Looking South For Real Estate Steal

Jan 21st, 2009 – Comment

Mark from Hamilton, Ontario writes about buying property across the border: Hey Lou, Listen to you on AM640 as much as I can. For the past 5 years I have taking a trip at least one a year across the boarder to do some snowboarding with the family.  We normally rent a condo on the […]


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Mark from Hamilton, Ontario writes about buying property across the border:

Hey Lou,

Listen to you on AM640 as much as I can. For the past 5 years I have taking a trip at least one a year across the boarder to do some snowboarding with the family.  We normally rent a condo on the hill.  I was considering getting together with 2 other people and purchasing one of these condo’s for personal use as well as to rent out when we are not using it.

Carving Deals on U.S. Hills

Carving Deals on U.S. Hills

The problem I have is I am not very knowledgeable in the field of buying property across the boarder.  I just bought my first home this past year in Hamilton so I have been though the process here.  Is there a difference in the process?  Should I wait to see if Real Estate prices fall further in the States?   Would it even be worth my while looking in to this at the moment, seeing I have just bought a house?

Thanks for your time.
Mark


Hi Mark,

You are not the only Canadians with their eyes on U.S. real estate!  The process of  buying a property south of the border is essentially the same but what you need is a good lawyer and accountant in Canada who has expertise with U.S. tax laws and real estate transactions.

I’m not sure of the price that you can snag the condo for but be prepared to bring lots of equity to the play. Out of country buyers are viewed as higher risk borrowers and I have seen down payments as high as 40% of the purchase price.

With your intent of using the property personally and having it available for rental you need to talk with your accountant as to the tax treatment of the net income or loss generated by the property. In addition with the intent of splitting the property with two other owners you have to have a process in place so the owners can sell their interest if and when they need to. Your lawyer will be able to create a partnership agreement that works to the satisfaction of the participants.

As for the best time to buy U.S. real estate I think it is safe to say that the market will not be this depressed forever. I would find the building where I want to buy and I would track the sale of condos and their historical selling prices. That way you will have an idea of relative value. Then I would throw some low ball bids at condos that are for sale and see if there is any interest at the price you offered.

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