Canada’s high housing costs make it difficult for many of its citizens to buy real estate. Do you need to look beyond your backyard to find more affordable properties, higher cash flow, and better financing terms? The US housing market has these in spades. Keep reading to learn about the huge opportunities available to you as a Canadian investing in US real estate!
Summary:
Yes! Although buying property in another country might seem challenging, there are no laws or restrictions that prevent Canadians from buying US real estate. Whether you plan to purchase an investment property to rent out for a profit or a vacation home, the process for buying a house in the United States is similar for residents and non-residents.
Is buying a property in the USA worth the inconvenience of managing a foreign investment? Here are several benefits of investing in US real estate:
Canadian homes are roughly 19% more expensive than US homes, and there are many markets in the USA where you can find properties at a much cheaper price point than comparable homes in Canadian real estate markets. You can buy investment property for only a few hundred thousand dollars!
Unlike in Canada, where mortgage terms typically range from six months to 10 years, you can get 30-year fixed-rate loans in the USA. This locked-in monthly payment makes it easy to calculate your cash flow over the long haul!
In many Canadian markets, rent rates aren’t high enough to justify inflated home prices. Compare this to US markets, where you can often cash flow with turnkey real estate or regular rental properties.
Browse our cash-flowing rental properties in some of the best markets across the USA!
Canada and the US have a tax treaty that prevents double taxation on your income. While you’ll need to report your earnings on both US and Canadian tax returns, you can claim a foreign tax credit in Canada, effectively eliminating your tax liability.
Although US properties are often more affordable and can offer higher cash flow than Canadian properties, the challenge of managing rental properties remotely keeps many Canadians from investing in US real estate.
Finding tenants, fielding maintenance requests, renovating units, and dealing with evictions are just a few of the many tasks that require boots on the ground. You could easily lose money to vacancies, property damage, and other issues if you don’t have the right team in place!
Turnkey rentals are some of the best properties for Canadian investors, as they provide both passive benefits and active income. Here are a few of the many advantages of buying turnkey:
Turnkey rentals come with property managers already in place. This allows you to reap all of the rewards of rental property investing without the headaches of day-to-day operations.
When you buy a regular rental property, you need to find, screen, and place tenants before you can start earning rental income. Since many turnkey rental properties already have tenants in place when you buy, you can cash flow from day one!
It’s no secret that older homes with aging systems and appliances need more attention than newer properties. Since turnkey rentals are newly renovated or build-to-rent properties, you’ll deal with fewer maintenance problems overall. That means more money in your pocket!
Talk to the turnkey experts today to get on the path to financial freedom!
Despite living hundreds (if not thousands) of miles from your investment property, there are very few differences between buying US real estate as a Canadian and buying it as an American resident. Follow these steps to purchase your first US property:
Find a real estate agent who has worked with nonresidents, as they can not only help you find a great property but also point you in the direction of property managers, contractors, and other resources in your market. If you work with a turnkey provider, you’ll already have a property manager for your newly renovated or built-to-rent home!
Unless you plan to pay cash, you’ll need to get a US mortgage for your US property. The good news is that many lenders will look at your Canadian credit history and income to qualify you. Getting a pre-approval roughly one to four months before you buy will give you an idea of where your finances stand and the amount you could qualify for.
Now that you know what kind of home you can afford, it’s time to start looking for properties to purchase. Work with your agent, scour the multiple listings service (MLS), or check out our turnkey rental properties for sale!
Once you find a property you want to buy, write and submit an offer letter to the seller. Remember to stay within your budget, list your down payment and earnest money deposit amounts, and explain any contingencies.
Due diligence is crucial when investing from afar since you may not have many opportunities (if any) to visit the property in person. A home inspector will assess the home’s condition and provide a detailed report that you can use to negotiate repairs and make the right decision on the property.
After closing, all you need to start earning rental income is a property manager and tenants. If you buy a turnkey rental property, both are already in place!
Repeat this process whenever you buy a property in the US. Whether you’re aiming to build wealth for retirement or generate enough cash flow to replace your income and retire early, US real estate can help you reach your long-term goals!
Not every US market will have affordable properties that rent for a profit and increase in value. Look for areas with steady population growth, a strong job market, and a business-friendly economic climate.
Not sure where to start? Here are a few of the best states to buy US real estate:
Check out our full list of the best states to invest in real estate and our most landlord-friendly states list!
Yes, Canadians must pay taxes to the Internal Revenue Service (IRS) for the profits from a sale and rental income from investment properties. The US/Canada tax treaty prevents double taxation on your rental income, however, and Canadians can still claim deductions like depreciation and mortgage interest on their US returns!
Whether you want a rental property that supports you in retirement or a vacation home to escape to during Canada’s frigid winters, a US investment property could be a valuable addition to your portfolio.
Buying turnkey is the easiest way to invest in US real estate from afar, as these properties are professionally managed and already rented!
Yes, there are no restrictions for a Canadian buying US property. In most cases, you won’t need a US credit score to secure financing, and you’ll have access to many of the same real estate tax deductions as US residents.
Yes, Canadians are required to pay tax on the sale of US rental property and any rental income generated. Since the US/Canada tax treaty prevents double taxation, you’ll pay real estate taxes to the Internal Revenue Service (IRS) and claim the foreign tax credit on your Canadian return.
Yes, foreigners can buy property in the USA, regardless of their citizenship. The biggest challenge for most foreign investors is managing US properties from afar, but buying turnkey alleviates this problem!