Canadian Investor, looking into USA market

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Canadian Investor, looking into USA market

Brandon Hall
Investor · Calgary, Alberta · Member since 2014 · 8 posts · 2 votes

Hello Everyone, I've been snooping around the boards for sometime and finally thought I would introduce myself as I'm interested in investing in the USA Real Estate market. 

A little about me:  I work in the Oil and Gas Industry up in Northern Alberta, Canada. I work as a project coordinator on large projects of $100+ million.

In the last year I have purchased two houses 5 minutes out of Downtown Calgary. One house I bought and rented out immediately, the other I lived in and renovated the basement into a suite before I rented it out. Now I'm looking for a third.

I have begun to realize that the market is way to expensive to get quality cash flow properties. I have two houses (4 units total) that are generating a good monthly return but I know I can get a lot more bang for my buck going south.

For example the average MLS sale price this month in Calgary is $482,113.

I also understand that it's next to impossible to get a mortgage as a Canadian in the states so I'd be looking to purchase properties with cash. I also have a few investors that would be interested if the right deal came up and I was not able to finance it on my own.

I'm really just starting my research as to where I would like to invest and I'm interested to hear of any other areas you might suggest. 

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Reno Rendon
Real Estate Investor · Fort Worth, TX · Member since 2014 · 7 posts · 4 votes
12y

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  • Elizabeth Colegrove
    Hanford, CA · Member since 2013 · 5k+ posts · 1k+ votes
    12y

    Welcome to Biggerpocket!

    We are buy and hold investors. Definitely look around here. There are lots of other Canadians investing in the US. While it is harder I believe they have been able to secure US mortgages.

    Definitly check out the blogs, podcast and forums. Another great source of information is individual blogs found in peoples signatures. Many of us including myself write about our niche. The only thing we all agree about is investing in Real Estate. Beyond that there are many different style and types of investing. My blog/website is about long distance self management, landlording, investing in class A investments, investing in a transient lifestyle, etc.

    Look forward to seeing you around!

    0Reply
  • Marie Shaug
    Rental Property Investor · Dallas, TX · Member since 2013 · 38 posts · 5 votes
    12y

    Welcome to the forums!  I'm in Calgary as well... much of the time!  :)

    0Reply
  • Brandon Hall
    OP
    Investor · Calgary, Alberta · Member since 2014 · 8 posts · 2 votes
    12y
    Thanks @Elizabeth Colegrove: I will be honest, I do not know to much about Handford California. What is the major industry there? 

    I should add that I'm also more interested in buy and hold real estate as I'm unable to be their to coordinate the flips or do the work myself. 

    0Reply
  • Vala Shahabi
    Real Estate Investor · Santa Monica, CA · Member since 2014 · 199 posts · 32 votes
    12y

    Hey @Brandon Hall welcome to BP! I had no idea the properties in Calgary was so expensive. There are many US markets in the midwest that we like and will provide exactly what you're looking for. 

    I'm curious, what kind of cap rates are you getting in Calgary?

    0Reply
  • Reno Rendon
    Real Estate Investor · Fort Worth, TX · Member since 2014 · 7 posts · 4 votes
    12y

    I l

    3Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    12y

    Hi Brandon,

    The problem with residential is you are dealing with local to regional banks. Most of them do not want to lend to foreigners. They want boots on the ground locally so they look good for compliance issues. As one VP told me they want to be able to drop by and see the investor if there is an issue versus being out of the country and there is a disconnect to resolve things immediately.

    Some local banks will offer a "foreign national" program but want as much as 40 to 50% down which after your foreign currency exchange kills cash on cash returns. You can buy cash but good luck refinancing the money out anytime soon for a decent LTV as that is hard as well.

    Residential and small balance commercial under 1 million is more of a hands on asset class which is why banks want local. You go up to larger commercial loans of 2 million and more and the lenders who are not banks in the typical sense could care less about you being a foreigner. Now they do look at countries with no tax returns, money laundering, and criminal activity as red flags and they avoid those.

    So you have some options. You can invest in a syndicate or partnership here where someone is local. If you want to own yourself and not have to put down more than 25% you need to look at RBC or TD bank as they are from Canada but have some branches here in the United States. If you buy in a state where they have a branch you might can get a regular loan through them as a Canadian citizen etc.

    If there isn't that connection and you want to own on your own then the foreign national program putting 40 to 50% down or paying all cash is the answer on the small balance stuff.

    You can get great terms with non-bank for 25% down but would need about 750,000 with 500,000 down, 200,000 in reserves, and 50,000 for legal and closing costs. You can also form a Canadian group and pool money to invest here. The larger commercial assets are professionally managed by large PM firms so the lender cares less about your local ties and more about your liquidity versus net worth.

    Of course there are exceptions these are just the guidelines of what I see with clients. Make sure you have you international tax treaty laws figured out before investing here as well.

    No legal advice 

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    2Reply
  • Brandon Hall
    OP
    Investor · Calgary, Alberta · Member since 2014 · 8 posts · 2 votes
    12y

    Hello @Vala Shahabi ,

    Thanks for the reply, the Cap rate is only 1-2% but housing prices for a single family home are up 10.24 per cent from a year ago

    0Reply
  • Ali Boone
    Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
    12y

    Welcome! I used to work primarily with international investors buying in the states. It's actually pretty easy once you get the hang of it and have your teams in place. The big thing is working first with a professional who can set up your entity and tax structuring. Once that is done the first time, it will carry you through however many properties you want to buy. But it's key to do that because otherwise if you aren't set up right, the tax implications could get nasty. I do know of some private lenders who will loan to Canadians as well, so while cash is easy and widely accepted of course, there are some lending options out there.

    0Reply
  • Mark Creason
    Real Estate Lender and Broker · Dallas, TX · Member since 2013 · 966 posts · 500 votes
    12y

    Brandon,

    I work in commercial lending, but have not seen an issue with lending to Canadians.  

    BTW, are you a hockey fan?  I am a Black Hawks fan.

    Mark

    1Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    12y

    Mark is not talking about small balance commercial stuff that local banks want. He works on minimum deals like I was mentioning above.

    Those types of lenders will generally not spend time on the really small stuff that banks want for commercial. 

    Podcast Guest on Show #47
    NNN Invest53 Reviews
    WebsiteView Page
    0Reply
  • Chad U.
    Investor · Boca Raton, FL · Member since 2012 · 1k+ posts · 1k+ votes
    12y

    Hi @Brandon Hall 

    I am a fellow Canadian investing in the US.  I know of some US based lenders who specialize in lending to Canadians.  I can also recommend some good areas to invest with nice cashflow.  PM me, and I can pass on the info as it's against policy to post here.  

    Chad

    0Reply
  • Brandon Hall
    OP
    Investor · Calgary, Alberta · Member since 2014 · 8 posts · 2 votes
    12y

    Thanks Everyone. Definitely lot's to think about. @Chad U. I have sent you a PM. I'd definitely be interested in hearing more. 

    0Reply
  • Dmitriy Fomichenko
    Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    12y

    Welcome to BP community @Brandon Hall  It is a great place to meet new friends and learn about various aspects of real estate and more. Here are a few recommendations for you:

    Find and connect with other BP members that are in your area: http://www.biggerpockets.com/meet

    Set up keyword alerts to be notified of the topics that interest you: http://www.biggerpockets.com/alerts

    Wishing you the best! 

    0Reply
  • Neil Thakkar
    Real Estate Investor · Chicago, IL · Member since 2008 · 38 posts · 4 votes
    11y

    Hey @Brandon Hall, 

    Definitely look into investing in the US if you can.  My sister lived in Calgary for about 5 years and I got a chance to do a decent amount of research on the real estate there.  First I very well believe Canadian banks weren't as lenient as ours so they didn't end up in the troubles that our real estate housing market had gone into.  Pros and cons of course for that. However giving people like us an advantage on picking up properties very well below retail for numerous different strategies (Flips and Rentals).  Secondly, Calgary specifically is a city that does directly well dependent on the oil and gas industry.  As we all know there is no shortage of that and the demand continues to stay high.  You will find amazing opportunities if you choose to invest in US.  

    0Reply
  • Pawan J.
    Developer · Vancouver, British Columbia · Member since 2014 · 122 posts · 26 votes
    11y
    Hi @chad urbshott I would also be interested in knowing about financing options for Canadians if I can figure out how to PM you I will connect.
    0Reply
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