Have any of my fellow Canadians tried flipping in the US? If so, how did you go about it and what should I look out for if I'm not going to be able to look at the property personally.
We purchase 90 to 100 properties a month and most of them we never see. Everything you do in person can be done without you. Learning how to trust professionals is the first thing to learn when investing outside of the country. Build a relationship with a Real Estate agent out of state. Someone that specializes in real estate investment. Let me know if I can further assist you.
@Nathan Wiebe with a great team, You really only need a great agent which I recommend @Paul Sian if you're looking in the Cincinnati area. I would also recommend a good general contractor who has a good eye for things and is organized, I pay mine $100 to go look at the distressed property and take a walk through video and tell me what needs replacing such as subfloors, mechanicals, roof, ect. But if I hire him to do the work then the $100 is subtracted from the final payment.
Sean Carroll, Contractor
Ya, a good real estate agent seems to be the consensus.
That sounds like a good plan @Sean Carroll . Do you do that for the property after you’ve bought already or before? What would you do during your analysis of repair costs for a property you’re interested in flipping from an out-of-state perspective?
@Nathan Wiebe 9/10 I do it before I buy the property, he's not a home inspector but I made a form for him to make marks on so he doesn't accidentally forget to check the electrical panel for instance. Then he gives me a cost of what it would take for labor and then an estimation of materials, so I can submit my offer quickly.
The big ones I make sure of are the roof, electrical, mechanicals, foundation, structural. These are the big-ticket items that can destroy the budget. otherwise, I know what finishes I want to use so I can estimate the square footage based off where the materials would go.
Sean Carroll, Contractor
@Sean Carroll do you think you’d be willing to be send me that checklist so I could get an idea of how to estimate repair costs?
It seems very difficult to me to flip from abroad. It's just hard to get good deals unless you're on the ground in the place you're buying, at least IMO.
@David Greene Out of State Investor has been my favourite book lately. He makes it seem like it should be possible with his “Core Four”.
I think @Andrew Syrios is telling & painting the whole story & picture for you.
It's extremely difficult for out of state(country) investors; as most are unfamiliar with price, area , market trends & conditions. If you have someone you can trust on ground that have equity together with you on the property, flips can achieve out of state . Too much unknowns for flip unless you can acquire property at a very low price. Buy & hold is a lot easier. Flipping needs a good knowledge, fast & hard working ground staff & hopefully you can have an experienced partner that can supervise on ground.
@Nathan Wiebe its more of an inspection report. Doesn't really give you pricing or anything like that.
Sean Carroll, Contractor
@Nathan Wiebe what I don't see addressed in this thread is the back end of the deal. As a foreign investor I think you will need to leave 35% of the profits parked with the IRS until tax time - which means you'll have to file some sort of US tax return. I haven't ever participated in this type of deal, perhaps @Andrew Syrios has. I do know that at every closing I attend the seller has to sign a document that is reported to the feds stating that they are not a foreign investor.
Ya, @Teri S. I believe I’d leave 10% of the selling price until tax time so I wouldn’t be able to do a lot of flips in a year. And I’m also a US citizen so I have to file a US return anyways.
I’m just looking at flipping right now because I don’t have any of my own capital so I’m trying to find a way to build some of my own so I can do my own deals and don’t have to rely solely on cash investors.
@Nathan Wiebe if you are a US citizen then that is a whole different animal. In fact you will not leave anything at the table - but the transaction information will be provided to the IRS. It will then be up to you to declare actual profits via whatever entity you are flipping under. I'm an S-Corp and file taxes as such. Of course the bottom line on the settlement sheet isn't all profit - that's where your bookkeeping and tax filing come into play. Good luck!
Thanks! I started working in the US Tax division of a big 4 accounting firm in Canada so I’m trying to learn pieces here and there about planning and reporting from someone in my situation.
Sorry to burst your bubble, but you should start by flipping a property locally first to learn the in's and out's of the business in your own backyard. THEN once you've got some experience, only then you should venture out flipping out of state/country. Particularly if you are using someone else's capital to fund your endeavor.
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