For Canadian homeowners planning their retirement as future “snowbirds”, a second mortgage can allow them to purchase a U.S. property that will serve as a rental property now and a retirement property in years to come.
The Globe and Mail’s Report on Business provides an informative discussion on the ins and outs of retirement issues for Canadian homeowners eyeing the U.S. ‘Sun Belt’ as a prospective retirement haven.
Financial planner, Bob Keats, tells RoB readers that, “the best areas to purchase US rental real estate are the areas of the US that are being hit hardest during this economic downturn of the past couple years. That would be Arizona, California and Florida.”
All three states are, of course, prime destinations for otherwise snowbound Canadian retirees. Mr. Keats notes the old real estate adage “location, location, location” remains true, but he also notes that there has been “the perfect storm” for Canadian homeowners considering an investment in a U.S. retirement getaway.
“With the Canadian dollar being as high as it is and property values being as low as they are in the states I mentioned [California, Arizona and Florida],” he observes, this may be a “perfect storm of the time to invest in US real estate particularly for someone with … goals to retire in Florida in 10 years.”
Mr. Keats’ opinion reflects the separate observations of the (U.S.) National Association of Realtors. “A large majority of Realtors report the changes in value to the U.S. dollar have had a strong impact on the international real estate business,” NAR President Vicki Cox Golder said in a statement. “In addition, perceptions abroad about trends in the U.S. real estate market have led many international clients to believe purchasing a home in the U.S. is more affordable than in their country and holds more value.”
Canadians, according to NAR numbers are the largest bloc of purchasers for U.S. properties. Accordingly, with interest rates for second mortgages at their current low levels, it seems that astute homeowners planning for a U.S. retirement may find this to be the ideal time to use a second mortgage to convert current home equity into a vacation rental property that will become a retirement property in their golden years to come.
