All Forum Posts by: Eric Tait

Hey Bob, 

I think Brian is using the term cap rates interchangeably with rate of return. The Belize market has no leverage to speak of, so most investments there are all equity, so for investors in that market their rate of cash on cash return is equivalent to the cap rate.  So think of it as the investment cap rate for his specific project and not the market cap rate as we do here in the U.S. 

Hey Justin,

I want to first caveat everything I say by stating that I am neither an attorney nor an accountant and I do not play one on TV. You will have to seek the counsel of these professionals for your personal situation. 

We are investing in the Country of Belize and before I get to answering the questions that you have asked based upon the counsel the we have received, I wanted to bring some points for you to think about on the front end before you invest.

The first is understanding your legal rights to property ownership in the jurisdictions in which you are looking to own. Someone spoke about ownership in the Philippines and as you can see it is not a straight forward process. You would want to find out this same information about Colombia. One of the reasons we are in Belize is because they are a British Common Law country and there are no restrictions on foreign ownership of real property. So the basis of law is very important for protection of your capital. 

The other advice is spot on, as you will need a US based tax adviser familiar with the rules around owning foreign rental property and at a minimum a real estate attorney, and possibly an accountant in the jurisdiction in which you are looking to buy.  

Now to answer your questions based upon the advice for our situation in Belize:

1. Rental income is taxed at the local level (1.75% of gross rental revenue), the income that comes to the US is distributed to investors at their individual tax rates as members of the LLC. You can only depreciate foreign real estate on a 40 year schedule, so there is not as much bang for your buck as U.S. real estate, but the benefit is still available. We will deduct all of the usual expenses otherwise.

2. Our understanding is that all passive real estate income has to be repatriated to the U.S. If we had an active business (i.e. property management) in the foreign country then that money we understand would not have to be repatriated, but if you did taxes would have to be paid at your ordinary income level, but you would be able to take advantage of the foreign income exclusion on that money. (again check with your tax adviser)

3. Financing is a country specific thing, the accountant and attorney in that jurisdiction can point you in the right direction. In Belize, there is no real lending to speak of that makes financial sense for a rental strategy, so we used all equity to purchase.  Once we have stabilized operations we will then look to go to the market and get long term financing very likely from outside of Belize.

4. Travel - that is actually a perk of ownership, we are in a resort area so while we do not NEED to travel there very often because we have a great team on the ground who runs the operations, we like to go as often as we can.  We would not have made the investment if we had to go and oversee the operations of the property. 

5. Yes, Yes, Yes, and property managers. Personally, I would start with the property manager and speak to a few of them as to what property type they say is in high demand and what they would like to have in their management portfolio.  They can also refer you to your real estate professional who will help purchase your property.  They can also refer you to the attorney, accountant and bankers.   

Hope this helps

There are some good courses out there on Syndication, I am friends with the guys who put this one on. 

https://realestateguysradio.com/events/how-to-rais...

I've been many times and it has been great, you learn as much from the other attendees as you do from the front of the stage.

Just be mindful, that if this is in the Houston area, and it is within the City's jurisdiction you are going to have to bring this property up to CURRENT code. We looked at a property like this and the cost to bring all the units up to code even if we had gotten the property for land value would have not made economic sense.  

Stafford is not a war zone area. It is a pocket between Missouri City and Sugarland, and the median incomes are 50K a year or greater.  

As many already know, the issue with hybrid multifamily (less than 5 units) is it rents like apartments, but the valuations track single family homes (comparative market analysis).  

Off first blush, those rents seem pretty good.  You are right to look at this as a cash flow play, but there is some development coming up off of highway 90 (south main) and that runs through Stafford. 

As for the rental market we have 30+ active units scattered across Houston (another 97 in a major C class renovation currently) and we have not had a vacancy of longer than 2 weeks after make-ready in over 4 years. I just rented one of our SFR's off of 1960 and Kenswick in less than a week from a prospective tenant who stayed in contact with me after she missed out on another one of houses a month ago. So the rental market is still very strong.

Hey Jacob,

What type of real estate investing are you interested in doing?

@Joe Fairless

The list source that we used was accudata.com

@Joe Fairless 

I had a partner on that deal who took care of the list, I took care of the logistics of creating the radio scripts and arranging the venues for the presentations as well as the AV team. I have an e-mail in to him to get the name of the list company.  

I am looking for an investor friendly commercial plumber in the Houston, Galveston, Conroe, Missouri City, La Porte, Pasadena, Sugarland, Pearland, Woodlands area.  

I have an apartment project where I want to replace old cast iron sewer lines and the original plumber who bid it thinks that he will not be able to handle the job.

Thanks for the referrals in advance. 

We did a 506C for one of our Funds for our resort project in Belize.  We bought a mailing list of accredited investors (at least demographically and psychographically they appeared to be) here in Houston. Of course we had many disclaimers that this opportunity was only for Accredited investors in the mail out as well as at the beginning of the presentation. 

We also video taped the presentation and edited it into sections so that prospective investors could watch it at their leisure like Brian Burke spoke about.  

@Brian Burke - what program do you use to record webinars?  That is something that I would like to start doing.