I get a lot of interest from all of you international investors who want to invest in the U.S. but there are a lot of questions that need to be answered before you can close that first deal. Like, what do I need to set up? Can I invest in apt buildings and if so, how? What are the tax considerations?
In this episode, Michael is joined by Reed Goossens, who answers those questions and more!
Reed is from Australia and moved to the US 4 years ago. He's a civil engineer by trade but wanted to get out of the rat race and started to invest in multifamily properties in the U.S. But he faced all kinds of difficulties investing here as a foreigner but finally figured it out. Now he's looking for apartment building deals all over the U.S. He hosts a podcast called “Investing In The U.S. – An Aussie's Guide to U.S. Real Estate” where he teaches people how to invest in the U.S. from abroad.
Here's what we cover on the show:
- What kind of investments are best suited for international investing?
- What do you need to do to get set up in the United States?
- What are some of the tax considerations?
- What are the options for getting financing for real estate deals?
- What are best practices for transferring funds from abroad to the closing in the U.S.?
OK, let's get into the show!
[podcast]
Connect with Reed
- Website: http://www.rsnpropertygroup.com/
- Email: reed @ rsnpropertygroup.com
- Podcast: https://itunes.apple.com/us/podcast/investing-in-u.s.-aussies/id1071004776?mt=2
Transcript
Hi there and thanks for tuning into the apt building investing podcast.
I've received a lot of interest from international investors who want to invest in the U.S. But there are lots of questions, like what do I need to set up? Can I invest in apt buildings and if so, how? What are the tax considerations. To help us answer all of these questions is Reed Goossens.
Reed's from Australia and moved to the US 4 years ago. He's a civil engineer by trade but wanted to get out of the rat race and started to invest in multifamily properties in the U.S. But he faced all kinds of difficulties investing here as a foreigner but finally figured it out. Now he's looking for apt building deals all over the U.S. He hosts a podcast called ” Investing In The U.S. – An Aussie's Guide to U.S. Real Estate” where he teaches people how to invest in the U.S. from abroad. Let's get right into the show.
Tell us about you and then about your business
I moved here in early 2012 with my girlfriend to NY city. I had a real passion for RE investing. I didn't want to be in the rat race anymore. I read Rich Dad Poor Dad and really educated myself. When I landed in NY I had to learn the US way of investing. So I did that over 12 months. I found some really cheap real estate. I could buy a $50K triplex and could cash flow $1000 per month. I cut my teeth on a few properties in upstate NY. I discovered the power of apt building investing and got some units together.
But I wanted to scale it. So I needed to raise money. That's when I created RSM Property Group to give myself a personal brand and raise capital for some of the bigger deals. Last year we took down a 215-unit deal in TX. I have a podcast as well to help international investors invest in the U.S.
Why did you decide to focus on helping people with investing in the US from abroad?
I heard of horror stories of people trying to invest from abroad, but with the syndication model it makes a lot more sense. I felt that I could help people who want to invest in the US from abroad.
With regards to investing in the U.S. if you're oversees, give us an overview of the kind of investing strategy that you see people succeed with?
The main thing people are most familiar with are turn-key single family properties. Less so in apartments, but we're both trying to change that. With the turn-key properties you can buy a portfolio. But I think the multifamily is an untapped market. There's not many providers out there providing turn-key properties.
What should people do to get set up before investing in the U.S.?
You need to set up an ITN number (an international tax identification number). I have tax advisors that set up all of my clients.
Next is setting up an LLC, which is important for asset protection and tax reasons.
Then you need to open a U.S. bank account, which is harder to do for international investors. We help with that, and also for transferring the money into the country.
WRT Taxation, what should investors be aware of when investing in the U.S. from abroad?
There's a minimum of 10% withholding tax of whatever profits there are. Investors now need to file tax returns. It's not more complicated than anyone else, it just needs to be done.
What are financing options for investors from abroad? How would people qualify for U.S. loans for apt buildings?
You have 4 options for international investors:
- Institutional investor financing: these are lenders who require a larger down payment of 35-40% who specialize in international investors. The larger the property the better because they look less at the investor and more at the property itself. Interest rates are higher around 8% but the loans are non-recourse. Many do require you to show that you have relevant experience and the proper net worth.
- Traditional bank financing: there are banks out there who are willing to loan, but they require 35%-50% down and it's normally a recourse loan. It's a lot harder to close these. The loan terms are 6-8%.
- Seller financing: these are great to get because you don't need any banks. Some sellers are open to that, so keep that in mind.
- Private lending: this is more like a hard-money loan. 10% interest rate, 50% down and shorter term, but they can close very quickly. These are great for value-add deals where you can finance out within 12 months. Now you've also shown experience when you go to a bank.
- Partner with a local person: An international person can control an entity from abroad, but you need someone local who will do the work.
What are best practices for transferring funds from abroad to the closing in the U.S.?
It's pretty straightforward once it's set up. The transfer agent have banks set up in the foreign country, the money will be deposited there and then is transferred to the U.S. bank account. Once you approve the transfer, the money is transferred within 24 hours directly into the account you specify.
Any other advice?
Eventually you'll have to travel to the U.S. to set up your a-team, bank accounts, etc. You need to set up your property manager, your partner, your CPA etc. You need to be able to rely on them, so it's important to build up that relationship. It's also good to have a local partner who makes sure everything is going smoothly.
If people want help getting set up here in the U.S. , How can people find you?
Web site: http://www.rsnpropertygroup.com/
Email: reed @ rsnpropertygroup.com
Podcast: https://itunes.apple.com/us/podcast/investing-in-u.s.-aussies/id1071004776?mt=2
