We have all been keeping an eye on what has been happening with our neighbours to the south and wondering how the so called Trump effect will affect us in Canada.
Many of my Canadian clients who have been investing in many US markets continue to pursue investing in the US as they don’t feel that the Trump effect is something to worried about.
Furthermore, with low property prices, low vacancy rates, high cash flow and most importantly no bidding wars, there are many opportunities to get into the market without breaking the bank – even with the exchange rates as they are!
Many of my clients, myself included still plan to invest in the US but are wondering what options exist for financing, so I thought this would be a great primer on how to finance your properties as a Canadian investing in the US.
Traditionally you would think that the bank would be your best bet but with rates starting to rise in the US, it is not always the case. In addition, unlike Canada, where A lenders pay the brokers, in the US that is not the case so you will get charged fees from the broker and the bank for being a Canadian client.
A few years ago, seeing how the market was ramping up, I ventured into the US to make some strategic alliances with banks, private lenders and even hard-money lenders. When it comes to Hard Money, this is always a last resort for financing a property due to the higher rates and fees.
Let’s look at recent case studies to see how my Canadian clients made out.
For instance there was my client who owned 15 residential properties in Tampa. Some had mortgages and some did not but the ones with mortgages were all financed using hard money at 15-18% – suffice it to say he was not cash flowing. We refinanced him with a bulk refinance, which saved on fees and the rate came down to 6%, which enabled him to not only cash flow but pull out equity to keep purchasing properties for cash with no further mortgages required.
There was also my first-time client who had some money to invest and wanted to start off small. I connected him to my wholesale partners in Tampa and he was able to purchase a property for $65,000 US + $5,000 wholesale fee and $10,000 renovations (as this was a foreclosed property). I was able to get him a 4% private loan with balloon payments on a 5 year term, which allowed him to cash flow and allowed him to further purchase 3 other properties with the money he was saving. His down-payment was 20% and his monthly cash flow after all expenses was $525 USD. Where can you get that in Canada?
Are you a Canadian investor interested in either starting a US portfolio or do you have an existing portfolio and looking for better financing options? Do you want to invest in residential and/or commercial? I can help!
Reach out to me at firstname.lastname@example.org or 416 -697-5443 and let’s discuss your options!