Canadians investing in the US!?

Question

Hey there everyone!

My name is Zach, and I'm a newb to BP. My brother and I are Canadians (dual citizens actually, but born and raised in Canada), currently own two rental condos in Florida (without a mortgage on them), and are looking to sell them and use the money as a downpayment to buy a multifamily unit in Texas. We just started looking around at different financing options, but it seems like there are massive limits for Canadians trying to get a US mortgage. So I suppose I have a couple questions for whoever happens to see this post and knows a thing or two about Canadians investing in US real estate!

- Are there lenders that give mortgages for Canadians looking to buy commercial property in the US?

- What are generally the best options for creating a corporate structure for a Canadian investing in Texas?

- What is other general advise for someone in my position?

Hope to hear back from someone!

Zach

Joel Owens · Answer

Hi Zach,

There are some options.

What kind of money down and loan size are we talking??

If it's a small loan you would benefit more from TD bank or RBC bank that are from Canada but lend in certain states here where they have branches to Canadians at favorable terms.

The local banks for foreigners have some foreign national programs but they want more than the traditional 25% down which after exchange rates for money and the international tax treaty offset kills cash on cash returns. The local banks have the regulators on them and really want a relationship with a local investor here in the states. Some of my other foreign clients I have called over 100 banks for them to see what was available. It's very limited for foreigners but there are some loans.

If you go larger in deal size for commercial I have CMBS lenders for clients that will lend at regular down payment 25% and rates to foreigners. Certain countries that have no tax returns or are known for money laundering and terrorist activity they will not touch but Canada is not one of them they mention. The minimum loan size is generally 2 million and up so 500k down at 25% and they want to see another 200k liquid for reserves after down payment. You will need about another 50k or so for due diligence and closing costs and lender legal with a 1% origination fee.

Hope it helps.

Linda Labbe · Answer

HI all am Canadian and now invest successfully in the states it has been in interesting time getting from where I was to where I am today... am more then willing to share ... would not change a single step taken but there are lots that I sure would not do a 2d time...financing can be a challenge but all challenges can be overcome...looking forward to chatting with you

Trevor Lambert · Answer

Hi Zach,

Here is a fantastic article which regarding the Tax planning perspective when buying US property if you are Canadian, check it out, it really helps when doing these cross border type of transactions.

http://www.canadianrealestatemagazine.ca/infocus/cross-border-tax-planning/

Chad U. · Answer

@Karen Ng

Look up Express Capital Mortgage out of Arizona and ask for Eric or Bryan.  Tell them Chad sent you.

Karen Ng · Answer

@Chad Urbshott, I'm also researching on financing options for Canadian to invest in US property, do you mind to share mortgage brokers who specialize in the procuring loans for Canadians? Thank you!

Hai Loc · Answer

I thought driving to Chicago was bad.. Timmins is way further unless you catch a flight from Porter..

I think you can find deals in Cambridge and London that can yield close to 20%. I see some Multi Family in Windsor that is about a 12 cap that can get you close to 20% cash on cash with 20% down and 2.7% variable..

Nice to see Canadians on BP

Filipe Matos · Answer

put 2 offers on 2 properties in the last 7 days, missed one by one day -another buyer sent offer first- and got the second one, both allow for 20%.

looking for the next one.

Filipe Matos · Answer

you are kinda right, at over 20% only windsor and places like Timmins will do,

but 20% is still possible in Hamilton and I am sure other towns. You just have to pick the right property.

In US you may find those returns around the corner, but here you just need to wait a few months.  It's fine for me, I buy one per year.

Bayard P. · Answer

Hi Filipe,

Where are you finding those high returns outside of Toronto?  Only area I could maybe see is the Windsor area.

Filipe Matos · Answer

Hi, Is there any Canadians here getting 25% or more cash on cash returns on their  US properties with or without financing?

I am moving into markets outside Toronto where I still can get 20% cash on cash, even 30% in rare instances, so I am curious about how it works out for you by investing in US

Thank you

Filipe

Canadians investing in the US!?

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