Anyone of Here Diversifying South of the Border?

[2ndstory]

Curious if there is anyone on here that owns property in the US as well as Canada?

I`m trying to decide whether to diversify by acquiring some in the States. The buyer`s market is still in effect and I was in Phoenix a couple weeks ago and looked around a bit. There seems to be deals to be had. I sold a property here in Winnipeg recently and got about 13k over list, which was good as a seller, but buying here is tough right now. I`ve been outbid and I didn`t even bother bidding on a duplex last week because it was listed at $269 000 and my agent figured it would take $317 000 to get it. It went for $318 000. Unless I live in it, there is not going to be any poitive cashflow to be had.

Anyway, looking south. Opinions?

Nik

 

[RedlineBrett]

Save yourself the trouble and don`t even bother looking. The US is so overbuilt and phoenix is about as bad as it gets.

Unless you plan to use the property as a second home or something I would steer clear.

 

[Thomas Beyer]

QUOTE (2ndstory @ Jun 8 2010, 02:41 PM)
..



Anyway, looking south. Opinions?




I used to own a condo there .. in Scottsdale, AZ .. all went reasonably well for 3 years until 9/11 .. and then all hell broke loose .. and in my 12+ year investment career this condo was the ONLY condo / project where I ever lost (my own) money on !



We also own a large 300+ unit project 1/2 h north of Dallas in Denton, TX ( www.theparksofdenton.com ). This project was bought for low 40's/door in fall 2007 and is doing OK .. but not WOW .. worse than our W-Canadian much higher priced assets !



are you looking for a 2nd home .. or an investment property ?



issues to consider:



1) harder to get a mortgage for Canadians .. likely 70% LTV max.



2) needs to managed impeccably .. who does this for one condo or house ?



3) US taxes have to be paid on income and capital gain



4) US currency could go against you .. so property goes up 30%, you pay US taxes on the gain, and $s come back with a stronger Can $ wiping put your gain



5) some heavily marketed projects are overpriced



6) Most sunbelt cities have some very nice and some very ugly areas - so do your research .. 5 trips minimum once you've decided on ONE city



7) they have termites, so ensure the building is concrete or brick



8) even one flight / year + US tax filings will eat away your measly annual cash-flow, so this is entirely a capital appreciation play



9) very high vacancies in summer



10) iffy economy .. poor now .. but will improve



11) many unfinished sub-urbs or condo projects .. so you may be stuck with this unfinished state for 2-3 years .. tough to rent there ..



12) left leaning government



13) high deficit for years, thus likely currency erosion



14) high property taxes, possibly even higher for non-residents .. check local by-laws and state laws !



15) some condo projects are 60%+ vacant and in foreclosure .. thus condo fees are very high for the remaining residents as much of the condo fees are unpaid !



16) some sub-divisions are 90%+ unsold .. hard to re-sell a home there .. and also tough to rent if rest of subdivision is all dirt



MY Conclusion: The ONLY reason to buy in the US (as opposed to in W-Canada) is either:



A) for a personal 2nd home because you wish to spend 3-5 months there as the grass is indeed greener than in Canada in the winter .. and the pools are ice-free .. so a nice 2nd home environment for us snow-birds .. .. but the green grass also is unplayable for 4 months .. @ +45 during the day and +32 @ night .. or



B) it is a larger complex in a growing city well managed, or



C) you have to go to a certain city anyway (maybe because your mother retired there) and as such you have time to look around and find some deals in ESTABLISHED neighborhoods that can be well managed by a 3rd party (not you !!)

 

[2ndstory]

Anyone have anything good to say about it?

Seriously though, what about the old saying "buy low, sell high"? It seems like that will work in the States right now. Up here, everything is high that I look at. If it`s low, there`s good reason. I don`t want to buy at the top of a cycle, and if Phoenix as at the bottom and about to pull up, it seems to make sense to look there.

Nik

 

[Rickson9]

QUOTE (2ndstory @ Jun 8 2010, 04:41 PM) Curious if there is anyone on here that owns property in the US as well as Canada?

Anyway, looking south. Opinions?

Nik

My wife and I own, and continue to buy, cash flow property in Phoenix, AZ. We don`t "buy low, sell high", but tend to "buy low, and hold for a long time".

From our limited perspective it is pretty easy to make money in Phoenix, AZ IMHO.

The only thing I would recommend is to ignore opinions from individuals who have never owned property in the U.S., but I think that`s kind of obvious if you think about it...

 

[ZanderRobertson]

Nik,

I met a lady this past weekend who thoroughly convinced me that Rickson is right. Not that I doubted you Rickson

email me you if you`d like to make contact with her. I believe she could help you a lot as she specializes in Arizona. I tried PMing you but realized you don`t have access to this function.

you can reach me at [email protected]

Zander

 

[2ndstory]

QUOTE (ZanderRobertson @ Jun 8 2010, 11:19 PM) Nik,

I met a lady this past weekend who thoroughly convinced me that Rickson is right. Not that I doubted you Rickson

email me you if you`d like to make contact with her. I believe she could help you a lot as she specializes in Arizona. I tried PMing you but realized you don`t have access to this function.

you can reach me at [email protected]

Zander

Thanks, Zander. Email sent.

Nik

 

[2ndstory]

Well, I`m back and forth in my head with the AZ property. I was ready to book my flights and then I was on the phone with Peter Kinch, and he made some good points. Unsure what to do. If there are properties in AZ that can cashflow really well, and cashflow is the goal, why not?

Thoughts?

Is Jim the only one one here who owns US / AZ property?

Nik

 

[Thomas Beyer]

QUOTE (2ndstory @ Jun 18 2010, 07:49 AM) If there are properties in AZ that can cashflow really well, and cashflow is the goal, why not?
why not if:
a) someone can manage them well, and
b) they are in a decent appreciating area, and
c) you can get a decent mortgage, and
d) you understand the tax implications while holding and exiting, and
e) you understand US weather, termite, mold liabilities, and
f) you see significant value upside, and
g) you those properties as better investments than Canadian ones, per cash $ invested, and
h) you plan to go down there anyway and enjoy it