This is the one of the main issue for a Canadian in buying a home in the states.
There are some US banks which can provide financing in the states based on your assets and income in Canada. Some of these banks are owned by the Canadian banks probably bought during the Financial crisis in the states.
1) Harris bank. This is part of the BMO financial group.
https://www4.harrisbank.com/
2) Royal Bank USA. Check out the following link:
http://www.rbcroyalbank.com/usbanking/rbc-access-usa.html
If you are willing to put 30 percent down, then I think most of the banks in the states will be able to provide the financing. Being a canadian I would rather try the Canadian banks first with some presence in the states, so that you can capitalize on your equity in Canada.
Last time I checked with the Bank of America, they said you can get financing now in the states only if you are working in the states and that too with 30 percent down. But if you want to just open a US dollar account with them, that's easy. You need a Passport and may be one more piece of identification. Later on, you will also need Tax identification Number or Social security number. The account comes with Visa debit card, that could be quite convenient if you travel to the states quite often. The account requires $1500 minimum balance to avoid monthly fee or if you could have a direct deposit there if you are working in the states.
Monday, July 19, 2010
Sunday, July 18, 2010
Condo versus Single Family Home
I am always confused about what to buy for investment? Single family home or condo. Condo seems to be a safe investment, especially if you live far and that too in a different country and can't look after the property on a regular basis. But I don't like the HOA i.e. the maintenance fee to be paid each month. Let looks at the pros and cons of each:
Condo
pros:
1) Safer, managed by strata. Less chance of break-ins etc.
2) Some have really good facilities, like community center, fitness center, swimming pool.
3) Really good bargains, condo have been hit really hard with this recession
4) Property management fee might be less. I have see that property management companies seem to prefer condo over single family homes as it is easier to manage. Their might be more condos in the same complex being managed by the same company and it's really works out good for them from economies of scale perspective.
5) HOA fees covers some of the expenses like building insurance, sewerage etc. This depends from condo to condo, so please check with your strata
Cons:
1) HOA fees i.e maintenance fee. This could be substantial ranging from $100-$400 depending on the amenities and location etc. If you are going to be using the property most of the time then this might be OK but if a condo is empty most of the time then this is just a useless cost. Also, HOA fee is not tax deductible like property tax.
2) Less Privacy. This is obvious
3) Less capital gain. Generally condos are the worst hit when market goes down and the last to come up when the real estate market picks up. Your capital gain could be less compared to a single family home.
4) Harder to get financing. It's harder to get financing for the Condos in this market. I had a discussion with few realtors and they told me it's quite hard to get financing for the condos. One of the reason is the unstable HOA fee. Many people have just abandoned their condos, leaving the ones still holding their condos with higher HOAs. This is because the total strata fee is shared among the current owners of a complex.
5) Unstable HOA as discussed in the previous point. You have to be careful about this one and make sure you clarify with your agent and the strata about the HOA going up.
Single Family Homes:
Pros and Cons are pretty much opposite of Condos. One thing you have to be careful about SFR is the insurance which could be substantial if you buy a property in Florida as you might have to get hurricane insurance as well and this could make is insurance costs quite high.
Condo
pros:
1) Safer, managed by strata. Less chance of break-ins etc.
2) Some have really good facilities, like community center, fitness center, swimming pool.
3) Really good bargains, condo have been hit really hard with this recession
4) Property management fee might be less. I have see that property management companies seem to prefer condo over single family homes as it is easier to manage. Their might be more condos in the same complex being managed by the same company and it's really works out good for them from economies of scale perspective.
5) HOA fees covers some of the expenses like building insurance, sewerage etc. This depends from condo to condo, so please check with your strata
Cons:
1) HOA fees i.e maintenance fee. This could be substantial ranging from $100-$400 depending on the amenities and location etc. If you are going to be using the property most of the time then this might be OK but if a condo is empty most of the time then this is just a useless cost. Also, HOA fee is not tax deductible like property tax.
2) Less Privacy. This is obvious
3) Less capital gain. Generally condos are the worst hit when market goes down and the last to come up when the real estate market picks up. Your capital gain could be less compared to a single family home.
4) Harder to get financing. It's harder to get financing for the Condos in this market. I had a discussion with few realtors and they told me it's quite hard to get financing for the condos. One of the reason is the unstable HOA fee. Many people have just abandoned their condos, leaving the ones still holding their condos with higher HOAs. This is because the total strata fee is shared among the current owners of a complex.
5) Unstable HOA as discussed in the previous point. You have to be careful about this one and make sure you clarify with your agent and the strata about the HOA going up.
Single Family Homes:
Pros and Cons are pretty much opposite of Condos. One thing you have to be careful about SFR is the insurance which could be substantial if you buy a property in Florida as you might have to get hurricane insurance as well and this could make is insurance costs quite high.
Friday, July 16, 2010
Steps for buying real etate in the states for a canadian
I have been following the real estate market for sometime now. The real estate market in Canada seems to be quite inflated, especially in Vancouver. I don't understand how people in Vancouver can afford such expensive houses. The average housing price in Vancouver is ten types the average salary which is quite high and I think this is before taxes. The averahe ration is about six. In some cities in the states the ratio is one. With the new HST in place things are going to be harder. I will come back to this topic some other time in more detail. The real estate market down south, however, as we all know is quite soft. There are three reasons, why it is such a good time for a Canadians to buy a property in the states. First, the the prices in the states are really low 2) The Canadian dollar is almost at par with american dollar and 3) It's easy to borrow money at low rate in Canada, especially if you have some equity in your home.
Having said that, how can someone go about buying a property in the states. let's go step by step
1) How do you find the property? So far I have used couple of sites. The most user friendly site I found was ziprealty.com I know this is from an agency but it lists properties from most of the other agencies. This site is quite user friendly and it has some really cool features. The good ones are a) local info, which gives information about crime, schools, walk friendly, weather etc. If you don't know the neighborhoods very well then these features can come in handy. b) Estimated value, it tells you for how much the house was sold previously. This can give you some idea of if it's a distress sale and how much upside there could be once the market picks up.
Other site where you can do the research about a city is citydata. It has lot of information about any city in North America. The URL is http://www.city-data.com/
One other site I have used for listings is realtor.com but I find it to not as user friendly as ziprealty. just my own experience, your experience might be different.
2) Type of property to buy, Condo or Single Family home
3) Purpose of the property, investment (are you going to rent out the property?) or vacation home
4) Where to buy the a property? We will discuss about the good markets to buy in another post
5) Choosing your agent
6) Financing. You can finance from canada or you can finance in the states. There are some banks in the states which can finance Canadians buying real estate in the states.
7) Tax implications.
8) Managing the property
I would like to discuss each of this point in detail in subsequent posts. thanks
Having said that, how can someone go about buying a property in the states. let's go step by step
1) How do you find the property? So far I have used couple of sites. The most user friendly site I found was ziprealty.com I know this is from an agency but it lists properties from most of the other agencies. This site is quite user friendly and it has some really cool features. The good ones are a) local info, which gives information about crime, schools, walk friendly, weather etc. If you don't know the neighborhoods very well then these features can come in handy. b) Estimated value, it tells you for how much the house was sold previously. This can give you some idea of if it's a distress sale and how much upside there could be once the market picks up.
Other site where you can do the research about a city is citydata. It has lot of information about any city in North America. The URL is http://www.city-data.com/
One other site I have used for listings is realtor.com but I find it to not as user friendly as ziprealty. just my own experience, your experience might be different.
2) Type of property to buy, Condo or Single Family home
3) Purpose of the property, investment (are you going to rent out the property?) or vacation home
4) Where to buy the a property? We will discuss about the good markets to buy in another post
5) Choosing your agent
6) Financing. You can finance from canada or you can finance in the states. There are some banks in the states which can finance Canadians buying real estate in the states.
7) Tax implications.
8) Managing the property
I would like to discuss each of this point in detail in subsequent posts. thanks
Wednesday, July 14, 2010
canadian buying real estate in the states
I am a Canadian and I have been thinking of buying real estate in the states considering the market there is considerably down and there could be a significant upside. I am not sure if that's true but I am hoping it will come up sometime. My main concern is managing the property. Also, I am not sure whether to buy an apartment or a single family home. Apartment are more secure in terms of break-ins etc but the HOA fee could be significant. Single family homes have no HOA fee but might need more maintenance, lawn mowing etc and I am not sure about the safety from break-ins since I will be mostly away and the house will be mostly vacant. The other things to consider are financing and taxes. I have been thinking of investing for long and am hoping to make a decision soon.
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