5 Things to Consider When Buying US Foreclosures As a Canadian

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As winter sets in Canada, many Canadians look longingly at the folks enjoying sunshine and warmth in the southern states of the US. Add to that, all the talk about foreclosures and hot deals, and many Canadians just can’t help themselves but rush South in search of a sunshine covered deal.

There is a lot to be said about having a place to hide from the winter in Canada and there are definitely some opportunities in the US Foreclosure market. There are also a lot of things to consider. Here are just five I want to share with you after reading a great book by Philip McKernan, called Fire Sale!:

  1. You have to see it for yourself – a bad area in Canada is nothing like a bad area in the USA. There is no substitute for getting out there and walking around the streets of any area you’re considering buying in. The only thing t is that in some of the cities in the US, you don’t want to be walking the streets of a bad area. It’s not at all safe and it’s definitely not a good area for investing. Check crime stats, vacancy rates and even insurance costs for an area and you’ll have some really good indicators of whether an area is trouble filled or not – then get out and walk it and see it for yourself.
  2. Financing Your Purchase – The best option is to buy with cash in the US. This means utilizing equity you have in your home or investment properties in Canada or cash you round up from other sources (mutual funds, stocks, GIC’s, family, etc.). That said there are options for getting financing from US banks if it’s for a second home. Expect to have to put down 25% – 35% and pay 5% – 6.5% interest if you are able to go through a bank. If it’s for real estate investing you’re looking at private money as your option if you don’t have cash from Canada to use.
  3. Is it a part time rental and part time home? Philip says “I see too many Canadians buying vacation property with this ‘investment’ focus but without a clue about what’s really at stake… just because you buy it does not mean vacationers will come.” If you have any intention of renting it out, remember your real estate investing fundamentals and make sure you’ll actually generate rent revenue. When will people want to visit? What will they pay? How will you attract them to your property? Some areas do make a decent vacation rental market but many are totally saturated with vacation rentals and you will have a hard time renting it out. Do your research and cover your butt!!
  4. What’s in your GUT? Do your research but listen to the inner voice inside of yourself that is either encouraging you or trying to stop you. It’s probably right.
  5. Get Clear on Why?!! Why are you interested in buying in the US? Many people are just buying in the US because they think that is where the best deals are. There are plenty of deals in Canada so you have to look deeper into what you’re doing and why to understand whether the US is a good place for you to invest or not.

No matter what your plans for investing are – it’s a good idea to pick up a book like the one Philip McKernan wrote to help walk you through some of the challenges and pitfalls you’ll encounter as you head south with your investment money. Beyond the above issues, there are tax and legal issues to address and then the small issue of where exactly you want to invest.

Source by Julie A Broad

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