Investing out of area - legal protections.

Investor · Ottawa, Ontario · Member since 2015 · 63 posts · 4 votes

Hello,

As a Canadian resident who wants to buy in the US market, what kinds of legal protections exist for foreign investors? Say for example there is a dispute of some kind with a turnkey real estate company or with a tenant, what avenues are there?

Also, how does one develop a comfort level while investing out of country? Everything just seems so much further away and you cannot "feel" your investment and the neighborhood because it is so far away.

Let me know what you think!

Thanks.

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Joel OwensBusiness Member

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Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes

11y

Hi William,

I would first look at your net worth versus your initial investment as a percentage. So if you were worth 2 million and bought a house 50k cash that is a 2.5% total of your portfolio value.

Maybe dip your toe in the water and see how one goes first. The turn key operator you choose is critical. Memphis Invest is one you might benefit from giving a call to explore options.

If you want funding that is harder but there are some Canadian banks in the U.S.

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Shawn Dandridge
Investor · Houston, TX · Member since 2011 · 209 posts · 56 votes
11y
@William Wong
There aren't any types of special protections for foreign buyers investing in the US real estate market. You'd have the same avenues as American's have, which is the court system.
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Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
11y
Hi William,
I would first look at your net worth versus your initial investment as a percentage. So if you were worth 2 million and bought a house 50k cash that is a 2.5% total of your portfolio value.
Maybe dip your toe in the water and see how one goes first. The turn key operator you choose is critical. Memphis Invest is one you might benefit from giving a call to explore options.
If you want funding that is harder but there are some Canadian banks in the U.S.
Podcast Guest on Show #47
NNN Invest53 Reviews
Website View Page
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Marco Santarelli
Specialist · Orange County, CA · Member since 2008 · 2k+ posts · 623 votes
11y
@William Wong
Welcome to BiggerPockets!
There are law firms that specialize in cross border legal and tax matters. Some investors set up their own entities here in the US, like an LLC, but it will come down to your personal situation. I can refer you to one of those firms if you like.
There are also some lenders that finance foreign nationals.
Continued success!
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William Wong
OP
Investor · Ottawa, Ontario · Member since 2015 · 63 posts · 4 votes
11y
@Joel Owens
Thanks Joel. It seems Memphis Invest is fairly active on social media. I have listened to a couple of their videos and read some of their materials on line. They seem to be quite good. What other turnkey companies are there that are fairly reputable? I just wanted to do a comparison. And have you had any experience with Memphis Invest yourself?
@Marco Santarelli Thanks Marco. Yes, would you have any referrals? It would be good to know what options are available in case things ever go wrong.
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Marco Santarelli
Specialist · Orange County, CA · Member since 2008 · 2k+ posts · 623 votes
11y
Originally posted by @William Wong:

@Marco Santarelli Thanks Marco. Yes, would you have any referrals? It would be good to know what options are available in case things ever go wrong.
Hi William --- I will send you a private message. Thank you.
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Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
11y
It's definitely all about the team you work with. I live in LA and only invest out-of-state (so not exactly country-to-country but the distance is as much if not greater). The only way for it to work is to work with good teams, and specifically a good property manager. The property manager will make or break your investment, no contest.
In terms of turnkeys (I also have always bought those for myself), the previous posts are right--same recourse as Americans would have.
The biggest thing to be sure is set up right is your US entity and bank account (for example, it's not an LLC for Canadians....an LLC will cost more in tax issues). That all needs to be done ahead of time before any properties go under contract. I used to work international contracts for turnkeys....feel free to reach out with any questions I can help with!
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William Wong
OP
Investor · Ottawa, Ontario · Member since 2015 · 63 posts · 4 votes
11y
Thank you all for your responses.
@Ali Boone
I am curious as to what your experience was like with turnkey investment companies and which ones are the best ones out there? What kinds of international contracts did you manage?
Thanks.
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Account Closed
Investor · Burbank, CA · Member since 2015 · 42 posts · 11 votes
11y
@William Wong
So glad i found your post as I was considering Mack and their products. I get their weekly news letter, the proformas are great and they also have very good reviews on turkey reviews.
i am really sorry to hear about your experience. I've posted in other posts but I am dealing with a nightmare-ish semi turnkey management team right now as well, and the kind of response and carelessness in your post completely reflect in the attitude I get from this said PM company. I am really sorry you are going through this, and wish you the best of luck. Hopefully things will smooth over in no time.
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Account Closed
Investor · Burbank, CA · Member since 2015 · 42 posts · 11 votes
11y
Sorry guys, I posted in the wrong window. Please ignore my comment and continue with the discussion.
Moderator please remove my posts so it's not disruptive to the discussion and I don't seem to be able to remove them myself ...?
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Mike D'ArrigoPro Member
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
11y
@William Wong Creating a legal entity such as an LLC will protect your other personal assets, however, it won't help with a dispute with a turn key company. As @Shawn Dandridge has pointed out, you have legal remedy through the U.S. court system. It can be more challenging buying remotely but the key is working with someone that is reputable and trustworthy of course. In my opinion, you want to treat real estate like any other asset class. You wouldn't invest in a stock because the companies headquarters are local and you can drive by and look at their building. Invest in the markets that will give you the best returns and then manage the risks. I've worked with investors as far away as Singapore and the Middle East, so Canada feels like it's right in the back yard. Feel free to reach out if you'd like bounce questions or ideas around.
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William Wong
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Investor · Ottawa, Ontario · Member since 2015 · 63 posts · 4 votes
11y
Thanks @Mike D'Arrigo for your response. Are you able to recommend a few reputable turnkey companies in the US? I have heard of Memphis Invest and they seem to be pretty good. If you know of others that would be great.
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Chad U.
Investor · Boca Raton, FL · Member since 2012 · 1k+ posts · 1k+ votes
11y
@William Wong
For heaven's sake, do not rush out and blindly set up an LLC like I see many others do without consulting anyone first. It's best that you consult with a cross border tax and legal specialist first prior to making a move. It could be that if you are only buying one or two properties, setting up in your own name may be the best route.
As for the best turnkey operators, there are several excellent ones throughout the US. But it should be dependent on the areas you decide to invest in, then choosing one in that market.
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