus points if there is information on running a prop. management business for foreigners.

For example, from my best research it can take months to get a Federal tax ID number for a foreigner, is this is necessary out of the gate? It is if we need to open them a bank account, but maybe we can just wire their dividends to their foreign account.

CPAs are asking for over $250 for an hour consultation and I would like to be as knowledgeable as possible before paying a professional for information.

Linda B. · Answer

Hi Ben, my parents (from Switzerland and living in Switzerland) have invested in real estate in the US by simply giving a loan to an LLC (which is run by an American friend of theirs). It was done through an attorney here in the US and seems pretty airtight for all participants, but of course since it's a friend there's also a certain level of trust. 
It definitely makes it easier for a foreigner not to actually own property in the US and not get involved in US taxes (income taxes, estate taxes, ...) if you aren't already working/ paying taxes in the US.

Francois D. · Answer

There are many ways to structure this, do not overcomplicate if you are going to hold just a few properties.

If you are interested in the Texas market, let me know, as a simple LLC can be formed for under $1k and that is really all you need typically.

Best

Gurpy Ont · Answer

@Jason Werner The issues are very country specific. I would suggest talking to someone who is already doing it.

https://myusapropertynightmare.wordpress.com/ has summarized his experience as an Aussie.

Jason Werner · Answer

@Gurpy Ont what sort of issues have you run into concerning dual taxation. This is my main question on this topic.

As for acquiring properties through an LLC this doesn't seem too difficult to solve. The main question is how does a foreigner receive profits if they don't reside in the USA? I have clients who live in China and would like to purchase small multifamily properties in Texas but I haven't been able to find out how they could receive the profits in China.

Do you have any good resources or advice?

Gurpy Ont · Answer

As a foreigner closing on first property, the biggest challenge is getting access to capital (to which US residents have easy and favorable access).

LLC, EIN, ITIN etc are all misc issues that should be left to a  professional. It can be done online if someone is so inclined.

Ensure that CPA and lawyer are cross-border specialists. Majority are not, and may provide incorrect advise. A strategy that works well for residents, might end up costing more to foreigner due to dual taxation.

Engelo Rumora · Answer

Hi David,

This is awesome. Found this website a while back.

Its sad to see so many fellow Aussie investors get screwed buying from turnkey sharks.

I find that many days I wear a white shirt and red cross just trying to help people out of the pig properties they bought.

Thanks and have a great day.

Paul Sundin · Answer

In many situations, a foreign investor will obtain an ITIN when a tax  return is filed.  However, as a result of withholding requirements, many real estate syndicators will be seeking an ITIN upfront. The  foreign investor will then need to obtain the ITIN prior to filing a tax  return.

Form W7 and proof of identity will need to be submitted. There  are many documents that can prove identity, but the most common is your  passport.  In addition, the non-resident must include a copy of the  section of the partnership agreement that displays the partnership’s  employer identification number (EIN) along with demonstrating that they  are a partner in the partnership that is conducting business in the U.S.

Make sure you discuss with a qualified CPA or tax professional before you start buying properties.

Dean Letfus · Answer

Ben Bakhshi my company helps people all over the world invest in the USA. All they need initially to buy is their LLC and EIN. It takes 6 to 16 weeks for their ITIN but that isn't critical so just get their LLC done and get whoever sets that up to get their EIN. Takes 48 hours and then they can close on their first property. PM me if you need any more help.

Steven Hamilton II · Answer

Ben Bakhshi,

They would apply for an ITIN when they do their first tax filing. The W-7 Application has to be accompanied by a tax return.

What is your business structure, that is first Are they shareholders or just lenders?

John Chin · Answer

Hi, Ben. I've worked with many Israelis and have conducted U.S. property seminars throughout Israel.

www.HardingTax.com supposedly does more IRS income filings for non-resident property owners and sellers than any other group. They can get the ITIN for your client and recommend how to take title.

Regarding property management, there are some things they need in place to properly serve foreign clients for easy communication/transparency and to avoid FIRPTA tax withholdings from income and the property sale.

Foreign investor guide?

Most Popular Reply