Canadians buying US real estate accounted for about 23% of
international buyers in the past year according to data from the National
Association of Realtors. This makes up
the largest chunk of foreign investment into American real estate for the past
three years in a row.
The US Housing Market Crash
The collapse of the US housing
market, along with the fall of the dollar and the global financial crisis that
ensued, combined to create opportunities for foreign investors like Canadians
to invest and profit from the purchase of prime US real estate. All of a sudden large chunks of prime
properties in choice US locations such as Florida, New York, and even Las Vegas real estate became somewhat
affordable for the average investor. The
30% fall in housing prices combined with a stronger Canadian dollar made it
very lucrative for Canadians to flock south of the border.
Essential Tips for Canadians Buying US Real Estate
The fact that American demand for
property soured due to the credit crunch, a lot of developers and realtors are encouraging
Canadians to invest in US real estate.
Many are offering fire-sale prices from foreclosed properties that were
once valued at hundreds of thousands of dollars. However, before you get that checkbook and
sign that contract, there are a few things that you need to know.
Check out the Property First
Never buy a piece of property
without visiting it in person. The
pictures online may tell a different story once you finally get to see with
your own two eyes the property you are interested in. This is especially true for foreclosed
properties classified as fixer-uppers.
Due to the vast amount of US
foreclosures, many US properties sit for a year or more without any
maintenance at all. There have also been reports that some
disgruntled US homeowners have taken out their anger on the property being
seized by the bank and have vandalized some sections in order for it to be
unsellable.
Be sure that you also check the
viability of the neighborhood as well as this will have a direct effect on the
value of your property should you decide to sell it later on. Neighborhoods that have higher crime rates
and poor schools should be avoided even if the price being offered is really
hard to refuse as this can backfire on you in the long term.
Do Proper Tax Planning
It is recommended that you do not
stay in the US for more than 121 days if you do not hold US residency
status. The consequence of doing this is
that you may have to shell out income taxes not only in the US, but also back
home in Canada. Consult with a tax
attorney that specializes in US tax regulations about the options available to
you since investing in US real estate may require you to be in the country for
long periods.
Do not Downplay Insurance Coverage
For Canadians buying US real estate, it
is important to note that insurance plays a major role in your US real estate
investment. Depending on the location of
your property, you may require coverage for natural disasters such as hurricanes
and flooding. Take into consideration that the premium for these would likely
cost more than your average policy.
Ensure that you have the correct liability insurance for your
property. Be sure to consult with a
legitimate insurance firm to know your options regarding this.
For more information on how you can
invest and profit from US real estate, check out www.stevemartel.com
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