Real Estate Investor · Toronto, Ontario · Member since 2010 · 413 posts · 114 votes
13y
Tim C. Financing is still difficult. Personally all my financing is from the private sector. This allows me to continue to purchase without any road blocks or jumping through hoops with banks.
Now if you do want to go conventionally, Canadians can get financing through Canadian banks who have US Affiliates (Example:BMO bank and Harris Bank) There are restrictions and guidelines to obtaining financing this way, but if you do manage you can get a great rate. Also down payments can range from 35-50% depending on the situation.
90% of Canadians either use Cash or leverage off Canadian properties/Line of Credits. With low interest rates it makes it appealing but remember that you will be losing a few points everytime you have to exchange dollars to pay down Canadian Debt.
I suggest not to hold in your personal name, it's a invitation to disaster with liability. I have in the pass, but strongly suggest some kind of structure. Buying in an LLC can be done if you elect the LLC just as a holding company and not an actual entity which pulls income. Usually set up with a C-corp or other entity is best. The reason for this is Canada doesn't recognize LLC and it triggers double taxation.
I normally use the structure above or some form of Partnership. Partnerships are great but general partners are subject to liability, so proper protection is still needed.
At the end of the day you should definitely sit down with a cross-border specialist. Everyone's situation and net-worth is different. I am not a accountant and any info given is just for education purposes and should not be used as legal advice**
As for withholding, there are restrictions and you may be subject to withholding. You can be exempt if the value is under 300,000 and buyer is owner occupied. But if not you will have to file a 8288-B form. If no form is filed the IRS will kindly hold onto your money until Taxes are filed. They are just that nice.
Im an investor in Toronto, both flips and income properties. The market in TO has become increasingly difficult due to low supply. This has forced most decent homes to end up going in bidding wars, which as an investor is a nightmare. Anyone else facing this problem and had success around it?
We have begun to look at investments in Phoenix, Austin and Atlanta, but on a recent trip we saw a lot of potential in flips. The idea of managing one remotely and the international struggles seem a bit daunting though....anyone have experience and advice on this?
I have been successful until now, 75% of my income properties have been purchased on bidding wars in crazy Toronto. I only buy properties with best possible future , one property a year. I am closing on my last one this month.
Now I am out of Toronto since I do not do flips, I ran out of money. I always need 200K to buy and renovate a income property, and I do not make 200K Net a year :).
if you flip, the bidding wars may be good for you, since you buy low and sell high on a bidding war :)
There is still houses that do not attract bidding wars, you just need to be patient e negotiate. I bought the last one 50K below asking because the seller was overpricing the property.... but still had a bidding war to deal with at 50K under asking, funny isn't it :)
I have properties in Portugal and I do not love to leave 100% of the management to the property Manager. For me it's only worth it to do it if you really get a lot more than where you live, maybe 50% more.
You have tax implications and accounting expenses to deal with.
Another thing to deal with is financing. I do not know how financing works in US for Canadians.
I was researching Detroit Downtown for apartment buildings, very risky, but who knows it can be good in the long run.
What is the cash on cash return you are seeing in US?
This is true, but some of the taxes withheld by the IRS are rebated on our Canadian taxes due to tax treaties between the two countries. You would receive similar treatment as an U.S.A. Citizen investing in Canada.
Now ... is it really worthwhile ... in some instances, yes.
We are looking at a 6-unit property in Texas with scheduled rent of $3150/mth, {claimed} operating expenses of $1484/month with an asking price of $180K.
We just purchased a 5-unit property here at home with scheduled rent of $3390/month {$4250/month once we get rents to market and bring a 6th unit on-line}, operating expenses of $1584/month; and the asking price was $389,900
That is why it can be worth it :)
Sweet numbers :)
Funny, I just bought a book about investment in apartment buildings and the author's main market is Texas.
Los Angeles, CA · Member since 2013 · 66 posts · 18 votes
12y
@Erika Di Salvo@Filipe Matos One way to finance in the US from Canada is by using a Line of Credit or HELOC. The problem with that right now is you're losing more than 10% to the exchange rate. Since homes can be purchased in the US for much less, this is an option for technically no money down at a good interest rate.
RBC also has a program for US investors, you have to put around 40% down though for investment properties. PM me if you want the flyer.
TD does lending for properties but only in a couple of states on the East coast.
Other than private no doc loans in the US, like Visio or Peak - they are all the options I know of.
@Gary McGowan have you looked at the student housing market in London? It's an area I became interested in while living there for about 8 months and would be interested to hear any thoughts on it.
I have looked at them, but the numbers never seem to make more money than with my multi family strategy (buy big space and rough, clean up and rent).
But he guys in Hamilton Mountain swear by them.
I think its a very good strategy if you just compare with sfh rental or duplexes/ some triplexes. Instead of renting to a family you rent to 5 or 6 students , at around $500 each.
Specialist · Toronto, Ontario · Member since 2012 · 2k+ posts · 891 votes
11y
@Account Closed
You can do it with BMO Harris via BMO locally. You can call your desired branch in the US and tell them to reach someone at your desired branch in Canada to go in and sign the papers in person and they will expedite the documents for you.
But one thing about these bank is they are not linked cross boarder.
Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
11y
Originally posted by @Account Closed:
Hi @Roy N. are you able to open a Cross border account at a Canadian branch? TD for example. Or do you have to do it in person in the US?
Ajay,
I'm not sure I can give an appropriate answer. We opened our first US TD account while I was at a customer site in NH (working with my other company). We have since opened a subsequent account working through our local TD branch.
One thing we did before opening the US account was to establish a US dollar account with TD in Canada. When we opened the US account it made it much easier for transferring funds.
Rochester, NY · Member since 2014 · 64 posts · 4 votes
11y
Hi there,
I was wondering if anyone would be able to answer my question. I am looking to borrow money from one of my investor friends who live in Canada. My attorney stated that this investor should be able to transfer money right into the attorneys escrow account with no problems. However, do we need to consider the currency exchange or are there any other fees we will have to pay from transferring this from Canadian account to American Account?
Any help would be greatly appreciated!! Thank you so much!
Your friend/partner should convert the CAD funds to USD prior to transfer. Once they have funds in a USD account at a Canadian bank, they can simply wire transfer to your lawyers escrow account.
Be forewarned that transferring large amounts at once (>10K) creates additional Homeland paperwork. Many banks will also increase transfer/wire fees as the balance grows larger ... it takes a bit of figuring to find the right amount to minimize fees and avoid the bureaucratic hassle. Also be warned that the receiving bank will likely deduct "fees" for being the passive recipient of the wire txfr.
When converting their funds from CAD to USD, I would highly recommend your friend/partner they do so through a currency exchange (FX) account rather than at their bank as they will get a much tighter rate. Also, the larger the amount, the better the exchange rate you should be able to negotiate. If they are going to regularly be moving funds back and forth between currencies, they should probably open and FX account with a brokerage (which, up here, may be another branch of their Big-5 bank). This will enable them to convert currency when it makes the most sense (i.e. last year for CAD => USD, right now for the opposite direction).
Investor · Boca Raton, FL · Member since 2012 · 1k+ posts · 1k+ votes
11y
@Jennifer Roth
I just answered this in your other post. See below.
I suggest your friend contact a foreign exchange/currency trading firm who charge far less than a bank does. Typically they charge 0.5% vs up to 2.5% by the banks, also, they generally do the wires for free as well. I use Firma Foreign Exchange, but there are others as well such as Knightsbridge. Typically they only do a min. of $10K, but the amount does not matter, you get the same exchange rate regardless if it's $10 or $100K and the wiring fees are still free.
Your friend should also check with an accountant or a cross border specialist on the best way to approach this, if they are not already set up to do business in the US. They'll need to get an ITIN and declare to the IRS any interest you pay and/or rental income they receive.
PS. there is no additional Homeland paper work for more than $10K
Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
11y
Chad:
Now, I'm curious ... either we've been doing something wrong or are simply "special" in the eyes of the U.S.A. agencies.
We've periodically been put through the wringer when transferring large sums into, or via, the U.S.A. - despite having done so for years. When we transfer smaller amounts, we've never had any paperwork or questions from Homeland.
When I originally signed myself and my company up with the FX trading firm, I seem to recall having to fill out a bunch of international clearance documents, as well as a consent for background checks. I can't remember which agencies conducted these, whether US/Can or Feds, etc? Since I got put through the wringer at the time, I believe that is why I have no issues now moving money back and forth. I do know that everytime I send money to the FX trading firm, before they convert and wire to the US, they want proof of where the funds came from via a printout of online transfer, or a bank teller's stamp if an internal transfer.
However, now you have me concerned, as I recently sent a large sum of money for a property to my lawyers escrow account, but did the wire directly through my bank this time since the funds were already in US dollars. This was the first time doing directly through the bank, so I hope that I don't get harassed as you've indicated?
Developer · Vancouver, British Columbia · Member since 2014 · 122 posts · 26 votes
11y
Hi Shahriar K. fellow BC flipper here and new to bigger pockets.
How is your new rehab business going?
We often team up with potential flippers/investors on rehab deals. Currently doing one in Nth Van. Happy to provide info on rehab side and also explain how we do out deals
Homeowner · surrey, British Columbia · Member since 2013 · 98 posts · 8 votes
11y
hey @Pawan J. the rehab is going well enough. I should be finished mid Jan and my biggest worry is if I can do a rent to own with a one year lease term or less.
Flipping in north van I know people doing tear downs and building new properties but haven't heard of many flippers. I am always interested in hearing more info on what others are doing around where I live.
Hi. My name's Alex. I'm also from B.C. I'm having trouble getting started. Everthing here just seems crazy expensive. So I'm looking into alberta and Saskatchewan. Do you have any advice for a beginner tying to invest out of province? I'd like to try the BRRRR strategy.
Hi I'm new to all this. Looking to buy my first property this year. I'm having trouble finding Canadian specifics on pretty much everthing. Any advice for a newbie?
Winnipeg newbie (kinda) here. been managing a rental portfolio for an investor, work full time in the financial sector and about to do my first flip. Can anyone recommend private lenders. A lot of the guys I've spoken to (from a google search) seem to lend based on as-is value. I'm hoping to find someone based on the ARV (70-80%), which would help me take care of the purchase and reno. Any help or ideas would be greatly appreciated.
Ottawa, Ontario · Member since 2017 · 3 posts · 1 vote
7y
Hello everyone. Arthur from Ottawa.
I've been reading a lot about real estate investment in the past 2 years and planning to make my jump and close the first deal by the end of the year /2020.
But I would like an advice...
I have ~$200k and would like to jump in rental properties, either in Ottawa or Gatineau (QC)...
If you were starting on the business today with that amount of money, what strategy would you use? BRRRR with 20% down payment on single/multi-tenant properties as far as your money can go? Ultimately, my objective is to have enough cash flow on my properties to be able to quit my job in the future.
Also, does anyone know about the tax implications on holding a real estate portfolio? Is rental income still considered passive income and taxed at 49% by CRA, even though it is your single source of income in case you are not working a regular job?