Working with foreign investors?

Question

Hi forum,

My wife (USA citizen) and I (Swiss) are in the process of moving to the USA. While my wife currently works in Colorado Springs and builds the foundation for our endeavor, I am still working in Switzerland for Dell Technologies.

Our plan is to buy our first multi family home within the next 6-9 months. There are some challenges we face:

1. My wife has amazing credit but was a student for the last couple years. Therefore, no real finace history.

2. I have a great income (was never unemployed since ~20y) but never lived in the US. Therefore, I have no tax ID / social sec. Nr. / credit score.

Do you have any advice how we can qualify for a mortgage?

Also, since we are planning our journey since quiet some time, some of our friends are very interested in investing in the USA as well.

Again, they never lived in the US and so they neither have a tax ID.

My idea is to partner with those friends and invest their money with my (to found) company. The big question is: can they be silent investors in order to avoid the hassle to apply for a tax ID? Or is that illegal? Has anybody experience with such business model?

Thanks in advance for your answers.

Roman M. · Answer

i have heard of some foreign investors structure investment deal as preferred equity or loans. They basically are paid preferred interest or loan interest, and if you structure it correctly they can get part of appreciation upon the sale (like shared appreciation loan). You will have to check with a tax accountant regarding tax liability on the loan interest paid to a foreign entity but I am pretty sure there might be some kind of exemption.

Alain Haug · Answer

First of all: Thanks a lot for your valuable answers. I know we have an unusual situation.To answer some of your questions: Yes, as soon as my wife has established herself in her new job, I will move over to the US and applie for the Green Card.

@Lia Martinez May I ask: did you spend all your personal savings in real estate or did you work with a hard money lender? It's a bummer that your husbands work experience does not count. In my case I was hoping my history with an US company maybe helps.

About the difficulties with the Green Card: I was under the assumption that a spouse is eligibel for a Green Card?

@Jerry Padilla I have sent you a PM

@Robin Searle I will send you a PM in a minute.

John Corey · Answer

Alan,

I can provide some prospective. I used to work in Switzerland and have investors there I regular chat with concerning investments outside of Switzerland. Note that if you were to work with investors who are based there, the Swiss rules for investing could easily apply. Similar to the USA SEC setting the rules for collective investments involving residents in the USA and the UK's FCA setting the rules for residents in the UK. The laws where the investor lives matter a lot.

My investing is UK and USA focused.

Lindsay Stewart · Answer

Hi @Alain Haug

Purchasing on a land contract might work (not sure if anyone else on this thread has also suggested this?).  Can limit your options of choice though, and often costs more to purchase, but could also offset some of the very high costs of hard or private equity.  Then in a couple of years, refinance out and pay the vendor off.

I sell a lot of my properties on land contracts, works nicely

Cheers

Lindsay

Lia Martinez · Answer

@Alain Haug The work permit comes in faster than your green card.  My husband got his in about 6 months time from the application submission date and he got his travel card at the same time (i.e. you can't leave the US or work in that time period between application and the receipt of the travel card). Then,  he walked over and applied for a social security number the same day we recieved his cards in the mail.

Roman M. · Answer

I have seen foreign investor loans with 30% down in South Florida.

Anthony Woods · Answer

@Alain Haug

You should consider investing passively until you're ready to go it on your own. Our company works with many passive investors in our syndication deals.

Alain Haug · Answer

Hi Kiley,

Thanks for your encouraging words. Don't worry- I will not give up just because our start might be a bit bumpy. I am sure, we will find a way to start our investment journey. I was just wondering, if some other forum members were facing a similar situation and how they handled it.

Kiley N. · Answer

@Alain Haug

US lenders can make loans to foreign nationals in the US.  It will take a special lender and the terms may be somewhat prohibitive compared to a standard loan to a US citizen though.  For example, I have seen lenders requiring 50% down for loans to non-US persons.  The rate is also most likely to be higher.  Could still be worth it though if that is the difference between acquiring a great deal vs not.

One route to consider is finding a US partner that brings financial strength for the first deal or two to get you established.  With that track record and some US assets on your personal financial statement, it will most likely get easier from there.

Also be sure to consult with an attorney and a CPA for advice on your plans.  The more international experience they have the better.

Don't give up!

Alain Haug · Answer

Hi guys, sure- passive investing could be an option but comes without the whole experience. Also, since I will not be able to work for some time till I receive my green card, I would have enough time to fix a house.

I‘ll be in the states in two weeks and will visit some local banks. Let’s see if they can help us.

Working with foreign investors?

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