Foreign Inverstment, Where Do I Start...?
I am originally from TX, USA and now live in Honduras. I have stumbled onto what I believe to be a very interesting investment op., but do not have the finances to go it alone and so am wanting to find one or two American partners to do this with. I am not posting this to offer it, I am wanting feedback and suggestions from others who are involved in RE as to what my best avenues might be and what all I will need to do to be 100% legal etc.
1. Will I need to construct a prospectus for a JV under SEC guidelines etc. even though the property and headquarters will be out of the country if I offer this op. to other americans over the internet? Would a JV even be the best vehicle for this?
2. How would ya'll reccomend that I advertise this opportunity as my target group will be to people who not only want to invest, but might be interested in retiring to this community themselves? I do not want to have to accept anyone who has the bucks and wants a foreign shelter for it.
The area is wonderful. climate as near perfect as anyone could want and a retirement apartment complex is greatly needed. I would most like long term co-partner investor etc.
I am fully familiar with the Honduran requirements (not onerous), but am unsure about the necessary requirements of making this type of offering over the internet.
Any and all replies greatly appreciated.
DD
are you a US citizen? Are you aware of potential US tax liabilty.
If this is a Honduras company doing Honduras REI, why would you need SEC approvaL
Can norte americanos own land in Honduras?
a JV isn't a entity, an LLC, Corp, LP would be the enity
Watch about promotion on the internet and sec/fraud/blue sky law.
If you plan on rasising the $ via the internet can you use the the article titled Private Securities Offerings on the Internet Copyright © 1996
Thank you for your reply!
Yes I am USA citizen,
Yes Americans can own land in Honduras, only time you get limited is when you want to purchase beach front property, but this is in hte Central Mountainous region, so no problem.
SEC has many forms etc. for foreign entities doing business (here is the real question) with Americans, or in america only?
Yes I understand that a JV is the vehicle to set up a limiteed partnership with a managing partner (me).
The offer would be a real one, very up front with very spelled out risks and possible benefits etc. I would not want a partner that was not thoroughly informed and enthusiastic.
THank you again! DD
That sounds like you would have to go the SEC/securities route.
You might talk to an atty that specialized offshore transactions as they are particularly scrutinized by the IRS, et. el. (and others)
Frankly with a high knowledge of the area and a command of the language and some relationships established in country I would seek my participators in country. Americans already in residence or steady visitors. Of course I like to involve the citizens of the foreign country.
Cheers Lucius
As a general rule investments offered to the general public in the US have to have a SEC registration (reg D). Last I checked the cost to file a reg D memorandum was around $50K and that was 15 or 20 years ago so I am sure it is much more now.
There are ways out of this rule
1) Do not solicit the general public (i.e. make a private placement) and,
2) Do not accept more than 35 unqualified investors.
3) You may take as many qualified investors as you wish-- but qualified investors must show that they have a history of investment in similar transactions and have the sophistication to understand the risks they were taking and had sufficient financial resources to stand the loss of their investment.
As to the form of the entity the traditional answer to that question was a Limited Partnership and I still think that is a superior product. However the LP is somewhat out of fashion these days and the more popular entity is a LLC.
In addition you need to be aware of the blue sky law of each state in which you offer this security or accept investors.
Remember that even if you stay inside the private placement exemption the fraud provisions of the SEC act remain in place. Therefore full disclosure is necessary. Otherwise you may get to stay in Honduras exclusively.
In addition there are very strict licensing requirements to any person whom you may wish to pay a commission for the sale of these securities. Ignore them at considerable risk to yourself but even more risk to the salesperson.
BTW, if you hear of a nice harbor for sale in Hondorus I'm in the market. Preferably something either undeveloped or with a junky marina which is not doing well bcause I'm really cheap.[ Edited by commercialking on Date 06/02/2004 ]
Thank you for the great input! I too still prefer a LP, simple and straightforward and plan to seek-out American investors in-country in Honduras first.
What type of harbor are you looking for? A commercial site on the mainland or an island/resort type site? I know a good honest Broker on Roatan who is active in real estate on the islands that I can recommend, but honestly the best way is to have a Honduran national that is trustworthy (I know a couple of great ones!) go look with your criteria. They get a much lower price quoted and many of the Hondurans do not 'list' properties with RE Brokers.
THis couple are the people who will do the negotiating on the place I have in mind to develope and are my current partners at our restaurant. I will not be showing my American face until the closing! Living there I have learned how to work it and developed very good relations with people there. I highly recommend Honduras as a good investment . The government is stable and highly democratic oriented, the laws reasonable and the majority of people wonderful though extremely poor. Also they like Americans there, which is not true in amny Central American countries.
Thank you again for your input, I hope I can get this thing going, it does not require a large sum, just more than I can do alone.
DD
BTW: I cannot find a way to list any properties that are not in the states or a territory here on the site.