Have you invested in Canada

[Marvin Hernandez]

Hello BiggerPockets community

Just wanted to know who have invested in Canada and how have that gone? Specifically asking for the London Ontario area as well as Windsor and Toronto? Is there a good market there? Who is interested in investing abroad?

[Mike Lambert]

@Marvin Hernandez

There are Canadian investors who invest in Canada because it's their home. Even though most Canadian markets are difficult from a cash flow and cap rate point of view, they find deals through motivated sellers through their network and by being on the field. More and more Canadians invest in the US because it's much more profitable for us, even though we're not there and it's more difficult to get financing and the necessary connections. I think that your city of Atlanta is one of the most popular destinations.

So I don't see the point for you to invest in real estate in Canada, given that it's much less profitable, more difficult to find deals and get financing, notwithstanding the fact that we don't have 30-year mortgages here (the "longest" mortgages people use here are generally the 5-year mortgages). Moreover, you have a foreign currency risk and the performance of the Canadian dollar versus the US dollar has been poor over the last few years to say the least.

It might make sense for you hold real estate out of the US for diversification and risk mitigation purposes. At first glance, it seems obvious to consider Canada because of the proximity and common rule of law, language and culture (to a certain extent). However, it's not real diversification given how the Canadian economy is dependent on the US economy. But the performance of the US economy is most of the time better.

From your message, it appears that your interest is rather about investing out of the US rather than specifically in Canada. If that's the case, you might, like I do, invest in Mexico, the Caribbean, Central America, South America or Europe. That way, you get a chance at better returns and you get a real diversification. Moreover, in countries like Mexico, the Dominican Republic, Costa Rica or Panama, you can invest in US dollar and therefore avoid the foreign currency risks.