Newbie looking to set up the first real estate fund

4 Replies

Hello everyone! Newbie to real estate investing and I'd really appreciate any advice/suggestions! I've been running my rental business for 2+ yrs. Now I'm looking to set up my first real estate investment by pooling ~6 investors for a SFH/MFH purchase. A bit background about my target investment:

Location: Boston, MA
Property type: SFH/MFH for rental business
Duration: targeting 5 years
Deal Financing: Cash purchase + refinancing later
**Note: all the investors (including myself) are non-US citizens (and only I, myself, live in the US)

While I have relatively good knowledge about the rental operations and investment targets, I am lacking experience in property purchase and fund setup. I am seeking advice on the following:

1) Legal structure:
I've consulted 2-3 lawyers on the right legal structure and I am getting a legal fee quote from 3K to 50K(!!!). 50K looks crazy to me (and will really hurt the IRR). I think the deal is fairly straight forward with very low risk. The only tricky part is that everyone in this deal will be offshore investors. Can anyone share their experience (and legal cost) in setting up this kind of deal?

2)  Accounting: It goes back to offshore investors. I am trying to understand the taxation for overseas investors (from Taiwan and Singapore). Any good accountant I can speak with on this matter? 

3) Financing: As the money will be from overseas, I figure it will be difficult to get financing in the beginning. I plan to purchase properties in cash first and refinance it after the rental revenues start rolling in. From my conversations with a few commercial lenders, I was told that I also need a personal guarantor. Are there any ways I can get financing without a personal guarantor (or I have a profitable US company that can back it up?) 

Sorry for so many questions! Thanks so much, everyone! 

@Sophia Lin  you should consult with an SEC attorney to explain the rules and requirements in the US. It shouldn't cost more than $15k to set this up. Check with Jillian Sidoti at Crowdfunding Lawyers.

In addition most developed countries have their own equivalent of the IRS and SEC and have their own rules and laws regarding solicitation and investing outside the country so you will need to consult an attorney in that country as well. For the US the SEC and IRS have rules posted online regarding this topic.

The banks are going to require a loan guarantor which can be a company if it has a track record and balance sheet. You can also pay a loan guarantor as well.

Given that the Boston market is flooded with international money and investors this process might not be as hard as you think. There's a handful of local banks that would be able to finance for out of country investors that would be able to assist with this, I dont think the you necessarily have to put in cash and refi out. Have you considered what your fees are in these deal? What part do you play? How are your plans of identifying these properties?

Originally posted by @Sophia Lin :

Hello everyone! Newbie to real estate investing and I'd really appreciate any advice/suggestions! I've been running my rental business for 2+ yrs. Now I'm looking to set up my first real estate investment by pooling ~6 investors for a SFH/MFH purchase. A bit background about my target investment:

Location: Boston, MA
Property type: SFH/MFH for rental business
Duration: targeting 5 years
Deal Financing: Cash purchase + refinancing later
**Note: all the investors (including myself) are non-US citizens (and only I, myself, live in the US)

While I have relatively good knowledge about the rental operations and investment targets, I am lacking experience in property purchase and fund setup. I am seeking advice on the following:

1) Legal structure:
I've consulted 2-3 lawyers on the right legal structure and I am getting a legal fee quote from 3K to 50K(!!!). 50K looks crazy to me (and will really hurt the IRR). I think the deal is fairly straight forward with very low risk. The only tricky part is that everyone in this deal will be offshore investors. Can anyone share their experience (and legal cost) in setting up this kind

Thanks Greg for the shout out! Sophia, I am happy to speak with you about your goals. If you go to our website, you can schedule a call with me. I can definitely help you. 

 

Originally posted by @Lien Vuong :

Given that the Boston market is flooded with international money and investors this process might not be as hard as you think. There's a handful of local banks that would be able to finance for out of country investors that would be able to assist with this, I dont think the you necessarily have to put in cash and refi out. Have you considered what your fees are in these deal? What part do you play? How are your plans of identifying these properties?

Thanks for sharing all the information. Could you share the bank names I can speak with to get financing? Now only looking for something around 400K.
Thanks so much!