Guest Article: First Steps for Foreign Investors
By JoanneFirst Steps for Foreign Investors
By Dustin Hahn
Many people living outside the US often ask, ?What do I need to do to if I want to invest in the United States in tax lien certificates or tax deeds?? I faced some challenges when I started investing in Tax Liens and Deeds while I was living in Canada and it took me several trips to the US to work out all the bugs.
Here are the steps that you need to take to prepare to invest in the U.S. from another country. Being I was living close?by, I actually went to the United States to do this, but you can also do this over the phone or fax.
If you do decide to take a trip to the US to set yourself up for investing in tax liens or tax deeds, or to attend the physical tax sales, only take $10,000 with you in cash or certified checks. Anything over $10,000 you have to declare at the boarder. This can be an issue sometimes.
The first time I went to the US I had $20,000 USD on me. The boarder patrol did not believe I was going down to buy property. They interrogated me for 5 hrs and almost denied me entry to the United States.
If you take $10,000 or less you don’t need to declare it. As soon as you arrive at the city where the Tax Sale is taking place make sure to open up an interest bearing checking or money market account. We do this for two reasons.
First of all, when you have a US bank account you can simply wire all funds to the account for any future sales you plan on attending in person or online. This way you don’t have to carry any cash at all. When you open your bank account you will need two forms of ID, a valid passport and a drivers license or credit card.
Secondly, you want to make sure to open an interest bearing account. When you start to invest regularly at Tax Sales you will need an Individual Tax Identification Number (ITIN) number. You obtain a tax ID number so you can declare any profits you make. Normally you don’t need a Tax ID number to register for the tax deed sales so for your first tax sale this is not important unless it?s specified in the county information.
You will however need a tax ID number when you sell your property. In the US most property transactions are done with an “escrow or title company” this is the company that distributes funds between the buyer and the seller when you make the deal. The escrow company can’t issue you your profits unless you have this ITIN number.
You can get the ITN number on the IRS website. When you get to the site simply search ITIN at the top of the page. The IRS will only issue you an ITIN number if you prove to them you have an investment that is earning interest. That is the reason you open an Interest bearing checking or savings account. All you do is attach the proof of the interest bearing account with the ITIN application.
You will want to make sure to have $3,000 to $5,000 in your interest bearing account in order to get approved. When I got my ITIN I only showed $3,000 in the account.
Is it necessary to have an LLC to invest in the US?
This is a common question foreigners ask and the answer is NO. You do not need an LLC when you first start buying and selling property in the United States. If you start investing hundreds of thousands of dollars in the US then you will want to get an LLC. An LLC is mostly used to protect? high dollar? investments.
In addition you cannot open a business bank account under the name of your LLC unless you have an ITIN number. Therefore just take it one step at a time.
If you wish not to travel to the US all this can be set up via phone and fax. Contact the bank and tell them you want to open an account and fax or mail all the documents required. Visit the IRS website after you open your interest bearing bank account. Fill out the ITIN application and send it out. It will take a few weeks to wait on the paperwork but its 100% worth it when you have it all set up.
Now go out and buy some tax liens and deeds.
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Dustin Hahn is a highly requested Real Estate speaker and an authority on tax lien and tax deed investing. At the age of 19, Hahn began studying hidden tax sale techniques. Only two years later, he founded the ?Ultimate Secrets of Real Estate? intensive training program as a way of sharing his creative and lucrative strategies with other real estate professionals who were interested in learning about tax lien investing. Today he teaches tax sale strategies to individuals from all educational and professional backgrounds. Find out more about Dustin?s courses for investors HERE.
12 Comments
May 6th, 2010 at 1:53 am
I did not know about the ITIN application before
now. I will be be travelling down to Texas in
about a week’s time, I have registered a Wyoming
Ltd. company and yesterday an I.R.S. ein no.,so I I am likely to have difficulty in setting up a
business bank accounts in Texas and in two other
states. Pity!! I wish I had known this before.
May 13th, 2010 at 7:20 pm
Hi Brian,
I don’t think that it should be a problem. An EIN # is a federal ID number and you should not have a problem setting up bank accounts in different states. Let us know how you make out.
September 17th, 2010 at 7:03 am
Hello Jo
I live in UK and will like to get involved in investing in Tax Lien and Tax Deed.
Is this possible for someone outside of the United States?
thanks
September 17th, 2010 at 12:55 pm
Hi Tunde,
In most tax deed states foreigners are allowed to purchase tax deeds at the tax sale. Not every state has online tax sales though, so if you don’t want to travel to the U.S. to do your due diligence and attend the tax sale, you will be limited as to where you can invest. Also it may be a little tricky to do your due diligence from the UK, but it can be done. I know of investors that buy liens and deeds in the U.S. from Canada, Australia, New Zealand and the UK and I’m sure there are investors from other countries as well.
August 24th, 2011 at 9:56 am
Hi Joanne,
I have come across your site and this page while searching in the net for more info about Tax Lien Investment for Foreign Investors. I am from Malaysia. Over here, we have hundreds of ever ready people who are eager and willing to know more about Tax Lien Investment. However, after going thru different websites, we come to know that it is almost impossible for a foreign investor like me to invest in Tax Lien from the comfort of our home in Malaysia using a pc. This is caused by 2 reasons.
1) We could not setup a US Bank Account to pay the county for the tax lien/deed. Do you have any solution that you can give us to help us foreign investors to open a Real US Bank Account to pay and accept payment from the county? Do you have any info or connections with any real reliable US Bank that can setup all these real US Bank Account for us foreign investors without travelling to US?
2) We do not know the complete list of counties and states that offer online tax lien/deed purchase for us to invest from our own home. You cannot expect us to fly there just to invest in a lien. Do you have the latest and up to date resources on this matter? Where we can get hold of the complete tax lien and deed listing that we can purchase over the internet for foreign investors like us?
If you could solve this 2 Challenges that we are facing, I can assure you, I have a large group of people ready to pay and learn from you. Or you could setup and create a SPECIAL package or information just for us foreign investors to get started. Please get back to me on this ASAP. Thank you.
Sincere Regards,
Xavier
August 24th, 2011 at 11:16 am
Hi Xavier,
I would check with Bank of America, their web site is http://www.bankofamerica.com and see if they will allow you to open a U.S. bank account without coming to the U.S. to do it. I know that it is possible to do things over the fax and by FedEx, and that you should be able to open an account without having to come to the U.S.
I do have a package that gives resources for all of the online tax sales. This is changing constantly, so I do update it once a year and whenever you purchase a course from me I always include lifetime updates, although I don’t always advertise that I do that. The course is Buying Tax Liens Online and you can find out more about it at http://www.buyingtaxliensonline.com. Another way to stay updated about online tax sales is to join my members area. I give a monthly training to members and in that training I go over what tax sales are coming up and which ones are online. Sometimes I spend time on how to register and bid for these sales and do the due diligence for the tax sales properties. All of these trainings are also posted in the members area and made available to members.
Also after subscribing to the members area for 2 months you get the Buying Tax Liens Online program, plus a couple of other courses as a bonus.
August 25th, 2011 at 3:55 am
Hi Joanne,
Thanks for your update and reply. Greatly appreciate it. I will check on the info that you have given and update you accordingly of the outcome. At the mean time, I will also look into the membership area of your site. By the way, are you interested to come over to Asia to conduct live training and workshop? Please email me if you have any intention as my company help to organise such an event and seminars. Thank you.
Sincere Regards,
Xavier
August 25th, 2011 at 12:27 pm
Hi Joanne,
I have checked with the Bank of America today. Apparently, we foreign investor are not allowed to apply a US Bank Account online if we do not have a Social Security Number. Since I only have an EIN, this is the respond given by the bank. “We’re sorry for any inconvenience, but at this time, only applicants with a valid Social Security number can apply online. You can apply for an account in person at any Bank of America banking center by presenting valid forms of identification.” This means I have to fly all the way to US just to open a bank account. Could you help me to look into this for a real solution that I am able to open a bank account without going over to US. You said it can be done via fax or FedEX. Could you help by giving the contact person from Bank of America or any other banks that is able to help me on this matter directly? Sincerely need your help on this. Once this is solved, I am sure, it will also helped all your potential foreign students to be involved in tax lien. Waiting for your reply. Thank you.
August 25th, 2011 at 1:09 pm
Hi Xavier,
There are 2 ways that you can get around this, and it looks like you already have one of them. If you have an EIN # that means that you have already established a US based entity like a corporation or LLC. What you need to do is let the bank know that you want a bank account for your U.S. entity, not for yourself, they should be able to do that for you with your company’s EIN #. The other way to get around this is to apply for an ITIN # from the IRS at http://www.irs.gov. The bank should be able to accept that instead of a SS#.
Also if you have a US company, do you have an agent here in the US that accepts your mail and can act on your behalf? I would try to get on the phone and talk to a representative rather than apply online. I would ask that since you are overseas if this can be done through the fax or online. I would try calling their customer service number. Let me know how you make out and if you run into any other obstacles. If you can’t get anywhere with Bank Of America let me know and I’ll see if there is another bank that will be more friendly toward foreigners.
August 25th, 2011 at 9:38 pm
Hi Joanne,
Thanks for your prompt reply. Really appreciate it. By the way, to buy tax lien, do we actually need an EIN or ITIN? Does all counties require this EIN? Or only a few require it? Which are the counties? And can we buy tax lien as an individual or we must by as a US entity/corporation? Please advise.
Sincere Regards,
Jacky
August 25th, 2011 at 10:07 pm
Jacky,
you need to have a tax ID number, it must be an EIN number if you are investing in the name of an entity, an ITIN number if you are a foreigner investing in your own name and a SS# if you are a US citizen or employed in the U.S. All tax lien sales require you to have a tax ID #.
I hope this answers your question. Are you investing in your name or in the name of your entity? If you have an EIN #, I’m assuming that you have a U.S. entity.
August 26th, 2011 at 9:12 pm
Hi Joanne,
Thanks for your reply. I do have a U.S. entity (Sole Proprietor) which is the same name as my own name. The question I would like to ask is what are the differences in terms of advantages and disadvantages to purchase lien and deed in my own name or in my entity name? Will we encounter any problem or challenges in the long run if we purchase it in our name or it is better to invest as an entity or LLC? Any difference between lien and deed?
I read from some sites telling us that if we invest in lien, it makes not much difference either as individual or as entity/LLC. But if we invest in deeds, we should get a LLC to safeguard us from any unforeseen ligitation that we might encounter. How true is it with that info? Please share more.
Another question is, I apply for my EIN via phone call to IRS. I told them I am applying as a Sole Proprietor just because I want to get an EIN to purchase lien. Is it necessary for me to actually setup a Sole Proprietor company in US to actually invest in Lien/Deed and to make use of the EIN? In my country, we have different types of company, such as Sole Proprietorship, Partnership, LLC & Public Company. We could not just say we have a sole proprietor entity and get an EIN. We need to setup the company officially. How about in US? What is the situation? Please share more.
Regards,
Xavier