I have an opportunity to present an apartment opportunity to a foreign investor with several million dollars to lead. My question is, based on your experience, what are the key items (bullet points, talking points, etc.) that need to be in the presentation to increase my chances of success with this foreign investor? Basic property details and financial projections are a given. Thanks, in advance.
@Pat G. Some foreign investors I've met with in the past have needed additional background on the details and merits of property ownership in the U.S. (i.e., how do syndications work, what role do property managers play, what are the basic tenant laws, etc.). Additionally, including light details on the next steps foreign investors will need to follow in order to participate in direct investments in the U.S. has been key in getting them comfortable with participating. Lastly, some foreign investors I've talked with aren't deeply familiar with the details of the sub-markets in which I'm investing. Highlighting the demographic trends, employment growth, and job diversity materializing in my sub-markets have resonated with foreign investors and have helped them become comfortable.
I generally structure my presentations and conversations with foreign investors around the following:
- Basics of syndication and property ownership in the U.S.
- Demographic trends, employment stats, and job diversity in the sub-market
- Specifics of the property
- Business plan to enhance the property's value during the ownership period
- Financial projection and details on financing terms
- Overview of property management firm and other key team members
- Additional detail on the surrounding metro area and the location of the property relative to transportation hubs, retail, and employment centers
- Basic requirements for foreign direct investment in the U.S.
- Anticipated timeline for fundraising and closing
@John Jacobus Thank You for all that information and detail. I have one question, where would I get the basic requirements for foreign direct investment in the U.S. I am guessing an attorney, but without spending $$?
Again, Thank You.
@Pat G. there are some very important tax issues that you will want to make sure your foreign investors are aware of and that you're planning for before proceeding. If your investor is not a US resident and does not file taxes in the US you may be forced to withhold up to 30% on distributions: "A nonresident who fails to submit a timely filed income tax return loses the ability to claim deductions against the rental income, causing the gross rents to be subject to the 30 percent tax." (https://www.irs.gov/individuals/international-taxpayers/foreign-persons-receiving-rental-income-from-us-real-property).
You will want to make sure that you speak with a CPA & Attorney that have experience working with foreign investors.
@Pat G. As a first step, I recommend a consultation with a CPA rather than an attorney, but eventually you should also consult an attorney. The chances of a free educational session with a CPA are higher than with an attorney, in my experience. Your international investors will need an ITIN, US bank account, EIN, and LLC, among other things. There are also important tax implications to consider as mentioned in the thread above. Offer to refer your investors to the CPA in exchange for a free educational session. Once you have the basics down, then you can use your money selectively to engage an attorney.
I work with a lot of international investors and quite honestly past performance and referrals have been my key factors. Also, show properties you have already performed well on, there is nothing better than showing the end result. Case studies are awesome tools, especially if you have good stories to tell through them.
@Pat G. Lot's of good advice to consider. It is still about you and the trust you can build
Guys, Lots of great information, Thank You for taking the time to give feedback, this is a great start and now I know where to go next. Happy investing.
@Todd Dexheimer . Thank You for taking the time to post, really appreciate it.
@David Thompson You should chime in. With your extensive experience, you can bring in a lot of value to this discussion.
I have experience dealing with foreign investors. It's not complicated and foreign investors are good source of capital given a variety of motivating factors these investors have for investing in the U.S. There are a few things to keep in mind from mechanics as well. Hope this helps.
it depends where the foreign investors come from. Chinese investors are particularly interested in knowing which schools are in the area. They believe that good schools will increase the value of the asset in future and it will attract more tenants faster. Good luck