Why investing in Michigan?
Michigan is one the best areas of the US, that’s where the big 3 (General Motors, Chrysler and Ford), and other several important American companies are located. It’s close to major cities like Chicago and important Canadian cities. It has a vibrant economy and a growing population.
How are demographics in Michigan?
After a continuous decline in population in Detroit and other Michigan cities, population is slowly starting to grow again.
How is employment in Michigan?
Employment is picking up thanks to new contracts and benefits received by the big 3 and thanks to foreign investment.
What are the best areas to invest in Michigan?
Right now we are investing in Saginaw, and we might invest in other cities as well in the future.
Can I invest without being an US resident/citizen?
Yes, you can, it’s perfectly legal for anybody in the world to buy real estate in the US.
How can a Non-US Resident prove ownership of the company?
When we form an LLC structured as a partnership we give a copy of the Articles of Organization, an copy of the Operating Agreement and an EIN (tax ID number) to the partner/investor.
Is it legal to own a company in the US without being a citizen/resident?
Yes, it’s perfectly legal.
Am I personally liable if the company faces legal issues?
No, an LLC (Limited Liability Company) limits the liability to the company protecting personal assets.
Can my family inherit my stake in the company if something happens to me?
Yes, in the Operating Agreement we list the beneficiaries that would inherit the stake in the company should something happen to the partner/investor.
Can we process a business visa to make sure I can visit the country if needed?
That’s an option, but we strongly encourage to inquire with local US embassies.
Can I hire a trustee to make sure assets are not liquidated without my permission?
Yes, you can. You can either have our lawyer or your own lawyer acting as a trustees for you.
How is the partnership structured?
The partnership can have 2 or more total partners that contribute different or equal amounts of capital in order to acquire rental properties in Michigan. If you contribute 100% of the capital for instance, you will have a 90% stake and be entitled to 90% of the profits at the end of the year after filing the tax return.
Who is the manager of the company?
Claudio Fahmy is the company’s CEO.
Can I sell my stake in the company to others?
Yes, you can, after approval by all partners.
Do I need an EIN or ITIN number to invest?
You do need an Individual Tax Identification Number (ITIN), or a Social Security Number and we will help you file an individual tax return here in the US before April 15th each year for the previous calendar year. The company will have its own tax return and its own EIN (Employer Identification Number)
Can I compound my gains after reinvesting profits into new properties?
Yes, you can. It’s totally up to you. You can either withdraw funds or reinvest after filing the tax return. Usually during the first year, the company won’t be profitable due to initial property repairs, but it will in subsequent years.
Are my personal gains taxed in the US or in my home country?
They will be taxed in the US because that’s where the properties are located, that’s why you’ll be required to file a personal tax return.
How high are real estate taxes in Michigan?
It depends wildly from location to location. We try to pick properties with the lowest property taxes in order to maximize the company’s return on investment (CAP rate).
Can real estate taxes ever be lowered?
It’s possible, it’s a process that requires an appraisal of the property and properly filing of documents done usually by a specialized tax lawyer.
What tax deductions and incentives are at our disposal?
The list of tax deductions is very long, it usually includes all kinds of business related expenses. Depreciation is also a non-cash deduction that the accountant calculates at the end of each year.
What is the property management fee?
Currently we charge 10% of the rent as a property management fee.
Do I have access to the business checking account?
Yes, you will be able to see all the transactions in the business checking account, but you won’t be able to withdraw funds directly with debit card. You will receive your percentage of the profits at the end of the year after filing the tax return.
Who is the target customer/tenant group?
We pick tenants that have a satisfactory background and credit history after doing background and credit checks.
How are tenants selected or rejected?
Based on their background and their ability to pay the rent after doing a background and credit check.What happens if the tenant does not pay the rent? We will start the eviction process that will take about a month, and the tenant will be evicted.
What is the minimum investment?
The minimum investment is $80,000.
What kind of return on the investment (CAP rate) can I expect?
The CAP rate right now is about 15%, but it can be much higher if the properties increase in value and they are liquidated someday.
Why not using debt?
That’s part of our company’s philosophy. We raise capital through equity financing even tho the cost of capital is higher, because we believe that our partners increase synergy in the company by bringing their knowledge and expertise.
Can we borrow against a property once repaired to increase the ROI?
No, we don’t use debt for investment purposes.
Can I invest in a big project with several equity investors?
This is an option. If several investors decide to form a partnership to acquire buildings, usually the return on investment increases on a per unit basis.