investing into a syndication

[Matt Belzile]

Anyone in Canada have experience putting money with a syndication? This would be my first time and I am wondering what to look for and what kind of questions I can ask to prob their legitimacy. 

Also, this is for a development project which I read are more risky and why the returns seem more attractive, so any pitfalls I should look out for would be appreciated. 

Thanks in advance! 

[Omar Khan]

@Alina Trigub Thanks for the shout out. 

@Matt Belzile Great to see more Canucks on the forums! :D

Be careful with the information you receive on BP. You will face a different set of issues depending on where this investment deal is physically located. 

As a Canadian investor, you will be dealing with a whole host of different issues (cross-border taxes, repatriation of income/capital, etc) that an American investor will not face if the deal is in the USA. Similarly, an American investor will face a different set of issues (apart from determining the financial viability) investing in Canada than a Canadian will face. 

Useful articles:

• Choosing the Right US Market To Invest In: The 4-Step Guide to Success
• The Inside Track to Vetting A Multifamily Deal Sponsor
• How to Avoid the Most Common Commercial Due Diligence Mistakes

Essentially, you will have to figure out net of taxes/fees if a US investment is worth while relative to a Canadian one. 

E.g. (simplified, assuming no FX issues) US: $50K investment, 10% return = $5k/year vs. Canadian $50K investment, 8% return = $4K net.

CPA Fees: $300 (US tax filing) + $200 (Canadian tax filing)

Other Fees (regulatory, one-time setup costs, due diligence): $100

Total Fees/Costs: $800

Net Returns (US): $4,200

You have to do the math and realize if the extra $200 is worth it or not. In some cases, by the time the CRA gets done, you will end up making marginally more or the same returns i.e. you could've stayed local. 

In your specific case, you will have to work with a sponsor who deals/understands cross-border taxes, Canadian/US banking and some other aspects. 

A lot of my clients are Canadians and we deal specifically with these issues. 

Happy to chat further. PM me if you need anything.