Canadians Snap Up U.S. Properties

Rickson9

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QUOTE (Berubeland @ Aug 15 2010, 08:51 AM) Rickson9 even though you are new to real estate investing you are a very savvy investor and unlikely to be taken in such BS.

I never say never. I make mistakes like anybody else (if not more so). I`ve only held RE for 10 years so I still have a ways to go.

Paying $35K per condo to collect $8500 per year in gross rent seems like a cheap way to learn.
 

addbo

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QUOTE (Rickson9 @ Aug 15 2010, 09:37 AM) I never say never. I make mistakes like anybody else (if not more so). I`ve only held RE for 10 years so I still have a ways to go.

Paying $35K per condo to collect $8500 per year in gross rent seems like a cheap way to learn.

A very interesting topic. Thanks for sharing Rickson9! At the end of the day each person is willing to share as much or as little as they like... just like the topic on Don Campbell`s Net worth solicited responses as to how it was not anyone`s business but that he was still free to share that he had 193 doors =) Is it fair to harp on a guy who at least took the time to share his insight?

I found it very interesting to read this topic and see the amount of negativity on Rickson9`s system. Isn`t the number one trait to avoid and control in Don Campbell`s is Negativity? "People can always find a reason for not doing something". While some skepticism is valid ("What`s behind the curtain")... I don`t really see the problem with what Rickson9 has shared (or not shared). At the end of the day if you want to invest in the US... or anywhere else ... you have to do your own due diligence... does it matter really what zip code he`s investing in... he`s told you Phoenix,AZ which is already pretty specific... and you can do your own MLS lookups to see where prices are in the range he`s talking about for his 2 bedroom locations... and then do a crime lookup and see which of those has the lowest crime rate =) (You`ll probably find his zip code in the list of zips that would crop up)

While the scarcity mentality is interesting... since REIN always teaches about how there are always opportunities out there... the whole capitalistic system is based on supply and demand... and people do make fortunes based on the scarcity of a resource (oil anyone?).

I for one applaud Rickson9 for sharing his current strategy and not letting the negative nancy`s prevent him from working towards his personal Belize.
 

TonyMandrique

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QUOTE (addbo @ Aug 24 2010, 09:26 PM) A very interesting topic. Thanks for sharing Rickson9! At the end of the day each person is willing to share as much or as little as they like... just like the topic on Don Campbell`s Net worth solicited responses as to how it was not anyone`s business but that he was still free to share that he had 193 doors =) Is it fair to harp on a guy who at least took the time to share his insight?

I found it very interesting to read this topic and see the amount of negativity on Rickson9`s system. Isn`t the number one trait to avoid and control in Don Campbell`s is Negativity? "People can always find a reason for not doing something". While some skepticism is valid ("What`s behind the curtain")... I don`t really see the problem with what Rickson9 has shared (or not shared). At the end of the day if you want to invest in the US... or anywhere else ... you have to do your own due diligence... does it matter really what zip code he`s investing in... he`s told you Phoenix,AZ which is already pretty specific... and you can do your own MLS lookups to see where prices are in the range he`s talking about for his 2 bedroom locations... and then do a crime lookup and see which of those has the lowest crime rate =) (You`ll probably find his zip code in the list of zips that would crop up)

While the scarcity mentality is interesting... since REIN always teaches about how there are always opportunities out there... the whole capitalistic system is based on supply and demand... and people do make fortunes based on the scarcity of a resource (oil anyone?).

I for one applaud Rickson9 for sharing his current strategy and not letting the negative nancy`s prevent him from working towards his personal Belize.


Agreed. Thanks for sharing Rickson9. Good luck to everyone interested in buying RE across the border.

TonyM
 

Rickson9

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A few more articles that were recently published for those who may be interested:Death of the American Dream
"Looking ahead, experts see a housing landscape where mortgages will be harder to get, the rate of home ownership will fall, and renting will increase. `We`re going through a fundamental shift,` said John McIlwain, a senior fellow at the Urban Land Institute in Washington, DC. `People are shifting away from the house as an investment and more toward the house as a home.`"
http://www.theglobeandmail.com/report-on-b...article1688272/

The Case Against Homeownership
"Homeownership has let us down. For generations, Americans believed that owning a home was an axiomatic good. Our political leaders hammered home the point. Franklin Roosevelt held that a country of homeowners was `unconquerable`."..."But the dark side of homeownership is now all too apparent: foreclosures and walkaways, neighborhoods plagued by abandoned properties and plummeting home values, a nation in which families have $6 trillion less in housing wealth than they did just three years ago."
http://www.time.com/time/business/article/...2013684,00.html
 

Thomas Beyer

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REIN Member
QUOTE (gwasser @ Aug 14 2010, 11:37 AM)
I wish you all the success with your U.S. real estate investing. It is not for me.

The complexities of U.S. immigration law and tax laws and local real estate laws require too much of my time to bother with.



The risk of ever increasing mortgage defaults and foreclosures pulling down real estate values even further is too high.



Many Canadian corporations thought that they were smart taking over U.S. business concerns. Most fell on their face. Robert Campeau comes to mind and so does Jean Coutu and many oil and gas companies. Too many to count. The U.S. is fiercely competitive and if things don't go in their favour, they are very good at making new laws to turn things to their advantage afterall. Look at the public outcry when some middle eastern countries were trying to buy some port facilities. Or look at when the Chinese were trying to buy Unocal.



Have you ever sold one of your U.S. properties and repatriated the proceeds? Just try and see how profitable it all is.



Why take all that sh...t (too many dots) when you are having one of the best real estate markets laying at your feet? Canada, in particular Alberta and Ontario (Canada's top 10 investment towns).


indeed .. more here on a possible US apocalypse: http://myreinspace.com/search/rein_members_only/Coffee_Shop/106-17948-91363-Socialists_wrestle_with_tea_party__the_US_Saga_.html#91363 .. as even if the US pulls through there $ will be worth a lot less and their taxes will be higher .. yielding FAR LOWER cash on cash returns after taxes than a similar Canadian investment !!



The only things that works right now IMHO is

a) buy houses in pretty areas with cash .. and sell them immediately, or

b) buy multi-family assets with low mortgages with supreme cash-flow for a long term (10+ year) hold !
 

2ndstory

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QUOTE (Rickson9 @ Jul 14 2010, 04:41 PM) I will not provide the zip codes where I am investing because the competition is already bad enough. I literally write up 20 offers to close on 1. This is not an exaggeration. There is enough information available online to research any zip in the U.S. (demographics, transportation, property/violent crime, proximity to shopping, schools, police, malls, universities, military bases, hospitals, golf courses, etc.) if an individual were so inclinded to invest.

I hope this helps a bit.

Rickson9 and I have chatted over the phone about US properties and he has been very helpful. I don`t expect him to tell me exactly the zip code of his investments. If he`s found a condo complex that he really likes to buy in and the competition is stiff, why should he? Not everyone gives away their prime fishing hole when they are asked for some tips on fishing. Find a good agent down there to help you.

I haven`t purchased an Arizona property yet, but I most likely will. Do your research. South of 49 and Fire Sale by Philip McKernan are both good places to start. Also search for an accountant that is familiar dealing with cross-border tax issues. This is the most complicated part imo.

Nik
 

Rickson9

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Although I feel that it is unlikely, I would really welcome the destruction-of-the-U.S.-real-estate-market scenario. For the sake of current U.S. homeowners I hope it doesn`t come to pass, but having said that, I won`t lie - I would be having a very good time!

Four things that I want investors to remember.

First, for those who own Phoenix, AZ real estate already, make sure you visit the Maricopa County Assessor`s web site at:

http://www.maricopa.gov/Assessor/ParcelApp...on/Default.aspx

Use the 3rd line "By Name & Street". Enter your "Last Name" and the "Street" that your property is located. Make sure your property tax bill is being sent to the correct address and that your payments are up to date. Americans are sometimes confused with our "weird" postal codes and don`t understand that they`re alpha-numeric and may change the letters into numbers to match their idea of a zip code. This would cause your property tax bill to fall into a black hole - not something that you want!

Second, Canadians also need to fill out a Form W-7 to get their Individual Taxpayer Identification Number (ITIN) to pay their share of U.S. taxes. An accountant familiar with the Canadian-U.S. Tax Treaty should be able to help you out. For more information, go here:

http://www.irs.gov/individuals/article/0,,id=96287,00.html

Keep in mind that the identification that you submit along with your Form W-7 needs to be Notarized. I used my passport.

Third, if you`re renting your property out make sure you have the proper Residential Property Classification. As a property owner that will be using a property for investment it is your responsibility to notify the tax assessor`s office that the property is a class 4 residential property (rental) as opposed to class 3 (residential). If your property is not properly classified you will be subject to fines and penalties. Your property manager should be able to help you out with this.

Fourth, if you own 6 or more lots or homes within a subdivision you need to file a disclosure document when you plan to sell, with material information about the development and surrounding area. As an investor, if you purchase 6 or more lots, homes, condos, town homes (etc.) within a single subdivision, when you go to sell even 1 of these properties, you will be subject to the rules governing public reporting. In other words, you have to provide the buyer a copy of a current and valid public report. Failure to do so may allow the buyer to recind their purchase contract for up to 3 years after the sale and get their money back. Read that last sentence again...slowly.

To bypass the issues around the last point, just buy 5 units or less within the subdivision and move on.

Last, but not as important as the above, keep in mind that returns of 20% on gross rent are not uncommon in Phoenix, AZ right now. Don`t get excited when you see prices that are only 5x gross annual rent. There are a lot of these kinds of properties so take your time and find the one that suits you the best!

I hope this helps!

Best regards.
 

wealthyboomer

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QUOTE (Rickson9 @ Sep 11 2010, 02:31 PM)
Although I feel that it is unlikely, I would really welcome the destruction-of-the-U.S.-real-estate-market scenario. For the sake of current U.S. homeowners I hope it doesn't come to pass, but having said that, I won't lie - I would be having a very good time!




The IMF, warned on Friday that high levels of national debt and a still shaky financial sector threaten to derail the global economic recovery.

The foreclosure backlog in US property markets is large and growing, in part due to the recent expiration of the home buyer's tax credit. When realized, this could further depress real estate prices.

This could lead to "disproportionate losses" for small and medium-sized banks, which could in turn "precipitate a loss of market confidence in the recovery," the IMF warned.
 

Rickson9

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QUOTE (wealthyboomer @ Sep 13 2010, 12:16 AM)
The IMF, warned on Friday that high levels of national debt and a still shaky financial sector threaten to derail the global economic recovery.

The foreclosure backlog in US property markets is large and growing, in part due to the recent expiration of the home buyer's tax credit. When realized, this could further depress real estate prices.

This could lead to "disproportionate losses" for small and medium-sized banks, which could in turn "precipitate a loss of market confidence in the recovery," the IMF warned.




Very good news! I need more time to stock up on U.S. real estate... just closed on another today; literally 2 hours ago as of this writing... Thanks for sharing this wealthyboomer! I appreciate it!



Bloomberg: Buffett Rules Out Double Dip Recession



Warren Buffett ruled out a second recession in the U.S. and said businesses owned by his Berkshire Hathaway Inc. are growing.



"I am a huge bull on this country," Buffett, Berkshire's chief executive officer, said today in remarks to the Montana Economic Development Summit. "We will not have a double-dip recession at all. I see our businesses coming back almost across the board...I've seen sentiment turn sour in the last three months or so, generally in the media," Buffett said. "I don't see that in our businesses. I see we're employing more people than a month ago, two months ago."

http://finance.yahoo.com/news/Buffett-Rule...sset=&ccode=



Speaking for myself, I'm noticing the same thing. Although I'm Canadian, I only invest in U.S. stocks and in 2010, the income statements and balance sheets of the companies I'm involved in have stabilized and are getting stronger! I'm close to having another 30% tax-deferred annual return.



Ultimately it will be fun to see who will be right - Buffett or the IMF!



Also, more good news for those looking to buy!



"Lenders took back more homes in August than in any month since the start of the U.S. mortgage crisis. The increase in home repossessions came even as the number of properties entering the foreclosure process slowed for the seventh month in a row, foreclosure listing firm RealtyTrac Inc. said Thursday. In all, banks repossessed 95,364 properties last month, up 3 per cent from July and an increase of 25 per cent from August 2009, RealtyTrac said."

http://www.theglobeandmail.com/report-on-b...article1709896/
 

2ndstory

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QUOTE (Rickson9 @ Sep 13 2010, 04:05 PM) Ultimately it will be fun to see who will be right - Buffett or the IMF!

Who`s usually right?
Rhetorical question of course.

Nik
 

Rickson9

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As usual, the press misinterprets my words, but the intent is there I suppose.

From the Associated Press

"This year in Phoenix, for the first time, there have been more buyers from Canada than from California, according to real estate data outfit Information Market. With the Canadian dollar approaching parity with its U.S. counterpart, the opportunity was simply irresistible to Jim Chuong, a 38-year-old Novartis sales manager from Toronto.

"Chuong, whose house in Canada is already paid off, used to invest in U.S. stocks. Now he`s investing in Phoenix condos, paying $50 a square foot for units that would cost $500 a square foot in Toronto.

"`It`s ridiculous is what it is,` Chuong says."

http://www.google.com/hostednews/ap/articl...docId=D9IL4I780
 

wealthyboomer

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New Wave of Distressed Homes to Hit US Real Estate Market

Nov, 23 2010

A wave of distressed residential properties may flood an already saturated residential real estate market in the coming months, according to CoreLogic.

According to a report from the financial and property information provider CoreLogic (NYSE: CLGX), there were 2.1 million units of distressed, but not-yet-listed residential properties nationwide as of August 2010. That’s an eight-month supply of distressed properties that had yet to hit the market.

Already listed properties, including distressed and non-distressed homes, totaled 4.2 million units in August. 2010, enough supply to last 15 months
.

Full Story from BizJournals.com
 

wealthyboomer

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QUOTE (Smitty @ Nov 24 2010, 01:00 PM)
And then, what about due diligence, especially considering the recent "freeze"?



Will you really own that foreclosed home in the US?



As per the following:



http://www.stockhouse.com/Community-News/2...nal-catastrophe



Don't know if he is simply fear mongering, but some food for thought at least.



Smitty




Don't worry about it being fear mongering as it is very much in the news. Much of this could become another economic disaster.

Bank of America could be forced to buy back millions of loans.


http://tinyurl.com/2bhcv6k
 

bizaro86

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QUOTE (Smitty @ Nov 24 2010, 01:00 PM)
And then, what about due diligence, especially considering the recent "freeze"?



Will you really own that foreclosed home in the US?



As per the following:



http://www.stockhouse.com/Community-News/2...nal-catastrophe



Don't know if he is simply fear mongering, but some food for thought at least.



Smitty




This is something that may be technically, theoretically true, but it will never get acted on. The MBS market will be able to convey good title, because if it can't, the whole US housing market would collapse, and completely freeze up. If that happens, you ain't seen nothing yet.




The situation is similar to the bankruptcy of general motors. There was no basis in law for the government to get all that equity for the United Auto Workers, it should have been evenly divided between all the unsecured creditors. But it was a political necessity, so that is what happened.



Michael
 

Rickson9

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For anybody else who might be interested. From today`s Globe and Mail.

"Jim Chuong, a Toronto-based sales rep for Novartis Pharmaceuticals Canada Inc., has been out shopping for U.S. investment properties since the fall of 2009. He has made several purchases since his first in early 2010.

"After an intensive screening of regions in the U.S. sunbelt, he narrowed his focus to Arizona. A key selection criterion was low crime rates: with the help of crime data published on the websites of most U.S. cities, he found that Arizona neighbourhoods were among the best for having both low crime rates and low house prices.

"`I`m finding rental condominiums for sale in Arizona at $50 per square foot in decent neighbourhoods, with little property or violent crime,` he notes (all dollar figures in U.S. currency). `That`s as much as one-tenth the cost in Toronto.`

"Also appealing were the choices for registering title. The state had an ownership option known as `community property with rights of survivorship,` which allows Mr. Chuong`s estate, in the event of his death, to pass on U.S. properties to his wife with little tax hassles.

"As well, taxes and insurance costs are low in Arizona. Annual property taxes, as Mr. Keats confirms, are under $1,500 for a $200,000 house – less than half the taxes levied in fiscally challenged Florida and California. There are big savings on home-insurance premiums too, compared to earthquake- and hurricane-prone Florida and California.

...

"U.S. housing should eventually recover, but it may not happen until well into 2011. Nevertheless, as seasoned value investors like Mr. Chuong know, exact bottoms in markets are hard to predict in advance. If you have the financial resources, skill set and perseverance to cover all your bases, buy the bargains when they arise and wait out any dips in prices that might occur after purchase."

http://www.theglobeandmail.com/globe-inves...787/?cmpid=rss1
 

wealthyboomer

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Money, Credit and the Federal Reserve Banking SystemConquer the Crash, Chapter 10
By Robert Prechter

How the Federal Reserve Has Encouraged the Growth of Credit


Congress authorized the Fed not only to create money for the government but also to “smooth out” the economy by manipulating credit (which also happens to be a re-election tool for incumbents). Politics being what they are, this manipulation has been almost exclusively in the direction of making credit easy to obtain. The Fed used to make more credit available to the banking system by monetizing federal debt, that is, by creating money. Under the structure of our “fractional reserve” system, banks were authorized to employ that new money as “reserves” against which they could make new loans. Thus, new money meant new credit.

It meant a lot of new credit because banks were allowed by regulation to lend out 90 percent of their deposits, which meant that banks had to keep 10 percent of deposits on hand (“in reserve”) to cover withdrawals. When the Fed increased a bank’s reserves, that bank could lend 90 percent of those new dollars. Those dollars, in turn, would make their way to other banks as new deposits. Those other banks could lend 90 percent of those deposits, and so on. The expansion of reserves and deposits throughout the banking system this way is called the “multiplier effect.” This process expanded the supply of credit well beyond the supply of money.

Because of competition from money market funds, banks began using fancy financial manipulation to get around reserve requirements. In the early 1990s, the Federal Reserve Board under Chairman Alan Greenspan took a controversial step and removed banks’ reserve requirements almost entirely. To do so, it first lowered to zero the reserve requirement on all accounts other than checking accounts. Then it let banks pretend that they have almost no checking account balances by allowing them to “sweep” those deposits into various savings accounts and money market funds at the end of each business day. Magically, when monitors check the banks’ balances at night, they find the value of checking accounts artificially understated by hundreds of billions of dollars. The net result is that banks today conveniently meet their nominally required reserves (currently about $45b.) with the cash in their vaults that they need to hold for everyday transactions anyway. [1st edition of Prechter`s Conquer the Crash was published in 2002 -- Ed.]

By this change in regulation, the Fed essentially removed itself from the businesses of requiring banks to hold reserves and of manipulating the level of those reserves. This move took place during a recession and while S&P earnings per share were undergoing their biggest drop since the 1940s. The temporary cure for that economic contraction was the ultimate in “easy money.”

We still have a fractional reserve system on the books, but we do not have one in actuality. Now banks can lend out virtually all of their deposits. In fact, they can lend out more than all of their deposits, because banks’ parent companies can issue stock, bonds, commercial paper or any financial instrument and lend the proceeds to their subsidiary banks, upon which assets the banks can make new loans. In other words, to a limited degree, banks can arrange to create their own new money for lending purposes.

Today, U.S. banks have extended 25 percent more total credit than they have in total deposits ($5.4 trillion vs. $4.3 trillion)
. Since all banks do not engage in this practice, others must be quite aggressive at it. For more on this theme, see Chapter 19 [of Conquer the Crash].

Recall that when banks lend money, it gets deposited in other banks, which can lend it out again. Without a reserve requirement, the multiplier effect is no longer restricted to ten times deposits; it is virtually unlimited. Every new dollar deposited can be lent over and over throughout the system: A deposit becomes a loan becomes a deposit becomes a loan, and so on. As you can see, the fiat money system has encouraged inflation via both money creation and the expansion of credit. This dual growth has been the monetary engine of the historic uptrend of stock prices in wave (V) from 1932. The stupendous growth in bank credit since 1975 (see graphs in Chapter 11) has provided the monetary fuel for its final advance, wave V. The effective elimination of reserve requirements a decade ago extended that trend to one of historic proportion.

The Net Effect of Monetization


Although the Fed has almost wholly withdrawn from the role of holding book-entry reserves for banks, it has not retired its holdings of Treasury bonds. Because the Fed is legally bound to back its notes (greenback currency) with government securities, today almost all of the Fed’s Treasury bond assets are held as reserves against a nearly equal dollar value of Federal Reserve notes in circulation around the world. Thus, the net result of the Fed’s 89 years of money inflating is that the Fed has turned $600 billion worth of U.S. Treasury and foreign obligations into Federal Reserve notes.


Today the Fed’s production of currency is passive, in response to orders from domestic and foreign banks, which in turn respond to demand from the public. Under current policy, banks must pay for that currency with any remaining reserve balances. If they don’t have any, they borrow to cover the cost and pay back that loan as they collect interest on their own loans. Thus, as things stand, the Fed no longer considers itself in the business of “printing money” for the government. Rather, it facilitates the expansion of credit to satisfy the lending policies of government and banks.

If banks and the Treasury were to become strapped for cash in a monetary crisis, policies could change. The unencumbered production of banknotes could become deliberate Fed or government policy, as we have seen happen in other countries throughout history. At this point, there is no indication that the Fed has entertained any such policy.
Nevertheless, Chapters 13 and 22 address this possibility.
 

wealthyboomer

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According to the Wall Street Journal`s latest quarterly survey of housing-market conditions, home prices continue to drop. They`ve dropped in all of the 28 major metropolitan areas, compared to a year earlier. And remember how awful things were in the housing market a year ago! In fact, the size of the year-to-year price declines is larger than the previous quarter`s in all but three of the markets surveyed.



Home prices have dropped most in cities already hard hit by the housing bust ` Miami, Orlando, Atlanta, Chicago. But declines increased in other markets that had before escaped most of the downdraft, such as Seattle and Portland.



Things could easily get worse on the housing front because millions of owners are in various stages of foreclosure or seriously delinquent on their mortgages. Millions more owe more than their homes are worth, and, given the downward direction of the housing market, are going to be sorely tempted to just walk away. This means even more foreclosure sales, pushing housing prices down even further.



So don`t be fooled. The American economy isn`t back. While Wall Street`s bull market is making America`s rich even richer, most Americans continue to be mired in a worsening housing crisis that the Administration is incapable of stemming, and of which Wall Street has now seemingly washed its hands.



Source: Robert Reich--Chancellor's Professor of Public Policy at the University of California at Berkeley.
 
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