4 Ways Overseas Oil & Gas Pros Can Invest in US Real Estate

No, I'm not talking about REITs

Hard-working, high-earning oilfield professionals are often drawn to invest in real estate back home in the US, but don’t know what their options are or where to start.

You may be in that position yourself – looking to create financial freedom through real estate & live life on your own terms (while escaping the oilfield life). You came to the right place. In this blog post we’ll go through 4 top ways for overseas Oil & Gas professionals to invest in real estate back home in the US.

This article is primarily intended for Americans who still hold citizenship, but who are not home in the States frequently enough to actively do their own real estate deals. Simply having citizenship & holding banking relationships are two huge advantages to investing in the US from overseas. We’re also not talking about REITs, which are far more akin to stock investing than actual real estate investing. The reasons why are best left for another day, for now let’s focus on creating real wealth with real estate.

1) Real Estate Syndications

Real Estate Syndications are private investment opportunities, not registered with the SEC as public offerings. Otherwise called a type of “Private Placement.” Real estate syndications come in many shapes & sizes, and syndication investors can invest in numerous asset classes, including:

Common Syndicated Real Estate Asset Classes:

  1. Multifamily Apartments (Our favorite)
  2. Self Storage Facilities (Another favorite)
  3. Mobile Home Parks
  4. Industrial Facilities
  5. New Development
  6. Large Single Family Portfolios
  7. And more!

We Love Multifamily Syndications

Most real estate syndications are offered under the SEC’s Regulation D, Rule 506(b) or Rule 506(c)Regulation A (or Reg A) is also occasionally used by sponsors to raise capital.

Many oilfield professionals have sufficient earnings to qualify them as Accredited Investors, giving them access to many investment offerings.

Accredited investors have the most passive investing options because they have access to both 506(b) and 506(c) syndications. The number of accredited investors who can participate in 506(b) and 506(c) deals is not capped. Unfortunately for non-accredited investors, they are limited to 506(b) deals only, and only up to 35 non-accredited investors can participate in any given 506(b) deal.

Real Estate Syndications are my preferred way of investing in real estate, having been in the space and syndicated several multifamily properties myself. If you’d like to learn more, schedule a call here.

2) Turnkey Rentals

Turnkey properties are ready-made real estate investments which are sold to investors by turnkey providers. Turnkey providers will typically buy properties in disrepair for less than their potential value, leaving room for the turnkey provider to perform renovations and add value.

It’s important to keep the terms straight when we’re talking about turnkey investing: Turnkey investors buy turnkey properties from turnkey providers. Investors aim to buy completely renovated properties with tenants in place, earning cash flows & appreciation over time.

Be careful, because not all turnkey providers are equal. There have been incidents of unscrupulous behavior by turnkey providers, so be sure to learn how to evaluate turnkey providers and their deals

Single Families are Typical in Turnkey Real Estate

3) Mortgage Notes

Did you know? You can become the bank by investing in mortgage notes. When you take out a mortgage, the mortgage note is created and can be bought & sold by investors and institutions. 

Investors can buy so-called performing and non-performing mortgages, in various lien positions. Most note investors aim to buy mortgage notes at a discount, improve their performance, and either hold the notes for cash flow or sell them at appreciated values.

Why would a bank sell a mortgage at a discount?

When a borrower stops paying their mortgage, the note becomes “non-performing,” meaning the borrower is not performing his or her duties. 

A non-performing mortgage is not producing cash flows as it should, and therefore is not worth as much to a lender. 

Banks are not in the business of restructuring mortgage notes to get them performing, and in many cases they’d rather sell non-performing notes at a discount to get them off of their books.

Become the bank by Investing in Notes

Enterprising mortgage note investors buy those discounted non-performing mortgages and try to restructure or renegotiate with the borrower to get the mortgage once again performing. Foreclosure is typically treated as the last-ditch effort, and not an ideal solution. The vast majority of mortgage note investors would rather keep the borrower in their home, restructure the note in some way, and get it performing once again.

If you want to go this route, be sure to research the legalities of investing in mortgage notes, including mortgage servicing requirements.  As an overseas investor, the good news is you don’t need to be there to get the work done. You can hire 3rd party professionals to provide Brokers Opinions of Value, do various in-person due diligence activities, perform servicing, handle negotiations, and so much more.

4) Private Lending

You can lend money to other real estate investors, and earn a return for doing so! Active real estate investors Stateside often need sources of capital beyond their own funds. That’s where private lenders come in.

Private lending is definitely not for newbies. If you’re lending money to another investor, you may be all on your own to evaluate the opportunity, negotiate terms, track the investment’s progress, and (if things go wrong) potentially take steps to get your money back the hard way.

Why I Invest in Multifamily Apartments

I believe Multifamily Apartments have the greatest potential to produce passive wealth and passive cash flow to investors, while providing fantastic tax benefits. The investing model we utilize has been executed by numerous operators across tens to hundreds of billions of dollars of assets. Here’s how it works.

We buy underperforming assets and force appreciation by raising the asset’s income. We take control, step into the driver’s seat, and add value to our investment.

The key value add equation

Commercial real estate is distinct from single families because commercial real estate is valued based on its income. The value of a commercial asset is calculated as:

Net Operating Income / Capitalization Rate = Property Value

By raising the net operating income we can directly increase the property’s value. Here’s an example.

Let’s say you have a 150 unit property. You see that you can raise rents by $100/month by investing $10,000 per unit to upgrade. That’s 150*$10,000, or $1,500,000 to upgrade your property.

What’s the upside?

You’re raising rents by $100 per month per unit net, so each unit brings in $1,200 more per year. Multiplied by 150 units, that’s $180,000 more per year in income.

Here’s the key: that income is capitalized, or added to the value of your property. In a 5% cap rate market, those renovations increase your property’s value by $3,600,000!

So your property’s value has increased by more than double the investment in renovations, plus it’s producing more cash flow every year! This is a fairly baseline example, too. $100 per month rent upside is fairly low, many of our deals are $250-300 per month under market when we buy them.

Conclusion

Oil & Gas professionals working overseas have numerous options for investing in real estate back home in the US. I’ve outlined 4 of the top options. Comment below with any questions!

About the Author

Taylor on stage

Hi, I’m Taylor. To date I’ve acquired, partnered on, or had a hand in over $250 Million in Real Estate Acquisitions. I help high earners invest in multifamily and self storage real estate through my company NT Capital

Subscribe
Notify of
0 Comments
Inline Feedbacks
View all comments

Join our Passive Investor Club

Not Sure How to Tell a Good Deal from a Bad Deal?

Learn 7 Red Flags in Passive Real Estate Investing

Free 7 Day Video Course

What Listeners are Saying

Extremely useful podcast
Extremely useful podcast
@thehappyrexan
Read More
Short, impactful with excellent guests. If you have a full time W-2 job or business and are looking for ways to get involved in real estate on the side, this is for you.
Simple & effective information!
Simple & effective information!
@jjff0987
Read More
This podcast is worth listening to for investors at all levels. The information is simplified for the high level investors but detailed enough to educate seasoned investors about nuances of the business. I recommend!
Awesome Podcast!!!
Awesome Podcast!!!
@Clarisse Gomez
Read More
The host of Passive Wealth Strategies for Busy Professionals podcast highlights all aspects of real estate investing and more in this can’t miss podcast! The host and expert guests offer insightful advice and information that is helpful to anyone that listens!
Great podcast!
Great podcast!
@Owchy
Read More
Love all the information and insights from Taylor and his guest. Fun and entertaining. Highly recommend.
Previous
Next

Popular Posts