I have been looking to get started in the mid sized multi-family niche. I have been looking for financing and I’ve come across a few that seem to be legit. However I have also gotten a few solicitations from foreign for me to “assist” them in investing and with an annual gain of 10%. One has even sent me a promissory note to sign that I have forwarded to my attorney for review. While he could not find anything wrong with it he did state that it wasn’t a situation he was used to seeing. I have gone on a few webinar about apartment investing, and one coach talks about one of his students securing financing out of the US. So my question is this: has anyone here borrowed or partnered with a foreign investor? How did you structure your deal? The last guy just sent me a promissory note to sign worth $12MM
You have to comply with SEC regulations when raising capital. You can borrow funds using your states laws for an individual person or entity.
Signing a foreign promissory note may obligate you to repayment in a foreign court even though you never received the funds.
I operate primarily Nevada, Wyoming and Delaware primary corporate entities with state entities for that states operations, you first need to determine when and how you would raise or borrow money. Keep in mind the SEC regulates debt capital raised from multiple people under the same agreement IE debt agreements. (Think like Debt Bond Market)
You want your loan to be under the jurisdiction of your choice, not there choice if you can help it? I choose Nevada for capital raises because the corporate veil can not be easily pierced and officers are protected provided no illegal operation occurred. Now if you intend to take this business public and do a IPO at some future point I recommend using a Delaware corporate entity as there structure promotes public company use.
How do you organize a company? How do you manage $12m worth of capital in a single year as your going to have payments due within 12 months?
What does it cost you to operate as a business before investment? Do you take on debt capital as say 1st TD notes? How do you perform due diligence to keep a uniform value? To what standards?
What is your lead time? Can you produce enough capital to pay debt after your lead time and still stay in business after the 13th month?
What kind of experience do you personally have in apartment properties.
I am not going to share more about structure as I operate in this multi family sector and it does not behoove me to create more competition.
Thanks @Gold River. That was very helpful advise.