This morning we talked about how Canadians are investing heavily in United States real estate, and realized that it may have gotten many investors excited about jumping into the waters and doing the same. But just how do you do it? First you have to find the deal, then fund the deal, then make the deal, according to Victor Menasce, who’s invested in over 30 U.S. properties over the past two years.
Finding the deal
You can just take a trip across the border to the city you wish to invest in and start searching around, but there are better ways to do it than that, says Menasce. He suggests going to auctions, trustee sales (that are usually held on the steps of the courthouse,) and wholesalers that are in the market, being paid a fee to connect good properties with qualified and interested buyers.
Funding the deal
Are you hoping that once you find that dream property that you want to invest in that you’re going to go to an American lender and get the deal for it? If so, you’re going to be sorely disappointed. Getting the funding for a property is one of the biggest advantages for Americans over Canadians when it comes to buying a home. This is because while Americans can simply head on over to their nearest local branch, Canucks cannot. We must bring our financing with us when we’re looking at deals, as this is the only way a U.S. seller will ever work with us.
Flip it
Once you’ve purchased a property in the U.S., what are you going to do with it? Allow tenants in? Good luck figuring out all the different laws concerning tenants and landlords in the two different countries. Or did you want to use it as your vacation home? Well, that’s not really an investment, is it? The only way to buy property in the U.S. and to make money from that property is to flip it. And the only way to do that, says Menasce, is to do some major renovation work first.
“We sometimes prefer more complex renovations because other investors are scared of them,” he says. “This affords us the opportunity to buy properties at a greater discount as a result.”
Buying investment property in the States is definitely one of the most lucrative real estate decisions you could make right now. But make sure you know how to do it so that when the time comes, you really are seeing all of those big profit margins.
