Based out of Canada and interested in US Real Estate

23 Replies

Hi,

My name is William and I am from Canada. I was hoping to get some guidance on how Canadians can start investing in American Real Estate?

Is there anyone who has done this before?

Thanks.

William,

The challenge is in knowing the economics of the areas you are hoping to invest. Can you not enter the country? If you can, then you'll just need to jump on the bandwagon with the other major international investors and start up.

Best to you!

TM

@William Wong

Welcome William!

I'm a recent transplant from Canada to the US.

I remember looking at US properties as a Canadian, and one of the challenges I hit alot was financing; US institutions wanted to see US based W2 income and US credit history (assuming say a pretty straight forward conventional investor mortgage, not a commercial mortgage) that felt like a significant roadblock.

One thing to note though is that some of the major Canadian banks (BMO, TD, RBC) have major US operations; and with those, comes the ability to secure financing based on your Canadian source income, and Canadian credit history.

This is a phenomenal resource for most Canadians (albeit you're limited often to only one property purchase as part of these programs, and some will restrict it to "vacation/second home" only, no investor/rental). Worth checking out (some googling should get you the programs - TD Cross Border Banking is the one I've used personally to handle all my cross border banking needs, although never got a mortgage with them).

Hope this helps - I'm sure if you give some more details around what hurdles you're trying to get past (financing, finding properties, property management, cross-border tax issues, etc.) you'll get lots of advice!

@Cal Ewing thanks for your reply. How did you get  started and what were some of the major challenges you faced?

My strategy would be a duplex as a student landlord. I am looking to get a feel for the experience of other Canadians who have attempted US Real Estate investments.

@Tom Mendez Thank you for your reply Tom. I will need to find a time to visit the US sometime.

@Shez B. Thank you Shez for your reply. That is actually really good to know! From what I understand therefore, you can qualify for a mortgage in the US from a Canadian bank (based on Canadian income statements) and receive the mortgage funds in US dollars.  

@William Wong

That's correct - Canadian credit history, Canadian income, US Dollars in all 50 states. 

For example with RBC's US mortgage program, their FAQ page states:

5. What types of properties does RBC Bank finance?

We finance primary and secondary homes and certain investment properties (for existing RBC Royal Bank clients). However, we do not offer commercial financing or financing for multi-unit complexes greater than four units. We also do not finance vacant land (lot loans), manufactured homes (mobile homes), working farms, or condotels (condos that rent rooms on short-term leases or are located in hotels).

@Shez B.

That is great news. I did not know RBC offered this. I have been relying on private money for my deals. I got started investing in the US working with a turn-key provider. It turned out well and was very hands off. From there I started taking more interest in finding my own deals. As mentioned above, funding deals has been a big challenge. Also, if you are going to invest away from your own area you will need to build a strong team in the city you are investing in. A good realtor that understands your goals, a strong property manager, a real estate attorney and a cross-border accountant are some of the people you will likely need. You can get referrals for these people right here on Bigger Pockets. 

From your comment it looks like you are going to school in the US and planning on living in one side of a duplex and renting out the other is that correct? If this is the case, you will have a lot easier time. Just make sure you work with an accountant who specializes in cross-border taxation so that you pay the least amount of tax possible.

@Cal Ewing

Indeed, it's a great program; I believe TD and BMO also offer similar; I can't remember which one (may have been TD?) limits their program to only one additional property, but others may be more flexible.

It's super convenient to have them look at your Canadian T4s and credit history as you'll get great rates compared to some US institutions who will charge a risk - rated premium (from what I've seen at least).

A good accountant is a must - totally agreed; to the point that I started a thread to look for one! :)

Hi William,  

One way may be to look for Canadian developers.  Here on Maui we have a project called Honua Kai that was developed by Canadian developers.  The majority of the project was purchased by Canadian investors and financed by Canadian banks.  I can't remember the specifics but let me know if you would like more information. 

Aloha,

Len

@Cal Ewing

 That'd be great, sending you a message off thread!

Hi there everyone, good to hear from fellow Canucks. i am also new to BP trying to find experience cross border accountant banks and someone to guide me to finance us properties like single family home rentals.

@Cal Ewing

 That's good to know. thanks Cal. I am not going to school in the US, but was thinking of targeting the student market. 

@Len Inokuma

 thank you for that information Len! yes, if you can send me more details that would be great.

Hi William,

The project's name is Honua Kai and is located in the resort area of West Maui.  The project is a condo-tel where owners purchase the fee simple interest in the unit and the hotel rents out the units.  This is an oceanfront condo project and the prices range form $725,000 to $4,000,000.  

The project's website is www.ownhonuakai.com

Unfortunately, I don't have any of the financials from the project but you can request information through the website.  

@Cal Ewing Hello Cal, Just wondering, which Turnkey provider did you use and would you recommend them?

Hey William, I used to work international contracts for folks buying in the US so I might be able to help you out some. It's actually pretty easy. The only thing you need to be sure to do is speak to an entity structure professional first so you are sure to get the right US entity setup to hold your properties in. It's not an LLC for Canadians either...those have bad tax consequences. I can't remember the acronym for the one you'll need instead (4 letter I think?). Once that is set up, then you just need a US bank account, and then you're good!

@Ali Boone Hi Ali, Would this legal structure be a holding company or corporation of some sort? and do you absolutely need to set up a US entity?

I spoke to a turnkey provider recently and he told me that none was necessary.

@William Wong

We have worked with several non US investors and we have helped them with setting up their entities as well as helping them secure several different options for financing the properties.  If you are considering the Memphs market let me know and I might be able to assist you. 

Curt Davis, Real Estate Agent in TN (#00321765)
605-310-7929

@Curt Davis Thanks Curt. I am considering my options right now. I have indeed heard good things about Memphis Invest, so, perhaps that may very well be an option.

Out of curiosity, What kinds of financing options do you provide?

It would be a corporation, yes. Not an elaborate one by any means, but a corporation. And yes, as far as I know you have to set one up.. Whether if that is a legal requirement or a financial requirement to avoid major tax hits, I'm not sure, but I've never heard of an international investor not having one to buy property. I believe it's more tax-related than anything. And trust me, the tax hits you could endure could be huge.

@Curt Davis, I'm interested to learn about the financing option for Canadian as well, would appreciate if you could PM too. Thank you.

Also interested in this. Have any of you begun investing in the US yet? I am from Ontario and would like to connect with someone else doing it.

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