Global Investors Podcast
GI4: Legal Issues Facing Foreign Investors in the US with Ronald Rohde
September 5, 2019

Ron Rohde is a Mandarin Chinese speaking attorney who represents foreign investors in the US. His practice focuses on commercial real estate acquisitions such as multifamily, office, and warehouse transactions. He currently practices in Texas but is licensed in Florida as well. His experience guides investors through US law and tax treatment.

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Announcer: Welcome to the Global Investor Podcast, a show that focuses on helping foreign investors enter the lucrative US real estate market. Host, Charles Carrillo, combined decades of real estate investing experience with a professional background in international banking to interview experts in all areas of US real estate investing. Now here’s your host, Charles Carrillo.

Charles: Okay. Welcome to another episode of the Global Investor Podcast. I’m your host, Charles Carrillo. Today we have Ron Roadie. Ron is a mandarin Chinese speaking attorney who represents foreign investors in the US. His practice focuses on commercial real estate acquisitions such as multifamily, office and warehouse transactions. He currently practice in Texas, but is licensed in Florida as well. His experience guides investors through US law and tax treatment. So thanks Ron for coming on the program today. And when you’re working with any type of investors, specifically in foreign investors, why do you find the US market is a target for foreign investors?

Ron: Yeah, absolutely. First of all, you know, Charles, thanks for having me on. It’s been a pleasure to kind of chat. So, you know, the US market represents a very unique opportunity. Uh, relative to the rest of the world. I think the US is the only stable and legally protected market that provides investors with the strongest base of liquidity, for exit as well as the breadth of opportunities to invest in a variety of products, no matter what your investment capital is and what your expectations for cash flow as well as future appreciation. You know, the US is just a massive, opportunity and Texas and Florida in particular are experiencing some tremendous economic growth as well.

Charles: Yeah. What are, what do you usually find for the types of goals for foreign investors? So like for domestic investors that come to us, whether they’re investing with us in this indication or if I just know of them and they’re investing directly and usually it’s, they have a set number that they’re trying to reach and a return. You have some that are doing on speculation, on the appreciation and then you have a lot of them in real estate that are doing on cashflow. What do you normally see when you speak to an investor of what they’re looking for?

Ron: Yeah, you know, that’s a good tie into a lot of how I operate. My business is asking the investor a lot of questions. More so than a domestic investor. The goals of a foreign investor are really unique and they must be clearly communicated to all their partners in the US to make sure that all the decisions are made with that goal in mind. So that said, a lot of foreign investors will look at preservation of capital. So almost by default, whatever nationality or whatever foreign currency that they’re currently holding, it’s probably going to be more volatile. It may have more capital currency, outflow restrictions and interest rates in their home country are probably lower than, t-bills or other comparable assets in the US so getting that money that they’ve earned in a foreign country out of that country into a dollar denominated asset or even lower, so in inflation protected assets such as real estate, where you can increase the rents as an if inflation occurs. That really is their number one goal. And so they’re going to care about the quality of the asset. They’re going to care about the longterm prospects of a location. I don’t want to say it’s more subjective, but they’re going to want a higher quality neighborhood or city that is not prone to even 20 year or 10 year swing because they would rather forego some cash flow, their foregoes some appreciation potential just to ensure that they don’t have a slip or a catastrophic loss of value because preservation of capital is very important.

Charles: Yeah, I would imagine that’s what I’ve heard from all different types of international investors. It’s the upside’s great. But just preserving the assets is definitely number one. You represent investors mainly across Asia, I would imagine that are international. Is that correct? And many of these countries face currency controls. And how is that, how do you, how do you face that problem? How do you solve that and how does that work?

Ron: Yeah, a currency current controls are definitely a big factor, um, at the varying levels of investment. So, you know, I will say that I come across in a lot for say, individuals or groups of individuals. You see it less so as a problem if you are a investment based company. Then in those cases you’ll usually have a money export license. So if you’re a small private equity fund and your, your mission is to raise money and then invest in real estate abroad, you usually have a currency export license and you’re able to transfer or wire large sums of money. That said, for my clients, you know, China, Vietnam, less so for say Hong Kong, Taiwan and Korea, for those people, they have to work within the legal limits. And so for example, for China, it might be the $50,000 limit per person per year. So as they’re transferring money, they either accumulate funds abroad over time or they can also recruit what’s called a friends and family. And so we’ll transfer money to a neighbor who will then remit that money overseas and Hughes up their annual quota and then will recollect those funds into a single account once it’s abroad. So those are some of the strategies and techniques, I usually work with my clients to ask them whether they would have in the US, whether they need me to, you know, advise on how they’re going to transfer. But people overseas, you know, you usually can get pretty creative.

Charles: What do you usually see? Just opening up one of those questions and one of your answers is what you usually see for people that already have assets in the United States in one form or another. And ones that just come in and say, listen, I don’t have any EIN, I don’t have any corporation. I need everything.

Ron: Yeah, absolutely. You know, I deal with new investors all the time. It’s really a different process because what I’ve, you know, particularly like is if somebody is already invested in the US they’ve already gotten that capital over there, usually be looking at a 10 31 or some type of rollover or even a cash out refi. They, if they were cash first. So they’re typically a lot more experienced. And that helps for me is they know what their goals are. They can articulate very clearly what they’re looking for, what type of leases they want, you know, they want single tenant. You know, maybe they had an office building with multiple tenants and they just said it was a nightmare as is too much decision making that they didn’t feel comfortable delegating to a broker or a property manager. So they had to make the tenant decisions and so now they want to transition into a single tenant property and triple net. You know, that’s, that’s great. You know, it’s very useful for me to understand where they’re coming from. Whereas a new investor, they might come to me with a blank slate and I say, okay, what kind of progress are you looking for? what size, what location? And they just say, I don’t know. And you know, anything, Texas, Florida and you know, that’s, that’s good in one sense of they’re very flexible. They, they don’t have their hearts set on something which is unobtainable. You know, they might come in with me and say, for $1 million, I want to buy a class, a office building in Dallas. And I say, you’re not going to get that. You just physically cannot find a deal for that amount with those other parameters because they’re all trading at very low cap rates. So, you know, as long as they’re flexible and we understand their goals, we can put them in touch with the right brokers or you know, tell them to look in the right areas. Because even within Texas, Dallas, Houston, Austin, and then you also have, you know, San Antonio, a lot of people like San Antonio now, has been priced relatively cheap as a secondary market or even tertiary. So outside of those major metros and things like that, that’s where I can help the new investor by asking them some questions and pointed them to the right direction as far as what they believe, what their goals are and what they believe the longer term economic outlook is. You know, even for Florida as well.

Charles: Interesting. What do you, what are some tips do you usually see for w would you suggest for success and mistakes you commonly see for new investors?

Ron: Yeah, I think, the best advice I would give people is to really treat this real estate investment as longterm and tried to avoid making frequent corrections or, you know, kind of honing in on, on little changes or little expenses, think of it as an investment and your horizon really has to be, call it the three to five years minimum. Because when you take that viewpoint, smaller inconsistencies or changes matter less in the big picture. You know, just like having a 401k account or a broader stock market index, you can’t check it every day. You can’t check it every month, but you know that in the longer run you’re going to come out and you’re going to get market returns, you know, that average the market. But, same for real estate investment. I mean you definitely want to be involved, but you need to know where you can provide the most value, from your kind of overseas role, which is sometimes limited in terms of communication.

Charles: So when, when you see investors for the first time, they make the decision to invest and they’re building their team. Do you, you, how do you, how do they start building their team? Do they start off with an account attorney like yourself and then kind of work from there? Or should they, you know, you, most people when they want to buy a property, and it’s a common thing in US they’ll speak to the broker first. They might, they’re probably not even ready. They don’t have their money, they don’t have their incorporations anything all set. How, what would you suggest for the first step?

Ron: Yeah, yeah. I definitely recommend reaching out to an accountant or a lawyer first. We’re going to be the ones that can help, form the entity. So if you’re going to form an LLC, for example, you’re going to want your LLC forms. You’re going to want to understand where your bank accounts are going to be open. Maybe start transferring some of those funds over, see if you encounter any difficulties with those buyers. And then after you know, one or, or a couple of months, once everything is set up, then you can go to your broker. And I think that you will present a much more credible profile as a buyer. You’ll be a much more serious and credible buyer if you tell him, this is the LLC I’m going to buy it with, this is how much capital I have now, but this is how much I’m anticipating. And you’ll also have a little bit of a feel for narrowing down the markets because even in a small city like, you know, Austin, there are thousands of properties to look at and ideally you want to be able to tell your broker broad goals, maybe some industries or asset types that you’re interested in, but then let him give you back feedback of, you know, what’s on available inventory that fits all of your criteria. So I definitely recommend talking to the accountant. Um, you know, maybe talking to other investors who have invested in the US because they’re going to be a great resource for the problems that they encountered, such as, you know, management and the time zone difference and what types of experiences they encountered.

Charles: Yeah, that’s very interesting because we have a, we have investors and I’m not sure if they come to you as well that are just looking for investing passively as a limited partner. And do you have a lot of investors that come, international investors that come to US to invest and they’ve maybe done the research and direct investing and it might not be for them and they decide I want to invest in Texas, but I want to invest through syndication. For example, how do you get someone prepped for that? If they came in, they say, I have a x amount of money, I’m going to invest as passively.

Ron: Yeah. you know, I definitely review the securities documents. I’ll review some of the offering memorandum and again, just to give them a legal interpretation of what the documents say and how it would be interpreted in a US court and then just see if that matches up with what their understanding of the project was. You know, we definitely do some of those reviews, but, um, it’s obviously since it’s less work, there’s less of a need to have a direct lawyer, but we can definitely provide that peace of mind that the representations made by the sponsor or the general partner reflect, what the documents actually say. Because, you know, I’ll tell you probably in every deal there is something that I explained to them that is not what they understood. You know, whether that was a miscommunication or just a lack of information or an assumption, it can be useful and valuable to the investors. Okay. Well, in that scenario I didn’t realize that that’s what would happen. So definitely, you know, we can review that. It’s very cost effective. And I think, yeah, even if we don’t see anything that conflicts, the investor has that piece of mind that the person they’re investing with is fairly straight forward.

Charles: That’s we actually suggest any of our LPS and vest to speak to an attorney cause you know, when you’re checking off in the subscription booklet, if they’ve done it once, rarely less than few times, whatever it is, and it just kinda has to, you have to know exactly what your, I mean, there’s so many pages there that it really should be reviewed by an attorney on your side, not on the syndication side. Right?

Ron: Yeah. So, so definitely for elections and if the investor has any questions about whether they’re eligible to check the box or compliant with Reg S you know, we have a lot of investors that are kind of, you know, maybe they’re here on a B1 or B2, but they reside abroad and how much time did they spend in the US these are, these are important questions that they should confirm and kind of not just assume that they know the US law and how it’s interpreted.

Charles: Yeah, as I understand it, if they have the LLC or such set up in the United States then in turn are coming in as a US investor, is that correct?

Ron: Uh, yeah. I think it would depend on the circumstances and kinda depends on, how the raise is structured. So if they’re doing something like a Reg S uh, then you wouldn’t have the US entity and you would want them to invest purely foreign. But, uh, that’s, yeah, it’s kind of a little more detailed. I won’t go into,

Charles: Okay. Yeah, no, of course. Of course. So we, you complete a hundreds of transactions and all different types of asset classes for real estate for what do you consider now where we are in this cycle, which has been going on for a decade. Uh, where do you, where do you find your clients favoring at this point? What do you, what do you see them investing into?

Ron: Yeah, I mean, absolutely there’s a certain segment of our clients that still believe that you can continue to invest, Because they have a longterm vision. So if you’re going to hold the property for another 10 years, you’re going to be able to withstand any type of future recession. So, given that approach, you can still continue to invest and still buy properties because you’re going to hold the property through another recession, even if it’s imminent. You know, even if the stock market tanks the day after you close, you’re not worried because you’ve underwritten it, you, you feel confident on cashflow, uh, you’re going to cover your debt. You’re going to be able to manage and keep the property even through a 50% reduction in occupancy. So for those investors, yes, they’re concerned about it and they might tighten their underwriting, but they’re still putting money out there because you can’t leave the money on the table if we don’t have a recession. And that’s really the alternative is if you stand on the sidelines forever, you’re going to miss out on a lot of gains if the recession doesn’t happen. And you know, there’s a lot of evidence that points to, while we might have quote unquote a nationwide recession, there are certainly, states and pockets that are still gonna be successful. And, you know, Texas and Florida and the southeast in general, we’re talking about increases in population. And even if there’s a recession that might just trigger more of a flight of population from high tax jurisdictions in the northeast and California to move into low tax jurisdictions. So, you know, everything is local and everything comes down to your individual property. But if you’re looking at a shopping center in Georgia and the anchor tenant is strong and some of the peripheral tenants are strong national guarantors, I would buy that in any market. I think Georgia is going to continue to see growth regardless of what happens nationwide. It would take something pretty catastrophic for Georgia to not be able to, again, just cover debt service or you know, provide cashflow with several national anchors. So, you know, that’s what we’re seeing. I also have some clients that are talking about new investment strategies where they don’t anticipate or they don’t model in income appreciation. They’re buying properties and saying, no, I’m not factoring yet 2 or 3% rental increase. I’m only planning to increase efficiencies on expenses. And so they’re looking for poorly managed properties from people who bought in 2013, 2015 they didn’t really know what they’re doing, but they’re making money and they’re going to get profit so you can cut their expenses and therefore no increase in a AWAI without increasing your revenue. So that’s another strategy that is coming, you know, a little bit more in boat. It’s a little bit more realistic on the lower end for returns, but it puts you in a lot more conservative pressure when you’re thinking about how do I reach my returns?

Charles: That’s a great way for conservative underwriting because normally it’s usually we’ll go over a deal and we’ll say two and a half percent of the expenses, two and a half percent on income, which is inflation, but having no, I mean no one, no appreciation on the income side and I know where we are in Tampon. I bet it’s very similar to areas you are dealing with in Texas 7-8% rent increases last year. So if that, I mean, that’s going to be a home run, you know, that’d be a triple going to a grand slam really for their investors, when they find out if that continues because it will be, it’ll be something people aren’t going to stop moving to these inexpensive areas and where the jobs are going, it just, you know, it just goes hand in hand. So that’s great. So as for your, for your law firm, Pam law, what do you guys, what do you guys provide? Uh, what are the services that you provide to your, to your clients?

Ron: Absolutely. So, you know, we, we have the supports that we have, the partner attorneys. It’s really the full suite of, of transactional work. So, we handle basically from an investor that’s new. It doesn’t have any capital in the US doesn’t have any experience, you know, maybe they don’t even know anybody in the market, but they’ve done some research and you know, they want to work with me because I have clients that will come from abroad and invest all over the US so, you know, California properties, Ohio, Illinois. Obviously Texas is very popular, but what we basically do is we’re able to walk them through the process and once they have the best relationship, I would say it’s a fairly strong relationship with our lawyer. We’re able to stand as a proxy for a lot of them because a lot of those issues that I mentioned about managing a direct investment versus a syndicated investment, making decisions, you know, repairs or tendon approvals or can variances or you know, permits are co signing contracts. If you’re unable to reliably be available, whether, you know, you have another job overseas, maybe you’re traveling more, the lawyer can really play a larger role, you know, with a power of attorney. So for me to be able to sign or make decisions, up to a certain level or to be able to speed up certain decision making processes really helps them throughout the rest of their investment period. And I think that that’s what having a reputable law firm can provide with you. Um, you know, cause I give a lot of advice to is, you know, when you’re looking at your property manager agreements, you may want to tweak different clauses, that are suited for you because for a regular, you know, multifamily apartment and they say, OK, repairs about 5,000, you know, you need my approval. Well, maybe we want to increase that because your timing is not going to be a 24 hour response. It might be 48 hours and we might want to increase that to 15,000. You know, things like that. They just want to take into consideration. Especially for emergencies anything with the habitability of the unit, water leaks, roof damage. You know, we have, we had a series of very bad storms here. So there needs to be some quick authoritative decisive decision making and whether that’s your property manager doing that or whether it’s your attorney, as a kind of, you know, I’m, I’m a pretty neutral third party. I don’t have interest in which roofing contractor comes out on site to, to do some emergency repairs, but we can all agree that it’s something that should be done or must be done immediately and putting some of those provisions in place can, can protect the invest investment and the investor.

Charles: What a, what makes a difference? I know you’ve outlined a number of different facts there of what you guys do, but have you had investors work with a traditional, like maybe a law firm that’s not as seasoned with international investors and then they transfer their business to you guys in the sense of, you know, obviously the language that you provide as you’re speaking. I mean, that helps tremendously, but what other, I mean, what other, you’ve had this happen before where people would go to one law firm and then come to yours.

Ron: Yeah. Um, I think definitely the language helps, but it’s also the culture and the experience working with that type of investor. You know, a lot of the traditional law firms are used to investors who can, you know, maybe respond promptly or they can’t understand different IRS forms and they can send documents in English and just, you know, expect them to be read, understood, signed, and then return. Whereas with, with foreign investors, it’s, it’s reasonable and it’s understandable for them to have almost on every document, you know. Um, I will say people also will bring me a lot more notices. They’ll get a notice from the city and they asked me, is this reasonable? Do I need to pay this? And you know, I’m, again, it’s, it’s that experience and patience maybe to work with them because I’m almost filtering levels of, you know, spam level emails or mail and whether they have a property manager or they, you know, they don’t receive it or they question the property manager, property manager saying, “Hey, we have a new health inspection or a certificate of occupancy that we have to do.This is something that we have to pay”. Okay, great. Or The property manager, you know, they don’t necessarily impose advice. They typically just give options and so if the investor doesn’t have experience in that, they need a lawyer that is comfortable giving them quote unquote, you know, business advice. They’re going to say, Hey Ron, my property manager says our, our parking lots in terrible shape. He gave me two options or three options to resurface or tear it up or, you know, tear it up cause we could install this. What, what do you recommend? I don’t have resources. I can’t just pick up the phone and call another general contractor to come over and give me an estimate. I can’t call another engineer. You know, a certain, at least not easily. And so I can act as a go between for a lot of different problems. And that’s what I think traditional law firms, they’re not set up to do. If somebody asked them what type of shingle they should put on, you know, the 30, the 20 or 10 year warranty that they, they’re not going to answer that. They say that’s a business decision. You do that. But in my experience, that’s really useful advice that they’re going to look to me for because they might question the property manager and says, well, you’re, you’re probably recommending the most expensive option and it’s going to be business to your friends, roofing company. I don’t, you know, maybe that’s what I choose, but I have concerns about it. And they don’t have the same duty to their clients to look out for their best interests like lawyers do. And so that’s probably the number one example that I deal with. And I try to give my best advice with the caveat of, you know, I’m not a property manager, I’m not an engineer, but I’ve seen these types of issues a lot. And this is what my clients choose and why. So you make your own decision.

Charles: Yeah. That’s so true to have that team because it’s not like for if you are local and you could just go to your local [inaudible] say, hey, give me referrals of three roofers you have, I have a leak last night. I mean, that’s just not gonna happen. You need somebody, you need to deal with your property manager and you need someone to check that property manager to make sure that everything’s in your best, always in your best interest because everybody’s really working for that investor. So that’s awesome. Yeah, that’s, the team is so important. But how can someone get ahold of you, Ron and your law firm and learn more about what you guys do, service you provide?

Ron: Yeah, absolutely. I think the best way is email, [email protected] or our website is Uh, you know, I, I use all the different messaging apps too, so I’m on wechat or whatsapp or any kind of messenger, you know, I probably have it downloaded on my phone.

Charles: All right, well perfect. So, listeners, what I’ll do is I’ll put all that information to the notes section so you can easily find the email address and links to everything we’ve spoken about and Ron, I really appreciate you coming on the show today and I look forward to, uh, speaking to you soon.

Ron: All right, thanks Charles.

Announcer: Thank you for listening to the Global Investor Podcast. If you’d like to show, be sure to subscribe on iTunes or Google play to get new weekly episodes. For more resources and to receive our newsletter, please visit and don’t forget to join us next week for another episode.

Announcer: Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Harborside Partners incorporated exclusively.

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About Ronald Rohde

Ron Rohde is a Mandarin Chinese speaking attorney who represents foreign investors in the US. His practice focuses on commercial real estate acquisitions such as multifamily, office, and warehouse transactions. He currently practices in Texas but is licensed in Florida as well. His experience guides investors through US law and tax treatment.

Ron’s clients like investing in the US because of the huge economic growth, there are always buyers available upon exit and the US is the largest capital market.

The majority of Ron’s clients invest in the US for asset preservation among other perks including; capital growth, hedging currencies and minimizing political risk. Ron works with a number of investors across Asia and many of these countries face currency controls. Ron assists clients to work around these potential problems.

Ron’s tips for success start off with building your US team (attorney, agent, accountant, property manager etc.) before you start looking for properties. As you start building your team, team members will suggest other potential team members (Ron provides introductions to accountants and lenders who work with international investors).

Ron provides; entity formation, contract review, financing review, due diligence, lease execution/negotiation, power of attorney to sign, compliance etc. He works with clients that are unfamiliar with US laws and helps to educate them and assist them with decisions.


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