QUOTE (marilyn @ Feb 8 2009, 07:03 AM) My husband wants to buy a condo in Phoenix. Does anyone know a good realtor in that area?
I`m a newbie to investing. Any opinions on timing in the market down there - property is likely to drop further the US over the next 12-18 months, but does anyone have an opinion of Phoenix?
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 !!)
