All Forum Posts by: Ewan Tong

Thanks, Bill. Yes, I am still seeking other partners on other deals. But good deals are difficult to find these days.

Yes, cash flow is my most important consideration, too. I concentrate mostly on major cities because it is easier to get demographic data and rental statistics about these places. 

Thank you, Barbara. I am constantly looking for multifamily properties in Boston areas, NYC and Chicago. But prices have gone up so fast especially in Boston and NYC that the cap rate is fairly low to justify the investment. What cap rate do you usually aim for?

Thank you, Karen. Yes, I think I am going to speak with a lawyer but at the same time I am wondering if there are some other people in this forum that actually used this kind of strategy for partnership. :)

Hi everyone! I am an international investor new to the US market. Every year, I stay in the US on business visa for a couple of months and scout for multifamily properties, mostly in Chicago, NYC and Boston areas. I feel that I am currently in a dilemma: on one hand, it is very difficult for me to find home mortgage loans as an international buyer (I do not have SSN); on the other hand, even if some mortgage companies will provide loan for me, they ask for 50% down for multifamily properties. Without the an adequate leverage of the bank loan, the return on investment in real estate will be too low. 

In this context, I am contemplating forming partnership with American citizens with good credit scores so that we can buy multifamily properties together with only 20% down payment. But I am not sure if the following scenario is a legal practice in the US:

This American partner and I form an LLC and make an offer for a $2M multifamily property together. By using his/her excellent credit score and tax records, my partner will be responsible to find a bank that could finance 80% of the purchase (namely $1.6M). We will have a 50-50 split of the share of the LLC and we will pay $400K together as down payment.

However, as a bonus for my partner who used his/her credit for the loan, I will pay 60% of the down payment ($400K x 60% = $240K) but only claim 50% of the shares (equity) of the LLC. On the other hand, my partner will only pay 40% of the down payment, namely $160K, but he is entitled to 50% of the equity.

I am wondering what is the legal implications of this arrangement? Is it legal in the first place? If it is legal, is it risky to do so? What terms and conditions should I add to our contact to protect the interest of both parties?

Thank you for your advice, BP'ers!