Question about a partnership with a foreign investor

14 Replies

I have been asked to partner on an investment property (in the US) with a foreign investor. It would be a cash deal. Two questions about this. 1. Are there any special considerations I should think about  in structuring the partnership with a non-US citizen and 2. Are there resources here on Bigger Pockets or elsewhere that might help me learn more about buying real estate with overseas money?

The money would be coming from China. I currently have an LLC set up, so then what you're recommending is that we set up a new LLC for the partnership which makes sense.

Originally posted by @Karin U. :

I have been asked to partner on an investment property (in the US) with a foreign investor. It would be a cash deal. Two questions about this. 1. Are there any special considerations I should think about  in structuring the partnership with a non-US citizen and 2. Are there resources here on Bigger Pockets or elsewhere that might help me learn more about buying real estate with overseas money?

Hi Karin,

I'm an overseas investor (living in Korea, investing in the US), but I'm a citizen so I don't have a specific answer for you. I have attended workshops on entity structure so I do know that foreigners have to think about that and tax implications, etc.

Here's a forum on BP where you might find your answer:

https://www.biggerpockets.com/forums/77-foreigners...

Hope it helps! 

@Karin U.

Yeah. I've found that forum very useful. I run a meetup out here in Korea - overseas investors and expats like me. It's been great connecting with others in my shoes to help share resources, etc. If you're interested in joining our closed FB group, check out the website in my signature. There's a link. Or you can message me.

By the way -  a little BP tip: If you type the "@" sign, the people's name in the thread (or your colleagues) will appear at the bottom of your reply box. Choose that person's name and they'll be alerted to what you say.

Sometimes it doesn't work so well, so you can just press the quote button next to the comment and that will recopy the entire post including the person's name.

Good luck with everything!  And here's an interesting article on China that I recently posted on our FB page:

http://davidstockmanscontracorner.com/the-red-tide...

Originally posted by @Daniel Ryu :

@Karin U.

Yeah. I've found that forum very useful. I run a meetup out here in Korea - overseas investors and expats like me. It's been great connecting with others in my shoes to help share resources, etc. If you're interested in joining our closed FB group, check out the website in my signature. There's a link. Or you can message me.

By the way -  a little BP tip: If you type the "@" sign, the people's name in the thread (or your colleagues) will appear at the bottom of your reply box. Choose that person's name and they'll be alerted to what you say.

Sometimes it doesn't work so well, so you can just press the quote button next to the comment and that will recopy the entire post including the person's name.

Good luck with everything!  And here's an interesting article on China that I recently posted on our FB page:

http://davidstockmanscontracorner.com/the-red-tide...

 Thanks, Sam. I'm going to take a look at the article--and you're right--the @ sign isn't populating the names for me :) 

Originally posted by @Karin U. :
Originally posted by @Daniel Ryu:

@Karin U.

Yeah. I've found that forum very useful. I run a meetup out here in Korea - overseas investors and expats like me. It's been great connecting with others in my shoes to help share resources, etc. If you're interested in joining our closed FB group, check out the website in my signature. There's a link. Or you can message me.

By the way -  a little BP tip: If you type the "@" sign, the people's name in the thread (or your colleagues) will appear at the bottom of your reply box. Choose that person's name and they'll be alerted to what you say.

Sometimes it doesn't work so well, so you can just press the quote button next to the comment and that will recopy the entire post including the person's name.

Good luck with everything!  And here's an interesting article on China that I recently posted on our FB page:

http://davidstockmanscontracorner.com/the-red-tide...

 Thanks, Sam. I'm going to take a look at the article--and you're right--the @ sign isn't populating the names for me :) 

You mean Dan, right?? ^^

No problem. Welcome to BP and feel free to reach out anytime.  

How well do you know this guy? And what are you bringing to the partnership? I would be very careful because you can get into big trouble if there is something hinky about the money. Be sure to talk to an attorney who's experienced with dealing with international investors.

Several months ago I was approached by a guy from Eastern Europe who said he wanted to park his money in the US by investing in commercial properties. He needed a company to purchase the properties and then manage them for him.

I was suspicious but exchanged emails and even had a few phone calls with him over several weeks. As we approached the time to do the deal, he dropped "joint venture" on me. I told him I was uncomfortable with that and that it would better for him to set up an LLC and then I would sign a rep agreement to act as his agent in the purchase and management of the properties.

I spoke with a RE attorney who confirmed that how I wanted to handle things was the best way. He also said we would have to take some steps with the IRS.

I sent an email to the guy laying out exactly what the attorney told me. He replied that, no, he didn't want to do it that way. He wanted to invest his money in my company and become a "silent partner." I didn't respond and I cut off all communication with him.

In a follow-up call with the attorney I shared the contents of the last email, and the attorney said it sounded like he was setting me up to be, as they say in New York, the DFG, or "designated fall guy."

Hopefully none of this applies to your situation. But I would definitely bring in an attorney to help you structure the deal so that you're not left twisting in the wind.

And by the way, subsequent to this experience I signed property management agreements with a couple of foreign investors who own rental properties in Houston.

Their American business entities are set up exactly as the attorney described, and I have an agency relationship with their entities.

Make sure you operate in the utmost secure manner here. Scammers use this route often claiming to have access to millions as they are wanting to partner with American investors to purchase here in the states. Some attempt to have you open up a joint bank account of their choosing so they can deposit the funds. However, you had to deposit funds to open the account and if they have access to it... Stealing $200+ a day from some poor naive foreigner is often good a living for scammers. Don't give them access to your personal account info either. I'd suggest using one of the deposit only business account systems that a few BP landlords have recommended in other posts when collecting rent from their tenants. 

Here's a link to one thread discussing it   https://www.biggerpockets.com/forums/52/topics/222...

This way you don't have to worry about getting ripped off from the door. This being the case if you all don't wish to wait until you secure the contract and have the title company handle the funds from there. My coin.

Kudos,

Mary 

@Karin U.

@Mary B.  & @Fred Heller --I should have mentioned that this is someone I know quite well. My husband & I have done business with this person for almost a decade and have been to China many times. In fact, my husband spends about 4 months a year over there! So in this case, I am not leery in the way I normally would be had someone found me randomly. And, of course, one of the first things we did was ensure we have access to a good tax accountant and business attorney!

Nonetheless, your advice is good--one can never be too careful in protecting their interests! Being new to this type of investing, I am soaking in everything I can to make sure I am building the knowledge to make good decisions. Thank you, thank you!