1st Property - Domestic or South of the border?

[lilbuffet]

Hi,

I have been going to a few real estate seminars and have been reading a few books. I am currently in my last year of university and my friend and I really want to start investing in real estate.

We see the opportunities down south, particularly in Arizona for real estate, but we are not sure if the first property we invest in should be there or in Canada? The laws in the U.S vary from state to state and can get confusing. Although the timing couldn`t be better, what would you suggest doing.

I have been doing some property valuations have looked at cash flow, NOI, ROI, GRM, is there anything else I should be looking at just to get some preliminary calculations done?

Any help will be appreciated

 

[jkcomm]

Hi there,

Speaking as a real estate newbie, I wouldn`t venture into US real estate in a split second. The things that can cause potential problems are:

1) Taxes (property and rental income) - In some states the government are not friendly to non-local investors in terms of property taxes. You may end up paying higher than local residents. What about taxes on net rental income? Could net rental income be subject to taxes in Canada as well as the US?

2) Laws - very complicated I`d imagine. I would keep it simple and buy "local".

3) Foreign exchange issues - given the sudden drop in the Canadian dollar, some of the deals down south might not look so attractive anymore (I could be wrong!).

Long story short, I would stay close to home and don`t hesitate to seek expert advice (which there are many in all the REIN forums). Last but not the least, do your DUE DILIGENCE!

Good luck.

James

 

[jarrettvaughan]

The grass is not always greener on the other side!

Why buy in the US when you can buy in Alberta especially as a newby. Stay in Canada, you will make more money, learn more, get frustrated less. Alberta is best in the world, do fall into the trap that you will make more money in the US.

 

[Thomas Beyer]

How much cash do you have ?

What is your timeline ?

taxes, laws, rental laws, and getting a mortgage are all MUCH more complicated in the US ! If you ave no job and intend to buy a house in the US: good luck getting a mortgage right now .. hard in Canada now .. harder to impossible in the US !

Yes, there are some great bargains in the US, but can you rent them from afar for 2+ years until their slump is over ? There is usually a reason why prices are way down in some markets !

Let`s not be naive .. focus on your studies .. focus on your first (or next) job, buy your own (tax free gain !!!) house or condo first, perhaps with a tenant or 3 fellow students in it .. THEN look for an investment property !

You also have to become an expert in an area and a type of property .. so multiple visits are relevant .. and it costs more to fly to AZ or NV than drive within BC or AB !

Keep the dream alive .. but work on the means and timing .. you`ll be a millionaire .. in time .. ! (it took me 10+ years to get from "gee, this real estate stuff seems very profitable" to buying my first revenue condo 12 years ago ...) .. with REIN support you`ll get there a LOT faster .. but you have to have the $s, the time and the education !


Related blogs:
1) how to get started: http://myreinspace.com/public_forums/General_Discussion/61-4391-How_to_get_started_.html

2) 5 ways to make money: http://myreinspace.com/public_forums/General_Discussion/61-3347-5_ways_to_make_money.html

 

[MikeMcCrae]

The less additional problems you create the easier this business is. Start local, the closer the better for your first one or two. Then as you learn you can do more adventurous stuff. Remember that most seminars out there are American and they don`t completely apply to you. And often a lot of there information regarding Canada is just plain wrong. Ensure your success. Keep it simple and follow the REIN principles and don`t look for the quick buck. Real Estate is supposed to be a long term investment.