What’s the difference between a rabbit and hare?
What’s the difference between a tortoise and a turtle?
These are crafty questions my young son asked me recently and it got me thinking…
Well, at first I chuckled.
Then realized it’s somewhat like explaining to investors the benefits of long-distance investing vs. international investing.
I’ll get to that in a minute.
First, let me give a short answer (IMHO) of the difference between a rabbit and a hare.
They are in the same family.
- They both are furry and hop a lot.
- The hare is thinner and has longer ears.
- The hare is a wild thing you can see racing through a valley.
- The rabbit is the one people choose as pets because they’re cuter and tamer.
- But in the long run, they are really similar.
As for the tortoise and turtle question, I invite you to look it up; they are similar and different at the same time.
Plus, they come in different shapes, styles and sizes. (Kind of like automobiles.)
Now that the zoological portion of this article is done, let’s move to the meat.
Long-distance vs. international investing… and which is “better”?
The answer is neither. (Ha! That was a GOTCHA moment!)
I talk about long-distance investing vs. international investing frequently at my Cashflow games, at events, on the phone and in person when sitting with investors.
- The truth is that long-distance and international investing are quite similar.
- The big difference is in the legal and tax requirements and how they are handled.
International investing has to do more with the HOW of investing in other countries.
It has certain legal and tax requirements; long-distance investing is more about the HOW of operating your business.
To put it more simply, both have to do with the HOW of things; long-distance investing has to do more with HOW you are operating your business and the systems you have in place to support your international investments.
Not to get into the minutia (because I am neither a legal or tax professional and will not advise you on these matters beyond sharing with you the basics of how I have things set up), my primary business entity is set up in Spain.
I have a legal and tax team set up there to support my efforts.
BUT I also have a legal and tax team set up in the United States! Plus, each of my properties in the U.S. are kept under separate LLCs (one per property).
A lot of people wouldn’t have things structured that way because it can get a little costly, but to me I wouldn’t have it any other way.
I want lots of protections and redundancies on both sides of any deal. That protects me; that protects anyone working with me; that certainly protects my investors!
One thing is certain…
When investing internationally, you need to know the differences in how things work.
Because I reside and work in Barcelona, but I retain citizenship in the U.S., and because I’ve lived a long time in each of these worlds… I know a lot about how things work in real estate from both sides of the ocean.
That’s why I usually use the term “long-distance investing” first.
It’s a cultural know-how sort of thing. Simply, I understand the cultures of the peoples involved here and in the States.
I know the processes involved in all aspects of deals here and in the States, from inception to raising capital to dealing with tenants.
Take tenant evictions, for example.
The look on investors’ faces here in Barcelona when I tell them how the eviction process goes in different states in the U.S. is priceless! They are stunned.
Kind of like this…
You see, while some states are more complicated in the eviction process than others, overall it’s still a lot easier to evict non-paying tenants in the States than it is in Europe.
Did you know it can take just days or maybe 6 weeks to go through the entire eviction process in a lot of states? California is a little different, however, because the process can take about 120 days if the tenant really knows the laws, which are on the tenant’s side… to a point.
There are a couple of other states that have longer eviction cycles, but moreover it’s a pretty quick process.
If you read my previous articles, you know that my sweet spot is multifamily housing… preferably apartment buildings.
You may also have the understanding by now that when investors and sellers work with me, I make every part of the deal a win-win for everyone involved.
I’m excited to share with you that I’m receiving opportunities in the States and I’m looking forward to expanding my portfolio.
Here’s one such opportunity; It’s in North Carolina where the eviction process is fast: