Anyone from Canada can advise me for multi family purchase in US

Real Estate Broker · Toronto, On · Member since 2018 · 4 posts · 0 votes

Hi,

I am a small investor with a couple of single-family properties in Greater Toronto Area. None is cash flowing but has a lot of equity. Want to buy some cash flowing multi-family in US or in Ontario? Any advice from pros?

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Omar Khan

Rental Property Investor · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes

@Majibur Mollah Ex-pat Canadian (lived/worked in Toronto for a decade) living in Texas. Your biggest issue is going to be lending. TD, RBC and BMO all have American branches but they are mostly catering to the snowbirds-type crowd i.e. folks who have a winter home in FL or AZ.

They do lending but primarily on "vacation" homes. Some folks have gotten around this by saying they are getting vacation homes and using them as investment properties. That is risky.

In your particular case, it will boil down to a few things: who you invest with in the US (most important), solid cross-border CPA and investment strategy.

Buying single family homes, especially as an international investor, is foolish because of lending, property management and other operational issues. You will eventually either have to or will be forced into investing in commercial properties to get proper returns.

I have a ton of Canadian clients because when I helped my network invest when I moved down here. Happy to answer any questions you might have in detail. PM me.

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Joel OwensBusiness Member
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Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
8y
Many Canadians use banks in Canada that have a presence in America. Those banks tend to lend though in only states where they have locations.
The conversion rate used to be in Canada's favor years back but has swung the other way so it's harder to invest in the U.S. for return.
I have had some Canadian clients in the past for commercial retail. It is tougher when California or similar will take reduced yields to purchase and do not have the currency conversion loss the Canadians do.
For me to work with foreign clients these days they have to have researched all the taxes, withholding,financing,return issues and be realistic about the numbers. If they are looking for a pipe dream I simply work with my clients in the U.S. who do not have to overcome all of those hurdles to complete a successful transaction.
Your deal size matters as well. If you are buying something in the millions of dollars more U.S. lenders might be open to a loan. If you are a foreign investor and want to buy small stuff expect just small lenders to express any interest and for the rates to be really high.
Think of it this way. You have an investor that is not just out of a city,county, or state from where the property is located but the whole country! If a problem arises the lender can have nightmare thoughts about trying to contact the investor that is thousands of miles away from the property. It's easy for the investor to let a property go and be (out of sight,out of mind).
You might want to look at partnerships with local investors in the U.S. or crowdfunding stuff it you are allowed to buy in.
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Omar Khan
Rental Property Investor · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
8y
@Majibur Mollah Ex-pat Canadian (lived/worked in Toronto for a decade) living in Texas. Your biggest issue is going to be lending. TD, RBC and BMO all have American branches but they are mostly catering to the snowbirds-type crowd i.e. folks who have a winter home in FL or AZ.
They do lending but primarily on "vacation" homes. Some folks have gotten around this by saying they are getting vacation homes and using them as investment properties. That is risky.
In your particular case, it will boil down to a few things: who you invest with in the US (most important), solid cross-border CPA and investment strategy.
Buying single family homes, especially as an international investor, is foolish because of lending, property management and other operational issues. You will eventually either have to or will be forced into investing in commercial properties to get proper returns.
I have a ton of Canadian clients because when I helped my network invest when I moved down here. Happy to answer any questions you might have in detail. PM me.
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Majibur Mollah
OP
Real Estate Broker · Toronto, On · Member since 2018 · 4 posts · 0 votes
8y
Thanks Omar for your reply.
If I decided to invest in commercial multi family, what kind of investment I should be looking for 20-25 Units. I might be able pool a fund of $500k. Can I start with out any partnership as I do not know anyone in US?
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Majibur Mollah
OP
Real Estate Broker · Toronto, On · Member since 2018 · 4 posts · 0 votes
8y
Thanks Joel. Anyone know a good lawyer and a CPA, who can advise me on this matter?
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Omar Khan
Rental Property Investor · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
8y
@Majibur Mollah I will get a notification if you tag me in a reply. You can do this by typing "@" and start typing my name, a drop-down will appear from which you can select my name. It will appear as blue (similar to how your name has appeared).
Your biggest problem will continue to be securing financing at the right terms. Doesn't matter if you bring in $500k or $2M. Unless you purchase in cash. This is because the Canadian credit history is not used by American lenders. The US subsidiaries of Canadian banks are leery of financing Canadian purchases in the US unless the borrower has a significant and deep relationship with these institutions in Canada.
I'll PM you and walk you through the steps.
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