How to get started in real estate investing while living overseas?

[Rosseau]

Hello all,



New member here, I've been lurking for a while but this is my first post. My husband and I are Canadians currently living overseas and planning to move back to the Ottawa area within 2-3 years. We have always wanted to get into real estate investing once back in Canada but I have been trying to think if it's possible to get a head start on it while we live overseas.



The avenues I have so far explored don't seem to be feasible due to restrictions on non-resident investments, undesirable tax consequences or simply the number of flights back and forth required to purchase and manage a property. I think I'm confined to just researching the market and developing a business plan and financial model, which I've been doing for a couple of years now. Any other ideas on how to get started? It's a bit frustrating to have capital and plans to use it and be forced to sit on the sidelines.



Thanks.

 

[GaryMcGowan]

Research and Education should never be taken lightly when investing in Real Estate.



One of your best assets is your team. I know many people in your situation that have decided to partner with experienced Real Estate Investors to purchase properties. The Real Estate Investor should bring to the table a solid track record of investments and partnerships. They can be the ears and eyes on the street to locate and research properties to managing the investment. Many partnerships like this exists had have been very successful. Due diligence of course needs to be taken by both parties on each other. A Joint Venture can be a very powerful way to invest your money.

 

[housingrental]

Do not invest

Learn, wait, and then take action when you're back in Canada

The world might look a little different in three years

 

[ChrisDavies]

I bought real estate here in Edmonton and then moved overseas for a while. The key is having a good team and reasonable expectations. I (and some other Edmonton Realtors) have teams we like in place, allowing a lot of our clients to buy places without having to fly out here at all.



Assuming you live in a country with a tax treaty with Canada, the taxes shouldn't actually be that complex. Financing can be a little bit tougher, but still managable. Try talking with Todd Millar (www.glennsimoninc.com). He and Danielle ran their Canadian investment company while living in Japan for several years.

 

[BrianPersaud]

best way to get a head start is understand what's going on in the neighborhoods you are familiar with by spending an hour a day with realtors, planners, neighbours. Listen and see and here what the trends are. In your conversations you'll learn what's right for you.



Have a lot of cash? Perhaps buying a place in Ottawa in the way of development for cashflow. Not a lot of cash? consider neighboring towns like Enbrun, Casselman, Alexandria, Hawksbury, Rockland and Cornwall and buy cheap for cashflow

 

[Rosseau]

Thanks for the suggestions - the advice on getting together a team is great but again it requires being on the spot to meet people and get to know them. Our savings are in USD which is another incentive to sit on the sidelines for a while.



However, vacant land is an interesting idea, we're not looking for cash flow right now and we live in a tax haven so we're not anxious to attract the notice of the CRA. I haven't filed a tax return in 12 years!

 

[KeenanTameling]

Hi There,

I think if you are to get better advice from the forum you should really reveal your situation.

My questions to you would be how long have you been out of the country? Do you own a home here now?

Do you have family in Canada? How often do you visit?

You should contact the CRA and get yourself sorted out as to what you can and can't do while away. Whether you file now or later you are still going to have to file, an accountant and tax lawyer will provide key advice that will guide you appropriately.

For Canadians any growth you have on the value of your primary residence is tax free. You need to weigh that math against your tax haven investment returns and do what gets you the best ROI. Return On Investment should be your first consideration, tax savings second.

 

[Rosseau]

To clarify: I am a CA, under Canadian tax law once you become non-resident (as defined by the CRA), you no longer have an obligation to file Canadian tax returns (unlike the US, where you are always taxed regardless of residency if you are an American citizen). I've been out 12 years now and was very careful at the time to cut all ties to Canada that might deem me a resident although the government is free to dispute my status at any time which is what I meant by not wanting to attract notice. We do have family in the Ottawa area and visit twice a year or so.



Establishing myself as a deemed resident of Canada by buying a house there would cost me far more in income taxes than I would gain in appreciation. We've done quite well in the US stock market over the past few years and I hoped that buying real estate in Canada would jump-start our future plans at the same time providing portfolio diversification. However, I think we've pretty much decided to wait on the sidelines for a couple of years.

 

[wgraham]

Some will argue with me on this one but I think that the terms "getting started" and "investing from a far" should NEVER be mixed. Your first RE investments should be relatively close to home. The only way to invest from a far is to partner with a local expert!! This is money and more importantly time well spent! Why risk screwing up your life and being forced to fly back and forth from Nirvana to your crappy rental property in Fort Mac!! Don't do it!



Pick a market that you think is going to help you get closer to your goals and then find the expert in the local market and partner with them! They are going to outperform you 9 times out of 10 and you get to have a life!! Outside of that you are working for free and compromising your lifestyle (ask me how I know this )

 

[invst4profit]

I agree 100% with Wade on this topic and for me applies to all investors starting out even living within the country or provence. My advice for those starting if you can not drive to the property in 45 minutes or less you are asking for trouble.



The number of times I see LLs from out of provence asking advice on how to get rid of a bad tenant or how to serve a tenant with eviction papers is growing by leaps and bounds. This is particularly common in Ontario where the RTA and the LTB have educated tenants, along with the free support of legal aid, on how to live rent free for 3-4 months. This is a growing problem which I expect will only get worse.



When starting out if you can not manage a property yourself have a partner that can. LTB hearings are a nuisance when having to fly in from another province or country only to have the tenant ask for and be granted an adjournment for a month on some trumped up excuse.

 

[Cory Sperle]

Rosseau, I was in the exact same situation only 6 years ago. I was a Canadian non resident living in asia and had cash to invest and nowhere to put it, but wanted to get into real estate. I could have waited until I returned to canada but after exploring the headache factor of self managing, I decided to invest with an expert in multifamily to grow my funds and learn at the same time. I'm glad I did because I made money, found a fantastic mentor who showed me the ropes, and have since bought two apartment buildings with my own cash. The JV is a fantastic way to grow your funds and learn at the same time, provided you partner with someone who has a good track record, has time for you individually, and has taken measures to reduce risk and protect your money.

 

[Thomas Beyer]

[quote user=CorySperle]Rosseau, I was in the exact same situation only 6 years ago. I was a Canadian non resident living in asia and had cash to invest and nowhere to put it, but wanted to get into real estate. I could have waited until I returned to canada but after exploring the headache factor of self managing, I decided to invest with an expert in multifamily to grow my funds and learn at the same time. I'm glad I did because I made money, found a fantastic mentor who showed me the ropes, and have since bought two apartment buildings with my own cash. The JV is a fantastic way to grow your funds and learn at the same time, provided you partner with someone who has a good track record, has time for you individually, and has taken measures to reduce risk and protect your money.




Well said Cory !! Good advice where I can add little !!



.. and well done too btw !!

 

[housingrental]

Hi Cory

Who is the mentor?

 

[RandyDalton]

I can't agree more with Wade.



Best thing would be to start researching Provinces and Towns now. Make decisions about where you want to invest. Then start researching Real Estate Investors who are experts in that town. Choose an investor based on a JV relationship that brings value to the table of what you are looking for. And start investing.



It is good to hear that you have done well in the US Stock Market over the past few years. Many have not. However if you look at leverage and the returns available from Real Estate I think you will find they are considerably higher with far less risk.



Regards...Randy D.

 

[RedlineBrett]

I would echo the posts of Thomas and Cory regarding being on the money side of the equation in this instance.



Invest with a good operator - you'll learn lots from them and you'll be a better investor when you get back to Canada and can be more hands-on.

 

[Thomas Beyer]

[quote user=RandyDalton]Best thing would be to start researching Provinces and Towns now.


That is hard from afar. You MUST be on the ground for a while.



Therefore, consider a JV with a REIN member .. or better; several. Take your considerable money, say 500K, and invest in 50K or 100K blocks.



Many folks specialize in areas or type of properties: some do apartment buildings .. some do student housing .. some do up-down duplexes, some do run down crappos in bad parts of town, some do townhouses .. some do US flips .. some do lease-to-own ..



ALL of those work if you partner with someone that knows what they are doing by proving the story to you with



a) a track record and

b) a compelling deal and

c) a story about themselves, the capable operator !!



Check out a few .. and later .. when you're back you might pick one or 2 [or maybe 3] of those specialized areas and do it yourself .. with far more work and far more risk .. but with 100% of the upside as you do all teh work yourself (upfront and ongoing) and also sign for the mortgages yourself

 

[Nicola]

I am a non-resident Canadian living overseas (Korea). I don't think buying property in Canada, if it is clearly for investment purposes, would be considered a sufficient tie to Canada to deem you to be resident. Talk to a good Canadian accountant.



My husband and I own properties in Canada, and we have done it all from Korea. It is certainly possible, though obviously not as easy as if you were living in Canada. More hurdles to get over, and not as easy to get mortgages and insurance...



There is a withholding tax of 25% of net rental income (if you file an NR6 Undertaking) - that's really the only tax hassle - and you will have to start filing annual tax returns for your rental income.