There are still opportunities for brokers to help clients land lucrative real estate deals south of the border, according to one leading broker, despite the American economy recovering from the recession and the housing industry slowly normalizing.
“I do still think it’s a good time to invest, not as opportune as a few years ago; they are starting to see an increase in value across the board, in most regions,” Scott Bentley of Premier Mortgage Centre told MortgageBrokerNews.ca. “We’re seeing the most increases in the sunbelt areas. There is an increased demand in south Florida from other markets, such as South America.”
The first hurdle Canadians must overcome is how to finance a property outside the country. While there are a few financing options available, it becomes more difficult to secure for a rental investment property.
“The challenge with that is trying to find financing for it,” Bentley said. “There are a number of institutions who will finance a Canadian’s second home (but) it gets more challenging when trying to finance a rental.”
A Canadian broker can help a buyer with refinancing of an existing home to help free up funds to purchase a second home in the USA.
“Typically, we would like at harvesting the equity from an existing property or portfolio of properties which would allow a buyer to pay cash outright for the home,” Bentley said. “Generally you wouldn’t arrange direct financing there. But brokers may have contacts there – there are some lenders who will finance Canadian buyers.”
Tapping into broker connections is a good way to assemble a professional team that will help expedite the process while outlining any pitfalls that someone living outside the chosen market may not be aware of.
“Typically you should have a team prepared in the area you are looking: legal, real estate partners,” Bentley said. “They can identify certain areas and have a better understanding of market dynamics. They are also able to help you navigate things to look for.”
And Bentley offers one tip for dealing with tax issues south of the border, which can cause problems for those who don’t plan ahead.
“There are some ways to hold that property in the trust and have a US corporation that is held by a Canadian corporation; you would need a taxpayer identification number,” he said.