A recent blog post on Condo.ca discusses a prospect many of us have probably contemplated lately: looking for an investment property South of the border. For Torontonians and Canadians in general, the past few years have certainly seemed like an ideal time to invest in the American housing market and for most of us, the thought evokes an image of a sunny little pied-a-terre to escape to during our chilly winter months. In fact, with all the stories of Florida condos priced so low they could practically be purchased on a credit card, it may be surprising that many Canadians are straying from the sunbelt and some are even opening their wallets wide enough to purchase in the luxury market!
I find it reassuring that, while our workout habits may suffer on vacation, our national conservative attitude towards mortgage debt seems too deeply ingrained for a south-of-the-border lapse. This is evident by the fact that 9 in 10 Canadians are paying for their U.S. properties in cash.
While many Canadians have already purchased vacation or investment properties, for those who are looking to take the plunge, here are a few factors to consider:
Consider whether you intend to rent out your property while you're not using it and have a frank discussion with a trusted real estate professional regarding the challenges and benefits to being a landlord. Royal LePage just released the results of our 2012 Recreational Property Survey and we know that while 51% of Canadians intending on purchasing a recreational property within the next five years would consider renting it to offset ownership costs, 83% of those who currently own vacation properties do not actually do this.
Consider asking your own real estate agent for a referral to an agent who practices in the U.S. Many of us attend international networking events regularly and seek out colleagues with similar professional characteristics who would provide our clients with the same level of service that we would at home.
Speak with a lawyer! I cannot stress this point enough. Not only are there taxation rules to be aware of but the landlord and tenant laws (should you plan to rent) can vary widely.
The main point here is to do your research. Real estate in the US may be cheaper than it is at home but it is still a large investment.
