An Ahmedabad family office receives a forwarded message: a pharmacy building in Texas, leased to a national chain, offered to Indian investors in fractions. The pitch is polished and the photographs are sharp. The family's advisor has two days to give an opinion.
He has spent twenty years analysing Indian equities and property, but never a US net lease deal. Who owns the building? Who pays for the roof? What happens if the tenant leaves? And what will land in the family's inbox at tax time?
Those questions have clear answers, and an advisor who can answer them becomes far more valuable to a family weighing its first US property. This guide explains how US commercial real estate investment works for Indian clients, from property types and metrics to deal structures, sponsor due diligence and the tax forms that follow.
What It Means for Indian Clients
US commercial real estate investment means owning a share of income-producing property, such as net lease buildings, self-storage facilities or multifamily communities. For Indian clients, it usually happens through a private placement: the client invests under the Liberalised Remittance Scheme, alongside other investors, in the structure that owns one property, with a sponsor managing the asset.
Three things decide whether a deal suits a client: the property, the sponsor and the structure. The rest of this guide takes each in turn.
The Three Main Property Types
| Property type | What it is | Who usually pays running costs | Main risk to understand |
|---|---|---|---|
| Net lease | A building leased to one tenant on a long lease, such as a pharmacy or distribution centre | Mostly the tenant, under a triple net lease | Reliance on a single tenant |
| Self-storage | Units rented to individuals and businesses on short terms | The owner | Local competition and new supply |
| Multifamily | Apartment communities with many tenants | The owner | Operating costs and local rent trends |
In a triple net lease, the tenant pays property tax, insurance and maintenance on top of rent. That makes the owner's costs predictable, but it concentrates risk in one tenant's ability to pay and to stay.
Key Metrics in Plain English
The cap rate is a property's annual net operating income divided by its price. It helps compare properties at a point in time, but it is a snapshot, not a promise of future income. Occupancy is the share of space that is leased, and matters most for self-storage and multifamily. Lease term remaining shows how long current leases run, and matters most for net lease. Loan-to-value shows how much of the price is borrowed; more debt means more risk if values fall. For a longer explainer, see our article on cap rate, IRR and NOI for Indian investors.
How Private Deals Are Structured
Each property is usually held in its own legal entity. The sponsor is the firm that finds, finances, manages and eventually sells it. Cash from the property is paid out through a distribution waterfall: investors typically receive distributions first, up to an agreed preferred return, before the sponsor shares in profits.
Offerings to Indian clients are typically made under Regulation S, the SEC exemption for investors outside the United States, and are not registered with the SEC. On Raveum, offshore investors invest through a US corporation, known as a blocker, which holds the property interest on their behalf and simplifies their US tax paperwork.
Five Questions for Any Sponsor
- Track record: has the sponsor completed similar deals from purchase to sale?
- Alignment: does the sponsor have its own money in the deal?
- Fees: what does the sponsor earn, and when?
- Debt: how much is borrowed, and when does the loan mature?
- Documents: do the legal documents match the marketing?
Private placements in the US usually involve a Form D filing, searchable on the SEC's EDGAR database, which helps check a sponsor's past offerings.
US Tax Forms Your Clients Will See
| Form | What it is | When it matters |
|---|---|---|
| W-8BEN | Confirms the investor is not a US person | Before the first investment |
| 1042-S | Reports US-source income, such as dividends from a blocker corporation, paid to a foreign investor, and any tax withheld | Each year, for offshore investors |
| K-1 | Reports a partner's share of a partnership's income, gains and losses | Each year, for investors who hold partnership units directly, usually US investors |
Because Raveum's offshore investors invest through a blocker, Indian clients typically receive Form 1042-S rather than a K-1. For the broader tax picture, see our article on US real estate taxes for Indian investors.
Reporting in India
Resident clients disclose the investment in Schedule FA of their ITR each year. Where US tax has been withheld, they may claim credit under the India-US tax treaty by filing Form 67 before the return. The remittance itself follows the LRS rules and TCS thresholds covered in our TCS on foreign remittance guide.
Risks to Explain
Private real estate is illiquid, so clients should expect to hold for the full holding period. Property values can fall, tenants can leave, and distributions are not guaranteed. Debt magnifies losses as well as gains. Currency movements can reduce returns in rupee terms. And a single property is a concentrated position. US estate tax can also apply to some US holdings; see Raveum's US estate tax guide.
How Raveum Fits
Every deal on Raveum passes Raveum's review before it reaches investors, and each is held in its own legal entity with full offering documents. Through the Raveum US real estate partner program, advisors introduce eligible clients. Clients invest directly with Raveum under LRS, and Raveum handles KYC, agreements and US tax forms. The advisor's own judgement about each client stays central.
For how this fits alongside other global routes, see our guide to GIFT City mutual funds and other global investment routes.
Frequently Asked Questions
Yes. Eligible resident Indians can invest in US commercial real estate through private placements, remitting funds under the RBI's Liberalised Remittance Scheme within the USD 250,000 annual limit. Offerings to investors outside the US are typically made under the SEC's Regulation S exemption and are open only to eligible investors.
A triple net lease is a lease where the tenant pays property tax, insurance and maintenance in addition to rent. It is common for single-tenant buildings such as pharmacies and distribution centres. It makes the owner's costs predictable, but it concentrates risk in one tenant's ability to keep paying.
A cap rate, or capitalisation rate, is a property's annual net operating income divided by its purchase price. Investors use it to compare properties at a point in time. It is a snapshot based on current income, not a forecast, and it does not account for debt, future rent changes or the eventual sale price.
A distribution waterfall is the order in which cash from a real estate investment is paid out. Typically, investors receive distributions first, up to an agreed preferred return, before the sponsor shares in profits. The operating agreement sets out each tier, so advisors should read it before recommending any deal.
A preferred return is the level of distributions investors are entitled to receive before the sponsor takes a share of profits. It sets the order of payment, not a guarantee: if the property does not generate enough cash, the preferred return may not be paid in full.
It depends on the structure. Investors who hold partnership units directly receive a Schedule K-1. Offshore investors who invest through a US blocker corporation, as on Raveum, typically receive Form 1042-S instead, reporting dividends and any US tax withheld. The offering documents confirm which applies.
Resident Indians disclose US property investments held abroad in Schedule FA of their income tax return each year. Where US tax has been withheld, they may claim foreign tax credit under the India-US tax treaty by filing Form 67 before the return. A CA should confirm each client's position.
Private US real estate is illiquid. Investors should expect to hold their interest for the full holding period set out in the offering documents, and transfers before exit are usually restricted. It suits clients who do not need the money for several years and who hold more liquid assets elsewhere.
Judge the Sponsor, Not the Pitch
The forwarded message about the Texas pharmacy is only the start. An advisor who understands the property type, reads the metrics, questions the sponsor and knows which tax forms will follow can turn a polished pitch into an informed decision. That is what families want from an advisor when they look beyond India for the first time. To introduce clients to reviewed US commercial property, see the Raveum partner program.
About the author: Miya Israni is Chief Marketing Officer at Raveum, where she leads marketing for the company's sponsor, partner and investor programs.
This guide is for general education for professional advisors and is not legal, tax or investment advice. Private real estate investments carry risk, including loss of capital, illiquidity, leverage and currency movements. Distributions are not guaranteed. Offerings on Raveum are available to eligible investors only and are not open to the general public.