Canadian investing in US

2 Replies

Hello, I am just doing some research and homework and crossing things out on my list of things to do.

2 questions in my mind and which still I haven't found answer to

1. which legal entity is the best for me to enter the market?

I have met up with various accounting firms (which are not specifically cross boarder specialist since it seems to me its hard to find them in Edmonton, AB, and I assume they are going to charge me tremendous amount of money for consultation and filings) when I talked to the partners at these firms, they all gave me different opinions. Some say I am better off with buying properties under my name directly, some say LP with Canadian corporation which I own, some say LP partnering directly with me. So I don't know what I should be doing as I am given so many options.

2. What is the smarter way of getting financing done? I know RBC offers mortgage throughout all states with reasonable mortgage rate. TD offers mortage in the east side of the States. I wonder why not many Canadians are not taking this opportunity but rather go with private lenders in states with 3~4% higher interest rate

Here is my situation

I am looking to buy and hold SFH, MFH (duplex~fourplex) and I am looking for cashflow with good NOI and COC return which kind of gives me insight to invest in Midwest (Kensas city, Indianapolis) and Texas (Houston, Dallas). I am willing to purchase multiple properties up to 3~4 right now, if there are good opportunities. I am looking to buy 2~3 properties per year using conventional financing way (25% down and 75% OPM ie. bank or private lender) and I will be keep doing this until I become financially free.

You as a foreign investor will not find conventional 25% down financing with US interest rates, thats why more Canadians or other foreign investors are not buying more.  You have to find private lenders who semi favorable terms. 

Good luck

Peter,

TD will do 20% down on one, maybe two properties max and RBC offers 40% down on one property only.  THere is an option of doing portfolio loans and you can get as little as 25% down, but you need a minimum of 5 doors.  

As for your entity choice, there is no clear cut answer on which is the best route to take. If you are buying only one or two properties, it may be okay to put in your own name with a really good insurance policy. However, by the sounds of your plans, you need to have a entity structure setup for the long term in which case the LLP with the Can corp as your GP may be the best option. I am not an accountant nor legal professional in any capacity so not providing advice, but this seems to be the most recommended structure I've seen.

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