Foreign Lender (family) would like to private lend for real estate investment in U.S.

4 Replies

What process would a foreign lender have to go through in order to private lend in the U.S.?

Hi Hector,

Please clarify whether the lender wants to start lending to various individuals and this is a general question or whether you're asking what a foreign family member needs to lend money to you in particular.

I'm not an expert in private lending so other BPers can chime in on the former but I believe it is a regulated activity that is best done with legal advice. On the latter, you can consult with your tax accountant and they can advise you how best to structure and declare the loan. The lender should check the laws of their country on lending capital abroad.

how much are wanting to lend? what are the terms? interest? I maybe interested in borrowing 

Private lending is generally a relationship-based business, @Hector Guerra . As a small lender, you almost always want to get to know whom you are lending to and preferably loan locally. This is obviously impossible here in the US if you are overseas, but it doesn't mean there are no alternatives.

There are a number of moderately sized mortgage pools that will accept money from individuals and diversify it over many loans. Here, you not a lienholder on a specific property but essentially own a share, or percent, of the overall pie of mortgages and your return is prorated accordingly. It's not unlike a mutual fund. Your safety comes from knowing and checking out the operator, not the individual borrowers, so due diligence is still important but whom you are qualifying and how you do it is different.

Alternately, there are many crowd funding sites that will enable you to invest in specific deals around the country among local operators. This is still in its infancy and a bit of the wild west. Some sites will accept almost anyone and others carefully vet the investments they represent, though there is never a guarantee. You really have to know the amount of effort spent by the specific portal and also check out the specific borrower.

To accept out of state investors, which you clearly are, these sites will generally have to have filed specific Federal offerings under such exemptions as Rule 506 or Rule S.  Some may have and some not. Here's a site that might be helpful to you if you go this route: Foreign Investors in U.S. Securities Offerings

In these cases, it means you might need to be an accredited and sophisticated investor, which you may or may not be. It can get very complicated very fast, so talk to the syndicator to see if you comply.

Under no circumstances do you want to announce to the world over the web that you have money to loan and then respond to everyone who says they have a deal they need money for. You truly have no idea who these individuals are, reputable or not, and you are taking a huge risk with your money, not to mention legal compliance and origination in their specific state, which can be a minefield.

Good luck Hector.

For clarification, Jeff S Na   I was not specific on the way I posed the scenario.  I am not offering lending opportunity.  As Jeff mentioned in regards to relationship based lending, my in-law who is overseas was interested in financing an upcoming R.E. deal for myself if the opportunity presented itself.  I am in the U.S.  

I wanted to see if anybody on the forum had references for attorneys and or CPA  who might specialize in this sort of transactions and set ups.    Or any information which might guide us in the right direction.  

One of my first posts, so apologize for the confusion.  

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