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Real Estate Investing In the US

QUOTE (JNB @ Jan 31 2008, 11:03 AM) Hi Rebecca,

We all do agree to keep it boring and use the REIN research as a guideline, but this should not stop us from considering other areas. I`ve been constantly looking here in AB, but I haven`t seen anything in a decent neighborhood (good long term potentials) that passes the 10% or even 9% rule (Income to expense ratio). May be it is about time that we will look else where and possibly have or start a publication such as "The Top 10 Cities in the US" to invest in



Best regards! :-)

I am in the process of selling off my 3 Canadian properties and probably keeping the 4th as maybe a home base. Heading south is a very good option. I was born in the USA but lived here since i was 4 and i would say that this is a great time to have an opportunity to go south. The door is wide open. It would take me about a year to wind down things here which seems to line up with what everyone is saying to buy down south in a year`s time. They say there is more yet to happen and the bottom has not been hit as yet. I have been looking at this website lately. http://www.nchinc.com/index.php?source=eblast It would certainly be warmer!

Dean

[email protected]
 
I attended a presentation given by David Ingram ifrom North Vancouver. He gave a number of horror stories about Canadians doing work on their own investments properties in the US, including an owner who fired her PM, and collected rent cheques while interviewing potential PMs. She was reported by the old PM, arrested, deported, and barred entry. The property went into foreclosure, and the original PM bought it because she held the 2nd mortgage.
Don, he would be a great REIN guest speaker, as he is very knowledgable on the topic. Here is his website: http://www.centa.com/

And, yes, I do mean we cannot do one iota of work on our own investment properties in the US. We can on our own personal use property. If you are without a PM, you cannot collect rent cheques. If you have snow in a driveway, you cannot shovel it out. If a neighbour has a kite land on his roof, you cannot do a favour and get it down for him. You will be deemed to have taken a job away from an American.

Having said that, you only get into trouble if someone reports you. But, is the possibility of being barred from entry into or through the US worth the risk? The answer for me is, "Absolutely not."

According to David Ingram, lying to an Immigration Officer when entering the US is a worse offense than smuggling. eg: If you are planning to golf for a day in Portland, OR, but tell immigration you are shopping at Bellisfair in Bellingham, WA, you will get arrested if a roaming Immigration Officer, through its mobile computer system, later IDs your car in Portland. You will also spend time in immigration jail, be deported, probably lose your vehicle, and be barred from reentry into the US, possibly permanently.

This is a minefield that I knew nothing about until hearing Ingram speak. I have often not told the full truth about the reasons for my visits to the US, in an effort to avoid lengthy explanations. Not anymore!!!
 
QUOTE (Torg @ Jan 30 2008, 12:48 PM) I am also looking at Arizona but will most likely wait another 12 months as I believe the market will drop some more. I have never purchased anything in the US. Do you have to go through a US bank and get a US mortage? Is the qualification process similar to Canada? Any suggestions for resources on the financing end?
Mark


We used a U.S. mortgage broker, Curtis Finster ( http://lease2ownbob.blogspot.com/search?q=finster ) who got us a mortgage at a U.S. bank. Qualification was way different.

As "aliens", we had to put up 30% downpayment and pay an extra 1%. Everything from there was on some kind of honour system. There was credit pull, no request for salary letters from our employers, nothing! And we have an amazingly flexible mortgage where we choose how much we want to pay in a month. If we select a lower amount than the agreed interest rate, the difference goes on our principal - not a balloon payment that gets us later.

Follow the link and speak to Curtis if you want to know more about U.S. mortgages.
 
Ours was a while back, and similar to Bob`s experience above in some areas. We got our mortgage in 2003 and back then received the same deal as any American citizen would have - an 80% LTV `no-doc` loan with no fees and an attrative interest rate of around 3.75% if I remember correctly. We dealt with Washington Mutual, first via a broker ino the LA area and for 3 yerars now directly.

It was also on that same `honour system` - the reason being that they have no way to pull our credit in Canada from the USA (so we were told). We offered to supply it for them but they declined.
 
Hi,

Key is to look at teh facts (and to understand that cheap doesn`t always mean good when it comes to investments)

The Canadian dollar isn`t about to collapse, so you can take that out of the `act now` equation. The peak of the foreclosures will not hit until at least November 2008, which means they won`t affect the market prices until at least January - February 2009.

The biggest drops i the coming 12 months will be felt in the areas with the biggest coming issues. Las Vegas, Phoenix (and all over AZ), all over Florida, southern California, pockets of Texas where speculators had driven the market beyond reality. In fact, you are seeing projects in Las Vegas already being canceled due to over-build and lack of demand.

There are currently a record 1 million homes in foreclosure, with nearly 3 million behind on their mortgages (a whopping 6.3% of all mortgages). And we haven`t even seen the highest number of ARMs increasing their payments. Over 30% of the new foreclosures were located in Florida and California.

This major value drop will also start to affect those `good borrowers` as their values drop below their mortgage values

And PLEASE, whatever you do, knowing the literally millions of properties that are going to becoming on the market in the coming 18 months DO NOT buy pre-built (un-built) properties unless you like HUGE risk and don`t mind getting stuck with owning a property that will be worth less than you paid for it.

Trust the actual facts help. Don`t be fooled by the hundreds of `promoters` pitching these deals in Canada... because they can`t sell them in their local market. Which leads to a great rule, why not take a holiday (away from this snow) and look around, you`ll be very surprised at what you`ll see.
 
QUOTE (DonCampbell @ Mar 9 2008, 06:41 PM)
Hi,



Key is to look at teh facts (and to understand that cheap doesn't always mean good when it comes to investments)



The Canadian dollar isn't about to collapse, so you can take that out of the 'act now' equation. The peak of the foreclosures will not hit until at least November 2008, which means they won't affect the market prices until at least January - February 2009.



The biggest drops i the coming 12 months will be felt in the areas with the biggest coming issues. Las Vegas, Phoenix (and all over AZ), all over Florida, southern California, pockets of Texas where speculators had driven the market beyond reality. In fact, you are seeing projects in Las Vegas already being canceled due to over-build and lack of demand.



There are currently a record 1 million homes in foreclosure, with nearly 3 million behind on their mortgages (a whopping 6.3% of all mortgages). And we haven't even seen the highest number of ARMs increasing their payments. Over 30% of the new foreclosures were located in Florida and California.



This major value drop will also start to affect those 'good borrowers' as their values drop below their mortgage values



And PLEASE, whatever you do, knowing the literally millions of properties that are going to becoming on the market in the coming 18 months DO NOT buy pre-built (un-built) properties unless you like HUGE risk and don't mind getting stuck with owning a property that will be worth less than you paid for it.



Trust the actual facts help. Don't be fooled by the hundreds of 'promoters' pitching these deals in Canada... because they can't sell them in their local market. Which leads to a great rule, why not take a holiday (away from this snow) and look around, you'll be very surprised at what you'll see.






Thanks Don for your advice(s)!







There are for sure lots of thing to consider in terms of investing in the US or anywhere in general. The beauty of having this web community is to hear/read every body`s knowledge and experiences. It is such a good help.



Jason
 
This is one HOT topic! Look at all the views and posts! This issue has a LOT of raised eyebrows with investor alarms ringing. I did a search on youtube.com to see what informational videos would come up on the topic.
http://www.youtube.com/watch?v=t-70w140kqc

http://www.youtube.com/watch?v=A9Q0WWMwRDA...feature=related Canadian buyers beware of a few things to note as mentioned in a prior post as well. He has a few more interesting videos on Canadian real estate. http://www.youtube.com/user/jurockvideo

I view the U.S. market as the new homeowners bought at the high end prices and could not pay the higher interest rates. Now the interest rates are lower and so are the house prices so investors can pick them up and rent them back to the previous owners who can afford the rental rates since the investor paid much less for their old homes. Everybody has to live somewhere. And what of the home owners of the high end prices who can afford the higher interest rates but have watched their home values decline by 40%!!!??? What if they throw in the towel, just because?

On the other hand, Canadians, Europeans and many more countries are watching the buying opportunity that is there and some have started buying it up. Others are waiting for election time. It is tempting to sell one house here and buy two there!
 
QUOTE (BobHudson @ Mar 8 2008, 06:27 PM) We used a U.S. mortgage broker, Curtis Finster ( http://lease2ownbob.blogspot.com/search?q=finster ) who got us a mortgage at a U.S. bank. Qualification was way different.

As "aliens", we had to put up 30% downpayment and pay an extra 1%. Everything from there was on some kind of honour system. There was credit pull, no request for salary letters from our employers, nothing! And we have an amazingly flexible mortgage where we choose how much we want to pay in a month. If we select a lower amount than the agreed interest rate, the difference goes on our principal - not a balloon payment that gets us later.

Follow the link and speak to Curtis if you want to know more about U.S. mortgages.


Most US lenders have really tightened up as a result of the suprime crisis. It`s definatly harder for US citizens to get loans now, so I would imagine it would also be more difficult for non residents. Probably still available, just much more expensive or requiring a higher DP and more verifications
 
CALIFORNIA REAL ESTATE

I am from Southern California and found your question to be a good one. I do believe at this time it is an extraordinary opportunity for Canadians to invest in US Real Estate, given the strength of the Loonie and the depressed US Dollar. You are able to purchase our real estate at a 30-40% discount. With the single family market down I believe a very good opportunity exists in buying apartments. This has been our niche for some time and I see this as a sweet spot for some time, especially with the California population explosion going on.

Let me know if I can help answer questions about the area. I have lived here all my life and know the different marketplaces extremely well. I see particular opportunities in the Inland Empire, SD, and OC. Glad to be a resourece for anyone that asks. I am finding that Europeans, Canadians and those from China are asking the same questions. Feel free to e-mail me off-line and we can dialog. One of the biggest issues is to have relationships with local banks and lenders who understand the market because the financing market is tight. Another thing to consider is to have a good local propety manger who knows the local vendors and suppliers. We feel this is what makes for a good investment. All in all, I see things daily that are of very good value.

Michael Duhs
(949) 939-8352
[email protected]
Plurimo Properties
 
QUOTE (JNB @ Jan 31 2008, 11:03 AM) Hi Rebecca,

We all do agree to keep it boring and use the REIN research as a guideline, but this should not stop us from considering other areas. I`ve been constantly looking here in AB, but I haven`t seen anything in a decent neighborhood (good long term potentials) that passes the 10% or even 9% rule (Income to expense ratio). May be it is about time that we will look else where and possibly have or start a publication such as "The Top 10 Cities in the US" to invest in



Best regards! :-)

Jason, I lived in Calgary before so I have 2 houses there with lots of equity. I want to start to get into investing by buying and rehabbing. (I`m trying to avoid the landlord thing.) I was wondering about holding onto ONE of the houses and selling the other. I think just selling one would give me enough capital to move on and buy elsewhere (possibly the US), but in your opinion, have the prices peaked in Calgary? In other words, should I get rid of both places? I`ll mention that both houses are in an innercity`ish` neighborhood (Kingsland), if that changes your opinion.

Thanks in advance!
 
QUOTE (JNB @ Jan 31 2008, 11:03 AM) I`ve been constantly looking here in AB, but I haven`t seen anything in a decent neighborhood (good long term potentials) that passes the 10% or even 9% rule (Income to expense ratio). May be it is about time that we will look else where and possibly have or start a publication such as "The Top 10 Cities in the US" to invest in.

Hi Jason,

I just wanted to say 2 things. First, the investors I`ve been talking to in the US have been telling me that in some places like North Carolina (Raleigh and Charlotte), Maryland (Baltimore) and in Washington DC, the prices are still on the move and there are lots of rehabilitation efforts going on that are driving prices up. Food for thought...

Also, I wanted to ask about Calgary. Have the prices peaked there? I have been out of the country for 5 years and was wondering if I should just sell one of my properties in Calgary, or if I should sell both. I want to sell at least one, so that I can move on and reinvest in other markets. My houses are both in Kingsland which is innercity`ish`. What do you think?

Thanks in advance for your advice.
style_emoticons


Lori
 
QUOTE (loriintaiwan @ Mar 19 2008, 12:33 AM) Jason, I lived in Calgary before so I have 2 houses there with lots of equity. I want to start to get into investing by buying and rehabbing. (I`m trying to avoid the landlord thing.) I was wondering about holding onto ONE of the houses and selling the other. I think just selling one would give me enough capital to move on and buy elsewhere (possibly the US), but in your opinion, have the prices peaked in Calgary? In other words, should I get rid of both places? I`ll mention that both houses are in an innercity`ish` neighborhood (Kingsland), if that changes your opinion.

Thanks in advance!
Sorry for posting pretty much the same questions twice. My pc froze when I posted the first time, so it didn`t look like it went through...
 
QUOTE (loriintaiwan @ Mar 19 2008, 12:48 AM) Hi Jason,

I just wanted to say 2 things. First, the investors I`ve been talking to in the US have been telling me that in some places like North Carolina (Raleigh and Charlotte), Maryland (Baltimore) and in Washington DC, the prices are still on the move and there are lots of rehabilitation efforts going on that are driving prices up. Food for thought...

Also, I wanted to ask about Calgary. Have the prices peaked there? I have been out of the country for 5 years and was wondering if I should just sell one of my properties in Calgary, or if I should sell both. I want to sell at least one, so that I can move on and reinvest in other markets. My houses are both in Kingsland which is innercity`ish`. What do you think?

Thanks in advance for your advice.
style_emoticons


Lori

Hi Lori,

Here in Calgary the price had already peaked and after the hype and panic it had been settling. I would say that the best time to sell would have been last year, but given that you must have been holding the props for a long time it wouldn`t be bad cashing in.

Jason
 
QUOTE (loriintaiwan @ Mar 18 2008, 10:33 PM) Jason, I lived in Calgary before so I have 2 houses there with lots of equity. I want to start to get into investing by buying and rehabbing. (I`m trying to avoid the landlord thing.) I was wondering about holding onto ONE of the houses and selling the other. I think just selling one would give me enough capital to move on and buy elsewhere (possibly the US), but in your opinion, have the prices peaked in Calgary? In other words, should I get rid of both places? I`ll mention that both houses are in an innercity`ish` neighborhood (Kingsland), if that changes your opinion.

Thanks in advance!

prices never "peak" .. they might go flat for a while (called a plateau) or might go down for a few years due to high interest rates .. but will always come up again .. it is called INFLATION .. and in an in-migration place like Alberta (or AZ or TX or SK or SC or NM or NV or any Chinese city or UK or ...) prices go up usually !!
 
[quote user=Dan_Eisenhauer]Before investing in an income property in the US, be certain you understand the tax rules as they apply to both Canada and the US. Find a specialist who can give you advice as it relates to both countries. The tax considerations are far from simple.


Who cares if the tax considerations are far from simple? Are people filing with the IRS and CRA themselves? I have an accounting firm that does this. What's the problem here?



Considerations of brain surgery are far from simple too. Are people doing their own brain surgeries now?



[quote user=Dan_Eisenhauer]Also be aware that you CANNOT do one piece of work on your own investment property. That includes collecting rent, or sweeping the sidewalk, etc., without running afoul of US immigration laws. If you are found doing any work on an investment property, it is grounds for immediate detention and deportation, with a lengthy, if not permanent, ban on travel into or through the US.



Learning of some of the intricacies of US investing has soured me on the idea, in spite of opportunities down there.




Who cares if you "CANNOT do one piece of work on your own investment property"? I've heard this 'objection' so many times and I still don't understand it.



Do real estate investors look forward to doing extra work when they invest in a property or something? I hate doing extra work. In fact, if any investment came with 'extra work' I would forget about investing right on the spot.



I'm a lazy bum that can barely screw in a lightbulb so speaking for myself, I'm not looking to do extra work on my rentals. In fact, in the 3 years since investing in Phoenix, AZ I'm happy to say that I haven't done any work (extra or otherwise) on my properties. Why would I want to?



Who the heck are the people who buy investment properties in order to do more work? Anybody? I invest in assets in order to have more money, more time and do less work. Why would people want to invest to do work? Makes no sense.



Do people just come up with these objections out of a hat or something? Because some of these gems make absolutely no sense. Seriously.
 
Hello everyone



I response to the comment regarding the US tax system far from simple cannot be dismissed that easily. As a Canadian CA and a US CPA, I can say that the tax system in the US is far more complicated than that of Canada's. Picking the right structure to own your US real estate is crucial. I have seen some clients who have received the wrong advice and have now locked themselves into a potential 60% overall tax rate on income generated from their US investments. Ouch. Secondly, the structure that is chosen will affect the capital gains tax treatment on the ultimate disposition of the property. I have seen the US rate vary from 15% to over 43% depending on the type of ownership structure and state of ownership. Not to be an alarmist, but the proper tax planning is crucial from the beginning.
 
Wow! I never would have guessed that there could be such variation. Thanks for that info.



The real problem there is that people don't know what they don't know...until the CRA or IRS enlightens them.
 
If you're doing your own taxes or going cheap with your accounting, you get what you pay for.
 
[quote user=Rickson9]If you're doing your own taxes or going cheap with your accounting, you get what you pay for.




What the experts above are saying is that it doesn't matter how good your tax accountant is if you only hire him (or her) to do your taxes and do not seek his advice on structuring purchases. An excellent accountant can't save you anything on taxes if you have structured the purchase in such a way as to leave no option but pay high taxes.
 
True. Solvable with one phone call. Or a visit to your local bookstore. I did both. I didn't set up a CBT if anybody was curious.
 
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