Q. What are “turnkey investments”?
A. Turnkey investments are cashflow properties which are being sold with all the work already completed. The property is in top condition, already has a tenant, is fully managed, and collecting income.
Q. Is there financing for Canadians when purchasing real estate in the U.S.?
A. Financing is not generally available for Canadians purchasing investment properties in the states. Canadian buyers are typically cash buyers. Cash buyers have the advantage when purchasing down south, as well the property purchased will be owned unleveraged which reduces risk.
There are a few rare options when it comes to financing.
1) Hard money lenders. They require approximately 5% up front, at 15% interest, and will require proof that the property is of sound investment.
2) Loan programs for ‘second homes’. These only exist for larger homes above 2000 sqft, over $160,000, and cannot be tenanted. These offer 60% loan to value, charge about 12% interest, with points up front.
If you would like some guidance and further details, please contact us.
Q. What are the tax implications when investing in the U.S.?
A. Canadians who sell Arizona real estate have two kinds of withholding taxes they may incur upon selling an investment or any other type of property. There are ways you can avoid withholding taxes. You can apply for a TAXID and have a W8BEN form ready to provide. It is best is to consult with an accountant or a tax expert for your own particular situation.
Filing taxes on its own is a simple process, but there are considerations to make when trying to make the most out of it. For example, one consideration is trying to avoid witholding taxes. In the end there is no difference in the profits you make.
You can check out the Foreign Interest and Dividends guidelines on the Canada Revenue Agency web site for more information.
Q. What are the immigration laws that we must be aware of when purchasing in the U.S.?
A. Non U.S. residents CANNOT do any work in the U.S. This means if you own a rental property, you are not allowed to work on your property; this includes all cleaning, cutting, moving of furniture etc. The consequences are extreme. You may lose your property and be banned from the states if you are caught doing so at any time.