Aginsky Capital | FAQs
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FAQs

 

Frequently Asked Questions

 

How will the transfer of funds from one’s home country to the U.S. be tackled?

Each country has their own set of regulations and processes when it comes to outbound foreign investment. If we have an office in your country, we will be able to guide you through the process. If we do not have an office in your country, you can either meet with us telephonically or at one of our regional offices internationally or we will introduce you to our partner firm who specializes in such matters in your jurisdiction. You can contact us for further inquiry at info@aginskycapital.com.

What will be the ownership structure of the real estate asset?

Although the structure varies depending on the investor requirements, most often, the real estate will be owned by a holding company, which will be structured as a limited liability company. The investor/buyer will be the sole owner/member of the LLC, which will own the property. If there will be multiple properties in a portfolio, then we will place each individual property into a subsidiary LLC, which will be owned by the master holding company. Most of the properties we buy are held under this structure.

While this structure is simple and helps to protect the buyer against direct liability, other structures such as corporations and trusts are also an option, depending on each client’s requirements. ACG can help you obtain the legal and tax advice needed to understand which entity best suits your needs.

How long does it take to set-up an entity and purchase the asset?

It depends on the structure. A U.S. limited liability company or a corporation will not take more than a week and a corporation will also not take more than a week. However, an international trust may take up to three weeks.

Once the buyer has made a decision with regard to which property to buy, it can take anywhere from two weeks to eight weeks to complete the transaction, with the average being 6 weeks.

Which states will I be eligible to buy assets in?

No matter where the buyer’s company is set up, he/she is eligible to buy property in any state. For example, if the buyer’s LLC is based in California, he can still buy a property in New York.

The vast majority of our firm’s assets are located on the West Coast of the U.S. due to the fact that our primary office is located there and that makes it easier for us to manage the properties first-hand and actually travel to each site on a regular basis. Moreover, we feel that there are currently more opportunities on the West Coast for upside and appreciation in the coming 5-10 years, than elsewhere in the country. However, we can certainly help you to identify and broker properties anywhere in the U.S.

What happens when the tenant vacates the property?

If the tenant is under a lease and still vacates the property prior to the lease expiration, the tenant will be liable to pay the rest of the rent due even if they vacate the property. This is a rare occurrence and usually occurs only if the tenant is bankrupt.

If they leave after the end of the lease term, ACG can help you find a new tenant to occupy the vacated space.
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Why invest in the U.S. real estate?

• Strong property rights
• Transparent and regulated industry
• Liquidity
• Potential for high returns (compared to other countries)
• Rebounding market (16% growth in 2013 alone)
• Safe haven (politically and economically over the long run)
• Diversification
• Perfect hedge against currency devaluation and inflation
• Refer to Why U.S. Real Estate for detailed answer

What kind of property do you recommend for investment?

• Government tenanted office
• Gyms/health clubs
• Office complex
• Medical complex
• Industrial warehouse
• Strong tenanted retail
See property recommended for details

How can I be assured that the property is unencumbered and free from dispute?

ACG conducts extensive due diligence prior to buying any property. One of the items that we investigate thoroughly is the title report, which shows the entire historical details of the property. Moreover, ACG always facilities a purchase of title insurance to protect the buyer in case there are any unforeseen title-related disputes post-acquisition.

How can I be assured the property is in good condition?

As a part of the due diligence, ACG also conducts a professional property inspection. At the end of the inspection we produce a detailed report on the physical condition of the property from the foundational and structural aspects of the property to the cosmetic affects. If we discover any defects in the property, we ensure that the seller fixes any and all of them prior to the sale or leave aside funds for the buyer to fix it or we do not buy the property at all.

What is the tax-structure in the U.S.?

You will have to pay an income tax every year on income received from the property and a capital gains tax when you sell the property (assuming you will sell it at a profit). ACG works with experienced CPAs and will help you file all the required taxes. The tax rates also vary by each state and changes every year. The latest federal tax rate can be found here: http://www.irs.gov/pub/irs-pdf/i1040tt.pdf. We will help you optimize the structure of the investment in order to minimize the overall global tax liability.

How do I bring back funds to my home country?

The investor has the option to leave the earned income in the U.S., in an offshore account in a tax-free zone, or bring the money back to their home country. The funds can be easily transferred to any of these destinations with a click of the mouse.

The repatriation of funds can be classified as any of the following: dividends from your company’s profitable activities in the U.S., owner draw downs, re-payment of interest or principal back to the capital source, if funds were originally brought into the U.S. as debt for the acquisition of the assets, or other. We strongly advise you to consult a U.S. CPA or tax lawyer to determine what would work best for you and can recommend such a professional upon request.

Will I be eligible for a visa or a green card by investing into real estate?

No. There have been talks in congress for a three-year visa in exchange for a real estate investment but it hasn’t gained much ground and we do not expect it to anytime in the near future.

However, an investment into a business (minimum of $1 million) will make you eligible for a green card via the EB-5 program. The investor also has the option of buying a business, which has real estate as its assets. Click here to learn more about the EB-5 program.

If I hire you to manage the property, how long is your management contract?

We typically sign month-to-month agreements with no-fault termination for either party with a 30-day notice. Thus if you are not happy with our performance, you can easily get out of the contract at any time.

Is financing available for my acquisition of real estate?

Yes, in certain cases we can help you secure up to 65% of the acquisition value in the form of debt, which can be fixed for up to 10 years at the current treasury rate plus about 200 basis points. The current five-year rate is 1.74%. However, the property and the tenants would need to qualify for the financing, meeting the Lender’s requirements. We work with multiple lenders across the country representing everything from major banks to insurance companies, pension funds, and even private sources of capital.