Invest while posted overseas?

[vinco]

Hi everybody,

My wife and I just moved to Ottawa.
We`re interested in real estate investing but we`re really beginners.

Do you think it`d be wise to purchase a small property ($150-250k range - 20-25% down) in Ottawa (or on the Quebec side in Gatineau)? We would live in the property for a few months and then rent it while being posted overseas (3 years out of the next 5)?

My main worry is how to manage the property while abroad.

Since we`re new to the city, we don`t have any family/friends that we can rely on in case anything goes wrong.
A property manager would of course be hired but would this be enough?

Or would it be wise to wait and invest in papers instead? Are there any other alternatives we should consider?

Thanks for your help.
REIN seems like a really good network to be part of. I`m glad we found it.

- Vincent

 

[housingrental]

What rent will the property be able to generate at what purchase price?
Are you looking to move back in to the property after 3 years? or keep it as a rental? or sell it?

 

[DaveRhydderch]

I know lots of people who live elsewhere and invest in Canada. They key will be to find a good property manager, and good tenants. The advantage you would have is you could find tenants before you leave. Sign them to a one year lease, get to know them a bit, and you`ll find its very easy to own a property and live elsewhere.

 

[Anonymous]

Hi Vincent,

My wife and I were in a similar situation last year when we purchased our first property while living in the US (a KWC triplex that we now live in). We`re also new to the city and don`t have much of a network yet to rely on. We chose to manage it ourselves only because we wanted to `learn the ropes` before involving a property manager.

Granted we were living within only a day`s drive (or 2hr flight), we still don`t regret buying sooner rather than waiting.

You may find some REIN members who manage property that you like, respect, and trust.

Mathias Muleme Ssenabulya

 

[Nicola]

QUOTE (vinco @ Apr 8 2010, 05:50 PM) Hi everybody,

My wife and I just moved to Ottawa.
We`re interested in real estate investing but we`re really beginners.

Do you think it`d be wise to purchase a small property ($150-250k range - 20-25% down) in Ottawa (or on the Quebec side in Gatineau)? We would live in the property for a few months and then rent it while being posted overseas (3 years out of the next 5)?

My main worry is how to manage the property while abroad.

Since we`re new to the city, we don`t have any family/friends that we can rely on in case anything goes wrong.
A property manager would of course be hired but would this be enough?

Or would it be wise to wait and invest in papers instead? Are there any other alternatives we should consider?

Thanks for your help.
REIN seems like a really good network to be part of. I`m glad we found it.

- Vincent

Hi Vincent,

My husband and I own several properties in Canada and live in Korea, so it`s definitely possible. However, it is really, really, really important to find a good property manager who you can trust, otherwise it will be very stressful. It is definitely helpful to have someone in town who can look out for you as well, but not essential.

You should also think about some possible tax consequences (speak to an accountant):

- if you change it from principal residence to a rental and back to a prinicipal residence, you may have to pay capital gains tax on the amount it went up when it was a rental. (Though you can file a section 45(2) election to keep it as a "principal residence" for up to 4 years, even though it isn`t. See the explanation here (#13): http://www.tavana.ca/newsletter/newsletter.asp?iddetail=18)

- I don`t know what you will be doing overseas - you say "posted", so I`m guessing you are either military or government, in which case what I am about to say doesn`t apply. If you are going overseas independently (to a low tax jurisdiction), and don`t want to continue to be seen as a Canadian resident for tax purposes, keeping a home available to you could be seen as a significant tie to Canada.

Good luck,
Nicola

 

[invst4profit]

Contrary to what others advise, in your case, I would strongly advise against owning your first property while out of country.
I say in your case because you have posted some information that concerns me.
Number one this will be your first income property. Rental properties come with considerable risk. You do not simply buy and wait for the money to roll in. You have no contacts and no friends in the area to assist when things go bad,and at some point in time they will go bad.
Only having a few months to put your plan in place is not realistic.

Good property managers are as difficult to find as good tenants. Again without contacts in the area and considering you will have only one property finding someone to properly manage it is extremely difficult and unlikely. Property management companies can and do neglect properties, they can place tenants without proper screening, not monitor the properties and often not chase delinquent tenants.

There will be times when you may be forced to return to Canada in short order to deal with major issues such as evictions.

If you were already experienced in this business my advice would be different but in your case this decision could go terribly wrong and I would not advise going forward at this time.

It`s easy for other investors to advise someone to get into the game but remember they are already experienced in owning properties. Also when things go bad they will not be there to pick up the pieces. Can you sleep easy at night in another country not knowing if your tenant is paying there rent, destroying your property or setting up a grow op in your basement.

 

[Tony Miller]

QUOTE (invst4profit @ Apr 10 2010, 10:47 AM) Contrary to what others advise, in your case, I would strongly advise against owning your first property while out of country.
I say in your case because you have posted some information that concerns me.
Number one this will be your first income property. Rental properties come with considerable risk. You do not simply buy and wait for the money to roll in. You have no contacts and no friends in the area to assist when things go bad,and at some point in time they will go bad.
Only having a few months to put your plan in place is not realistic.

Good property managers are as difficult to find as good tenants. Again without contacts in the area and considering you will have only one property finding someone to properly manage it is extremely difficult and unlikely. Property management companies can and do neglect properties, they can place tenants without proper screening, not monitor the properties and often not chase delinquent tenants.

There will be times when you may be forced to return to Canada in short order to deal with major issues such as evictions.

If you were already experienced in this business my advice would be different but in your case this decision could go terribly wrong and I would not advise going forward at this time.

It`s easy for other investors to advise someone to get into the game but remember they are already experienced in owning properties. Also when things go bad they will not be there to pick up the pieces. Can you sleep easy at night in another country not knowing if your tenant is paying there rent, destroying your property or setting up a grow op in your basement.

I agree with invst4profit. Remember that you don`t need to be a landlord to invest in real estate. Maybe a hands-off investment like a REIT or a rent-to-own opportunity while you are out of the country would be good to start off with? There are many more knowledgable investors than myself on this forum who could provide you with information about these. Also, try to learn as much as you can while you are away.

 

[julieCEO]

I don`t know what type of investment you are going to make. But just remember that you have complete idea about that area. Batter you contact any agent in that area. They will help you in making investment.

 

[surfermoe]

Vincent, my wife and I live and invest in Ottawa, and we`re also planning to move overseas (although not for another two years or so).

As you know, there are hundreds of foreign service officers in Ottawa who are regularly posted overseas and rent out their homes while abroad. We know many who have done so, and our next door neighbours are currently in Mozambique on a 3-year posting with CIDA.

Having said that, I strongly feel that it`s essential to "know" your home/rental property before leaving it to a property manager. There may be quirks about your property that are better to let the prop mgr know about before you leave. We`ve also been advised to hire a prop mgr at least six months prior to leaving the country, so a face-to-face relationship is established beforehand.

Re. the price you`re planning to pay, I can tell you from experience that you`ll only find decent properties for that price on the Gatineau side. Even shacks in Vanier are selling for more than $150k-$250k these days.

Send me an email if you want to chat: moe at keywordsblogger dot com.

Moe