Attorney and/ or CPA recommendations for foreign investors
Investor · Colorado Springs, CO · Member since 2013 · 643 posts · 280 votes
So I'm in the process of setting up a company that will coach foreign investors to purchase rental properties in the US. Below is a rough list of the process I have put together, but I really need to communicate with some people who have walked foreign investors through the process in the past. I am specifically looking for an attorney that could help setup the entity and a CPA who could manage the accounts.
Any referrals for good attorneys or CPA's for this process?
Mike
1) Setup an LLC in the US owned by a foreign investors
2) Get a tax number for the LLC
3) Setup a bank account for the LLC
4) Transfer the cash from overseas to the LLC bank account
5) Find a property and make an offer from the LLC
6) Give POA to an "agent" to close on the property
7) Sign an agreement with a property management company
Hi I am a foreign investor
1) Setup an LLC in the US owned by a foreign investors
=> I used LegalZoom, only help could be with Operating Agreement, but a model agreement for property investors could be fine (I used the Legal Zoom one, not great)
2) Get a tax number for the LLC
=> DIY
3) Setup a bank account for the LLC
=> I got a referral from an acquaintance, not east to deal remotely with US banks
4) Transfer the cash from overseas to the LLC bank account
=> easy. use FX brokers
5) Find a property and make an offer from the LLC
=> realtor and visits are required
6) Give POA to an "agent" to close on the property
=> you can close remotely if you buy with cash, if you get a mortgage some banks require notarised signature in US
7) Sign an agreement with a property management company
=> remote again
8) Accounting => you have to use a CPA, at least once, because us tax system is complicated and there tons of rules and forms
Hi I am a foreign investor
1) Setup an LLC in the US owned by a foreign investors
=> I used LegalZoom, only help could be with Operating Agreement, but a model agreement for property investors could be fine (I used the Legal Zoom one, not great)
2) Get a tax number for the LLC
=> DIY
3) Setup a bank account for the LLC
=> I got a referral from an acquaintance, not east to deal remotely with US banks
4) Transfer the cash from overseas to the LLC bank account
=> easy. use FX brokers
5) Find a property and make an offer from the LLC
=> realtor and visits are required
6) Give POA to an "agent" to close on the property
=> you can close remotely if you buy with cash, if you get a mortgage some banks require notarised signature in US
7) Sign an agreement with a property management company
=> remote again
8) Accounting => you have to use a CPA, at least once, because us tax system is complicated and there tons of rules and forms
Thanks Chris. This is the insight that I need. I know it is easy to setup on LLC. I guess I just need a good understanding of the process and a good operating agreement template. Would you mind sharing yours?
I would also like to know the bank that worked out for you and your CPA. I will send you a PM.
Any other foreign investors out there going the DIY route? Any pitfalls I should be aware of?
Mike
The bank is BBVA Compass in Florida, we were referred by a friend realtor in Jacksonville. When you are referred by a local, it helps. Also BBVA is Spanish, so they are more foreign friendly. I also have an account with HSBC, which is very convenient as I have one in UK. Basically they would open an account for you anywhere in the world if you are already a client. But the don't do small business accounts in US.
The problem with BBVA is that you need to do some procedures face to face, and they don't have branches where our investments are. We have nothing in Jacksonville. I am shocked that they charge 25$ for wire transfers, and there is a limit of 5000$! we had to wire funds from abroad from different banks to make some big payments.
I was not happy with the accounting firm I used, now I am trying with an individual CPA.
Hi Arne,
your experience is very insightful.
- I do not invest as an LLC but will start one soon. I have 3 doors, one SFH, one Duplex, looking for the next MFH.
=> What sort of areas and price ranges for the Duplex and MFH? Is it possible to find financing as alien no resident? I got a 5/1 ARM at 4.75% ate 60% LTV for a SHF, but it was so difficult and costly in fees and paperwork ... I agree biggest challenge is financing, and having a good property manager.
for FX, I have used xe.com, moneycorp (good for large amounts), currencyfair.com and I know about transferwise but it seems it is not as good.
Thank you both for sharing your experience. Every little bit helps as I try to sort through this process. Since I am building a business around the idea, I need to get it right and learn as much as I can. Hearing from people who have walked through the process is the most helpful.
Mike
Chris, my apologies for missing your post for so long...
=> What sort of areas and price ranges for the Duplex and MFH? Is it possible to find financing as alien no resident? I got a 5/1 ARM at 4.75% ate 60% LTV for a SHF, but it was so difficult and costly in fees and paperwork ... I agree biggest challenge is financing, and having a good property manager.
My area is South West Florida, (Ft Myers), but it appears that appreciation/demand has made it difficult to find good deals. In this area I consider "good" as monthly rent above 1% of purchase price.
A Duplex here ranges from about 150k to 290k with achievable rents between 1400-2400 per month, but there are just a very few on the market, mostly not the good deals. In March I bought one in the 160s and after about 10k in rehab I achieve above 2200 rent. This would have been impossible without my Agent/PropMgr being very knowledgeable in that area.
There are probably a lot better markets for cash flowing MFHs right now and that is what i would like to expand my horizon towards. I hope to be able to find reliable partners in new markets. I was thinking about Birmingham, AL. Just started my research.
To financing: I was able to get a loan at 5.5% with 65% LTV, 3/1 ARM for the mentioned Duplex. I now have an offer for 70% LTV at 5.7%, 5/1 ARM, and another offer (Portfolio Loan) to wrap one of my properties with a good 50% equity into the loan which would limit my cash requirement for a new property significantly. I also consider getting an equity loan on my primary residence to pay cash for the investment prop and then refinance within the first year. This, however, still needs to be confirmed if there are restrictions for foreign nationals.
In which markets and properties are you investing in?
Arne
That is a good list to start with. From a tax standpoint, the three main US tax issues that foreign investors need to be aware of are: (1) income tax; (2) estate tax; and (3) gift tax. Some of these issues are rather straightforward, but depending on your tax situation there may be entity structures that you can implement that can make the investments more effective and tax efficient.
Many foreign investors will find themselves being assessed tax at the same rates as US individuals. These rates begin at 10% and go up to the highest rate of 39.6%. The US tax code also has a very favorable long-term capital gains rate of 15% (subject to certain income) that may apply upon the sale or disposition of the property.
In addition to federal taxes, investors will also have state taxes to consider. The US has of course 50 states, but only 43 have a state income tax. But some states impose a transfer tax and other assessments that can complicate the situation. Navigating state tax law and filing the applicable tax returns is certainly not easy.
Dear All,
I am looking to buy an investment property in Florida. I am planning to use Self Managed Super Fund (based in Australia) through establishing LLC in Florida. It would be great to hear from you about your experience with this investment scheme.
I am also looking at good attorney and accountant to deal with, preferably close to Palm Coast. Any your thoughts are highly appreciated.
Thank you. Kind Regards. Sergey
Dear All,
I am looking to buy an investment property in Florida. I am planning to use Self Managed Super Fund (based in Australia) through establishing LLC in Florida. It would be great to hear from you about your experience with this investment scheme.
I am also looking at good attorney and accountant to deal with, preferably close to Palm Coast. Any your thoughts are highly appreciated.
Thank you. Kind Regards. Sergey
Sergey,
That is a bit harder to find someone to specialize in. I'm happy to answer some questions for you.
You definitely need someone qualified, does not have to be a CPA, could be an Enrolled Agent or an attorney. Just make sure they specialize in tax and have significant experience dealing with real estate investors.
Here is a great list of questions to ask a potential accountant: http://www.biggerpockets.com/forums/51/topics/70447-questions-to-ask-a-cpa
Also check out the www.NAEA.org page in your search. It should help you find someone local. If someone comes to me, I'll send them your way.
If you need help in your search or want to verify something don't hesitate to ask.
For example: I have clients worldwide and things are just as easy as I e-mail them, talking on the phone. I even use Skype and TeamViewer to communicate with clients so I'd highly recommend looking for one of the best with great references that interviews well with you.
So look for someone you can connect with that works out for your situation.
Feel free to ask here if you have questions
I am a London (UK) resident who sends money regularly for investing back to Canada (less lately b/c of the currency exchange at the moment). I use Transferwise, and have compared it to well-known services like World first. For transfers up to GBP 10,000 I can definitely recommend Transferwise as having smaller spreads (difference between what they exchange your money for, and the real exchange rate) as well as their flat fees. As @Arne Haeussler also mentioned, banks are not preferable as they'll generally charge higher flat fees, provide worst spreads, and take more time. Hope that helps in some way
Back when I needed it, I found other FX brokers with better spreads than Transferwise.