Morgan: Now is a good time to look at buying U.S. real estate
With the United States still struggling to regain it footing from the financial breakdown from 2007, perhaps it is time for us Canadians to look to our sister to the South and see the opportunity that has knocked on our door and invest in U.S. real estate.
With the foreclosure rate still skyrocketing in popular tourist areas such as California, Nevada and Florida, just to name a few, we are continuing to see prices fall further into the basement.
Our dollar continues to remain strong, hovering at, close to or above parity against the U.S. dollar. And this has given Canadians greater purchasing power.
Any long-term U.S. real estate investment will ultimately turn a great long-term profit.
Canadian buyers are able to, on average, finance 70 per cent of their purchase from private lenders or banks, but keep in mind that there may be more hoops to jump through to qualify for an American mortgage.
While prices remain low in the United States, senior economist with BMO Capital Markets, Sal Guatieri, has stated prices will not remain low for long.
“While there’s little urgency, now is likely a good time to buy U.S. real estate in regions with relatively low foreclosure rates, as conditions should improve enough to put a floor under prices this year,” says Guatieri.
In Arizona alone, 60 per cent of homes sold now are distress sales and the average median selling price is around $119,000.
Canadian investors are commonly buying
properties in Arizona for $90,000 and are able to rent them out for $800 to $1,000 per month. On average the return for the first year is roughly nine per cent, and in following years you could possibly see as much as a 12 per cent return on your purchase.
As the numbers reflect, there is great opportunity for Canadians to obtain a profiting investment property in the U.S., but bear in mind there are many different measures that will need to be considered, such as taxes, downpayment and even property management.
Do your research and pick a neighbourhood that is right for you and always keep in mind the number one rule of real estate: location, location, location.
Where Americans see a great risk to purchasing investment property in today’s economy, Canadians are able to see the advantage and take it. We are known to flock to “snowbird” locations such as Arizona, Palm Springs and Nevada, so now that the opportunity presents itself strike while the iron is hot.