Transcription of Episode

Lauren Cohen, Bob Bluhm

Welcome to investing across borders with Lauren Cohen. Every week she will share valuable information that you need to know in order to successfully invest in real estate and other business endeavors in North America. We believe in helping clients invest, live, work and play across borders. And now, your host,

Lauren Cohen 00:22
Hey, everybody, I am Lauren Cohen, the host of investment across borders the podcast where we teach you how to invest live, work and play across borders. And you can subscribe to our podcast on Spotify and Apple on all of the podcast channels, we would love to have you as we explore opportunities not only to invest live, work and play across borders, well, I guess play is part of it. Because we also talk a lot about mindset. So stay tuned for some of those upcoming episodes. We have been on hiatus for far too long. And we are super excited to be back with my good friend, colleague partner in crime and many, many episodes of working with our clients, Mr. Bob Bluhm, Bob, please say hello and introduce yourself.

Bob Bluhm 01:12
Hi, Lauren. I’m Bob bloom. I’m an attorney in Dallas, Texas. And I specialize in setting up legal structures for Canadians who are investing in us real estate and otherwise may be wanting to start a business. So it’s our specialty, we’ve been doing it for years and years and have represented 1000s of Canadians, just like you who may be interested in business opportunities in the States.

Lauren Cohen 01:38
What got you into working with Canadians of all people, I mean, being one of myself.

Bob Bluhm 01:44
Well, Canadians are my favorite people. They’re the nicest people ever. They really are, they’re really wonderful. And I just enjoy working with them. I you know, it was a couple of students who were from Canada who were just, you know, learning how to invest in us real estate themselves. And they became so good at it that they became coaches and teachers themselves. And one thing led to another and I had set up their entities and structure. And so they invited me to continue doing that for their students. And it just has grown over the years.

Lauren Cohen 02:22
It really has, I mean, pretty much everybody in the space works with Bob in some way, shape or form. He is a very well known transactional attorney. And I will say that for myself, I feel extremely blessed. I met Bob a few years ago through a client who’s actually finally finally filed their applications. Because the lawyer that we worked with to file it took a very long time. But that’s how we originally met Bob. And now I just keep me like re meeting and reconnecting. And we’ve met in person a couple of times. And every single one of my clients that works with Bob is thrilled. And I’ll tell you one of the reasons that I’m so happy about that. Because Bob’s predecessors that we worked with to set up these entities and structure. Each and every one of them fell short of our expectations, and therefore our clients expectations. And Bob does not do that. Bob has a wonderful team. Listen, there’s gonna be hiccups and challenges. No, no team and no, attorney, no professional is perfect. But at the end of the day, the beauty of working with Bob is that he’s real, he’s authentic. And he really cares about his clients. And he goes out of his way above and beyond. There are a few clients that have been super, super challenging. And Bob has always been extremely generous. And also honest with me about when he thinks that the client is just not going to do what they say they’re going to do. And I appreciate that as a fellow colleague, because sometimes we don’t see the forest for the trees, right. We’re our own worst enemies. And we put on our rose colored glasses. And I think that Bob as an asset protection expert as his main kind of focus, you know, when that’s what he is, he’s an asset protection attorney. So when he looks at entities and looks at setting up structure, he doesn’t just look at it like, oh, well, let me just set this up haphazardly. Because this is the way everybody does it. No, instead, he looks at it as like, okay. There could be there’s some of our clients that have what six, Eight, Ten entities and and for my own stuff as well, I have referred to and utilize Bob’s expertise and services because he looks at things from that perspective. And I think it’s so important when you’re setting up a structure, especially investing in another country to have that kind of expertise behind you. So like Bob, tell us a little bit about how that looks when you’re dealing with let’s say one of my many referrals which fortunately we have on I just I have two more for you as of today.

Bob Bluhm 04:59
We take a lot of time to get to know the client to get to know the client’s business, what the client intends to do if someone’s just starting out, and then we customize the structure. And it has to be customized because this cannot be cookie cutter, it’s not a template that everybody gets the same thing by any means. It is quite individualized and depends on many, many different factors that could one little fact can change the structure. And so it is something that we often work with someone over several meetings over the phone, several, several sessions in order to, you know, finalize the structure and get it exactly right, so that it’s tax efficient, meaning we eliminate double taxation, and it provides excellent lawsuit protection because that is a much bigger deal in the States than it is in Canada much, much better.

Lauren Cohen 05:55
I think that Canadians, too often overlook the importance of that, because once you’re in the US, and you’re setting up a structure in the US, and you’re investing in the US, suddenly you become subject to potential litigation in the US or you know, anything, and then that you need that protection in hand. It’s so so so very important. And one of the things that Bob does for all of our clients, both for all of his clients, but specifically for all of our clients is he drafts this amazing graphic, a diagram of the entities. And for me, as a visual learner, I find that to be super, super useful, because somebody could tell me something 10 times and it may not sink in. But if I look at it, and they visualize it, I used to do flowcharts in law school, that’s the only way I could ever remember anything. Okay, other than my name. But anyway, it once you visualize it, it becomes real. And he does these flowcharts that show how the structure flows, and how the ownership flows and how the money flows, which is as important as how the ownership flows for you as the owner, because you’re ultimately looking to make money from your investment, or your real estate investment, you’re not looking to just do it necessarily to have a nice little vacation home. Although some people do that as well, the structure is less important there because you’re not going to be earning income. But as soon as you start earning income in the US, you become subject, as Bob said, to potential double taxation without the right structure in place. And that’s why it’s so important to have the expertise in hand. And Bob, the beauty, or one of the beautiful pieces about working with you is that, you know, like for my own purposes, I have a Canadian business partner and one of my businesses and so we had to set up a structure that is not that I wouldn’t otherwise have needed because I am American. So I pay taxes in the States, and I don’t I no longer pay taxes in Canada. But for this particular entity, I have a Canadian partner. So we had to set up a much more complicated structure. And Bob said, well, even though your business is going to be transacting in Florida, you can set up your limited partnership in Virginia. Why? Because Virginia was what 200 bucks, I think, and Florida was 1000. And it serves the same ultimate purpose. So that’s what we did. And that’s what he does for clients like you may think that you need to set up in Wyoming because of some rumor that you’ve heard, but maybe Wyoming isn’t the right fit for you. And this is another beautiful factor that comes into play when you’re working with Bob, because he does know every state and what’s what, what the implications are of setting up shop there, like California is gonna cost you three times as much to keep your entity alive as pretty much any other state.

Bob Bluhm 05:58
That’s right.

Lauren Cohen 06:12
So you’re never gonna recommend California unless somebody is only planning to do business in California and must have an entity there because they’re just it doesn’t make logical sense. But you might recommend Florida because it doesn’t have all of those same heavy, heavy annual fees and so on.

Bob Bluhm 09:03
That’s right.

Lauren Cohen 09:04
Yeah. And so, and you have how many paralegals are on your team.

Bob Bluhm 09:08
We have four very active, very busy paralegals, and always adding more so but these paralegals do a wonderful job. They are very proactive, they are responsive to clients and they can’t say enough good things about our paralegal team.

Lauren Cohen 09:26
No, they’re wonderful. And that’s made a huge difference as well, because lawyer is only as good as the team that works with him or her. Just like me, my team is critical. And without them I would be, you know, falling on my face and struggling but it does take time to get those right. Teammates or team members in place. And Bob’s team is wonderful. We have seen in the past few weeks, several of his team members come up with great initiatives that you know, helped to save our clients from a lot of hassle. One of the biggest challenges that our clients face Often as Canadians investing in us in the US or setting up US businesses is getting tax IDs, and or employer identification numbers as they’re known here. Now, for us in America, it takes us about what two minutes to get a new taxpayer identification number, because we have social security numbers without a social security number, you are basically in a waiting game. So sometimes it used to take as long as a month, now we have it a little more expedited. And sometimes there’s even ways depending on who makes the call and when to get the, the tax ID within a day or two. But it really is a process. And Bob’s team outlines that process for you, and works with you to make it seamless, they even give the opportunity for you to sign off the forms to his team so that they can file everything. I mean, it’s just a seamless process. And that’s what we like, because we like our clients to feel that their hands are being held throughout. And it’s it’s really just a pleasure. You know, always pleasure. He’s always just kind and thoughtful. And I can’t say enough good things about you, Bob. Really.

Bob Bluhm 11:12
You’re very kind. Lauren, thank you. Thank you.

Lauren Cohen 11:14
It’s just a pleasure. Because, you know, working with lawyers is not always easy. I acknowledge that, as a lawyer myself, sometimes they have a little bit of a, you know, a little bit of an attitude, let’s say, or a little bit of an arrogance, and you don’t get that from this lovely gentleman. So it’s really a pleasure. Bob, can you give us a little little information about like, when you bring a client in? Are there any factors that like common factors that can determine how you set up the structure? Is there anything that you watch out for specifically, if their high net worth isn’t necessarily different? Any kind of tidbits or special information that you can share?

Bob Bluhm 11:57
Well, sure. And and I think one of the first things that we’re concerned about is what kind of investing will the client be doing in the US? are they wanting to build a portfolio of single family homes? For instance? Are they investing in short term rentals Airbnb, you know, in the Disney area? Many are? And so there’s a specific structure for that? Are they looking to emigrate, or get a visa? And and have a business of some kind of the US? In which case, that’s an another type of structure? You know, how many properties are they wanting to do? Are they wanting to scale their business into potentially other states. So the you know, the goal that the clients have are key, you know, what kind once again, what kind of investing will determine, you know, what type of structure we set up, where the investing is going to be done, what state you know, in the US, we don’t have a federal Corporation as Canada does, where you can do business across all provinces. It’s very state specific. And, as you were mentioning, certain states are really to be avoided, if possible, such as California, New York, Illinois, really tough states in which to do business, very expensive. And then there are some wonderful states in which to do business, Florida is chief among them. In Ohio is great. And North Carolina’s North Carolina, South Carolina, Georgia, people love to invest there, Texas as well.

Lauren Cohen 13:31
So I’m gonna, I’m gonna stop you there for a moment. Because I have had I had a client last year, who needed to have to make some changes to their Georgia structure. And this is before you and I were working together. And it was a nightmare to figure out oh, it was related to the title of the property. So there was some real estate concerns involved. And because Georgia is in the what is it a Commonwealth or something, it’s like a little different the way that they have their their entities set up. Right. And I didn’t, I wasn’t aware of this. So it took a very long time to find a law firm to assist the client with this transfer of title, and to make sure that the entity was set up properly, and so on. So it’s interesting because you said Georgia is one of the easier places so I guess as long as you know, which is obviously you, then that’s the key because Bob really knows like literally every state, right?

Bob Bluhm 14:38
Yes, we’ve we’ve, we’ve filed in every single state. We know the time the you know the approval times in the States. We know the cost of filing in each state. It varies from one state to the next. Some states are very reasonable. low fees, low business taxes, other states are very, very expensive. And so we, you know, to the extent we can we avoid those very expensive states.

Lauren Cohen 15:06
And also another thing that’s very important to understand is people think that if they go to, let’s say Sundays, because that’s in Florida, go to Sundays, and you set up a limited liability company, which is not a good idea for a Canadian, okay, just saying. But let’s say they do that they think that that’s it, and they’re done, they paid 150 125 bucks, whatever it is, and they’re done. They have a company, is that true?

Bob Bluhm 15:31
They have the beginning of a company, they have an application for a company, which is really all the articles of organization are. And but it’s it’s kind of like saying, or expecting to have a house that you can live in, when in fact, all you have is the foundation of the house, the slab, there are no walls, there’s no roof, there are no windows, there are no doors, there’s nothing else. And in fact, it’s the bare bones beginning of an entity and that will not do. In other words, it’s not going to eliminate double taxation, it will not give you liability protection. When push comes to shove, it’s kind of an illusion that you have an LLC When in fact, you really have this the bare beginning of an LLC. But there’s so much more to not only creating the LLC, the documentation, which is so important

Lauren Cohen 16:25
What kind of documentation because I think people are pretty much I don’t want to use the word clueless, but a lot of people just simply don’t understand that, that the articles are just the foundation, what is what are the essential components of a complete Company Entity structure?

Bob Bluhm 16:44
Well, the there are the rules, so to speak, of how you’re going to operate the entity. And for a corporation, those are called bylaws. For a limited partnership, it’s the partnership agreement. For a limited liability company. It’s an operating agreement. And these are absolutely essential documents, which which spell out what state law requires you to do in order to have a validly operating company. In addition, we want to have minutes of an organizational meeting, we want to have minutes of a manager’s meeting minutes of a general partner meeting or, you know, a partner’s of the of the limited partnership members, minutes of a shareholder meeting and a corporation. We want to have various resolutions, because you know, the IRS is hiring 87,000 new agents. It’s unbelievable.Yeah. And the reality is, there are going to be a lot more audits. And the key to stay either staying out of an audit or making the audit as painless as possible is to document document, document, and have in your corporate documents, authorizations to take certain deductions to make certain reimbursements. And so those documents need to be there, in order to satisfy the IRS in order to satisfy a plaintiff’s lawyer if and when you are sued. Because once a lawsuit strikes, you’re going to be required to produce all of your company documents, whether it’s a limited partnership and LLC, a corporation, and the plaintiff’s lawyer is going to put those documents under a microscope. And if there is anything wrong with the documents, or they’re non existent or not up to date, they will pierce the corporate veil, which means it’s as if the entity doesn’t exist, you have no limited liability instead, you have unlimited personal liability.

Lauren Cohen 18:41
Yeah. So it’s no protection at all. You may as well no, that’s, that’s right.

Bob Bluhm 18:46
So it’s absolutely critical that these documents be drafted properly, and a full set of complete protective documents be provided to you. That’s what we do is what we provide to our clients. And then beyond that we teach clients how to operate these these entities. What do you do with a corporation? What do you do with a limited liability company? If indeed we have one? What do we do with a limited partnership? How do they relate to one another? And what which one does what? And so it’s very, very important that the client understands that and we spend a lot of time helping clients understand exactly once they have these entities, what they’re going to do with them.

Lauren Cohen 19:28
Yeah, for sure. Yeah. Because that’s really important. Actually, it’s interesting, because it’s also relevant when in the visa perspective, because people get their visa, and they’re like, Oh, I’m done. No, no, because that’s just the tip of the iceberg. You have your visa, now you have to run the business. Now you have to make money to show that you’re not running a marginal business so that you can either renew your visa or maybe move to a green card. So the you know, setting up that entity is only the beginning. Now you have to run the company and One of the other amazing elements of Bob’s service is that he doesn’t just disappear. After you set up your, your company, if you have questions, or you want to set up time, he’s available. And he really is probably more generous with his time than me. But just an amazing resource. And one of the things that I noticed, I was of counsel to a company that set up entities like a national entity, structure company, but all they did was set up the, the entities, and then they would have like corporate veil, packages, and whatever. And it was great. But there was no lawyer at the helm, there was no legal team to really guide the clients. And so that it was just a process, it was just, you know, a number, like, let’s get some volume going, and whatever. And it was great, and it served a purpose. But the problem is, then the client ends up just having these documents they don’t really understand. And, and that doesn’t do anybody any good. Because having stuff that sits on the shelf or having, you know, having like, it’s like anything, the intent is great, but without the actual implementation, you’re really missing a vital component of what you need to do. And like Bob said, the gap, legal obligation and legal liability in the US is very different than elsewhere. And people will go after you, especially if you have assets, no matter where those assets are located. And that’s why it’s so important to have proper legal and tax guidance throughout the process. And we have a cross border tax guy that are amazing resource that Bob works with quite regularly more than one. But one in particular that I happen to use myself, because you know, we’re our own best customers. But again, I just feel that it’s so important. And one of the things to also understand is that when if you’re investing to emigrate, your structure is going to be different than your if you’re investing just to invest, because you’re going to need additional entities. And again, this is where Bob’s team comes in, we work together with our immigration team to make sure that the whole structure makes sense. Sometimes what you think could start as two entities ends up being four or five, because you want to make sure that you’re not marginalizing your investments, with, with loans and with with mortgages and so on. But this is a comprehensive service. And Bob is a key piece of our team and a very valued piece. So thank you.

Bob Bluhm 22:35
Well, thank you. But if I could add, Lauren, I think one of the great values in working with you is that I mean for a client to be working with you is that you bring together a number of different disciplines, you can provide not only real estate expertise, immigration expertise, but you have brought together a cross border tax Council, which we which we work with on a regular basis, you have the asset protection, entity structuring tax reduction side with me. And if other professionals are needed to be brought in, then you certainly do. And so the clients advantage in working with you is that you represent not only the client, just you, but you have this team of professionals that work with you. And that gives the client tremendous comfort to know that all the different aspects of of their project had been looked at carefully from many different angles from a tax angle from a liability and legal angle from an immigration standpoint, from perhaps even a real estate standpoint. And that’s one of the great things that people, your clients really truly appreciated working with you. They’ve expressed that to me many times.

Lauren Cohen 23:52
Well, thank you. Yeah, it’s definitely something that has been morphing over time. And it’s very important, like I just got off a call with somebody who is a very sophisticated Canadian real estate investor, and a member of Q spire you know, keys buyer, we have lots of case buyer clients that we work with. And I was at the keys buyer event with one of our clients in October. And anyway, he I reached out to him on LinkedIn. And we just had a call and he said this was the best buy assistant said I wish we recorded this. He said this was the best 15 minutes I’ve spent in the past two months and I said oh my goodness, and he he was just so happy. He said, I didn’t even know that somebody like you existed, because it’s true. Like most people are piecemealing and they’ll go to Bob. Bob is awesome. But then they’ll go to somebody who may not have the knowledge base that Bob has, or they’ll find a realtor that’s not investor focused or they just won’t understand that they need this whole picture of services and that is what we offer and that is why we do that we only do it as a holistic package, our, our clients are not just looking for immigration or just looking for an entity, they’re looking for the whole package that they need for whatever it is that they want to do, whether it be investing or investing to immigrate. So,

Bob Bluhm 25:12
And let me add, if they were originally just looking for an entity, they soon discover that they there are things that they that they don’t know what they don’t know. And, and and it’s so important to have this very comprehensive view of your tax situation, your immigration situation, how this how this move affects that approach over here. And so that’s why it’s so important to have these many different professionals with different experts, levels of expertise on your team very important to him

Lauren Cohen 25:48
It is also important that somebody that understands what you’re going through as a Canadian, or otherwise investing in and possibly immigrating to the US, because as many of you know, my ex husband was deported on the way back from our honeymoon. So I know when I told Bob that story once he was like, what, and I’m like, Yeah, that’s why I do what I do. It’s not only be sent, but I’ve been there and literally been through how and come back, and I help other people avoid that. And it really means something to me, just like it does, Bob. And that’s why we resonate so well together, because I’m not just doing this to make a few bucks, okay, I’m doing this because I really care about people having the right path and making sure that their assets, and everything else are covered in the process, because you’ve got your family at stake, you’ve moving your family from one country to another, it’s a big deal. And it can’t be underscored enough. And I think that that’s just something that too many lawyers tend to overlook. The other thing is, as I am an immigration lawyer, but most immigration lawyers don’t understand the whole process, like don’t understand the importance of asset protection, and I’m not belittling immigration lawyers, it’s just that immigration lawyers are very specialized. And my practice is much broader. And it has a much I think it’s much more holistic for sure. And it’s not for everybody, because, you know, some people just want that fast, quick answer. They just want to get the visa done. They don’t care what it takes. Oh, and another piece. And this is really important in working with Bob, and I together is that some clients come to us. And we’ve seen this and they say, Oh, I just want to invest, I don’t want to visa. And then they’re in the process of setting up or they’re investing. And they’re like, Oh, well, maybe this is appealing. After all, you mean, I can get us credit if I get a visa and I can do this. And I can do that. And I can access maybe a 1031 exchange that I couldn’t otherwise access as a Canadian. Wow, there’s big appeal there. And so this is something that is important, because it’s not just set up your entities and we’re done. It’s set up your entities with a view to what your goals are, as Bob said, going forward. And that’s so very important. So thank you, Bob, for your time. Sure. Do you have any closing remarks to share with our audience?

Bob Bluhm 28:17
Well, I, I would say, especially to the key Spire, clients who are beginning a coaching program, oftentimes are brand new in real estate, it’s so important to get these entities set up right away. Because when you find the deal, you’re gonna have to act fast on that deal. There’s a lot of competition for good deals. And if you don’t have your entity set up, you don’t have your EIN, you don’t have all the things that are necessary in order to make an offer. Even close on a property, you’ll miss out on that deal. And so you really want to get the entity structure started as soon as possible. So that, you know, in which we take care of I mean, your job is to go find the good deals. Our job is to take care of you on the legal side. And so get those entities set up as soon as possible. So you can get started right away, investing in these great deals in the States.

Lauren Cohen 29:19
Yeah, and these great deals that are only just starting and are going to continue because the market is definitely shifting. And people are thinking that because the rates are so high, that it’s not the right time to invest. And that’s not true. And it’s funny because I just also got off a call with somebody who’s in Columbia, but from Toronto. She lives in Columbia from Toronto, and she was saying she’s a millennial. And she was saying how she wishes or actually I apologize she’s just past being a millennial. And she wishes she had started investing when she was younger. And so why I had one investment property in the GTA and Toronto area for a short period of time and and and I wish that believe me, I wish I had kept some of those. But anyway, the point is that there is no time like the present to start and don’t like don’t let the higher interest rates detract you because that’s temporary. Okay, you can always refinance and it’s got to be worth it because the cap rates are so amazing right now and your your opportunity to buy at a discount on your, you know, like leverage your opportunities. Now, don’t wait until the rates go down because then the prices are gonna go up. So it’s all relative, right? And you have to just act well the opportunity is there because like Bob said, the deals are in front of us every single day, and you’re going to miss out if you don’t have your structure set up. So please reach out to us again. I’m Lauren Cohen. I thank you for joining us here at our investing across borders podcast. You can find us at or our masterclass Imagine that and we would love to connect with you and, and figure out a way to help you invest live work and potentially play across borders. So I’m Lauren Cohen signing off for today and thank you to Mr. Bob bloom for your time. It was a pleasure. Thank you so much. Bye for now.

Thanks for listening to investing across borders with Lauren Cohen. Make sure to check the show notes for any links and for guests contact information. If you have questions for Lauren. Please reach out to her at founder at E counsel If you enjoyed today’s episode, please subscribe rate review and share the podcast with a friend