Can I invest in real estate through an LLC being on an H1B visa in the US?

Question

I understand that I allowed to make passive income being on an visa and not be actively employed / working for another company. I am not trying to work for another company, but I just want to pool money with other investors into buying a house and using it for short term rentals.

• Does being in an LLC mean that I am employed by the LLC ?

• Has anyone else done this before ?

• Can I legally do this ?

I found conflicting answers on the web:

• avvo says I should avoid it
• this source says that it is possible

Looking for some guidance on this question

Answer 1

You really, really, really want to speak with an attorney that specializes in immigration issues before doing anything. It may be possible to structure the investment in a way that doesn't jeopardize your immigration status. But trying to do it yourself (or relying on the advice of random folks on the internet) has a good chance of violating your visa.

In theory, if you can show that you are an absolutely passive investor that has no part in running the business, you could do this. Proving that you are a passive investor in a closely held company is going to be hard. An immigration attorney might be able to help you thread that needle.

From a purely monetary standpoint, however, if you want to invest in real estate, why not simply buy shares of a REIT (real-estate investment trust)? There would be no concern that you were anything other than a passive shareholder. You'd have a lot more diversification than you would in a closely held company. And it's a lot easier to buy and sell shares in a REIT than in real estate that you own through a closely held company. Most of the reasons to invest in real estate directly rather than through a REIT involve doing some amount of work yourself rather than paying someone else to do it. But doing any of those things would violate your visa.

Answer 2

I suggest to spend <$250 on a consultation with an immigration attorney to be sure. In fact, many would provide free 30 minutes consultations, which should be enough here.

I'll answer based on my understanding, as a layman.

I understand that I allowed to make passive income being on an visa and not be actively employed / working for another company.

That is correct. You're allowed to make investments regardless of your immigration status. You can make investments even without being in the US at all.

Does being in an LLC mean that I am employed by the LLC ?

No. You're a member of the LLC ("partner" from tax perspective). As long as you're not actively participating in the business (i.e.: you're the "silent" partner), you should be fine. The partnership/LLC Operating Agreement should explicitly spell out your roles and responsibilities.

Has anyone else done this before ?

For sure.

Can I legally do this ? I found conflicting answers on the web: avvo says I should avoid it, this source says that it is possible

Avvo is a advertisement/promotional service for lawyers. You will not find answers to legal questions there, but you'll find plenty of lawyers who will answer them for you - to you. On the page you linked to all the responses are basically "pay me for legal advice and I'll tell you".

The second article is written by a doctor. I wouldn't ask a lawyer to perform a surgery on me, so trusting a doctor on legal issues is probably similarly ill-advised. However, I found that article to explain the issue in detail and within reason, to the best of my understanding and I agree with the conclusions.

The devil is in the details and you need to have the paperwork to cover all your assets. An attorney can definitely help you here and is worth the small amount they'd charge for the work.