All Forum Posts by: Rabih El-Khoury

@Vinay C. no i didn't; most of them won't do small rehab work or specialize in just one or two areas (e.g. kitchen and bath). Thanks @Wesley Read for the lead; will look into them. I also have found that experienced realtors/investors, such as @Curt Davis (who I have been in touch with) will often bring to the table a tried and tested team of contractors they've worked with. From what i'm seeing so far, this is the best route to go down. 

Not that I can think of. Paying cash actually makes life easier in many ways, particularly as you're getting to learn the ropes. That's what I'm doing too. Focus should be on the property and everything related to it. Good luck and shoot any other questions you may have. 

Hi. On the same boat. Visiting Memphis end of this month for a first, on the ground look. I'll be happy to share my notes. 

Thanks @Curt Davis, appreciate your input as always. See you soon! :)

I'm visiting Memphis end of this month (June) and want to meet, hopefully, several contractors for upcoming rehab projects. I'm trying to put a hit list of must-meet/recommended general contractors.

Ideally, these GCs would have experience working with investors, are willing to do anything from cosmetic/touch-up work to a full gut rehab (i.e. walls, tiles, bathrooms, kitchen, roof, HVAC, electrical, plumbing etc.), and therefore would be satisfied working projects from $1,000 to $50,000.

I scoured BP, Google, Houzz, and Buildzoom for reviews, ratings and license checks and shortlisted: 

Before & After Builders
SCC Residential Design & Construction
The Dave Moore Companies
Capital Construction
Dan Caldwell Homes
G&G Construction Solutions
R&E Remodeling
Vollmer Construction
AtoZ Construction Solutions

The list is neither comprehensive nor exhaustive but these contractors fit my criteria and have solid reviews. I think...

If you have personal experience with any of these contractors, please let me know. 

If you know/recommend anyone else from personal experience, please share their contacts, i'd be super grateful.

Thank you!

@Colette Albright I searched the net to determine which U.S. state charges what rate of taxes on income. Additionally, I brainstormed with the company I worked with to setup my LLC on which state would best fit our investment plan. My advice, regardless, is to work with a seasoned tax person, who is also experienced with foreign investors. The laws to start with aren't straightforward and they have recently changed under Trump (my sister in law works in a tax office and they're still doing workshops to get their heads around the updates).

Hey guys -- this is developing into a good actionable thread, thank you! A couple of inputs: 

@Willem Botha after 24 months of calls, emails, on-site meetings etc... I too have decided that at least for the first couple of properties, turnkey is the better (and more time-efficient) way of starting. I'm happy you selected Mid South (I have a call meeting with them tonight) to take things forward. We all know BRRR is the ultimate goal, however, with us being so far away, it's just too many things to juggle without having a tried, tested and trustworthy team on the ground. Plus, the financing available, particularly cash-out refinancing for the BRRR is expensive for non-U.S nationals like us (around the 7.1% interest). This kills the cash flow and the ROI. You're just in a better position when you come to a lender, be it a bank or a private lender, and tell them you own 3 or 4 properties. My plan is to get to that stage with turnkey and then hone in one or two states and start building a reliable and trustworthy team (broker, inspector, appraiser, general contractor) to do BRRR.

@Colette Albright, you asked 3 questions: 

1) Do you need an accountant and a lawyer? It depends on how big and complex your investments will be. To-date, I have used neither. I read all the documents shared with me (from brokers, general contractors, syndicators etc.) and I found it isn't rocket science. With up to a few (or even several) properties, if you're organized and file everything and if you can tabulate everything to produce a Profit & Loss statement, that's all you really need to file your taxes. Point is, i'm not at a level yet where I can afford an accountant -- if you're making $700/month from 2-3 rentals and your accountant wants $500 to prep two excel sheet documents, they're wiping out almost a whole month of income. Add to that your tax person is going to charge you not less than $700 to file your individual and LLC taxes, now we're two months down. To setup a company, you need to have a shareholder agreement (if you're partnering with someone) and this again can be downloaded from the internet and filled out. The company I used to setup my LLC even prepped the agreement for us as part of the service. A good tax person will guide you through not just filing but getting your ITIN.

2) A, B, C or D? First, I saw it for myself, a B in Dallas is very different than a B in Baltimore. It gets trickier if you go to Cs and C-s... in some areas of Dallas Fort Worth, you "might" entertain a C or C-, in Chicago, you will find a hard time finding a contractor to go to a C- to work on your property. If you're a flipper, i think Bs and As are a good option. The math speaks for itself. Area is say, seeing properties sell for $300,000, you find a distressed property for $120,000 that needs $70,000 in rehab, you flip it and make a sweet +/- $100,000. If you flip in C or B- areas in, say, Baltimore City, you'll find something at $40,000 that needs $20,000 in rehab to sell it at $30k-$40k... for some that isn't enough for others maybe. I'm a cash-flow investor who wants to buy and hold. I have yet to find anything that makes sense in an area of a "B." The lower I go in zones the better the cash flow (typically) but with that comes the headache of potential tenant problems. At this stage when I don't have a particular market i'm focusing on (i fish around the Midwest for properties) and i don't have reliable and trustworthy property manager i've worked with for years, i'm not willing to take that risk yet. 

3) Should you apply for citizenship? If you'r a U.S. citizen/green card holder things can be easier, particularly with funding (actually, i'd dare say maybe only in view of funding). However, the IRS will follow you to moon to tax you on any and all money you make. My wife is American. My son is American. I still have visit visa... get my point :) 

I think we need somehow to share an online sheet with lenders who are/are not foreign national friendly. It's the one thing that will deter or accelerate all our projects and i think it's silly that each one of us has spent/will spend so much time locating and vetting lenders. We should collaborate. 

@Colette Albright

Hi. Financing for non-US citizens/green card holders is a hit and miss. I've been at it for more than 20 months, have spoke to more than 50 people from banks to private lenders. What I can tell you is that it's possible. The easiest are hard money lenders because they don't really care about your status. Second, and the only real option I can say I have to-date, are commercial/private lenders and for re-financing rather than conventional. Meaning, they will give you a cash-out refinance once you've paid initially for the property and put a tenant in it. They are expensive (currently in the 7.1% interest range) and one really needs to vet any such lender for their ability to actually provide you the cash (many of them out their are actually resellers, not the actual fund owners). Conventional banks and conventional loans are the most elusive to crack. My advice is not to factor their availability in any strategy you're putting together. With a few properties under your belt they may look at you differently and be ready to talk (personally, that's what I'm working on). 

Hi Collette, 

Happy to help. I went through the process you're asking. Here's what I did:

First: you need to have an address in the U.S. Fortunately, you can get an address by working with a "registrar address" company. Essentially, they provide you with a virtual address and it is perfectly legitimate (the IRS sends me documents to this address, so it's legit!). You can find many such companies online and the registration process is super easy and the service very efficient.

Second: I recommend you setup an LLC. It's pretty easy there are several companies that do this online for you... PM me if you want the company I worked with (actually this company will steps 1 and 2 for you at the same time, awesome!) It's important you decide where you will setup. Different states have different advantages and disadvantages. We chose Texas. Once you setup an LLC you will get its EIN (or company tax number, similar to VAT number in Europe).

Third: you need to setup a bank account for the LLC. This isn't a must but down the line (loans, rent deposits etc. it's easier/required). This can be tricky as most probably a) you will need to physically visit a branch; b) they might ask you for your personal Tax Identification Number. Best thing to do here is to call banks and ask them. We bank with Chase. I would consider a small bank too, as long as they have an online portal.

Fourth: find your tax person. This is your guy or gal who will handle your tax filing, consult you on how to file etc. This isn't needed to setup your business but, looking back, I wish I had done this exercise when we setup and not wait till 2 months before tax filing date (March/April). 

That's it, really, pretty easy. The only real hurdle is getting your personal tax identifiction number, everything else is pretty easy. 

If you have any specific questions, send me message. 

Good luck! 

Yes, but refinancing not standard loans. It is possible to get std financing but one needs to work with smaller banks; i haven't had the chance to fully do that yet. Happy to help.