Real Estate Investment In the US from Europe

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Real Estate Investment In the US from Europe

Sivan Aviv
Specialist · Germany · Member since 2019 · 7 posts · 0 votes

Hi All , 

I would like to share with you my story and my future plan in order to get feedback on it's feasibility.

In the past 10 years i was working ultra hard saving every $ and now some things happened and i forced to resigned from the place that i was working in the last 10 years. During this time i was able to save around 1.4m dollars which i want to start investing in US real estate from my residents in Europe (The market that i'm living in is not good for investing) . in the last few days i'm reading the book of David M Greene : "Long-Distance Real Estate Investing: How to Buy, Rehab, and Manage Out-of-State Rental Properties" As progressing in the book i understood that there isn't something that should prevent me from investing in the US. My main goal is to create cash-flow and for this i thinking to buy in cash 10-15 single home apartments in around 50K usd then to make the renovation and to bring them to a value of around 100K usd each ( according to the 70% rule , these numbers make sense (assuming 20k renovation costs)). according to the 1% rule i should be able to cash-flow out of these properties around 10k-15k usd gross every month in rent. Once i will be able to cash-flow this amount i'm going to start refinancing these properties and proceed to the next 10-15 properties. because i'm not a US citizen i will have to create an LLC (i was thinking about Nevada) and to do all the activity on the LLC.

i want to ask you :

  1. Can you please share your thoughts about the above plan?
  2. Can you "attack" this plan and tell me why it's not going to work ?

Thanks a lot !

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
6y

The only thing I see really wrong with the plan is that you have no experience. If you have no experience renovating a home, how are you going to supervise someone else renovating a home? David can do it because he's a real estate expert and he had a very strong mentor getting him started 18 years ago. You can read his book and learn a lot about how he finds a REALTOR or Property Manager to build a team, but there are 100 other things his book doesn't teach that you will have to learn on your own.

You may want to consider something that is more hands-off that still provides strong returns, like syndication deals.

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    6y

    The only thing I see really wrong with the plan is that you have no experience. If you have no experience renovating a home, how are you going to supervise someone else renovating a home? David can do it because he's a real estate expert and he had a very strong mentor getting him started 18 years ago. You can read his book and learn a lot about how he finds a REALTOR or Property Manager to build a team, but there are 100 other things his book doesn't teach that you will have to learn on your own.

    You may want to consider something that is more hands-off that still provides strong returns, like syndication deals.

    The DIY Landlord Book4.7247 Reviews
    WebsiteView Page
    1Reply
  • Sivan Aviv
    OP
    Specialist · Germany · Member since 2019 · 7 posts · 0 votes
    6y

    @Nathan G. Thank you! I flipped several properties in the past but not in the US. I will check regarding the syndicates. Thank you very much!

    0Reply
  • John Corey
    London · Member since 2019 · 722 posts · 386 votes
    6y
    Originally posted by @Sivan Aviv:

    Hi All , 

    I would like to share with you my story and my future plan in order to get feedback on it's feasibility.

    In the past 10 years i was working ultra hard saving every $ and now some things happened and i forced to resigned from the place that i was working in the last 10 years. During this time i was able to save around 1.4m dollars which i want to start investing in US real estate from my residents in Europe (The market that i'm living in is not good for investing) . in the last few days i'm reading the book of David M Greene : "Long-Distance Real Estate Investing: How to Buy, Rehab, and Manage Out-of-State Rental Properties" As progressing in the book i understood that there isn't something that should prevent me from investing in the US. My main goal is to create cash-flow and for this i thinking to buy in cash 10-15 single home apartments in around 50K usd then to make the renovation and to bring them to a value of around 100K usd each ( according to the 70% rule , these numbers make sense (assuming 20k renovation costs)). according to the 1% rule i should be able to cash-flow out of these properties around 10k-15k usd gross every month in rent. Once i will be able to cash-flow this amount i'm going to start refinancing these properties and proceed to the next 10-15 properties. because i'm not a US citizen i will have to create an LLC (i was thinking about Nevada) and to do all the activity on the LLC.

    i want to ask you :

    1. Can you please share your thoughts about the above plan?
    2. Can you "attack" this plan and tell me why it's not going to work ?

    Thanks a lot !

     Your ability to invest in the USA is going to be tied to being able to access finance.You do not fit the avatar for ideal customer for most lenders. There is extra risk or extra hassle so they just pass on applications from applicants outside the USA.

    Having an LLC will not change things much. It is mostly a pass through structure. They will still care about you.

    You can build credit over time. That said, you may still not fit the profile.

    As you move towards larger properties, the lenders look less to the individual and more to the property only. The logic is simple. Once you are bigger than X, a person and their day job income could not make a real difference on the monthly debt service.

    You also want to think carefully about the legal entity. An LLC could be exactly the WRONG entity for you given your tax status. Having a pass through entity in the USA might work great for your IRS obligations and yet force too much exposure to your home country's tax regulations. It might, just might, be better to have a C-corp or something else. You will need an experience CPA in the USA who is used to dealing with USA to German tax planning. If you were in the UK, I could share what i know about that combination.

    A complete tangent. You said you are based in Germany and are finding it not appropriate to invest there. Fine. That is why some EU nationals investor in the UK. So, I am used to the conversation.

    If you wanted to grow past your own funds, you may be able to set up a structure where others in your home country invest in your deals. You would need to understand the regulations for Germany before you launch anything. In the UK, I can use crowdfunding under UK FCA regulations (and passport to the rest of the EU) for USA investments. So, you have choices and possibilities which others might not understand as it is niche when dealing with cross boarder.

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  • Neddie SmithPro Member
    Rental Property Investor · Portland, OR · Member since 2018 · 56 posts · 18 votes
    6y

    @Sivan Aviv feel free to connect me (PM) if you like. I started investing in the US from Austria last year. Now I am investing together with my german partner. 

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