Wednesday, February 26, 2014

Invest in U.S. real estate: ready for the paperwork?

Low prices of real estate in the United States attracting strong interest from investors in Quebec . The prospect of gain in the medium term is enticing.
But in reality , the cost and remote management are grounds for discouragement.

Claude Parent has acquired several properties in Florida after the real estate crisis of 2008. It's a geek . He leads the company Via Loans , specializing in private mortgage financing.

"I work in real estate here . I went to the United States in 2009 because prices were low . But this is not necessarily a sign of profitability, " he warns.

Three years later , Claude Parent made ​​his accounts. " I have two properties . I'll keep one and sell the other. "

Profit for the operation? "Zero , he says. Whatever the property you are buying , municipal taxes are high, condo fees also accounting costs more, and you must live with great unknown : the local market. Each time , suddenly you have to hire intermediaries. "

Claude Parent has a single family home in Fort Lauderdale. In 2012, he will have paid $ 8,000 in taxes, including municipal taxes , school and water. "It was $ 4000 when I bought in 2009 ..." , he cowardly .

Maintenance costs are another cost in money and in time . "I'm here , the building is there. What do I do? I hire someone from a distance. When there are more complex work , must obtain permits . And it is much more difficult there than in Quebec. "

Cumbersome administrative formalities impressed Claude Parent. "There is a lot of paper handling . Americans have more paperwork than us. A mortgage contract , a purchase contract, lease ... Everything goes through lawyers. Litigation risks are therefore multiplied. It is necessary that lawyers work ... "

And on the insurance ? "This is at least twice more expensive than Montreal . Once there was a hurricane , prices rise ... and when there is none, as insurers are raising their prices to make reservations. "

Exasperated by the remote management

All these cumulative costs make the costly operation. Claude Parent estimates the annual costs of ownership in Florida at least 6% , even before a mortgage include in the calculation. " You will get a rent at attractive prices , but the various high costs eat up . It was nice to easily rent is barely profitable. "

Even if one hopes to gain from the sale of his property, Claude Parent knows that his income is uncertain. It must take into account the exchange rate, and these uncertainties. "Currently, the U.S. dollar is below the Canadian dollar, but it is possible that he put together when we sell. " That's what cost him dearly at previous sales. "I lost my profits because of the exchange rate. "

Gourmand time and costs , real estate investment in the United States should first interest those who can go on vacation. "Buy to make it your second home , but not to sell quickly , recommend Claude Parent. And if it's only for one week a year , better rent ! "

Claude Parent is not ready to reinvest in the United States . "I got tired of remote management over costs . Real estate, when you do not take care on site, requires someone to do it for us. In addition, one must know the tax and legal rules. Having a local partner is still the perfect solution. "

The Montreal businessman return to vacation in Florida. But the future is on the Quebec market that will grow its business. "I thought it was a good business opportunity , but in the long term , investing is more profitable here than there. "

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