Does buying U.S. real estate still make any sense for Canadians?

Posted on March 8, 2016 by | 102 Comments

I never thought so myself.  That’s my opinion, certainly with our Canadian dollar so low.  However, I’m willing to at least listen to someone who believes otherwise.  Enter Mike Wolf, an author and U.S. real estate investor.  When Mike reached out to me recently via a friend, and asked for some time on my site, I was very curious and very skeptical why he thought buying U.S. real estate now (with our miserably low Canadian dollar) might still make sense.  Here’s what Mike and I chatted about.

Mike, I’m very skeptical about this. I have to ask you flat out, why is U.S. real estate a good investment, at these pathetic Canadian dollar levels?

I think the U.S. real estate market is still great for several reasons:

  1. The American real estate market is much more affordable than the Canadian market – even with the currency exchange.  In places like Atlanta I can buy a property for $100,000 U.S. that would be comparable to, if not nicer than, a $500,000 CDN property in Toronto or Calgary.  At some of the auctions I attend in Houston I see single family homes selling for $10-15k and that barely buys you a shed in Canada these days.  The people I teach are picking up homes for pennies on the dollar.  I don’t know of anyone who can say that about any market in Canada.
  2. The U.S. typically has better returns on the amount of rent an investor can get in relation to the purchase price of the property.  In other words, one can get a much better return on investment in most U.S. cities.
  3. The U.S. has been recovering at a tremendous pace and should continue to see significant gains while Canada starts to head into a recession.  I do not like buying into a dropping market and I believe real estate in most of Canada is getting ready to head into a severe downward correction.
  4. The tax benefits.  Most specifically in the U.S. they have something called the 1031 exchange*   *All investors are encouraged to review detailed tax consequences before making any major investment decisions – taxation issues can and do change.  *Under Section 1031 of the United States Internal Revenue Code if an investor sells a property and purchases more property they can defer the capital gains tax indefinitely.  Think about how much more quickly you can build your portfolio if you don’t have to pay capital gains after every transaction like you do in Canada?  The best part of this is that Canadians can take advantage of it too if they structure things properly which is one of the things that I teach my clients.
  5. The richest people on the planet invest in American real estate for a good reason.  In addition to buying something that can give you passive income and capital appreciation you can also ‘depreciate’ your properties for tax purposes.  Without going into a lot of detail this means people like Warren Buffet, Donald Trump, and Robert Kiyosaki are paying a lot less taxes than most middle class people.  The bottom line is that the more real estate you own the less tax you’ll pay if you set things up strategically.

Where do you hold real estate investments now? 

I control properties in Calgary, Houston, San Antonio, Las Vegas, Phoenix, Florida, Atlanta, and Kansas City.  I’ve been a real estate investor for over 25 years.

Where are you looking for new real estate investments?  Why?

My top market is Atlanta.  Why?

  1. The market must be landlord friendly.  What this means is that if I get a non-paying tenant I can get rid of them quickly.  In Atlanta I can generally get rid of a bad tenant in under 3 weeks.  In Kansas City it takes approximately a month.  If I contrast that with California it can take over a year to get rid of a bad tenant, which is exactly why I won’t invest there.
  2. Population growth and good economic fundamentals.  People are moving to places like Atlanta to find jobs.  The economy is vibrant and because the government is very business friendly (they offer tax incentives to companies who do business there) there is a large number of fortune 500 companies that call Atlanta home.  Companies such as Coca-Cola, Delta Airlines, Home Depot, Turner Broadcasting base themselves out of Atlanta.  What this means is that my tenants can afford to pay their rent and if for some reason they lose their job there are a lot of other jobs waiting for them.  Also, the industries are diversified so if we contrast that with a one industry city (e.g. Detroit) the economy doesn’t tank when that industry is failing.
  3. Return on Investment.  While most investors put this as their most important criteria I have learned that if you pick the wrong market all you’ll get is ‘paper returns’.  As an example, it’s possible to buy a very inexpensive property in a place like Detroit or Ohio that looks really good on paper.  The homes might be $20 or $30k and rent for $700 per month.  The truth of the matter is that most tenants will only make 2 or 3 rent payments then you’ll have to evict them for non-payment.  While ‘high ROI’ sounds great it can be a lot of headaches, stress, and losses of revenue over time.

I’m still not convinced Mike.  So, on that note, let’s talk about the downside.  Can you tell me about some of the challenges you’ve faced in owning U.S. properties? 

The biggest challenge was with my mindset. When I first started investing in real estate I was a control freak.  Like most entrepreneurs I felt that nobody could do the job as well as me.  When you have that mindset it really limits the ability to scale your business because there’s only one of you.  Here’s my example:  when I bought my first US property in Las Vegas about 12 years ago I was forced to get a property manager because I couldn’t collect rent in both Calgary and Las Vegas at the same time.  What I found out was even though I had to pay my property manager 10% of the rent he actually produced more revenue for me than I did.  I learned that having a team produced better results financially while giving me more spare time and freedom to do the things I love.  I’ve learned that having the right team allows you to move beyond only investing close to home.  I wish I would’ve figured that out earlier in my career.

Let’s talk tax. What are some of the tax implications for Canadians owning U.S. real estate?  Isn’t this a PITA (pain in the a$$)?

The answer to that is if done properly a Canadian can pay less tax doing a transaction in the United States than they would doing the same transaction in Canada.  This depends entirely on what type of entity or entities they are purchasing in.  The proper structure isn’t one size fits all and it’s important to talk to a cross-border accounting specialist.  Before I put any of my clients into a potential deal I always make sure that they talk to my cross-border accounting team to make sure that they can take advantage of the different options available to them that will keep their taxes to a minimum (not to mention protect their assets).  But you’re right Mark, if done wrong an investor might be subject to withholding taxes and/or double taxation.

Any final thoughts Mike?

I think there are some great opportunities out there and the biggest transfer of wealth in history is happening right now.  I believe the US real estate market will not be on sale forever.  The thing you do today will have a big impact on what your financial future.  I believe there’s always money to be made but it’s much easier when things are undervalued.

Thanks Mike.  This was interesting to learn about but I’m not convinced this is right thing for me/us.  I do agree with you with one thing:  the things you do today will help shape your financial future.  All the best to you.

Readers, what’s your take on Mike’s responses?  Would investing in U.S. real estate in certain markets make sense now?  Does it make sense going forward? 

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102 Responses to "Does buying U.S. real estate still make any sense for Canadians?"

  1. David · Edit

    Very good post Mike – thanks ! Just one comment please : when you asked what are some of the challenges, a huge red flag for me was an answer that started with “mindset”, and continued to discussing a “mild negative” which was turned into a positive ! As far as I can see this is the oldest trick in the book, and what I was expecting to hear was about an actual dollar loss due to a transaction gone bad – there isn’t an investor on planet earth who hasn’t experienced those (unless they are cheating of course), and the handling of those scenarios is the real challenge !

    Reply
    1. Mark · Edit

      U.S. rentals:
      If a Canadian resident receives rental income from real property located in the U.S., they are subject to a non-resident withholding tax of 30% of the gross rental income, which is required to be remitted to the Internal Revenue Service (IRS) by the tenant. The 30% withholding tax cannot be reduced by way of the Canada – United States income tax convention.

      U.S. ownership and sales:
      If a Canadian resident sells real estate located in the United States, they are subject to a 10% or 15% withholding tax of the gross selling price under FIRPTA (Foreign Investment in Real Property Tax Act). If the property is sold for an amount greater than $300,000 but less than $1,000,000 and the property is being purchased with the intention of being used as the purchaser’s residence, then the sale will only be subject to a 10% withholding as opposed to the 15% rate.

      Owning U.S. real estate:
      Since its U.S. source income – that must also be reported in Canada to the Canada Revenue Agency (the “CRA”). You must report all U.S. rental income earned to the CRA, even if you’ve rented your property for fewer than 15 days in a tax year.

      There is a bright side, though: you will receive foreign tax credits from the CRA for the federal and state income tax that you pay in the United States. These foreign tax credits offset the tax owing in Canada, and if you receive sufficient foreign tax credits, you may be able to completely avoid double taxation.

      Failing to report your rental income in both Canada and the U.S. can result in fines and hefty interest charges being added to any income tax that you should have previously paid. You may also suffer other tax consequences, such as missing out on the opportunity to carry forward losses in future tax years.

      How is this not complicated?

      Reply
  3. Michael · Edit

    Do any Canadians here have experience buying in the US and understand deeply the process of: 1) getting financing from the US (where you don’t have a credit history) 2) the tax implications of the purchase ?

    Any help would be greatly appreciated!!

    Reply
    1. Mark · Edit

      Michael, thanks for coming on the site. I don’t think financing is an issue for some Canadians investing in the U.S. (in some markets) because some folks are flush with cash.

      That said, I personally wouldn’t own property in the U.S. due to the volatile (and downright crazy) political situation – but that’s another 100 posts for another day 🙂

      I would think the tax considerations for Canadians are a major deterrent.

      Reply
          2. Flacid · Edit

            Even if it were legal for a Canadian to physically manage their US rental properties I wouldn’t want to do it. Been using the same Property Management companies since 2009. Managing US rentals isn’t the hard part. Finding a deal where the numbers work is, but most people won’t get to that point because they’re easily discouraged by issues like those mentioned in this thread – which aren’t really the big issues

            Reply
  4. Ivan Tiangco · Edit

    Hi Mark, thank you for your very informational article. I am still thinking about investing in property in the United States (currently looking at Nevada and Texas considering I have family there that could help out in managing the property). I am brand new in the real estate world and am currently working towards my Realtor license here in Toronto. My aim is to invest in property and to receive a monthly flow through rental.

    Multi-family homes in the states look like a solid investment considering that they’re much more affordable than homes here in the GTA, and I wouldn’t need such a high capital to receive multiple streams on rental income. In the GTA a $500,000CAD condo could rent out for about $1500 for 1 tenant whereas you could have multiple tenants paying a bit less than $1500CAD/m for the same price of $500,000CAD. Doing the simple math, USA property seems much more profitable when you don’t have such a high capital. Of course, there may be fees and taxes that I would have to pay but overall, more profitable.

    My problem now is actually finding these deals and understanding the market more. I am 23 years old and have never invested in real estate, but I know for certain that this is what I want to do. What are your thoughts on this Mark?

    Much appreciated.

    Reply
    1. Mark · Edit

      I wouldn’t be so sure Ivan. “Multi-family homes in the states look like a solid investment considering that they’re much more affordable than homes here in the GTA, and I wouldn’t need such a high capital to receive multiple streams on rental income.”

      You need to consider the location of the property, quality of the tenants, U.S. taxation, and a load of other factors.

      I used to invest in real estate and it’s not always a cake-walk. If you’re looking to be a landlord, maybe consider REITs first?
      https://www.myownadvisor.ca/looking-income-dont-want-landlord-try-reits-101/

      Happy to discuss. Cheers. Mark

      Reply
  6. Hal · Edit

    Hi Mark,

    I have a unique opportunity to purchase investment rental properties in North Carolina. This specific area seems to have all the stars aligned. I’m lucky to have family friends that are from Toronto and living there for over 40 years. They have made an absolute fortune there and practically owned an entire town at one time. They have been telling me to buy properties in NC for years and even offered to help find, evaluate, the properties etc. The banks often contact them directly re: foreclosure properties. Many of the cities and towns around them have grown rapidly over the years and it was inevitable that sooner or later it would reach them.
    Rental demand is very high with a near 0% vacancy rate.
    Here’s an example of a rental property:
    3 level triplex (3 apartments) – purchase price $260,000
    rent @ $1,000/month per apartment
    vacancy: 0%
    Property value year to year: + 3-5%

    The only thing that has held me back thus far is the lack of knowledge when it comes to setting up a company, taxes, and legal. The thought of being double taxed from both countries scares the hell out of me. Do you know of a consultant that I can speak to in order to get me started? Please email me at hal9003@hotmail.com Thanks!!

    Reply
  9. Elise · Edit

    I’m surprised no one brought this up, but his comment regarding 1031 exchange can be very misleading and dangerous to canadian investors who should be VERY weary about using it. The following link explains it much better than I can, but basically if you do not pay the taxes in the US (by using 1031), the Canadian government WILL make you pay taxes on it. The problem is that 1031 is merely a deferral of payment until a later point in time, meaning the day where you have to pay it in the US (unless you die and pass the property on), you will have to pay it in taxes on the US side as well, leading to double taxation!

    So no, canadians shouldn’t use 1031, as the tax rates are lower in the US, and you’d much rather pay once, to Uncle Sam, than to end up paying twice down the road.

    http://moodysgartner.com/can-canadian-taxpayers-defer-a-gain-on-a-disposition-of-property-by-reinvesting-the-sale-proceeds-like-us-taxpayers-can/

    “Normally, the foreign tax credit regime protects Canadian taxpayers against double taxation. In the above example, because of the application of § 1031, no US income tax is payable in the year of sale and consequently, no foreign tax credit will be available under section 126 of the Act. Therefore, the Canadian individual will be subject to the full amount of Canadian tax on the capital gain and depreciation recapture arising on the sale. However, the gain and depreciation recapture is merely deferred for US tax purposes, and these will eventually be realized on a future sale that is not accompanied by a § 1031 Exchange. At that moment, all gains and depreciation recapture will be subject to US taxation and because these were previously subject to Canadian tax, section 126 will not grant a foreign tax credit for the US tax paid, leading to double taxation.”

    Reply
      1. Elise · Edit

        Not right now, but this is something we will be looking into in the next couple years, so I’ve been reading up a lot on the subject. The 1031 Exchange sounded great when I first heard about it, but then I looked at if something similar existed in Canada (not really…), but more so found out that canadians could potentially get trapped in double taxation if they do take “advantage” of it.

        I doubt Mike Wolf was aware of this point, which is why I wanted to share the information in case people just took him on his word, as the reality for canadians is different.

        Reply
        1. Mark · Edit

          Thanks Elise. Personally, I have enough to deal with when it comes to saving and investing and paying down debt. One property is enough for us (principal home) and we’ll be using our investments to generate cash flow for renting aboard in another decade or so. That’s the plan anyhow!

          Reply
        2. Dean · Edit

          Elise – thank you very much for your insightful and detailed comments. I have heard from others that Canadians cannot use 1031, and when I saw in this article that Mark claims otherwise I got very excited. I was a bit skeptical though so I did a ctrl+f and found your comment – I’m glad you brought this up.

          Mark – I did enjoy the article and it is very useful! I think it would be good if you took out the portion about 1031 or at least add an asterisk and say that there are other potential complications with it. The comment was made 1.5 years ago and I’m sure a lot of Canadians have read this article since then and will continue to read it, so it would be great for everyone if it was made clear that the 1031 sentence is perhaps not accurate.

          Reply
          1. Mark · Edit

            Hi Dean,

            Thanks for your comment (and Elise too for your update as well). I will absolutely put an asterisk here in the post, to ensure folks know they need to do their own due diligence on any foreign taxation issues.

            Reply
  10. K. Anderson · Edit

    I have been dreaming of buying a property in the Florida Keys for a very long time. I know it’s attainable but everyone laughs at me as being foolish and a dreamer, including my husband. We own three properties in Ottawa, Ontario. Those are crazy to upkeep, pay taxes on, hydro here, gas going up. I see no reason (unless Florida has loops I don’t see), to not invest in a South Keys property and spend time there while renting it out when we are not there. As we age, the weather in Canada is increasingly harder to bear but I still work and cannot retire for at least another 7-10 years. My husband has retired already. Any advice?

    Reply
    1. Mark · Edit

      I don’t think it’s foolish at all. I know a number of folks that own property in the U.S. It can be a great decision and a good financial one as well. I only stated in my post it does not make sense for us – at least right now. We have other debt obligations and we’re trying to grow our wealth in other ways over the next 7-10 years.

      If you can buy it, own it, rent when you’re not there – that could be a great way to build wealth and have some fun too.

      Good luck with your decision!

      Reply
  12. Natalie · Edit

    Mark,
    Thank you for the comment. Greatly appreciated… and I am so glad you acknowledge Detroit as a good market right now.
    I listened to the wealthy speak about and act on Detroit and I decided to follow, and it has been a great choice thus so far.
    I do agree that liquid money is always good but I’m sorry, I do not agree that you have a bit to lose with real estate. Real estate is one of the biggest investments you can make with gain.
    I have been purchasing houses for about 15 years now and I have nothing negative to say other than tenants can be a pain in the butt. Now, you may have been doing this much longer than me and have seen some loss, but I do not see where you lose. Unless, the real estate investment just ups and vanishes or burns to the ground without any insurance…I don’t see how it could be a bad thing. That is just my experience and opinion though. I am encouraging anyone who is thinking about real estate to go for it. You can have both liquid cash and real estate. It is never good to put all your eggs in one basket anyways.

    To touch on another thought, there certainly can be horror stories if you are going to invest in the unknown with no one at all to assist you. I myself have learned that, and in light of that have been down in the U.S. myself and have put together a team that I trust.
    I’m happy to assist anyone that needs a hand.

    Michael – I will contact you shortly as you have requested. 🙂

    Natalie

    Reply
    1. Mark · Edit

      No worries Natalie…always great to read other comments.

      You can lose money with any investment Natalie, at any time, this my point. Nothing when it comes to investing is without risk, especially short-term. We used to be landlords as well by the way, I have experience. 🙂

      Long-term, just like the stock market though, you should expect to earn money from RE. I agree you can have both liquid cash and real estate; that is rather smart if you do.

      If RE is working for you, and has worked well, then there is no reason to change your approach if your goals are being met. In the end, that is what matters.

      Cheers.

      Reply
    3. Channa · Edit

      Hi Natalie,

      Would you mind providing me some assistance in passing on your contacts etc. I also would like to explore US Real Estate market.

      Reply
    4. Olga · Edit

      Hi Natalie

      I am writing almost 3 years after your post but wondering if you are still active in RE in the US. I am preparing to buy my first property there hopefully by the end of the year and would be very interested to learn from you as well. Great to see women investors in RE – seems to be a field dominated by men…Thank you! (odeleanu@gmail.com)

      Reply
  13. Jim · Edit

    Disagree with Mark. As a person who owns US real estate and stocks there is no inherent advantage of one over the other. Stock investors cite an illusory liquidity advantage but if you’re a buy-and-hold investor, liquidity is meaningless. I’m not going to sell. If I want unrealized capital gains I’ll hold stocks. If I want cash flow I’ll buy either real estate or dividend paying stocks depending on which one is out of favour/inexpensive.

    Disclosure I have a 7 figure portfolio of stocks and a 7 figure portfolio of US real estate. My real estate generates $1000 a day in rent.

    Reply
    1. Mark · Edit

      Jim, you seem to have done very well for yourself – and good on you! No small feat in terms of that income for sure.

      I’m not sure liquidity is meaningless. Of course it has meaning otherwise nobody would invest this way.

      In terms of the stock market vs. RE investing, there is no one right or wrong way. Doing both adds diversification which can reduce overall investment risk. Doing one over the other may or may not have long-term benefits. Nobody can predict the future accurately.

      “If I want cash flow I’ll buy either real estate or dividend paying stocks depending on which one is out of favour/inexpensive.” That, we are aligned for sure.

      Continued success to you in 2017.

      Reply
  14. Natalie · Edit

    I think investing in the U.S. is a no brainer. What do you have to lose? Yes, our dollar is horrible but the reward comes after you have finished spending and you start collecting either the rent of the money from your flip.
    Your question now should be…how do I flip the house or even renovate the house if I’m not there? Let me do it for you. I have taken a liking and have been successful that I have decided to do it for others in my business.?
    I have been investing since last year in Detroit as the city is coming back with a vengeance.
    I currently own 3 properties and the amount of potential tenants that came to see the house was outstanding. I’m happy and see no negatives in this adventure.
    Where can you purchase a house for cash money (no mortgage) and receive a return of $700 to $1000 a month? I can answer that question. 🙂

    Reply
      1. Tipu Sultan · Edit

        Hi Natalie, I’m a Canadian living overseas. I’m interested in buying distressed property, collaborating with you, either to flip or refurbish for rental income.

        Reply
    2. Mark · Edit

      I love counter opinions Natalie.

      You have quite a bit to lose with real estate actually and depending on who is running your rental while you are not in the country – I’ve heard about horror stories.

      That said, absolutely a great deal of money can and has been made in the RE market. I just prefer to keep things more liquid, in the stock market. You can’t sell a rental unit/house on demand.

      Smart call on Detroit. It had to come back eventually. Owning 3 properties must take a bit of work…and if you can do that…well done.

      In terms of income of $700 to $1000 per month, I have that now I just don’t spend the money from my portfolio.

      Thanks for the counter argument.

      Reply
      1. Anonymous · Edit

        Natalie’s $700 – $1000 a month is per house……She has 3 in Detroit so that amount is tripled.

        In Detroit currently, a 3 bdrm 1 bath (square box) house in stress or foreclosure is selling for around $15,000 to $25,000……add in full rehab cost of $12,000 – $15,000 and each house costs her about $40,000 US.

        Her ROI with $700 – $1000 a month rent is earning her between 21% and 30% GROSS RETURN for each house.

        Now Subtract 40% of the rental income to cover everything from property management fees, property insurance, vacancy, repairs and upkeep (minimal since you just rehab’d the entire place) property taxes, and a contingency fund for any future major repairs.

        Her NET ROI is now somewhere between 12.6% to 18% per month, in U.S. dollars.

        As a side note, once occupied with a rental lease and with the full rehab investment in the property, the appraised/bank value of each home should easily be $50,000 to $55,000. So her initial investment of $120,000 is now netting her a return of 12.6% to 18% and has gained her $30,000 to $45,000 in new equity to go and buy another house if she wanted to leverage her investment and make even more.

        Here in Canada we can not even imagine these levels of returns on a Canadian bought property.

        Reply
        1. Mark · Edit

          Well, that’s pretty good, I must say. Yeah, here in Canada – I cannot even imagine that. No way will happen but they have been calling for a housing bust for sometime. Never say never? Thanks for sharing.

          Reply
        3. cayenne · Edit

          anonymous – i’m really interested in talking to you. and, of course Natalie. because as natalie says below.. “you really explained that so well”. i’m interested in buying in detroit and in california. with different reasons to each purchase. the former for investment and the latter for a dual lifestyle. i can be reached at theETCgroup@gmail.com. look forward to hearing from you

          Reply
    12. cayenne · Edit

      Natalie… it’s a whole two years since this comment and i’m curious where you’re at. i have my eyes set on the detroit market and i’m curious to talk to you asap. i can be reached at theETCgroup@gmail.com. thanks much. more than happy for your to work with me as you mention in your comment above. or, if you’ve moved on, then refer to others who can give me a bottom line of ROI versus addition of tax implications of the rental revenue properties in the US and the lower dollar amount. i can be reached at theETCgroup@gmail.com.

      Reply
    13. Randy Ballard · Edit

      Hello Natalie

      I was interested in information about Your strategy and success in the Detroit market.
      I think you are totally right in regards to cash flow and more for your money. I am a Canadian whom is very much interested .

      Could you please send me your email

      Reply
  15. Michael · Edit

    Recently purchased my first rental property in Toronto and have been very keen on getting property south of the border. My only hesitation is the legalities of buying international property, and my tendency to be a control freak on the units I own. Would it be possible to put me in touch with an agent and property manager that you use in Atlanta? Or any of the US markets you spoke highly of?

    Thanks!

    Reply
    1. Mark · Edit

      Congrats on your rental Michael. I think owning property internationally can be good if you know what you’re getting into. My wife and I have considered, just in passing conversations at least, property in Florida or elsewhere but we figure renting a place for one or two months in our financial future will give us more flexibility.

      I don’t know the US housing market very well so unfortunately I can’t offer any suggestions. Maybe pick something warm? 🙂 Ottawa is cold!!

      Reply
    2. Ivan Tiangco · Edit

      Hi Michael, have you purchased the property south of the border yet? Also, how is your rental property doing in Toronto to date? I live in the GTA but want to get into the US market

      Reply
  16. Dean Paley · Edit

    I would be interest to see how this does not run afoul of the Foreign Accrual property income rules. Earning rental income, capital gains (dividends and interest) through a foreign corporation likely will be subject to the FAPI rules which deem the income earned personally.

    Definitely would not recommend wading into foreign owned corporations without sound advice.

    Reply
  17. Anonymous · Edit

    Mike is correct. I’m a Canadian who has been investing in U.S. real estate since 2010. We have 10 homes in AZ and TN. Yields are strong. Tenants are plentiful. This won’t last forever.

    Reply
      1. Anonymous · Edit

        Dean is my accountant. He likes joking around. 😉

        Anyway, interesting article. I’m skeptical of Canadians being able to avoid capital gains tax upon sale of their US property. I looked into that years ago and was surprised to read what I read here. I still don’t think it’s possible. Canadians are going to pay capital gains tax to someone. That’s what we do 😉

        Reply
        1. Mark · Edit

          So am I, re: skirting capital gains – with a foreign property. Good luck with that and yes, that’s what we do 🙂 I prefer to own REITs for now but longer term I wouldn’t rule out a small sunny southern getaway!

          Reply
  19. Barbara · Edit

    What I found interesting in this, was his talk about investing in places that are more landlord friendly. Such a place doesn’t exist in Canada, where tenants have all the rights.

    My son is studying in New York State and I was a bit shocked reading his lease, all 40 or so pages of it. Nothing at all for tenant protection. Renewal date is August 1 and he had to re-sign the lease in February. He chose to not re-new this year. The landlord can demand any amount of damage deposit and has no rules about returning it and can increase the rent any amount. Although my son has a good enough landlord, I met him and he gave me some tips about dealing with tenants, lol. (I own one rental townhouse)

    Many areas in the USA have cheap properties, but they will stay cheap. And the building code standards can be shocking–I never knew that wiring could be on top of the walls, until I saw it in New Jersey and New York.

    Reply
    1. Mark · Edit

      As a former landlord, I found the regulations protected mostly the tenant. Interesting to hear from you Barbara on the freedom landlords have in the U.S., well, New York State anyhow.

      Reply
      1. Rob in Munich · Edit

        Similar here in Germany, while rents and yeilds are lower the majority of the running costs are passed on to the tenant. As well it’s cultural for tenanats to paint and fix up a unit (including installing your own kitchen). Main negative is that rents tend to be low so yields by extention are low.

        Reply
  20. RBull · Edit

    Real estate investing in the US doesn’t really appeal to me either. For me there are too many negatives going against it even if it could be lucrative. I’ve been a landlord before and that was with rentals located only 3km away.

    At some point later in retirement we “may” consider purchasing a small US home, although my wife currently says no way. LOL Although I wouldn’t really treat this as an investment- just an expense for a chosen lifestyle.

    I would be more inclined to do something like you are Cannew and a common set up where we were in last year in Texas with a rental. My folks own a little larger unit- a mobile in south Texas in a large park and not too far off will have to make a decision on what they’re doing with it due to their ages. The unit prices are reasonable, the lot rent that includes all park facilities and activities is reasonable and the taxes, upkeep are also very reasonable.There is also strong demand for renters but that opens a new can of worms.

    We’re not at the age where that lifestyle suits us (yet or maybe never if my wife has the last word) as we want to do some more world traveling etc.

    Reply
    1. Mark · Edit

      We have toyed with the idea of buying U.S. property, but haven’t pulled the trigger yet. When my wife and I look at the tax implications, rental headaches from afar, property management concerns, etc., we figure we are better off renting a place short term when travelling. Will that change for us? Maybe. I think it would be different if I had a corporation. I could likely put the condo under the corporation business structure. That would make a great deal of sense, tax-wise.

      Reply
      1. Rob in Munich · Edit

        Yeah it would be a step learning curve. As mentioned you can build a team to manage it but that’s a lot of work to setup. As I mentioned Bigger Pockets is worth looking at, if for no other reason it’s no different

        Reply
  21. SST · Edit

    As stated, almost all the qualities attributed to US RE can be found in stocks. Comparing bubblicious Canadian housing prices to US prices isn’t all that reasonable. There would have to be a tremendous deal in both price and income (even after FX) to make it worth the initial and ongoing effort. No mention of the shift in the mortgage era. The guest has been invest in RE for the past 25 years — a falling rate environment, which results in higher prices and higher rents. How will a stagnant/rising rate environment effect those factors?

    Reply
    1. Mark · Edit

      I see this as well: “There would have to be a tremendous deal in both price and income (even after FX) to make it worth the initial and ongoing effort.”

      I just worry, and I can be a worry wort, about the headaches associated with property management; finding a good company, and making sure the place isn’t trashed by a tenant. The tax issues are concerned depending upon which state you own property in.

      Reply
  22. cannew · Edit

    We purchased a Park Model trailer. It’s classified as a Trailer, more like an RV and we rent space rather than owing land. Don’t think I would be interested in owing a single property, especially in AZ where the crime rate is quite high. In the park where we rent they have 24/7 security, year round which keeps our belongings more secure.

    Reply
  23. Lloyd · Edit

    It’s not for me. I have neither the time nor inclination to pursue personal purchases of U.S real estate. I’d rather just purchase stocks of companies that do as that makes more sense for my personal situation.

    Reply

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