Canadian looking to invest in Arizona or Texas.

General Real Estate Investing
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Canadian looking to invest in Arizona or Texas.

Noah Zielinski
holland landing, Ontario · Member since 2013 · 11 posts · 1 vote

Hey BiggerPockets,

I'd like to invest in one of the southern states this winter, Arizona or Texas. I have a lot of questions and need some advice.

I'd like to know your opinions on the best places to purchase a single family home, which will be rented, that's in the 80-100k price range. I've done a lot of reading but first hand advice would be great. Are there any locations that you'd recommend from personal experience or places that I should stay away from?

I'd also like to know if anyone can suggest the best means by which to purchase a home in the United State as a Canadian. My goal is to start a real-estate investing company that will eventually be incorporated. Is it worth it to incorporate right away or better to wait? Also, what would the first steps be in starting a business that will invest out-of-country. Can anyone recomend first steps to take?

Lastly (for now :P), can anyone recommend a real estate agency that is experienced in investment properties? I'll be driving through the States for 3 weeks over December and January, my goal would idealy be to leave a home owner.

If anyone has advice for someone just starting off it would be greatly appreciated. Thanks!

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David J.
Investor · Houston, TX · Member since 2009 · 210 posts · 261 votes
13y
Let me do a quick check and see what turn key provider is offering me the best referral fee and I will PM you the best city to buy in.
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  • Barry Ratliff
    Flipper/Rehabber · Temple, TX · Member since 2008 · 169 posts · 46 votes
    13y

    Hi Noah, I am from Central Tx. between Waco and Austin Tx in Temple. As you know Tx is a large state so to select a location is a matter of preference based several factors. Location, job growth, supply vs demand, schools, medical, quality of life, cost of living, etc. I am a real estate broker and I work mostly investment properties and coach local investors to gain more market knowledge, fix n hold or flip properties and of course market the properties to maximize their profits. Example I have been recommending is a location in southern part of Temple Tx that is exactly what you're seeking. I have sold $80-90k priced homes where investor put 20% down, total payments $650 per month and getting $1100 per month in rent. That's a 31% ROI. 3br 2ba 1 car garage approx 1100-1200 square feet. There are not a lot of locations like this so you have to have local knowledge of those kind of pocket neighborhoods. The reason why this location works is the homes not to old, small yards, local hospital doctor residents or young professionals as tenants close to their employers, trees and located in middle of more expensive homes. Let me know if interested to know or other locations in my 9 county area or other parts of Texas. www.barryratliff.com. By the way, you are looking in a good price range.

    1Reply
  • Ali Boone
    Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
    13y

    Heyo! I've worked with a lot of Canadian investors and talked to even more so I'm pretty familiar with what you are wanting to do. I'll try to nail out all your questions-

    - Stay out of the ghettos :) Kidding. Well, I'm not but you probably already knew that and it doesn't narrow it down. Honestly, you won't find anything to give you returns in AZ at that price range. Or even out of that price range probably. I know of properties there I could tell you about but the returns are slightly negative to minimally positive. That's just the reality of the market there. At least for Phoenix, not sure the others. TX is great. Houston will be your better bet for that price range but Dallas is an option too. Atlanta would be your next best bet. Indianapolis would be great for that price range but not sure if it's as far south as you want or as popular of a city.

    - Realize you are asking about two different things here, and two different things that need two different entity structuring setups. As a Canadian, if you buy a US property you definitely need to be incorporated in a particular way, but that way is specific to "passive" income, rather than "active" income, because it's a rental property. If you start a business, that is "active" income and would need different structuring. Plus, that one may have to be setup as a Canadian entity, not a US entity. Don't quote me on that one, but I think that's the case. But for sure if you are going to buy a property in December, get with an expert to get that entity setup so it's done *before* you find a property. You'll have to have a US bank account setup too. If you wait until after, it's too late and you could get some serious tax consequences.

    - I don't know actual agents that are familiar with investment properties as all the properties I work with and hook people up with are off-market properties. I do know companies with these in the cities I mentioned above and some others. My disclosure is if I hook you up with any of them and you were to buy a property, I could make a referral fee from that. Required BP disclosure :)

    Welcome (soon) to the US!

    0Reply
  • David J.
    Investor · Houston, TX · Member since 2009 · 210 posts · 261 votes
    13y
    Let me do a quick check and see what turn key provider is offering me the best referral fee and I will PM you the best city to buy in.
    4Reply
  • Account Closed
    Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    13y

    Noah,

    Most snowbirds from Canada will get a loan from their bank and pay cash for US proprieties. There are a lot of Canadians in the Dallas, Houston, Brownsville Texas area.


    Joe Gore

    1Reply
  • Marco Santarelli
    Specialist · Orange County, CA · Member since 2008 · 2k+ posts · 623 votes
    13y

    @David J.: Good one... Your comment gave me a chuckle.

    (Seriously though, I think a number of people try that.)

    0Reply
  • David J.
    Investor · Houston, TX · Member since 2009 · 210 posts · 261 votes
    13y
    Marco Santarelli Give us an example of a normal referral fee. Does your company pay a referral fee? How much is normal.
    0Reply
  • Noah Zielinski
    OP
    holland landing, Ontario · Member since 2013 · 11 posts · 1 vote
    13y

    Thanks everyone, it's really helpful. A lot to look into, I'll have to look into the taxes too.

    @Ali Boone Thanks for answering, I just have a few more questions. Are off-market houses those that aren't listed on MLS, do they generally offer better prices? Also, if you have the time, could you link to an example of a house in Huston that could be a potential candidate, just so I can get a better understanding of what to look for? If I end up buying it I'll give you a referral fee lol!

    0Reply
  • Marco Santarelli
    Specialist · Orange County, CA · Member since 2008 · 2k+ posts · 623 votes
    13y

    Hi Noah Zielinski:

    Welcome to BiggerPockets!

    Nice to see another fellow Canadian on here. I just met up with a couple from Toronto in Atlanta and Dallas last week to give them tours of our properties there. They loved all the possibilities and our team on the ground. Sounds like you're considering to do a similar trip.

    Atlanta or Dallas would be better picks versus Phoenix right now because of the higher prices, lower inventories, and lower rent-to-value ratios there. We are still seeing 8% to 11% cap rates in Atlanta and Dallas, with favorable COC returns. If you're able to finance your purchase, then you will get much better COC returns.

    Financing for all of our foreign national investors is very tough -- in other words quite rare. Although I have a couple of private money sources (their market scope and terms are not the best), I've had some Canadian investors get loans from RBC.

    You have many options open to you with $80k to $100k, but if you're able to finance your purchase you can open up a broader range of properties in the southern states.

    Depending on what your investment goals and criteria are, I could recommend some other markets for you. You may want to download our "2013 Housing Market Forecast" for some general information and food for thought.

    I would get some legal and tax advice before setting up a corporation or LLC as there are many implications to doing it incorrectly. Don't feel pressured or rushed to set up a new entity, as I've done in the past, but do not hold title to you property in your personal name.

    I would be happy to put you in touch with my contacts depending on what you need. Start of considering the legal and tax side fist, if you can.

    Continued success!

    0Reply
  • Ali Boone
    Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
    13y

    I assume your comment was geared towards me, @David J.. If so, at least put my name on it next time so I'm sure to see it. And actually, I've referred plenty of people to companies or places where I make zero referral fee but if there's even so much as a slight chance I could receive one, I have to disclose that according to BP rules. But if you are challenging my integrity, I'd be happy to give you references for connections I made with no monetary compensation. If you are curious about how referral fees work or how much is typically paid out, start a new thread. Or, if you didn't mean your comment towards me or in a sarcastic tone, pretend I didn't say any of this.

    Sorry for the sidebar Noah. Yes, off-market properties are those not listed on the MLS. They are oftentimes turnkey but they don't always have to be. Typically with off-market properties you will end up with a better deal of some sort, whether it be price or returns or condition or who knows what. A lot of this is market-dependent but if a property has made it to the MLS, it is almost always the case that investors (at least the ones in the "know") have passed it up already. If they have passed it up, it makes me wonder why and chances are I should pass it up too. In a really quiet market that isn't being eaten up by investors, this isn't as much an issue. But like Atlanta for example, if a property is on the MLS for more than about an hour, it should probably be passed up because investors there stalk inventory like crazy and would buy it if it's worth it.

    I can't link you to a Houston property on here but I can show you one offline. Feel free to contact me. I'll even show you one that isn't available for purchase to appease anyone worried about referral fees being paid. Lol.

    0Reply
  • Noah Zielinski
    OP
    holland landing, Ontario · Member since 2013 · 11 posts · 1 vote
    13y

    Sweet thanks!
    I guess it pays to be a hipster when investing?

    0Reply
  • David J.
    Investor · Houston, TX · Member since 2009 · 210 posts · 261 votes
    13y
    Ali Boone Not sure why you would assume I was referring to you but if you feel like you need to share feel free. I just thought it was the perfect opportunity to get a chuckle from Marco Santarelli Kind of like when someone posts "I have 100k, what should I do?" My comment was completely situational and directed to the OP. I was unaware of your tendency to troll the forums for opportunities to disclose your referral fees until you tongue lashing above. As we are all aware, a fool and his money are soon parted.
    0Reply
  • Ali Boone
    Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
    13y

    Glad we were able to settle that one offline @David J. :)

    0Reply
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