What's going on YouTube? Thank you so much for watching this YouTube channel. My name
is Matt. My company's called The DeRosa Group and we have a lot of cool stuff to talk to
you guys about on this YouTube channel. We have a Mentorship Monday series. We have a
series called DeRosa Success Stories where you can email us at success@derosagroup.com.
If you've learned something from my book, something from this channel, and you want
to broadcast what you've learned from us, email us at success@derosagroup.com. And if
you love this channel, we love you. Take a second and subscribe to this channel so you
get some notifications of things that we've got coming down the pipeline. Take a minute
and do that. Today's conversation is with a good friend of mine, Reed Gossens.
Hey mate.
So, Reed, you're from out of the country, right? If you've heard Reed talk, you he's
from out of town. That's awesome.
Guess where.
Guess where. So I want to talk to you about people investing from outside of the US in
real estate because we get a lot of people that have inquiries, from people from outside
the US, as I'm sure you do. And there's maybe people watching that want to raise capital
that they realize that the economies overseas are not what they are in the US. And so if
we, as real estate investors can find a way to legally and successfully reach into other
countries and pull that money to the US to invest in our projects, we can do it, win-win.
We raise capital for our deals, while also giving them another opportunity. So before
we get into that, I want you tell our audience a little bit about you and how they can get
ahold of you.
Yeah. So my name's Reed Goossens, as Matt just said here. I am originally from Australia,
deep down under, the deep south, by West Texas, right? I am the co-founder of Wildhorn Capital
and I'm also the podcast host of Investing In The US. We have about a quarter billion
under management, 1,800 units in Austin and San Antonio. You can check me out on reedgoossens.com
and you can find all the links up there on that website, so yeah.
What's the name of your company again?
Wildhorn Capital.
Wildhorn Capital. I love that. Of course, because you're invested in Texas. So you've
got to have a Texas-y sort of-
Right. My business partner's Texan, so...
Right. Right. You both talk funny.
Michael. Yeah.
So you've done a lot of work and obviously you're from outside the country, you've figured
out how to invest in the US successfully, right? So let's say someone watching wants
to start soliciting money outside and they either want to start soliciting money outside
of the US, or they even have someone that's from outside of the US that wants to invest
in. What are some conversations they could have? We'll get into getting the money into
the US in a second, but what are some conversations that you should have with people that are
looking to invest in the US and real estate that are not either US residents, US citizens,
or even just are contacting us from out of the country? What should we talk about?
Well, I think the biggest thing is, I can talk a little bit about the comparison between
Australia and America and just start there, right? Because the big thing that international
investors have is perspective. What I bring, what my special source is, what my superpower,
we're surrounded by Captain America here, is the fact that I do have a lens of looking
through international investing. The thing is, you have to realize in America, you guys
have probably in my opinion, the best climate, environment for investing in commercial real
estate in the Western world.
You have a massive GDP, you're the number one in the world. You have incredible debt
financing vehicles that are not available to other countries. In my home country of
Australia, we do not have Freddie or Fannie that have 10 years interest only at a 4% interest
rate [inaudible 00:03:20] over 30, that just doesn't exist. Also, we all-
Sometimes I wonder if it should exist here or not.
Yeah, right. So we have a lot of Western countries like Australia, like Europe, like London have
a massive supply demand issue similar to coastal cities here where our cap rates are actually
even lower than your cap rates for commercial real estate and have historically been lower.
So you look at Singapore or you look at Sydney, an office space in Sydney or Singapore is
probably trading at a two cap. So you look at an office space in New York City or Boston
or LA, and you get it for a three, four cap, you're essentially getting it for half price.
Is that a supply demand issue as well?
Supply demand issue, yeah.
Okay. Got it.
So, you have all these exterior factors of why people are investing in the United States.
One other thing I'm going to throw in there is that, if you didn't know this, when you
apply for a bank account outside of the United States, the US wants to know where their citizens
are. So there is one question on every single bank account outside the United States is
like, "Are they a US citizen?" Everyone said, "Sure, we'll give you this information Mr
United States, can we have it in the reverse?" And they said no.
So now US entities are viewed with the privacy as nearly like an offshore bank account. So
why a lot of international investments are coming to the United States, a couple of all
the good stuff we talk about, the GDP, the debt, the yield, the forced depreciation,
now also entities are viewed as nearly off shore for an international perspective.
If you invest in the US?
If you're an international person.
That is interesting. Let's highlight, let's make sure that gets captured here for a second.
So, let's say I'm looking to invest in the US from, name it, UK.
UK, yep.
It's a simple, friendly country. The UK, not something any more obscure where there's maybe
deeper regs or laws or whatever, just UK. If I want to invest in the US from the UK,
I can set up a US based LLC. Simple. That gives me a US-based EIN number.
Correct.
I check off, "No, I'm not a US citizen on the form."
Correct. Yep.
And that's as far as the conversation goes. The US does not report the existence of that
entity back to the UK.
Not who's behind the entity, which is what the whole purpose is.
They're not going to report Joe Smith, who's the founder of that LLC, who's a UK resident.
Correct. Yep.
They're not going to go tell the UK, "Hey."
Right. And people asked Obama back in the day, "Hey, can you give us that information
because we're giving it to you?" He's like, "No." And so what he essentially did was,
do offshore bank accounts for the international masses, one, attracting more international
money because of all these regs, but two, has also nearly done away with from an international
perspective, why just come and invest in the United States? Don't go to the Cayman Islands,
come here instead.
Yeah. Well, that's interesting. So, it sounds like you've done a lot of homework on this.
Has that reduced investment in places like the Cayman Islands, the Bahamas?
No. Not at all because obviously it's a lot of US people trying to get their money outside
of the government. Right?
Right. They're doing it here. But if I'm a UK resident, is it just the same? If I want
to invest in something or at least park my money somewhere, is it now just the same as
putting in the US as putting it in the Caymans? Or is that even-
The differences between the two, I'm not familiar on. But I'm sure there is pros and cons of
either or, and for every individual person they're going to have their why they want
to do that. But having your money in a US entity, backed by US dollar, with a first
world country, it sort of ticks all the boxes.
Interesting because I talked to somebody from Germany a while ago that was concerned about
investing in the US because the German government is very in your stuff. Right? And he was very
concerned about the German government wanting to tax what he made in the US, there's even
caveats and carve outs there. But if he were to set up a US-based LLC, it'd be very hard
for them to get much further than-
There are, so between Australia and most Western... Sorry, the United States and most Western
countries there's a US tax treaty. So any taxes you do pay in the United States, you
will get a credit for it in your home country. Please look at, when you do come to the United
States, you have to have a US based CPA, but you also have to have your home based CPA
to advise on both sides of coin.
And if you have a US-based LLC, so let's say that the first step is for the foreign investor
to set up a US based LLC, if they do that, they're going to have to pay US-based income
taxes.
Correct. Correct.
Which is probably why the US is fine with this because obviously if you're making money
in the US, you're reporting that income through a US-based CPA and everything like that. Right?
That's correct.
So let's say someone watching has either a relative or a friend or whatever that's overseas,
no reason to name the country, just any country, that wants to invest in the US. Is it okay
for them to just take the money that's foreign currency and couldn't I just set up the LLC
for them? I could set up an LLC fairly quickly, right? So what's to stop me or is it okay
for me to just have them wire me the currency and pay the exchange rate for me to set up
the LLC for them and on their behalf?
Yeah. The answer to that is no. You never want to take international money directly
into your own bank account because the US government does stipulate if you take on foreign
money, you as the individual, Matt Faircloth or myself, Reed Goossens, is that we have
to then have a withholding tax of 30% minimum. Setting up then a US entity means you're at
arms length. You can still accept their money and it takes a little bit of upfront capital,
a little bit of upfront work, but once they've got that set up, they can invest anywhere.
They can invest in DeRosa group, they can invest in Wildhorn Capital, they can invest
wherever they want.
Wherever they want.
And then for us, as the operators, it's like taking on any other US-based entity's money.
Hardest part you have to get over is the US bank accounts. Historically, you have been
able to open up bank accounts from abroad, but the US has cracked down. So nine times
out of 10, I advise my international investors, "Are you coming to the United States for a
holiday? When you come, open up a bank account when you get here." Because they want to see
a physical person.
You can just [inaudible 00:08:59]. It's hard for me to do from overseas. So, if you're
dealing with a foreign investor, their best shot is to come to the US, maybe meet with
them, have a face to face, have them go look at some properties with you. And if you've
got that kind of money they want to put to work in the US, they should be able to invest
a little bit in a trip to the US to come and set up a bank account, come visit you, get
themselves legal in the US and that.
So the bottom line, and I knew the answer to this question, but I'll make sure everybody
heard this, you do not want to take foreign money invested directly to you. You want to
have that investor have that as their burden to set up the LLC themselves, get the EIN
number set up, then you're doing business with a US-based company. You don't want that
liability of doing it for them, you want to have them do it on a trip to the US, and then-
Them do it through a CPA based here in the United States, which is what they legally
can set up.
Yeah, and there's many out there that will do that for them.
Correct. Exactly.
Great stuff. So again, we've highlighted a lot of reasons why international investors
may want to invest in the US, just different economies. I didn't realize the supply and
demand thing and 2% cap rates, that sounds crazy and that. Now let's talk about negative
interest rates because I've heard other countries have negative interest rates and have economies
that are out there. The negative interest rate to me means the government's really just,
give you money.
Yep. Yep.
So, what's to stop somebody from a place like Sweden or Finland that has negative interest
rates to just send the money to go to the US, set up the money, and they just borrow
whatever they can from their government there and invest it in US real estate?
Right. Well the thing is investing across borders is still, sort of borrowing from one
country to buy in another is still very difficult. Because the lending vehicles... Unless you're
working with a big bank like HSBC and you're worth a lot of money, and you can leverage
your home based portfolio to buy stuff in the United States, which can occur, given
HSBC is a very massive bank that will do that. You can do that. You can. You can, if you
have a big portfolio back in your home country and you blend on that to buy US real estate,
that can occur.
The average person does not have that. And so I would not advise to go and pull out $200,000
on a mortgage in Australia to invest here in the United States. Unless you got, I get
a lot more from the international perspective, what you call self-directed IRAs, which are
called self-directed superfunds in Australia. A lot of people-
That's a way cooler name.
Superfunds.
Yeah, it's super fun.
It's super. Super Captain America.
They get a cape, right? They should get a cape for that.
But what that means is that you can park your money in the United States for an extended
period of time, you just let it grow on itself and so your US bank account is just keep growing.
You just keep investing on itself and it keeps going over and over until you want to pull
that money out of the United States.
The other thing we didn't really talk about was foreign exchange risk. Now, a lot of people
are trying to play both sides of the coin. Back in 2012 when I first moved to the United
States, the Aussie dollar was on parody with the American dollar. Historically, that hasn't
been great. A flood of money coming to the United States at that point. Historically,
it's roughly around the 70 to 75 US cents mark. So for every $1, Australia would buy
about 75 cents US, right? That's historically what it's been. Other countries, it's whatever
it is.
I wouldn't try and play both games. You can't have your cake and eat it as well. If you're
going to bring money to the United States, it's going to be here for an extended period
of time. I'm talking five to 10 years. So you're hopefully timing the market better
to take your money home and you can maximize-
So, you don't just wait until like, "I'm going to wait till the exchange rates are right
and that's going to push it in." It is what it is.
It helps.
Yeah, it does. I've heard there's a lot of Canadian investors in the US right now because
the exchange rate is good, but at the end of the day, like you said, it's a longterm
play. So you can't just, "Oh, I'm going to do it now, but I've got to pull out before
the rates change." No, you're investing in the US not for the exchange rate deltas, or
just really for a lot of the other reasons we talked about. Cap rates, lending opportunities,
growth, there's a lot of growth areas like Austin, Texas. There's a lot of room to expand
around the cities. Here in the northeast, not as much expansion opportunities. There's
still economic growth opportunities, but the US offers a lot of green field places that
you can build housing, build economic structures and things.
At the end of the day, you guys are 300 million people, right? You're the biggest GDP in the
world and in the Western country, the reason why I said it's the best in the Western countries
is because of your large population. You have the tier one markets in New York, San Francisco,
the LAs. You then have these tier two markets because there's so much population that it
drives them to the Midwest, and it could drive growth. Compared to other major Western markets,
we just don't have as much population there. Australia's only got 25 million people. UK,
70 million people. In France, I think it's like 90.
You can't really [inaudible 00:13:44] in Australia because you've got an enormous continent,
but there's only so many people to occupy all the spaces.
And also we live in a desert, right? So we only inhabit less than 20% of our land. So
there's just completely different scales of why America has been the land of opportunity.
I mean, been advertising that since the First World War. But also you have a lot of land,
you can inhabit north to south, east to west. That drives these secondary markets and tertiary
markets where people need to live for affordability, but then in different cycles they have their
upswing. Right? And that's like somewhere like Austin, Texas.
Got it. So we've talked about why investing in the US is a good idea. So, my hope is that
this video will give you guys some talking points that you can go over with people that
want to invest in the US through your businesses. We've talked about things you can and things
you really shouldn't be doing if you've got people that are lined up that want to invest
with you.
Now, if you want to research this further, my buddy Reed has two phenomenal books which
you guys need to read both of them. The first one is Investing In The US, very simple. It's
very clear what this book's about. If you've got people, if you are from outside of the
country, because a lot of our YouTube viewers actually are from outside of the US. If you're
looking to invest in the US, you need to read this book. If you've got people that are in
your network that want to invest in the US, you need to read this book. And if you want
to just start soliciting people from outside the country for a lot of the reasons that
Reed said, you need to read this book.
Now, Reed also has a second book. Tell us what you got there and why people should be
reading that.
This is a cool little book. It's called 10,000 Miles to the American Dream. On the back,
there's eight authors, we're all Aussie and we met a couple of years back all-
That's a whole wall of trouble right there on the back of that book, yeah.
We met through actually my podcast, which is called Investing In The US and I just started
by saying, "Hey guys, let's have a mastermind. Once a month, we're Aussies, we think the
same, being an entrepreneur can be lonely. Let's jump on a call once a month." Through
that, we started meeting up once a year. Through that we said, "We've all got a story to tell,
we've all come to the United States," traveled across the pond as we like to say, "and we've
all achieved financial freedom through investing in US real estate." So each chapter is every
one of the author's stories and my chapter in there talks a little bit about, it's called
the 6-P Rule, the art and science of raising capital like a pro. There's six different
P's that I walk through about how to go and successfully raise capital for your real estate
business or really any business. So, cool little book.
That's great. It sounds like a great read, so cool. If people want to hear more, I know
you mentioned your company earlier, but to make sure that they get it on the bookend
here. So if they want to hear more about Reed Goossens, or Longhorn Capital, or anything
else that you guys are up to, what's the best way for people to get ahold of you?
Just go to reedgoossens.com. That's R-E-E-D-G-O-O-S-S-E-N-S. There's plenty of links on there and for anyone
who is coming through LA and they want to say, "G'day," you can hit me up at info@reedgoossens.com.
Just put in the subject line, Matt Faircloth, and just give me a little bit of heads up
before you come because I've always loved meeting up with other entrepreneurs who want
to get involved in real estate.
That's awesome. Cool. Thanks for watching guys. Phenomenal conversation Reed, I really
appreciate having you here.
Thanks mate.
Cool. Have a great and profitable week.