Home & Garden

Florida Investment Property Questions.

  • Last Updated:
  • Mar 13th, 2013 10:23 pm
Tags:
None
Sr. Member
User avatar
Dec 28, 2008
563 posts
100 upvotes
Rural Ontario

Florida Investment Property Questions.

Hi All..I'm starting to look at investing in Florida property (more specifically a condo unit by the beach on the Gulf side) but would like some input from anyone that has gone this route. To be clear, I don't plan on just buying then renting it out to anyone. I'm thinking of using the condo for my personal enjoyment during portions of the winter but then "renting" it to family and friends that want to use it and keep it clean as I would...so I doubt I'll be using a rental agency or management company. Also, I'm looking in the 90-150k range for home prices.

Buying property outside of Canada is completely new to me so as part of my research I thought I'd ask the great RFD community for any insights:

1) What should I consider on the financial side that is different from Canada? (ie: Are the qualifying requirements in FL stiffer or more lenient than here? Do Canadian banks finance purchases in the USA?, etc)
2) Any pros/cons for dealing with short sales or foreclosures?
3) What are potential tax ramifications both in Canada and USA?
4) How do I ensure that I find a reliable and honest real estate agent down there?
5) Besides the standard costs of property tax, condo fees, mortgage, utilities and insurance...any other on-going costs that I should be aware of?

Thanks!

R.
"The point is, how do you know the fairy isn't a crazy glue sniffer? "Build model airplanes!" says the little fairy, well, we're not buying it. He sneaks into your house once, that's all it takes. The next thing you know, there's money missing off your dresser and your daughter's knocked up, I've seen it a hundred times." - Tommy Boy.
13 replies
Member
Dec 29, 2009
460 posts
66 upvotes
I own investment properties in NY state, but here is my understanding
Reignman wrote:
Mar 12th, 2013 7:23 pm

1) What should I consider on the financial side that is different from Canada? (ie: Are the qualifying requirements in FL stiffer or more lenient than here? Do Canadian banks finance purchases in the USA?, etc)
From my understanding, you won't get a mortgage in the US. Unless an american is on title, you're going to have difficulties. Canadian banks usually won't mortgage a US property, but they will likely provide you with a LOC on your Canadian property which you can use.
Reignman wrote:
Mar 12th, 2013 7:23 pm
2) Any pros/cons for dealing with short sales or foreclosures?
I hope you're going down to see these properties. The problem will be, especially in condos, that if one place is in foreclosure be careful about the rest of them. If a lot of them are in foreclosure you're going to have potential huge liabilities for condo fees. For example if it's normally split between 130 condos, but now there are now 30 that are actually owned, the costs won't be split in 1/130 now it's 1/30. There are also issues with whether the previous owners have kept the place in good condition.
Reignman wrote:
Mar 12th, 2013 7:23 pm
3) What are potential tax ramifications both in Canada and USA?
You will have to pay capital gains in both the US and Canada. I'm sure that they will offset to some extent.
Reignman wrote:
Mar 12th, 2013 7:23 pm
4) How do I ensure that I find a reliable and honest real estate agent down there?
Good luck.
Reignman wrote:
Mar 12th, 2013 7:23 pm
5) Besides the standard costs of property tax, condo fees, mortgage, utilities and insurance...any other on-going costs that I should be aware of?
you pay higher property taxes in Fl if you don't live there. I'm not sure how much more, but I know it's quite a bit more. Insurance will be higher because you aren't there and obviously costs of hurricanes etc. Airfare...?
[OP]
Sr. Member
User avatar
Dec 28, 2008
563 posts
100 upvotes
Rural Ontario
iherald wrote:
Mar 12th, 2013 7:38 pm
I own investment properties in NY state, but here is my understanding

From my understanding, you won't get a mortgage in the US. Unless an american is on title, you're going to have difficulties. Canadian banks usually won't mortgage a US property, but they will likely provide you with a LOC on your Canadian property which you can use.
Good point. I was thinking that Canadian banks such as RBC or TD that have branches in the USA would accommodate a Canadian investor.
iherald wrote:
Mar 12th, 2013 7:38 pm
I hope you're going down to see these properties. The problem will be, especially in condos, that if one place is in foreclosure be careful about the rest of them. If a lot of them are in foreclosure you're going to have potential huge liabilities for condo fees. For example if it's normally split between 130 condos, but now there are now 30 that are actually owned, the costs won't be split in 1/130 now it's 1/30. There are also issues with whether the previous owners have kept the place in good condition.
I would definitely go down to view the properties. When it comes to the condo fees, will the condo association show me their books in terms of how much buffer they have built up in case needed maintenance?

Thanks for the post. How long have you had property in NY State? Have you had any issues crossing the border when going to check up on things?
"The point is, how do you know the fairy isn't a crazy glue sniffer? "Build model airplanes!" says the little fairy, well, we're not buying it. He sneaks into your house once, that's all it takes. The next thing you know, there's money missing off your dresser and your daughter's knocked up, I've seen it a hundred times." - Tommy Boy.
Member
User avatar
Jan 26, 2011
267 posts
54 upvotes
Gatineau
If someone registers a company in the US and the company purchases the condo, it might make you save some money on the long run. I have absolutely no idea if this is feasible though.
[OP]
Sr. Member
User avatar
Dec 28, 2008
563 posts
100 upvotes
Rural Ontario
BingoRingo wrote:
Mar 12th, 2013 8:21 pm
If someone registers a company in the US and the company purchases the condo, it might make you save some money on the long run. I have absolutely no idea if this is feasible though.
I have heard people mention registering an LLC for this type of scenario but I'm wondering if its too complicated a step to take especially with my first go-around. Anyway, I appreciate the insights!
"The point is, how do you know the fairy isn't a crazy glue sniffer? "Build model airplanes!" says the little fairy, well, we're not buying it. He sneaks into your house once, that's all it takes. The next thing you know, there's money missing off your dresser and your daughter's knocked up, I've seen it a hundred times." - Tommy Boy.
Sr. Member
Aug 5, 2008
566 posts
78 upvotes
Reignman wrote:
Mar 12th, 2013 7:23 pm
Also, I'm looking in the 90-150k range for home prices.
Ugh... good luck. I've been lurking at condo unit on the gulf side and anything that is right on the beach and in a decent building is much more expensive than that... 300K-600K depending on the building, size, etc.
There are 10 kinds of people in the world... Those who understand binary and those who don't :!:

[removed]
[OP]
Sr. Member
User avatar
Dec 28, 2008
563 posts
100 upvotes
Rural Ontario
junkmail2002 wrote:
Mar 12th, 2013 10:15 pm
Ugh... good luck. I've been lurking at condo unit on the gulf side and anything that is right on the beach and in a decent building is much more expensive than that... 300K-600K depending on the building, size, etc.
Is that 300k-600k before or after the crash? I've been seeing ones for 130k now but were sold/valued at 300k in 2008. This is 3 bed, 2.5 bath 1400 sq ft townhouses in a gated community by the beach. Of course the pics look decent but would need a closer look before making any movement.
"The point is, how do you know the fairy isn't a crazy glue sniffer? "Build model airplanes!" says the little fairy, well, we're not buying it. He sneaks into your house once, that's all it takes. The next thing you know, there's money missing off your dresser and your daughter's knocked up, I've seen it a hundred times." - Tommy Boy.
Deal Addict
Jan 27, 2006
4522 posts
771 upvotes
Reignman wrote:
Mar 12th, 2013 8:26 pm
I have heard people mention registering an LLC for this type of scenario but I'm wondering if its too complicated a step to take especially with my first go-around. Anyway, I appreciate the insights!
LLCs is the wrong type of incorporation as an LLC is NOT recognized by CRA so you will face double taxation. An LLP on the other hand is recognized on both sides of the border and works for CRA and IRS. I would suggest that you consult a tax specialist that understands taxes North AND South of the 49th.
Deal Addict
Jan 27, 2006
4522 posts
771 upvotes
Reignman wrote:
Mar 12th, 2013 8:03 pm
Good point. I was thinking that Canadian banks such as RBC or TD that have branches in the USA would accommodate a Canadian investor.
Both banks will however they will need to be listed as second homes AND NOT investment properties. As such, they need to be owner occupied which means no renters.

Reignman wrote:
Mar 12th, 2013 8:03 pm
I would definitely go down to view the properties. When it comes to the condo fees, will the condo association show me their books in terms of how much buffer they have built up in case needed maintenance?
Yes they will. You can make it a subject of the sales contract.
Deal Addict
Mar 5, 2011
1153 posts
102 upvotes
Kitchener
coyhunter wrote:
Mar 12th, 2013 7:55 pm
property taxes double for Canadians...non resident
That is simply not true . I don't know where that rumour started .
Deal Addict
Dec 25, 2004
2139 posts
210 upvotes
Correct. That is baloney. Non Floridians do pay more in property tax, but not double. Florida residents get a "Homestead Exemption" which means their property value is assessed at a lower rate than a non-resident. I believe it is $25,000 less for residents.

I purchased two properties in Florida using my Canadian secured line of credit. I could have gotten a mortgage from RBC Bank (the US version) but the rate was higher.

Every foreclosed property I saw was trashed. Watch out for Chinese drywall. Prices are on their way up fast in Florida as Canadians and Europeans have figured out the bargains that can be found. A two bedroom on St. Petes beach went for as low as $250,000 but that was last year.
Deal Addict
Jun 6, 2007
1025 posts
133 upvotes
KINGSTON, Ontario
peano wrote:
Mar 13th, 2013 6:37 am
Correct. That is baloney. Non Floridians do pay more in property tax, but not double. Florida residents get a "Homestead Exemption" which means their property value is assessed at a lower rate than a non-resident. I believe it is $25,000 less for residents.
Florida - The Florida homestead exemption allows a $25,000 exemption for all taxes for the value of property which is assessed a property tax plus a $25,000 exemption on all taxes except school millage. Furthermore, increases in assessment shall not exceed the lower of: a) 3% of assessed value from prior year; or b) percentage change in CPI

Source: http://dor.myflorida.com/dor/property/limitations.html

OP, I purchased a home in Sarasota, Florida in Feb 2012. Here is my step-by-step process of purchasing a home in South Florida, including all inspection, tax, title and transfer information: http://forums.redflagdeals.com/people-l ... st14287183
Deal Guru
User avatar
Dec 12, 2009
10457 posts
1591 upvotes
Toronto
OP, you can get answers to all your questions by attending a seminar from Florida home finders. They do seminars from time to time. I went a couple of years ago. The information session was a good eye opener. What was really surprising was they said up front the seminar was a session on buying real estate in the US and there would be no pushy sales pitches. They kept to their word. Overall, I came to the conclusion is was better to rent a place from time to time unless you do intend to spend a whole bunch of time down there.

On your question of foreclosures, others have already mentioned avoid. Definitely, they are cheap but you get what you pay for. The US has some pretty wacko laws covering real estate. I think they have this thing call redemption period where after the foreclosure and the property has been sold off, the borrower that defaulted still have kinda like a second chance to pay up and still reclaim the property. Another concern on foreclosure sales. From my memory, there is agreement between Canada and US on double taxation. There is a treaty in place the allows you to pay once only. On your question of reliable agent, I have no experience with these people, only recommend their seminars which are very informative without sales pressure.

http://www.floridahomefinders.ca/
× < >

Top