Affect of US and foreign partner when seeking funding?

Question

Hi All,

I've been exploring partnering with a US citizen (I'm Canadian) to purchase small (i.e., "residential") multifamily properties together in Chicago - 2-flats or 3-flats.

Traditionally banks don't want to have anything to do with lending to foreigners like me, but I think having an American in the partnership would make a positive difference.

Does anyone know what effect the partnership would have on getting funding?  Or better yet, does anyone have an institution to recommend where they've successfully done something similar?

Thanks,

Larry

Brie Schmidt · Answer

@Larry Smet - Ashlee is a good person to ask.  From what I know you would need to set up an American LLC.  Then depending on how the LLC is structured any person with more than 20% ownership would need to be on the loan app.  We just did this for a portfolio loan we are doing.  You would need an American partner with strong credit and reserves and assets,  but I am not sure how the Canadian citizens we be looked at. I can ask my lender if you want?

Ashlee Reimer · Answer

@Larry Smet

Send me an email at ashleereimer@hotmail.com and I will send you the RBC info I have.

Larry Smet · Answer

Thanks @Roy N.,

I talked with TD a few months ago but they were only on the eastern seaboard, not the midwest.

Please send me a PM if you have a good contact at RBC.  That sounds promising.  Thanks for the info

Larry

Roy N. · Answer

Larry:

Both RBC and TD provide mortgages to Canadians through their USA subsidiaries.  We have also found a handful of small local/regional banks - particularly in the rust belt - who have no problems lending to Canadians.

I do strongly recommend you sit down with a real estate attorney and accountant with cross-border expertise.   You will want to take a strong look at setting-up an U.S.A. based legal entity, probably as a 100% owned child, of a Canadian entity.  This will give you control of whether and when you repatriate retained earnings to Canada and will lower the withholding tax on the U.S.A. side of things when you do repatriate ... {don't smile too much, the CRA will still get you on this end ... eventually}.

Brie Schmidt · Answer

HaHa @Larry Smet Thanks for noticing!

Larry Smet · Answer

Perfect.  Yes, please send me the RBC info.  That sounds promising.  I currently hold all my properties in two US LLLPs.

Thanks for chiming in @Ashlee Reimer!

Larry

PS - Congrats to @Brianna S. on helping out folks on biggerpockets - she just hit the 500 post mark!  Nice work Brianna!

Ashlee Reimer · Answer

Hi @Larry Smet!

You would probably want to set up an American LLLP owned by a Can Corp. Do you currently own a Can Corp? Have you looked into take out loans with a hard money lender? There are some that have pretty reasonable rates (depending on what you are used to). RBC does have a investors program, if you want I can send you the details on it. I believe it was they would loan a min amount of 70k at 60% LTV for 15-25 years. But no rehab loans, that you would have to come up with the cash or contact a hard money lender. Most HML will loan on rehabs.

Hope that helps!

-Ashlee

Larry Smet · Answer

Hey @Brianna S. , that would be great.  I'm reaching out through my network to a number of lenders because they all have different policies.  Any info you get would be welcome!  I'll also reach out to Ashlee - thanks for the lead.

Larry

John Hauser · Answer

I know @Ashlee Reimer is a Canadian investor.  @Steven Hamilton II have you seen this among your clients?  Thanks.

John

Affect of US and foreign partner when seeking funding?

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