All Forum Posts by: David Pollard

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Hey Michael, looks like you've got a few uninformed responses here so I'll provide you one from someone that actually invests in Detroit.

I live in California now and have 12-doors in Detroit. I'm still actively investing but I help others get started there as well.

The city has been insanely good to me and my family, but yes... you do need to do a lot of due diligence and/or work with someone that REALLY understands the intricacies of the market. Happy to connect and see if I can be helpful.

Hey @Arhum Nomani 

I know a lawyer that helps clients set up entities in the U.S. She has been doing it for 15 years. She also used to live in Canada. She advised me on things like double taxation and other things you have to be aware of. I would be happy to connect you with her. I also know some lenders that help Canadians invest in the U.S with their entities.

Hey @Roy Cleeves thanks for the question. Allow me to address a few things I have seen thus far...

1) In the areas I have invested in the US I have seen comparable gains in large multifamily as I have in Canada, but no where near the same cash on cash returns. For example, I have a large multifamily that has increased in value conservatively by approx. 40% in the last 10 months being acquired mid January 2021.

2) Forced appreciation based on increasing rents thereby significantly increasing value faster than Canada since we are regulated with rental increase restrictions.

3) The areas I have property in are significantly more landlord friendly than Ontario/Canada therefore rarely have issues with delinquent tenants.

4) Access to scaleable properties. Upwards of 80% of large multifamily in Canada is owned by institutions willing to pay very low cap rates requiring very low leverage and minimal cashflow. The US is opposite with upwards of 80% of larger multifamily owned by private/corporate investors.

5) I operate my real estate like I operate my other businesses and that means they need to cashflow. Cashflow and cap rates in my area are being significantly compressed compared to the US.

6) I have an extremely favourable structure to allow Canadians to invest in US real estate easily without complications (legal or tax).

7) 1031 exchange

These are off the top of my head.

Open to hearing anyone else's thoughts? 

When it comes to taxation, particularly cross-border taxation the rules can be very complex.

Firstly, I'd like to let you know that I am a Canadian investor who's been investing in the U.S. for over 7 years but I AM NOT AN ACCOUNTANT OR LAWYER. The information I'm giving is based on my experience and expertise as an investor.

The most important thing to keep in mind is that it's not one size fits all. Everybody has a different tax situation and in order to determine the correct structure one would need to know a fair bit of information before they could assess the ideal setup for you. Some of the things that come into play are:

a) Are you flipping or buying to hold (Passive income is taxed differently than earned income)
b) What do you have for assets (do you need a corporation for asset protection and if so what type is best for your situation)
c) How are your Canadian assets held? Corporately, personally?
d) What type of write-offs do you have?

The above are just a few of the things that come into play when determining what type of entity(s) you require to strategically reduce taxes and liability issues.

If someone tells you a "solution" without knowing your situation RUN! You should always consult with a cross-border specialist prior to making these decisions.

I have some great cross-border accountants on my team who can guide you. Let me know if you require their help.

@Ensel Moore I would look for a free property management software to help you accomplish this. There are several softwares on the market now, so I would do some testing to see what works best for you and your rental business.