Working Capital The Real Estate Podcast
Real Estate Investing Across Borders with Lauren Cohen | EP50
Apr 21, 2021
In This Episode
Lauren Cohen is an International lawyer, realtor and cross-border expert. Also a bestselling author and global speaker. Lauren is the only globally acclaimed legal and Real Estate business advisor. Lauren Cohen loves Real Estate and fills many shoes. She is often working with first time investors introducing them into the World of Real Estate and helping them form a new path of income stream. At the same time she also works with experienced investors helping them buy properties, not only in their countries, but across borders.
In this episode we talked about:
- Lauren’s background
- Lauren’s path towards Real Estate
- Eight steps of Investing across borders
- Deal analysis: how to conduct it
- Substantial investment
- Qualifying for visa
- Holistic approach in Real Estate deals
- Immigration and green card
- Investment of non-residents
Here’s the gift – a link and coupon code for my e-book, Real Estate Investing Across Borders:
Coupon code: REI4FREE
Jesse (0s): Welcome to the working capital real estate podcast. My name is Jesse Fragale. And on this show, we discuss all things real estate with investors and experts in a variety of industries that impact real estate. Whether you’re looking at your first investment or raising your first fund, join me and let’s build that portfolio one square foot at a time. All right, ladies and gentlemen, welcome to working capital the real estate podcast. Our special guest today is Lauren Cohen. She’s an international lawyer, realtor and cross-border expert, also a best-selling author and sought after speaker.
Lauren is the only globally acclaim legal and real estate business advisor. Lauren Cohen loves real estate and fills many shoes. She’s often working with first-time investors, introducing them into the world of real estate and helping them form a new passive income stream. At the same time, she also works with experienced investors, helping them buy properties, not only in their countries, but across borders. Learn how you doing? Good. How are you? Thanks for having me, Jesse. My pleasure. Well, it’s a, it’s a pleasure to have you here. Thank you for coming on. And what we normally do is start from the beginning on this podcast.
So maybe you could give listeners a little bit of a background into your area of expertise and how you got into the world of real estate.
Lauren (1m 17s): Sure. So thanks again for having me. So I’m originally from your town from Toronto, and I know, are you still on lockdown now? What’s going on this time?
Jesse (1m 27s): Oh my God. You know what we just got out of, you know, you can’t even remember the different zones now. So I think we’re in gray zone now or red zone, all that, all that means to me is outdoor dining is now allowed. So we’re in
Lauren (1m 42s): Right in time. Thank God it’s spring.
Jesse (1m 45s): So that’s where we’re at right now. But yeah, about a week ago, we were in full lockdown.
Lauren (1m 50s): Crazy. I mean, I’m in Florida, it’s the exact opposite. We haven’t been on lockdown. People don’t even wear masks in Miami Dade and I’m happy to be in Palm beach where there’s still a mask coordinates, but I hear about it every day from my mom, from my brother, from everybody. And I’m on the phone with Toronto literally all day. So as I was saying, I’m originally from Toronto, excuse me, I’m sorry. I’m now in South Florida. And my special sweet spot is helping people find a path to invest in the U S I’m also a lawyer in Canada.
So I’m a lawyer on both sides of the border and a realtor here. And I help people mainly invest in the us and set up the proper structure to protect themselves across borders. And ultimately if they so choose to my, my signature program is immigrated through real estate. And that’s actually one of my websites immigrate to real estate. Imagine that. So it’s kind of funny because my main website for a really long time. So one of my, one of my issues for, for a long time was trying to figure out what my, my company name E council had to do with what I was doing well, it was because it was a virtual business, electronic and counsel providing counsel and guidance, but people were like, well, what does that have to do?
But then again, Apple doesn’t really have anything to do with computers and Starbucks doesn’t have anything to do with coffee, but meanwhile, now it’s easy immigrated through real estate. Yeah.
Jesse (3m 13s): Nice. So you got into that and was, was it through the legal world that you first were exposed to real estate? Or was it the other way around?
Lauren (3m 22s): I’ve been exposed to real estate since I was a young young girl, not that young, but young enough, my mom was a realtor in Toronto for a long time. I grew up in it with it all around me, with her going to listings and offers and multiple offers. And this, I mean, that was when Toronto was in the first heyday of craziness, you know, and it just kept going ever since. And then I did real estate law for a little bit in, in, in Ontario. And then I moved here and I got into the world. I always wanted to be a mergers and acquisitions, lawyer doing deals.
And I’ve been writing business plans and helping people find their paths to immigrate through business investment. And I got my real estate license when I got my green card. And then it kind of just put all the pieces together. And now I’m with exp Realty, which is international and then the chair of the international investment committee of exp commercial. So it’s all kind of coming together and really being that true cross border expert because although I don’t focus only on Canadians for natural reasons, I get a lot of Canadian clients because they trust me and I speak Canadian, you know?
Jesse (4m 28s): Yeah. So for, I mean, there’s a lot of snowbirds in Florida from Canada, but what, what brought you to Florida?
Lauren (4m 35s): Oh, that, that was an ex-husband. That was an ex husband. And I lived here for three years with him and I was miserable. I hated it. And then I moved back to Toronto and I lived in Thornhill and worked in Mississauga and I would drive through the snow after living here in Florida for three years. And it’s once you’ve had a taste of the good weather, it’s really hard to adjust back to the not so good weather. Let’s just leave it at that.
You know, now you’re getting into spring. You’re not going to have to deal with all that stuff, but I never liked shoveling snow. I like looking at snow from afar. So I was never a cold weather person. So I was happy to come back here and I came back in Oh one and I’ve been here ever since.
Jesse (5m 21s): So the business that you developed in Florida, did it start originally with cross border investing from so, so how did that evolve into, into what you do now?
Lauren (5m 31s): Okay. So my, so I started by being an in-house lawyer because I wasn’t able to get licensed in Florida as an attorney. So I had, and I had some amazing compliance experience and I’ve worked in house down here. And then I decided after I had my law license, but I wasn’t able to practice fully because I wasn’t licensed in Florida. It was licensed in another state. So I kind of struggled and tried to find way and started writing business plans and met.
I met somebody who started one of the most successful franchises in the U S and he was a serial entrepreneur and had me write a business plan and business plans are needed for immigration cases, which I didn’t know at the time, cause I really never, it never, you know, I just, I was an easy path to immigration because I was a lawyer and I had an advanced degree and so on. So anyway, to make a long story short, I went on my honeymoon with my now ex-husband to Thailand. And on the way back from my house honeymoon, he was removed expeditiously removed, put in immigration, jail and deported.
And I was told me, you can do what you want because I was in the process of getting my green card at the time. And they’re like, but he’s not going anywhere with you. And I’m like, what? Okay. I’m like, what? So that kind of pushed me. There was a silver lining, which is the name of my book, finding your silver lining in the business immigration process. And the silver lining was that it pushed me into the direction of finding my path. And so being a dually licensed lawyer, I knew that I had some, there was something I had to do, but it didn’t know what it was like.
It wasn’t there yet, for me, it didn’t show up, but wasn’t on my vision board. I didn’t see it. And then my, my ex-husband being deported and going through all of that, I was determined that others would not have to go through that because of wrong counsel or, you know, in unfold, like incomplete council, that kind of stuff like, okay, well you can do this, but you really can’t. So it was purgatory and in a lot of ways, and I just decided to that it was my, my responsibility, my obligation to make sure that other people didn’t go through the same thing.
And that’s really what pushed me. So the doing the business plans, I started writing business plans for immigration cases, and then it all just kind of came together. And so I’ve been an immigration concierge, just a little bit of a coined term because it’s really no such thing, but it’s kind of being the attorney and yet really being the quarterback and the project manager. And I’m also doing a lot of immigration stuff in Canada as well. So just knowing, working with so many other realtors, you know, almost 50,000 as part of exp that come to me as the go-to that say, Hey, I have a client that wants to come in from Hong Kong or from Italy or from Israel or from Canada into the U S and so many Canadians.
I’ve never, never, never seen, I’ve seen the volume of leads that I’m seeing today because people want options. And, you know, Covid, it was, was tough for my business at the beginning because people, obviously they’re not crossing borders, they’re still not to a certain extent, but now they’re realizing that they need to pave a path for future options so that they, you’re not stuck because this could happen. God forbid, we don’t want it to, but I mean, who would’ve thought and who would’ve thought a year that we’d still be here and you’d be on almost locked out having some outdoor cafes open.
I mean, it’s crazy.
Jesse (9m 2s): So despite the last administrations, you know, the, the feeling that you got, that people were going to be leaving the country and coming up here, it seems like there’s still, or there is quite a bit of inflow into the States for those that are looking at investments that maybe, maybe we could separate the two, one being people that just want to invest in the U S and then others that want to invest in potentially use that as a, as a way to immigrate. So on the first one, from an investment point of view, what do you typically tell people? If they say, Hey, Lauren, I, you know, a great deal came across my desk, however, it’s, you know, it’s in Wyoming or it’s in New Jersey, or it’s in Florida.
What, what do you, what’s the process for a, for somebody outside of the U S
Lauren (9m 43s): That’s an excellent question. So basically it’s really, really, really, really, really important that you don’t just run into it, that you do steps because if you run in, or if you go in head first and you don’t do the steps and you don’t do the planning and you don’t create the strategy, you are going to end up paying the price later. And the price could be a very, very big, a very, very big tax bill from Canada revenue agency or the UK, you know, tax taxing authority.
So this is a very big problem. And unfortunately, people don’t think about it. They don’t know what they don’t know, and they don’t think about it because they haven’t hit the pain yet. Right. And so you’re not let the other pieces, you may not be able to come into the country like now to visit your properties or look at new properties or whatever. So if you don’t have your structure in place and your documents in line, and perhaps get a visa in your passport, whether you want to move to the U S or not, you’re going to hit some wall somewhere.
It could be a legal wall. It could be a financial wall. It could be a tox wall. And so this is where the strategy comes into play. I had somebody call me today and she says, well, I’ve read a lot. I know what to do. I’m like, this is not going to be a good client, because if you’re not going to listen to me, then it’s not going to work out. Now, my strategy is I have eight steps to investing across borders. And then we’d love to share the gift with you with the eight elements and 10 steps to immigrate through real estate. That’s my signature. And so eight, the eighth, eight steps are within the 10.
So there’s two extra steps to immigrate, but the first and second and third steps are identical. And most important is looking at speaking to a cross-border tax adviser and speaking to an asset protection lawyer. I don’t care if you’re never planning to live in the U S you need to protect your assets on both sides of the border. And if you don’t set up the right structure, if you, if a Canadian sets up an LLC in the U S limited liability company, the man’s will be not have done anything. It’s going to hit them. And they don’t realize that because they read something that says Americans should set up an LLC to invest in property.
And the same thing goes with a lot of these very high end coaching programs that charge 30, 40, $50,000 a year. Okay. You’re not in because you’ve seen it all and they come to Canada and they’re like, here’s your perfect picture. Here’s how to invest in us real estate, give us 40, 50,000 and we’ll get, we’ll walk you through it, but do they care what the CRA says? No, because you’re just that Canadian. What do they care? It’s okay. You’re, you’re in Canada. I don’t need to worry about you.
Jesse (12m 22s): Yeah. Yeah. It seems like partially the reason I’m nodding is because half the time it’s like either at the, at the very best, it’s just ignorance at the very worst it’s that they know, you know, that there’s, there’s going to be difficulties and a lot, oftentimes it’s like, well, the here’s the program for, you know, us citizens. Well, like you just mentioned the LLC, we don’t recognize LLCs. You know, you might as well be a corporation for, for our purposes. So in terms of, you know, before going into those steps, which actually might get fleshed out through them, the first call obviously would be just somebody like yourself.
I’m, I’m looking at a property it’s in this state. Lauren helped me out. What do I do next?
Lauren (13m 1s): So one of the important things also is to have a deal analysis, because, you know, the way you analyze deals could also be different in your country versus like, okay, you, I know you have guests from other countries, but let’s just use Canada because most of our people are from Canada. So the way you’re going to look at a deal in Canada, it’s not identical. Now it’s similar, but it’s not identical to the way you’re going to look at a deal in the U S. And part of the reason is because of regulatory differences. For example, if you’re looking at a subject to, in the U S which is called agreement for sale in Canada, which they basically don’t even have in Ontario, why?
Because prob properties are not upside down in Ontario, right? I mean, it just doesn’t happen. I mean, thank God for Ontarians. But anyway, in Alberta where my business partner is, there are a lot of upside down, so we do agreements for sale. So what that basically means is you go in and you don’t actually have to qualify for the mortgage. And in Canada, you don’t take title, but in the us, you do. So you may look at the deal differently because you’re going to take title. So you’re, you have an equitable title in Canada and a legal title in the U S how does that differ?
Does that mean that there’s more obligations? Does that mean that there’s more liability? You know? And so then you have to look at how that impacts your asset protection plan, because all of these elements interplay together, you have to figure out, do you want to invest alone? Do you want partners? If they’re partners, are they going to be financing partners? What’s the benefit of that? Do they have access to financing? Are they maybe credit worthy in the U S so it’s a, it’s a comprehensive strategy that you really need to go through to figure out what to do when you see that deal.
And just because the deal seems great, doesn’t mean you should take advantage of it until you have these in place. So make a plan and plan ahead, because you know what, there’s going to be another deal.
Jesse (14m 58s): Now, are there certain States, like, you know, the one benefit of being right by the border is, you know, driving a Rochester or driving a Buffalo, or there’s, you know, there’s certain areas that, or a, you know, closer to Windsor drive to Detroit, are there certain States that are more advantageous for, you know, in this case, specifically Canadians, but other, other people from different countries that are just easier to deal with?
Lauren (15m 22s): Yes. A hundred percent New York is not one of them. I didn’t think so. Florida is definitely a great state. Texas is good. Wyoming. You mentioned Nevada. Some Georgia is a challenging state to deal with regulatory wise, but there’s great deals there. So it, again, it’s all about coming up with that kind of comprehensive holistic strategy that looks at all of the pieces. You know, do you want multifamily and do you want commercial, if you want commercial and okay, well, let’s backtrack for a second.
And do you want a visa? Because if you want a visa, your plan is not going to include, or should not include too many single family homes, because that’s not going to really help with the visa. Okay. If you want multifamily, is it commercial? How many doors are there? If it’s commercial, you qualify for a different type of financing, right? Because suddenly you’re not only looking at your credit, but you’re looking at the history, the P and L and all the history of that, of the property and the returns. So your credit is less important when you’re dealing with a commercial property.
So once you get over five units, your commercial, you might be able to get financing more easily. You know that. So it’s, it’s a matter of figuring out again, that strategy, if you want. Now, one thing that is problematic, and I haven’t, I finally found my solution and I’m so excited to, to invest for a visa. You have to have kind of three elements, one a substantial investment in to a non marginal business. That three has an economic impact on the surrounding area and maybe the country.
Okay. So substantiality is discretionary. So a substantial investment in a tech company might be, well, it’s going to be less than a substantial investment in real estate. I’m sure you know, why?
Jesse (17m 19s): Oh, I just assumed that the there’s more leverage when you’re dealing with
Lauren (17m 23s): Definitely. And you get a tangible asset. So if you get a tangible asset, they want to see more investment because it’s not as the money is supposed to be kind of at risk. Okay. So suddenly your average of a hundred thousand investment in let’s say a franchise or a tech company, or whatever is really more like two 50 in a real estate business. And that’s up. Pardon me?
Jesse (17m 50s): Cause you could lose that from their point of view, much easier with, with not being able to recoup.
Lauren (17m 55s): Correct. And that two 50 has to be only a down payment for maybe a much larger, like at least 800 to a million. So that’s financed. Okay. So, and then the other problem is cashflow marginality, because you could buy, let’s say 10, a 10 door building, and your cashflow might be 5,000 a year. I mean, sorry a month. That’s not going to be enough to qualify you for a visa because it’s not, you have to support more than yourself and your family.
You can’t get a visa to replace your income. You have to get a visa because you’re going to impact the economy, which means hiring people well, $5,000 a month is not going to allow you to hire anybody. So then, so it’s gotta be this holistic approach. And so many people like I have one person now who’s like, put, you said, I only need five doors. I said, it could be five doors, depending on what those five doors look like. It’s a minimum, you know, it’s not one size fits all.
And so I think I’ve come up. Well, I know I’ve come up with a strategy that actually puts all the pieces together. And actually this is the first time I’m saying this publicly, but it’s really, really cool. It’s a multifaceted Airbnb mixed use Airbnb. That is like, I’ve never seen before. And I’m just super excited to launch this because this brings it all full circle because there’s multiple streams of income involved, which means that you’re looking at 50,000 a month instead of 5,000 a month.
So that’s not marginal.
Jesse (19m 28s): Yeah. So is that marginality, is that that 5,000 or 50,000, is that NOI or is that total rent? How, how does that
Lauren (19m 38s): It’s then it’s the net because you have to look at yeah. So you have to look at what your, so the gross, right? So if it’s 50,000 gross, that’s enough to support you. I’m sorry. It’s not the net, it’s the gross, but you have to make sure that you have enough in there to pay all the bills, all the expenses, the staff, how many staff do you need two to five? How does that look? We don’t know. We have to look at each business and then, and then you look at, you have to hire, you have to pay yourself.
Now. People are like, well, I don’t need to pay myself. Now I’ve done a lot of YouTube in my life, a lot, all of them successful. And you can, you can not need to pay yourself for the first year, but if you’re not paying yourself for the first, like for the whole term, then it’s marginal. There’s something up with that. They’re not going to approve it.
Jesse (20m 29s): Hmm. So it’s interesting because as a landlord, you know, we buy properties and you, you know how it is especially, well, I, you know, the same, the same is true in the States, depreciation or CCA up here where, you know, the whole idea is for us to do, to claim as little as possible to make as much as possible and then claim as little as possible. But the, what I see as a landlord, oftentimes we are employing multiple people, even at a small scale of say 50 units. We’re employing multiple people. However, they’re not our employees. Right. They’re contractors, they’re leasing agents.
So does that play into that or is that marginality by that total value of, of monthly and granular?
Lauren (21m 7s): Yeah. So that’s a trick question, but I’m going to answer it anyway because I could be the lawyer and kind of say, well, it depends, which is true. It does, but here’s the, here’s the answer. And by the way, I want to quantify this. I didn’t say this at the beginning. And I try to, none of this is legal advice. This is general information. Okay. If you want legal advice, you have to retain me and then we can talk. But this is for Jesse’s benefit in the benefit of the listener. So, so, so contractors, you can include contractors.
So th th what my specialty has been for 20 years is the business plan. And the business plan is the single most important document that supports the petition, the legal petition for the visa. Okay. And those business plans I’ve been writing them for faeza, it’s not for visas. And by the way, that’s an oxymoron too, because you know, business plans to raise capital. You want to show as few employees as possible because that’s gonna increase your ROI. But in this case, you want to show more employees because that’s going to increase your chance of getting your visa, which in this case is your ROI.
Yeah. Okay. So it’s the same challenge. Contractors can be included, but I would not take on a case that was only contractors I’d want to see a logistics person, maybe a property manager, maybe Jack, like a janitorial Sur supervisor, somebody to manage the land when he called superintendent type of person. So you’ve got to have some employment, but it doesn’t necessarily have to all be true in, in the U S W2 or in Canada, too, for employment.
Jesse (22m 44s): That makes sense. So, if we were to go through the, you said it was eight for the investing and then 10, an addition of two for the visa. If we were to quickly go through those, I think you, you mentioned originally tax a tax advisor and asset protection lawyer. Is that, is that number one? Or
Lauren (23m 0s): Let me, can I share my screen? Just, yeah,
Jesse (23m 2s): Absolutely. Let me, let me give you the power here. Power. Yeah. Advanced sharing options. So who can share all participants, you should be able to share now. Perfect. And if I interrupt by just saying what’s on screen, or if you just kind of, for the listeners that don’t see, don’t see this, we’ll put a video out on YouTube, but for those that are just hearing from audio we’ll,
Lauren (23m 27s): And this is included in the gift that we’re going to offer. Okay, perfect. So this is my eight elements of a successful cross border investment strategy. Number one, always the most important is where are you investing or location, location, location. It doesn’t matter if you’re investing for a visa, you’re investing for an ROI. It doesn’t matter if you’re investing for cashflow or to buy and flip it’s location. Okay. Two investment goals. What are your short-term goals? Cashflow flipping getting more capital long-term goals.
Do you want a visa? Is that a part of your path? Whether you want to move to the U S or not is irrelevant. You may need that visa to give you flexibility, particularly Canadians, because usually you can drive across borders. Okay. And all of this stuff is obviously like COVID neutral. Let’s say third. What are the pro, what types of properties do you want? Vacant land, single family multifamily mixed use mobile homes. What’s the options. Commercial Airbnb. Let’s think about what that looks like.
Structure. Okay. We talked about structure. Now. This is not the steps. This is the elements. I’m going to go through the steps in a moment. Okay. So the structure is what’s. What, what us entity do you want? Do you want to invest alone or with partners? How does that look? Is it because you want to access capital or do you just want to use somebody else’s experience and knowledge? And I have a lot of clients that do a lot of joint ventures and help others because now they’ve done 40, 50, 60, 70 deals, immigration considerations. Do you want or need a visa and then how to choose your team members.
So how to choose your team members and what your two are. Your team members is critical, banking, logistics, due diligence, accounting, taxes, all of that. Now I’m going to stop sharing and I’m going to open another document.
Speaker 2 (25m 12s): I’m hoping, I’m hoping I’m going to stop sharing. And I’m going to open a document. Just give me one second. I want to pull up here. We are. Now this I’m going to share.
Lauren (25m 31s): Sure. I’ll share it so you can actually see it. This is my famous slide, which is not even fully launched yet. I mean, it is fully ready, but it’s not really, I don’t really share this. Okay. But these are the 10 steps to immigrate through real estate. And the first eight of these 10 steps are applicable, whether you’re immigrating or not recommended investments. So if you’re not, if you’re not immigrating, it’s not a recommended investment. It’s what is your investment? Right?
Number of doors, number of doors, number of doors. Doesn’t matter if you’re investing for immigration or not cross border tax guidance every day of the week. I don’t care where you’re from. You need cross border tax credits. Even if it’s across borders, across the pond, ideal structure. How does that look? And then it’s actually kind of in reverse order because your asset protection attorney, my asset protection partner is going to help you to figure out the ideal structure. Okay? So cross border tax guidance and asset protection. I won’t work with clients anymore. That don’t do both.
I just won’t. If somebody says to me, I want to set up an LLC and you have a nice day, I’m not doing that. Okay. Professional consulting, again, you’re back to all of these professionals to guide through the process, including realtors that are specialists in, maybe they understand the foreign investor model. You don’t want to just tire somebody, some Schmo. That’s going to find you an off-market property that has no clue how to analyze the deal and help you with the process financing, what financing options are available.
Business plan. Everybody should have a business plan. I don’t care if you’re getting a visa or not. It could be a strategic plan, but you need a plan because without a plan, you plan to fail. It’s, it’s just a fact you need a strategy. So that could be, that could be supplemented with business plan or strategic plan. And then numbers nine and 10 are specific to the visa process, legal guidance and filing of your visa petition, which is done at the V you know, to get the visa. And then number 10 is you get visa success.
Now, why does that have a big check Mark? Because a lot of people think that that’s when the process ends or process, if you’re in Canada and that is not when it ends, it’s kind of like when you buy the property, is that when the, the, the situ is that when you stop working on it, when you buy it, when you close on the deal? No, that’s when the work starts. Yeah. So seeing what the visa, but way too many people get their visa. My like, okay, I have my visa. I don’t need to worry. And then suddenly four years later, they need to renew it.
And they’re like, Oh my God, I don’t have a business anymore. I didn’t do anything. What? I didn’t hire anybody.
Jesse (28m 10s): So for those, you know, that like myself, this is, this is a world that don’t know a lot about in terms of like immigrating from, from the perspective of say whoever coming to the, to the States, once you have your visa, is the visa synonymous with citizenship? Or is it a path to citizenship?
Lauren (28m 30s): Okay. So this particular visa that you too is, is a non-immigrant visa and it is not a direct path to a green card. Okay? So there are waves, a lot of creative waves, especially if you have a spouse that has a job or gets a job when they’re here, or you have a business in your foreign country, and you’re still running that business, which I always recommend, then there are ways to get your green card while you’re in <inaudible> status.
But, you know, you can, some people choose to never get their green card for tax reasons. And you can renew the <inaudible> five times as long as you continue to satisfy the requirements. So
Jesse (29m 16s): Let’s on that topic of tax. Let’s talk a little bit about the actual purchasing of a property. You mentioned this a few times, LLC, for those investing in the States say, they find, you know, whether it’s a single family or, or an apartment in this case, they find this place. They go to put it in their either personal name or LLC or limited partnership. And they they’re trying to figure out what the best way to hold it is. Is there a, probably it depends question, but generally is there a, is there a couple of questions?
I was like, we’ve had enough lawyers on the show to, but yeah. So for those investing and they go into look at a property and like you said, LLC will be, LLC is almost like a tip for you that they they’re reading the wrong stuff and we need to educate it.
Lauren (30m 2s): That’s right. I don’t know why it’s not letting me share my other screen. I’m trying to share my PowerPoint. It’s not letting me for some reason. Okay. Well, I’ll just, I’ll just answer the question instead of showing you, so basically, yes, there’s kind of two ways that generally work with my asset protection partner and myself. So for Canadians, one is use a Canadian Corp set up a U S Corp Canadian Corp owns us Corp C Corp, which is not an LLC. And the C Corp is like the holding company and in turn owns individual LLCs.
That can work.
Jesse (30m 37s): So if I just back up, back up for one second, just so I understand that the, the LLCs in this case will be on title for individual properties, right? There will be a parent company that will be the C Corp and then the C Corp, the American C Corp is owned by a Canadian Corp.
Lauren (30m 50s): Usually it doesn’t have to be, that’s usually the most beneficial way, and I’m not a tax expert and I’m not an asset protection attorney, but generally speaking, that’s what we recommend to most of my clients. The other way, which I like better is the limited partnership model, which is very popular. And basically you set up the limited partnership. It’s a protection, it’s an entity, but it’s not filed with the state. So it costs a little more at the beginning, but you don’t have to pay each year to renew it. And then not limited partnership owns the individual LLCs.
Okay. So you’re still owning the properties with an LLC. Now, if you’re in America and you’re doing this, oftentimes they’ll recommend a rule, recommend a series, LLC, but for Canadians, that just won’t work because the parent is an LLC that won’t, that won’t fly.
Jesse (31m 38s): Yeah. So what we, and at my brokerage, we have a, a U S apartment fund in for the Canadians that invest. I believe we invest in a us LP as a Canadian LP if I understand it correctly. So, so that’s, if you were going to purchase a property now, does the complexity of going in not understanding that there may be withholding tax or filing elections to avoid withholding tax? Is that all done? I mean, I assume that would be done as you’re doing the structure, as you’re filing the structure, you’re talking to a tax expert and making sure that, you know, the income is actually getting taxed properly.
Is that, is that,
Lauren (32m 17s): I mean, like we have, I have two or three cross border tax advisors that, that are generally working with my clients that work through my company and they are, they’re kind of guiding through every step of the way. They don’t charge a huge amount at the beginning because they want your tax re work. Right. But they’re there to make sure that when they get tax work, they’re not going to say, Oh my God, you owe a hundred thousand dollars to the CRA. Now let me tell you another story.
So I had a prospect, not a client who came to me last August and said to me, I just had, I have to pay the CRA a hundred thousand dollars of my 160 that I made in the U S you know, you can’t feel that bad. I made 160 passively. That’s not so bad, but to pay a big chunk of that, more than 50% to the, to the revenue, to revenue Canada, not a great plant. So I said, okay, we need, and he didn’t have any structure. He was doing this all personally his name, okay. I said, okay, we need to create a structure.
He said, no, I’m not doing it. I’m not doing it. I know best. Okay. You want to give a hundred thousand to them? No problem. A week ago, I was referred the same guy by somebody else that, that this colleague of mine who has a passive, almost like a syndicate that this guy wanted to invest in, but she won’t, she can’t take the investment if he doesn’t have an entity. So he said to me, I just want to set up an LLC. And here’s why I said, sorry, I can’t help you if you’re not going to do this.
Right. I cannot work with you because at the end of the day, who’s going to get blamed me. Yeah. So it happens every single day because people just refuse to listen to the right guidance. And also they’re doing a lot of their own research and, and, you know, as well, I mean, look at, look at all this stuff. If you get a booboo on your finger, right. If your kid gets like a rash, Oh my God, the kid’s going to die. They have a bowl or something. Well, no, I mean, it’s crazy with COVID, but I’m just saying like, you could quit, make yourself insane because there’s so much information you need to find whether it’s me or anybody else, a specialist that can hold your hand, that single source overseer, that will hold your hand and say, I’ve got, you’ve got this.
So you can stay in your lane and do the investing. You don’t want to be the lawyer and the tax advisor and asset protection guy and all these other people.
Jesse (34m 44s): Yeah. So I, you know, don’t want to go into specific tax or legal advice, but w you know what, we see a lot up North, and I’m sure, you know, people investing in Canada, oftentimes, like you said, invest in syndications in the States. I believe the K one is equivalent. The partnership income is equivalent to our T 50 13. I think something like that. We always make it more confusing, but it basically long story short is it’s a partnership income. And when you’re investing as a non us resident into a syndication, which you see a lot of marketing for, and you see a lot of these syndications in the States, is it possible to invest as an individual because you’re technically a limited partner?
Or is it always better to have a UN entity setup?
Lauren (35m 29s): No, that question I’m going to deflect because I do not know the answer, but my guess would be, it’s always better to have an entity set up. And that’s probably what you see more of. Yeah. If the fund allows that, cause some funds won’t allow, you know, there’s also like pre IPO, a lot of Canadians. Like I have, I have a colleague of mine for me XP, and she wants to invest in a pre IPO opportunity. And they, she can’t because she doesn’t have a social security number and she’s not in the U S and she’s in Canada.
And it it’s, it’s about securities laws. And she’s like, well, can you help me? I said, well, I could invest. But like, I can’t really help you either denied because I, you know, you don’t have a social security number. If you want to get a visa, you can get a social security number, then you can do what you want. So that’s another thing as well, getting this E two visa allows you to get a social security number, getting U S bank account, like do all the things that you would do if you were in the U S full time, without never, without, without never, without ever having to be in the U S full-time.
And that’s a beautiful thing, because it really buys you options. Yeah.
Jesse (36m 35s): And even for people that are just, you know, you’re buying a vacation home, say in Florida or something, I have been, I don’t know if this is correct, but I know like we were talking about before I can go drive to Buffalo, I can go to bank of America, opened an account. Only if it’s in person. I don’t know now with COVID, if they’ve changed that. But I was under the impression that there was an ability to get, is it an ITIN number? And is that, is that, is that offer the same function or would you still show, you still would need the social security number? Yeah.
Lauren (37m 4s): The, you can’t build credit with an ITIN number, the social security in the U S like a sin number in Canada. It’s like, okay, I have my, and connected to employment and, you know, Oh, hip and all that, the social security number in the U S is like, literally, you don’t exist if you don’t have one. Yeah. Like, like, they’re like, you get it from my, my son had it. I got it for him. When he was like three days old, they come to the hospital. They’re like, here, I’m like, okay, whatever you say. So it’s just, it’s, it’s just a very different approach.
So an ITIN number is kind of like a stop gap, more than anything else. Got it.
Jesse (37m 41s): So when you’re, you’re talking to investors that say, say that they, they don’t know yet, if they want to go through the 10 step process, but they know they want to go through the eight now building credit as a non us resident. I mean, I’m sure that has, it’s all kinds of challenges on its own.
Lauren (37m 58s): Well, yes, you can do it as a non-resident, but it’s hard to do it without a social. So the visa, the visa is actually a non-resident visa. So it’s not immigrant non-resident, it’s called a temporary visa. But I wanted to also mention to you that because of the demand for kind of this guidance, I actually have a six month kind of like baby-step a six month mentorship program where I walk people through the pre-investment process of getting all these things in place, because everybody wants to know, what do I do?
What do I do? What do I do? And too many people are just flailing arms to get through those eight steps or those 10 steps. I did a mini course, it’s available in evergreen. It’s like $167 on how to go through the steps. And we actually have a worksheet and everything, but I would recommend to everybody that’s interested in this and doesn’t want to deal with all this stuff on their own, just work with somebody like me, that can walk you through it. It’s not $40,000, but it’s going to save you a hundred thousand dollars in potential taxes to just have that guide through the process, because the steps are not easy.
And by the way, the reason I created the 10 steps to immigrate through real estate is because of a friend of mine. Who’s here from Ottawa. I didn’t know him when he did his visa. He’s here on an E two doing an AB five, which is a green card. And he was like, I’m, I wish there was somebody like you when I was doing this. Cause I, I didn’t the guy that helped me really didn’t understand that there was a path through real estate and most people don’t. So it’s all about, you know, having somebody to kind of guide you through. And he said that his friends, his buddies, they don’t want to deal with like the little nitty gritty.
They want to just say, here, do this, I’ll give you the money. I want to invest. I want to run a business, but I don’t know what to do, help me
Jesse (39m 54s): For, for individuals. I’m sure there’s listeners that have relatives in the States or so for myself, you know, I have relatives in New York. And is there a, is there an opportunity that makes this process easier when you are potentially partnering with a us resident? Or is it yes.
Lauren (40m 10s): Just because you’re going to get access to credit access, to financing.
Jesse (40m 13s): So in the same way that we look at real estate that, you know, you have the sponsor, that might be the one, you know, the ASO, the, the signing authority, and then you might have somebody that’s the grunt work and you could kind of structure it in the same way where that us person is, is basically that credit piece. And then you add in some other way.
Lauren (40m 30s): Yeah. I have a client doing that right now with her business. So absolutely that’s, you know, a us person, us resident, us citizen, whatever, they have us credit, they have access to banks. They, and so if you partner, that’s another workaround, there’s also a lot of Canadians that are heavy us investors that have credit because they’re such heavy us investors and partnering with one of them might be advantageous to so that, you know, there’s always options.
Jesse (40m 59s): Another thing I was going to ask is if you have somebody that say, for instance, has been investing in private real estate and say in the form of investing in us LPs for a number of years, but hadn’t has never gone through the process of getting a visa that, that by itself, would that build, that’d be starting to build credit or okay.
Lauren (41m 17s): Because what happens is you’ll, you’re creating a relationship. Okay. And when you create a banking relationship here, that banking relationship like in Canada, it’s all about relationships. So it’s going to help, even though you may not be directly building your credit, it’s going to help you access money and accessing money is what it’s all about. So you may not have a credit history. The other thing that you can do to build credit in the U S is you can buy, you can invest in a, a secure credit card, so you can invest 20,000, get a credit card.
But then the problem is actually I take that back. If you don’t have a social security number, there’s really no point because what do you, what are you, what are you building a credit around? You need that social to be able to build the credit.
Jesse (42m 1s): And does it is a social is a visa visa isn’t required to, to go, go to the start, the process of getting a social is, is there, or do you have to have the visa? So either way, yeah,
Lauren (42m 13s): You can’t get a social security number without a visa. When I first had my first visa, it said on it valid with ins authorization only so two, and this did wasn’t as relevant for a bank, but for a position, for a job, it was because you’re tied to your job. So you can’t just go and get another job and show your social. Or, you know, now I don’t know how that works now, because nobody’s showing a social security card. They’re just giving their social. But if you check your you’re going to find out that the person is not eligible to work other than, you know, with, with authorization.
Jesse (42m 51s): Yeah. I mean, well, it’s a, it’s definitely an interesting topic and specifically what you do, because I’ve, I’ve thought about it multiple times where I work with a very large brokerage, we have something like 90 offices, a majority of them are in the States. And I, a lot of friends of mine that have gone into work in the States have, they’ve always had that process kind of spelled out by their employer because they’re in Chicago and their employer is in Chicago and they figured that out. Whereas when you have only passive investors, that it’s definitely a little more opaque. I don’t think there’s a, you know, Google, you know, your name comes up for the 10 step process.
So how has, how
Lauren (43m 24s): Has that, how has that evolved
Jesse (43m 27s): Over the last few years? I’m sure I’m seeing, I see. How has that evolved over the last few years? I’m sure you’re seeing more and more people that are trying to figure this out
Lauren (43m 35s): Absolutely way, way, way more. So I only developed this, this process over Covid because I’ve, I’ve had my real estate license. I’ve been a cross border lawyer. I’ve been writing business plans. I’ve been helping people get visa as I’ve been helping people get visa through real estate investing. But Jesse, I’ll be honest with you. I was never involved on the real estate side until COVID because I was not, it’s largely because of the XP, because it’s such a global company and I’m very involved in the global scene.
And so, and now I’m also involved in real estate. I didn’t do a deal for 12 years. Like nothing, not even like a referral, nothing. I don’t even know why I had my license. It just sat there. Yeah. Okay. But in America, in Florida, it’s easy to pay $32. You do 20 hours of stuff and you renew it. It’s not like hidden Ontario. I know it’s crazy. And the same goes for my law license. My inactive law license in Ontario costs me more than my active law license in the U S it’s crazy.
It’s completely crazy. But with that, that aside. So when, so I started kind of getting in more and more and more and more involved in real estate. I created a partnership with my partners in Calgary. We teach creative, real estate investing, and this all has been literally transpiring during COVID and then getting more and more and more involved in the throws of the thick of things at the XP. And starting to realize that there was that people, there was a demand for how to, how can you use real estate to invest, to invest in immigrate?
And I knew that there was a path and people are like, no, no. And I’m like, yes, yes. So it just kind of all came together and there’s, there is huge demand. Like I’ve never seen before from, from people from all over the world. Yeah.
Jesse (45m 31s): Since, I mean, I’m sure it has something to do with interest rates being low, and then a lot of capital out there for real estate. But, you know, fingers crossed it that the business keeps going in the right direction. I want to be mindful of your time here. So we have four questions that we ask every guest before we sign off. And then you can tell people, you know, where to find you, but if you’re ready to go, I,
Lauren (45m 54s): I mean, I’m as ready as ever. I don’t know what they are, but I’ll try to answer them.
Jesse (45m 59s): What are, is your view on mentoring and mentorship?
Lauren (46m 3s): Gosh, there’s nothing. You cannot run a business without a mentor, without many mentors, sometimes a mindset mentor, a business mentor, a strategy mentor that could be the same person, but you always need to mentor for sure.
Jesse (46m 18s): Something that you know now, and it can be in your real estate business and law that you wish you knew at the beginning
Lauren (46m 23s): In your career that I should not be practicing law. That I am the, I’m the, I’m the coordinator. I’m the ringleader of the orchestra leader. Right.
Jesse (46m 35s): All right. Dan leader, in terms of resources that you’re, you’re either reading right now, you’re listening right now that you’d like to shout out or that you’d find that listeners would get, get valuable.
Lauren (46m 48s): So there’s several books that I really enjoy. Essential ism is one of them which happens to be by Gary Keller, which happens to be here competitor if he XP, but that’s okay. It’s a great book. And it’s all about focus and focus and focus. And I read a lot of self-development books. I’m reading one right now that I am not going to share the name of, but basically it’s about women, women, powerful women coming into their power. And I think that as women and I particularly am guilty of this, sometimes not stepping into my power and instead hiding behind it because you know, somebody is like, Oh, she’s what did they call me?
I’m overachiever. I don’t think of myself as an overachiever. It’s just of what I do. I mean, I can’t, you know, it’s what I do. You’re doing achieving right. There you go. Thank you.
Jesse (47m 37s): Okay. Last fun question. First car, make and model.
Lauren (47m 40s): Oh gosh, that was a Chevy not citation. It was, I couldn’t drive it cause it was stick. It was Chevy. Like, I don’t know that it was stick and it was a two door, Chevy something. And I suddenly forget, and it wasn’t meant to drive it,
Jesse (48m 2s): But it was still so standard. We, we call stick these days a, a, a millennial safety or a safety device.
Lauren (48m 11s): I went to Osgoode. Right. And no work. Yep. Oh yeah. I can imagine I lived in Thornhill and I was driving and I’m like, I call my dad. I go, daddy, I can get to school.
Jesse (48m 26s): The Hills are your enemy when you’re trying to learn manual that’s for sure. Lauren, where can listeners find you aside from a Google search?
Lauren (48m 34s): Sure. Thank you. So you can find me immigrate through real estate.com also E council global ECE, O U N C I L I N C global.com. I am literally all over social media. Lauren Esq is my brand new website. That’s going to be launched around my podcast, which is called investing across borders. Imagine that, and that’s on Google and Apple and all of those things. And I started it in November and I’ve been having a lot of fun and there’s a lot of great Canadians.
You’d probably enjoy it. So subscribe to my podcast, investing across borders, and that’s really, I’m happy to help anybody. And I, I put the gift link in the chat so you can share it to real estate investing across borders. I should put me easy, but that’s, that’s basically, I’m here to help you guys. Okay. And just don’t do it without the right guidance, whether it’s me or somebody else.
Jesse (49m 33s): My guest today has been Lauren Cohen. Always want to say this about a guest Esquire learn. Thank you. Being part of working capital. Thank you so much, Jesse. It was really a pleasure. Thank you so much for listening to working capital the real estate podcast. I’m your host, Jesse for galley. If you liked the episode, head on to iTunes and leave us a five star review and share on social media, it really helps us out.
If you have any questions, feel free to reach out to me on Instagram, Jesse Fragale, F R a G a L E, have a good one. Take care.