The U.S. real estate market presents a compelling opportunity for international investors looking to diversify their portfolios and capitalize on one of the world’s most dynamic economies. With strong economic growth, a stable legal system, and increasing housing demand, U.S. real estate continues to be a top destination for global capital. However, investing in the U.S. as a foreign investor comes with significant challenges. Tax implications, regulatory compliance, and structuring investments correctly are all critical factors that must be considered to avoid unnecessary liabilities. Many U.S. operators do not work with international investors due to these complexities, leaving investors struggling to find reliable entry points into the market.
At Rockfish Capital, we have developed a structured investment approach that allows non-U.S. investors to participate in U.S. real estate opportunities while maintaining compliance with both U.S. and home-country regulations. One of the key strategies we utilize is Regulation S, an exemption under U.S. securities laws that allows foreign investors to invest in U.S. real estate offerings without being subject to SEC registration requirements. However, while Regulation S removes the need for U.S. securities compliance, international investors must still adhere to financial and tax regulations in their home country.
For German investors, this means compliance with BaFin, Germany’s financial regulatory authority. To ensure full compliance and simplify the investment process, we have established a German investment vehicle – Rockfish Capital Germany GmbH – specifically for our German investors. This structure ensures that German investors can participate in U.S. real estate without dealing with the complexities of U.S. tax filings or withholding taxes. Instead of investing directly in a U.S. property or partnership, investors can participate through Rockfish Capital Germany GmbH, which then acquires ownership in the U.S. real estate asset. This is done through a compliant financial instrument known as a "Wertpapier" (security), which allows investors to retain a direct economic interest in the underlying real estate while ensuring compliance with German financial regulations.
Because Rockfish Capital Germany GmbH is the legal entity investing in the U.S., it handles all K-1 tax filings, ensuring that individual investors are not required to file U.S. tax returns or deal with IRS reporting obligations. This structure also protects investors from unnecessary withholding taxes, creating a more efficient and seamless investment process. By using a properly structured security, German investors can achieve direct exposure to U.S. real estate without the administrative and regulatory burdens typically associated with cross-border investments.
Case Study: How Rockfish Capital Successfully Raised $4.5M for a 192-Unit Texas Multifamily Acquisition
To illustrate how this structure works in practice, Rockfish Capital recently secured $4.5 million from European investors using this exact investment model. These funds were deployed into a 192-unit multifamily property in Houston Texas, allowing investors to participate in an institutional-grade U.S. real estate investment while avoiding unnecessary tax filings and compliance burdens.
Through our German investment vehicle, investors acquired ownership stakes in the property via a compliant Wertpapier, ensuring they maintained direct exposure to the real estate asset while remaining fully compliant with German financial regulations. Additionally, because the investment vehicle itself manages all U.S. tax reporting, investors do not need to file with the IRS, and their returns are not subject to U.S. withholding taxes.
This real-life example demonstrates how international investors can safely and efficiently invest in U.S. real estate without regulatory headaches. By structuring investments properly, we ensure that foreign investors benefit from the strong fundamentals of the U.S. real estate market without the common tax and compliance barriers.
Why Now is the Right Time to Invest in U.S. Real Estate
Beyond structuring investments correctly, investors should also consider why U.S. real estate is particularly attractive right now. Several key market trends make multifamily real estate an ideal investment opportunity:
The U.S. continues to experience a severe housing shortage, with demand for multifamily rental units at an all-time high due to affordability challenges in the homeownership market. Texas, in particular, remains a top destination for real estate investment, with rapid population growth, business-friendly policies, and increasing rental demand driving appreciation and strong cash flows. Despite global uncertainty, the U.S. economy remains one of the strongest in the world, providing stable and secure investment opportunities for foreign capital. Real estate remains one of the best-performing asset classes during inflationary periods, offering investors tangible, income-generating assets that protect capital over the long term.
By leveraging Regulation S exemptions and structuring investments through a compliant international investment vehicle, foreign investors can access the U.S. real estate market in a legally sound and tax-efficient manner while capitalizing on these compelling market dynamics.
Beyond Germany: Structuring Investments for Other International Investors
While this article highlights our German investment vehicle, Rockfish Capital works with investors from multiple countries and tailors investment structures to meet the regulatory and tax requirements of various jurisdictions.
Whether an investor is based in Switzerland, Austria, the UK, or another country, we develop customized, legally compliant structures that enable seamless access to U.S. real estate. Our goal is to ensure that all international investors can participate in the U.S. market without unnecessary tax burdens, withholding issues, or complex compliance obligations.
Consult a Tax Advisor & Securities Attorney Before Investing
While U.S. real estate offers significant opportunities, international investors must ensure they are investing within a legally sound and tax-efficient framework. Every investor’s situation is unique, and proper structuring can make the difference between a profitable investment and one burdened by unexpected tax liabilities or compliance issues.
Before making any investment, it is crucial to consult with a qualified tax advisor and securities attorney to ensure that your investment strategy aligns with both U.S. and home-country regulations.
This article is for informational purposes only and does not constitute investment, legal, or tax advice. Investors should always seek professional guidance tailored to their individual circumstances.
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