# Buying US real estate... looking for opinions from anyone with experience



## Siwash (Sep 1, 2013)

Hey folks:

I am looking into this for my parents. They are in their 70s and healthy, but obviously given their age, they aren't thinking about this in terms of a long-term investment (in other words, not expecting major appreciation in 10 years, although you'd think some appreciation could occur in that time!). They are looking at this in terms of rental income. The region they would be interested in investing in is Atlanta, Georgia. My sister has lived there for 7 years with her husband. You won't believe what you can get down there. Very decent homes for less than $200K. We're talking 4 or 5 bedrooms, 4 bath, 3000 sqft, etc... What I need to get a handle on is the rent. Where they live (about 40 minutes north of the downtown) rents on decent detached homes range from $1400 to $1800... So low by our GTA standards but the houses are also much cheaper. So I have to figure out what the viability is. I heard of something called the GMR (gross rent multiplier?) where you can crunch the numbers to figure out the feasibility. Property taxes are low, but I think we'd have to look into what foreign owners would pay.. 

Any experience out there with buying US properties, especially properties outside of vacation areas like florida? I'm interested to hear from those who've invested in rental income properties.

Thanks...


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## Just a Guy (Mar 27, 2012)

As a general rule of thumb, especially for beginners, use the 1% rule. If you buy a place, which generates 1% of the purchase price in rent, you'll be fine. So, a 100k place should generate $1000/month in rent.

Now, let me warn you off...

Cross border real estate is a lot more complicated than most people expect. There are different rules, taxes and laws. In some states, like Florida, foreign investors pay a different property tax (I believe it's 5x higher). There are some places where it is illegal to upgrade your property yourself (must hire locals) this includes even painting your property. Some states have estate taxes, foreign withholding, the IRS will want you to file a US return...

Getting a mortgage is much more difficult as well, as well as loans...the real estate laws are different as well, hence all the title scams you hear about, but never see up here...

This may not be the best thing for people in their 70's to jump into...

That being said, marina would be a good person to talk to.


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## HaroldCrump (Jun 10, 2009)

Just a Guy said:


> So, a 100k place should generate $1000/month in rent.


Doesn't that rule out pretty much anything in Canada these days?
Unless you manage to buy a dilapidated shack and pour $$ into it to renovate.

Where I live, houses that rent for $1,000 a month sell for $400K+

@OP, sorry, off topic.


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## Just a Guy (Mar 27, 2012)

Nope, but you have to look...I've picked up a bunch in the last year...a couple of private posts to me have also found places all across the country.

Again, not common...when I did my tax appeals I owned 4 of the top 10 lowest sale prices in one city and the ones I purchased weren't the slum ones, so part luck, part looking, part negotiating...they all appraised much higher, so I was able to get all my money back out, plus renos.

My 5 purchases in the last year averaged 75k and generate $1050/month...beating the 1% rule. 

To be honest though, if I weren't doing it, I wouldn't believe it either...I've never had places this profitable before.


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## Siwash (Sep 1, 2013)

Just a Guy said:


> As a general rule of thumb, especially for beginners, use the 1% rule. If you buy a place, which generates 1% of the purchase price in rent, you'll be fine. So, a 100k place should generate $1000/month in rent.
> 
> Now, let me warn you off...
> 
> ...


No mortgage needed..They'd buy the properties outright... I figure it will be a bit complicated. I am not expecting an easy transaction. But I thought it would be good rental income for them... Based on you calculation, if they bought something for $180 K they'd need rent of $1800. Not sure of they'd get that kind of rent down there for a $180K property... more like $1500.... or so... 

They could look at a cheaper property... but lower than 150K I'm not sure they'd be getting good tenants. Not sure... have to research more..

Thanks... And is Marina a forum member?


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## marina628 (Dec 14, 2010)

We have several homes in that area but we are paying $40,000 -$60,000 range and getting $800 - $900 for rents so your numbers are very unattractive compared to what we are getting . I have 5 under contract right now but likely will only close 1-2 ,we are much younger than your parents and first thing they do need to look at is tax planning and what happens when they die. I won't advise on that aspect since I have hard time understanding the tax thing myself and paid about $10,000 in professional fees to set our stuff up,what works for my family may not be best for your parents.


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## marina628 (Dec 14, 2010)

We bought our first in early 2012 then and have no issues with getting good tenants there. We are buying homes about 25-35 years old and they are anywhere from 1200 -1800 sq ft detached homes. Generally we are spending anywhere from $4000 -$13,000 to freshen them up then get them rented fairly fast. We buy for cash but now starting to pull some equity out to reinvest in more units. We own homes in Douglasville and Decatur and a one in Atlanta.


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## Eclectic12 (Oct 20, 2010)

Just a Guy said:


> ... the real estate laws are different as well, hence all the title scams you hear about, but never see up here...


What's different about US RE laws that's more prone to title scams?

And for that matter, unless you are referring to one particular type of title fraud, you appear to be mistaken.
A precedent setting law suit was filed after in 2005 a woman found out the title to her home had been stolen.
[ She didn't appreciate that in addition to paying for a long legal process to get title back, the legal system was saying she was also on the hook for the mortgage paid to the thief.] 

In 2008, a quarter of the total claims paid by the insurance company, First Canadian Title were related to title fraud.
http://www.whichmortgage.ca/article/fighting-title-fraud-118726.aspx


Then too, the Toronto couple who were living in their condo when the title was stolen to it were not impressed as they stated a phone call or someone showing up at their door to evalulate the price would have been enough to stop it.

Over the last twenty years, I've read stories of these scams in Edmonton, Toronto, Kitchener-Waterloo, Calgary, Vancouver to name a few places.

Also - when I bought my first home, title insurance was buried in an appendix ... with the last house, it was a big topic.


Cheers



I can recall reports over the last twenty years of title fraud in Edmonton, Toronto,


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## Just a Guy (Mar 27, 2012)

Compared to the USA, Canada doesn't have a lot...

I'm not an expert on US laws, but I do know they are significantly different than Canadian ones. Their banking system is also quite different. 

It would be foolish to go to a different country and expect things to be the same as in your own country. The USA looks very similar to canada, most Canadians assume the two countries are generally the same and, for the most part, they are. However, as anyone in business will tell you, those little differences can have major effects.

I'm probably considered an expert in Canadian real estate, but it's hard for me to keep up with inter-provincial differences...I wouldn't want to tackle international ones, especially with each state having different laws. I know enough to realize that it's more difficult than most people assume.


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## Pvo (Jul 4, 2013)

Just a Guy said:


> Nope, but you have to look...I've picked up a bunch in the last year...a couple of private posts to me have also found places all across the country.
> 
> Again, not common...when I did my tax appeals I owned 4 of the top 10 lowest sale prices in one city and the ones I purchased weren't the slum ones, so part luck, part looking, part negotiating...they all appraised much higher, so I was able to get all my money back out, plus renos.
> 
> ...


Whereabouts are the majority of your properties? If you don't mind me asking..


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## james4beach (Nov 15, 2012)

You're asking for a world of tax hurt by buying or investing in US real estate. Weird things will happen that you can't even dream of right now.

Before you consider such a thing, go see a proper US/Canada tax accountant (they'll charge you $250 to $350 an hour) and bring an adult diaper


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## Eclectic12 (Oct 20, 2010)

Just a Guy said:


> Compared to the USA, Canada doesn't have a lot...


Since the reports on both sides of the border indicate that the fraudster only needs weeks to steal the title and the legit owner takes months/years to get title back (never mind the old days of being asked to additionally pay back the fraudulent mortgage) - if I'm affected, I'm not sure I care whether it's a lot or not. 


IAC - the statement implied a connection between differences in law that resulted in title scams "never" happening here ... which is not the case. 


It astounded me to see first a US news show then ten plus years later a Canadian news show outline the same title scam which IMO could easily be stopped.


Cheers

*PS*

I haven't had much success finding objective numbers for the US or Canada so I'm wondering how the "not much" is being measured against 350+ million versus 34+ million citizens?


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## Just a Guy (Mar 27, 2012)

Pvo said:


> Whereabouts are the majority of your properties? If you don't mind me asking..


I prefer major Canadian cities...though I am being tempted by some smaller surrounding ones of late.


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## gt_23 (Jan 18, 2014)

Siwash said:


> Hey folks:
> 
> I am looking into this for my parents. They are in their 70s and healthy, but obviously given their age, they aren't thinking about this in terms of a long-term investment (in other words, not expecting major appreciation in 10 years, although you'd think some appreciation could occur in that time!). They are looking at this in terms of rental income. The region they would be interested in investing in is Atlanta, Georgia. My sister has lived there for 7 years with her husband. You won't believe what you can get down there. Very decent homes for less than $200K. We're talking 4 or 5 bedrooms, 4 bath, 3000 sqft, etc... What I need to get a handle on is the rent. Where they live (about 40 minutes north of the downtown) rents on decent detached homes range from $1400 to $1800... So low by our GTA standards but the houses are also much cheaper. So I have to figure out what the viability is. I heard of something called the GMR (gross rent multiplier?) where you can crunch the numbers to figure out the feasibility. Property taxes are low, but I think we'd have to look into what foreign owners would pay..
> 
> ...


I have been looking seriously at Atlanta for the last 2 months but haven't purchased anything yet. The market has rebounded quite a bit from its low and is sitting about 15-20% lower than the pre-recession peak and supply has tightened. I think you should be able to find single family homes with a GRM of 8-9 in some of the surrounding towns/suburbs. It seems to also be a relatively landlord- and tax-friendly state.


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## gt_23 (Jan 18, 2014)

p.s. if you know of any honest Realtors or wholesalers in the area, please send me their contact info.


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## Just a Guy (Mar 27, 2012)

gt_23 said:


> p.s. if you know of any honest Realtors or wholesalers in the area, please send me their contact info.


Another good example of an oxymoron.


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## katherinewatsonus (Aug 27, 2014)

US real estate agents guide well in this concern...


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