Foreign investment syndication

[Philip Njapa]

Hello all, I’m reaching out because I have an extended family connection from a different country who reached out to me to start his commercial real estate journey. He has up to $4mm in cash for an initial investment. He plans to do more with me and bigger pockets (no pun intended) if the deal goes well. Can someone recommend any advice on anything (setting up partnership structure, accounting/ setting up a bank account , lending with foreign investors, sourcing deals etc…). For background I work in Capital Markets at a commercial real estate mortgage bank and I am a fully licensed real estate sales broker in NC. Thanks!

[Bruce Lynn]

What country are they from or living in....

Where and what do they want to buy?

Why do they need a partnership?

Why is the word syndication in your title?

Study up on FIRPTA.  Easy to buy, not as fun when you sell.

Might also study up on CTA....no more shell games....

My guess is you need to hook them up with one of your great attorneys to get them an LLC and also find them a bank that will allow them to open a bank account. It can be done, but probably tricky. They will need great documentation on how and where they got that money. If in their country they have a foreign branch of a US bank that might make things easier, for example if they can walk into a Citibank branch or a JP Morgan branch in their country, sometimes that can facilitate things. Might also try one of the stock brokerages that has intl offices as well like Schwab or Fidelity.

I would also get it here in the bank account and ready to spend, before you do much work with them.  That way you know the funds are ready and investable.  Otherwise many many many agents spend a lot of time and effort finding property and writing contracts only to find that the funds can't be transferred, or they don't have immediate access to the funds, or they need some kind of approval from 3-4-5th parties, or there are exchange restrictions, or 9000 other excuses.

You probably need to find them a commercial broker who can handle whatever kind of investment they want to make. Hotels, Apartments, Office Buildings, Strip Centers, NNN, or whatever it is that interests them.

Do they want to leverage their money? If so you need to find out if you don't already have that expertise as to who will lend to them, what their requirements will be, and what kind of leverage they can expect, and what the fees will be. As you probably know commercial lending on CRE is not the easiest task right now, then add all the complications to it...foreign buyer, new LLC, new bank accounts, etc and that probably cuts out a lot of lenders who will be interested.

Also find out what their goals are to determine if what they want is even feasible.  Sometimes foreign investors just want a place to park money, and don't care much about returns.  Trying to protect their cash from inflation or government appropriation.  So they can have entirely different goals than say your next door neighbor investor who will often just throw out the words cash flow without really know what that means exactly.

[Taya Shavers]

Hi Philip. If I may ask what is your family member planning to do with their money ?