Overseas Investor In USA Residential Realestate
What is the best entity for me to purchase residential property as a foriegn investor. I am looking at purchasing property for the short to medium term(not flips). I am thinking of setting up an LLC to own the properties. I have contacts in the US that I can use as a local registered agent. I appreciate that I will have trouble obtaining finance as both I an any new LLC will not have 2 years of US tax records. I do have a good credit rating and tax records here in New Zealand, but feel that these will not be relavent in the US.
I have 20 years experience in property development and investment in NZ.
I would appreciate any advice you could offer. 
There are so many ways in which you can invest here that it's hard for me to every try to answer your question.
I had some friends that wanted to start making more money on their investments and have seen the deals I have been doing on preforeclosures so we set-up a LLC. I buy the property (and arrange the financing) and they bought 1/2 of the LLC for a portion of the equity in the idividual property and transwer the property to the LLC. I'll collect the rent and make the mortgage payments for a couple years, then rehab and sell for a nice profit --> they should get 25% on their money and I do quite well also.
This is such a hands-on business that I would imagine that unless you are able to keep a close eye on your money you will end up parting with it quickly.
try to find some partners that you can trust and i think you'll have a much more likely chance of success.
Thanks for your comments Feltman.
Do you have any comments as to what is the best entity for me to purchase residential property as a foriegn investor. I am thinking of setting up an LLC to own the properties. I have contacts in the US that I can use as a local registered agent. I appreciate that I will have trouble obtaining finance as both I an any new LLC will not have 2 years of US tax records. I do have a good credit rating and tax records here in New Zealand, but feel that these will not be relavent in the US.
Thanks
You can go to www.sunbiz.org has info on corporations, llc and such for the state of florida.
in any real estate deal you need to have
1. a deal
2. cash or
3. credit
if you dont have either of these you need to partner with someone who does, but you need to bring something to the table. you can't have no money, no credit and no knowledge of real estate and expect to make it work. just my 2 cents. good luck.
Reply to Nirvmd.
I have cash and knowledge. I can find the deals.
I am just looking for some advice on what would be a suitable entity to invest through. Also possible financing sugestions when you do not have 2 years of USA tax records. Do Banks lend on a loan-to-value-ratio of the purchase price, or of an appraised value?
I prefer to operate without partners.
Thanks
If you can, get to the US and get a tax id and fo about establishing some credit.
As I said an llc will be fine. A lot of banks will not lend to non-residents as harder to collect. if it is a good property they might make exceptions. You could try paying cash and then after a bit go to the bank and get a mortgage or try an equity line and go from there.
Without knowing the type of properties you plan to buy and the manner in qhich you will endeavor to profit, it is really impossible to guide you on what legal entity to use.
The obvious considerations are Tax implications, asset protection, ease of operation, and of course credit.
If you are buying and holding your asset protection needs are significantly different than if you will be flipping properties.
Let us know what you plan to buy and how you suspect you will structure transactions and maybe i cna help a little more.
Ijust re-read your 12/6 post and realized that you indicate that you have both the capital and the ability to find deals - should I presume from NZ? If this is the case, please ignore my previous advise and rethink your interest in investing in distressed real estate. I don;t know many people who can successfully invest in properties accross state lines without partners; I sure don;t know how you can accomplish this from across the world.
I intend to source potential properties through the internet and through local contacts. I would then spend 3 -4 weeks in the area to inspect, make offers, arrange finance etc. I intend to use a property manager to oversee the properties in my absence.
I am looking at single residence houses too 150K and posible entry level duplex or multiplex's. I intend to hold properties for 6 months to approx 3-5 years.
thanks,
Mike
Mike,
I invest in the US while living in the UK. I have the advantage of having a US credit history.
I can field some questions about how to get started and translate between what you are used to doing vs. what the US expects.
I happen to be traveling to NZ this Feb (south island) and know a bit about the Denver market. Hence we might be to hook up in person if our schedules line up.
For the most part assume that the initial deals will require greater down payments or more creativity or similar to get some history started. You might not make as much profit as someone who has access to low cost US financing. After a period you will have more options. The LLC will always be an issue in that many lenders what to look at the members for a guarentee and you do not help much that way. Some lenders are much more flexible about lending to an LLC once it has been established a bit.
John
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