is a syndicator a good way for foreign investors

Multi-Family and Apartment Investing
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is a syndicator a good way for foreign investors

Etienne Dubois
New to Real Estate · Hong Kong · Member since 2020 · 14 posts · 19 votes

i am a foreign rental property investor looking to build a portfolio in the US, are syndicators a good way to start? or are there better ways for non americans to invest in properties in america or is the 500,000 usd route better to get residency in america to qualify for american mortgages 

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Joseph Firmin
Rental Property Investor · Smyrna, GA · Member since 2018 · 974 posts · 645 votes
6y

Hi @Etienne Dubois, syndication is a good way to start if you're unfamiliar with the markets you would like to invest in or how real estate in general is grown in the US. A few things to note as a foreign investor to begin investing in the US (if you don't want to go the $500K route you mention):

  1. Obtain a US-based LLC
  2. Apply for an EIN (Employer Identification Number)
  3. Execute an operating agreement with partners
  4. The first 3 can all be done with the assistance of a company like Corporate Direct. These next 2 you can do on your own.
  5. Apply for an ITIN (Individual Taxpayer Identification Number) or Social Security Number
  6. Open US-based accounts (with the above items in hand, you can open a US bank account)

This will set you up to legally invest as you see fit. Actively or passively (via syndication). I would recommend discussing with a CPA familiar with this process to ensure you get the best advice possible and invest in the most tax-advantaged manner possible. Happy to help if you have any other questions! All the best Etienne!

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    • Joseph Firmin
      Rental Property Investor · Smyrna, GA · Member since 2018 · 974 posts · 645 votes
      6y

      Hi @Etienne Dubois, syndication is a good way to start if you're unfamiliar with the markets you would like to invest in or how real estate in general is grown in the US. A few things to note as a foreign investor to begin investing in the US (if you don't want to go the $500K route you mention):

      1. Obtain a US-based LLC
      2. Apply for an EIN (Employer Identification Number)
      3. Execute an operating agreement with partners
      4. The first 3 can all be done with the assistance of a company like Corporate Direct. These next 2 you can do on your own.
      5. Apply for an ITIN (Individual Taxpayer Identification Number) or Social Security Number
      6. Open US-based accounts (with the above items in hand, you can open a US bank account)

      This will set you up to legally invest as you see fit. Actively or passively (via syndication). I would recommend discussing with a CPA familiar with this process to ensure you get the best advice possible and invest in the most tax-advantaged manner possible. Happy to help if you have any other questions! All the best Etienne!

        1Reply
      • Evan Polaski
        Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
        6y

        @Etienne Dubois, I generally agree with Joseph.  For many syndicators, they are not setup to assist in getting your money into or out of the US, nor understanding of foreign tax laws.  However, most that I am familiar with, will accept money coming in from a US entity with a US tax number to tie the investment to.  

        There are accountants and attorneys that will understand what is needed, and how to structure the entity that will allow you to invest in US syndications, and be treated more favorably from a tax perspective in your home country.

        Beyond those logistics issues, I believe syndications are a great investment for many investors, regardless of locale.  They give you access to larger deals than most can afford to take down on their own.  They allow you to leverage other people's expertise.  I am also seeing better returns passive than I have recently been achieving in my own deals.  Obviously the deals you will see will all vary from my experiences, but at the end of the day, I view syndications as a great way to invest overall.

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      • Basit SiddiqiBusiness Member
        Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
        6y

        @Etienne Dubois

        There are compliance burdens when dealing with foreign investors.

        There are withholding requirements required by syndicators on foreign investors. This requires additional forms to be filed which normally require professionals with expertise in the matter to advise them on.

        Failure to file the appropriate forms along with remitting witholding payments can result in huge penalties on the syndicators.

        It is this reason that many syndication's do not accept foreign investors.

        You still also have to be mindful that you may have a tax return filing requirement in the US.

        It is possible to invest through a syndication or directly...you just have to be mindful of the additional steps.

        Good luck to your investing.

        [email protected]917-280-8544
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      • Andrew HoganPro Member
        Rental Property Investor · Indianapolis, IN · Member since 2016 · 559 posts · 463 votes
        6y

        That US LLC with an EIN and a bank account really are the big ones to knock out. 

        No need to pay the formal residency "bribe" :)
        Good luck!

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      • Asif Karmally
        New to Real Estate · International · Member since 2018 · 15 posts · 10 votes
        6y

        I am trying to navigate this maze too - am and non US investor from the UAE, looking to build up passive income and capital growth via investing in syndications. In terms of tax structure : 

        1. I understand the point about US based LLC (e.g. in Delaware) with the EIN

        2. What I'm not clear on is whether I should own the US LLC in my own name or should it be owned by another international LLC - ie with the US LL and associate EIN would you avoid dividend witholding and FIRPTA issues ?

        3. While its easy to set up a delaware LLC and get an EIN number, I've not yet found a bank that will open an account for the LLC remotely (without physically visiting the bank in the US). I already have personal bank accounts in the US, as well as a social security number ( a remnant from my student years in the US in the 1990s).

        If anyone can shed more light on points 2 and 3, I would be very grateful. 


        Also, if you have any great syndication deals, let me know !  

        0Reply
      • Charles Carillo
        Rental Property Investor · North Palm Beach, FL · Member since 2018 · 2k+ posts · 1k+ votes
        6y

        @Asif Karmally

        DM me...there are a couple banks you can use that we have used with our partners before.

        0Reply
      • Todd Dexheimer
        Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
        6y

        Investing in a syndication is definitely a good route to take. Get to know several sponsors and understand their requirements and philosophies. 

        I think this is a good guide: https://www.biggerpockets.com/member-blogs/10145/83067-limited-partner-s-guide-to-investing-in-the-right-deal

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      • Roni E.Pro Member
        Specialist · Earth 2.0 · Member since 2019 · 598 posts · 271 votes
        6y

        I would speak to an attorney and CPA if you need reccomendations please message me. I would see what is long term plan do you want to move to US and start process of citizenship. I would check out the new rules as no longer $500k. https://www.artoncapital.com/g...

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      • Asif Karmally
        New to Real Estate · International · Member since 2018 · 15 posts · 10 votes
        6y
        Originally posted by @Charles Carillo:

        @Asif Karmally

        DM me...there are a couple banks you can use that we have used with our partners before.

         @Charles Carillo thanks - I will DM you. 

        0Reply
      • Jerel Ehlert
        Attorney · Austin, TX · Member since 2014 · 888 posts · 759 votes
        6y

        You need to get with an immigration attorney to discuss. The EB-5 program has lots of nuances. For instance $500K is if you start a business (not counting real estate) and it generates a certain number of jobs (not necessarily a direct hire) for a certain time period.  OR, you invest a certain amount of capital (which can include investment real estate). The amount can be more or less, depending on whether it is in a TEA zone or designated regional development zone. 

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      • Eric Johnson
        Lender · Chicago, IL · Member since 2016 · 653 posts · 313 votes
        6y

        @Etienne Dubois there is foreign national mortgages available for investors. I’ve helped clients in different countries refi and purchase property with no US FICO.

        Don’t do syndication if you want to control your asset and your investment

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