All Forum Posts by: Erik Pilon

Also part of the analysis paralysis was based on “I’m considered an expat anyways. Why limit myself only to Canada? Why not New Zealand, USA, UAE, UK, etc... at this point?”

Then froze at looking at all the countries in the world and their expected immigration / birth rates for 2030.

Felt I was at a gambling point when I started seeing myself looking into Jamaica. I’ve never even visited or met anyone there! But its population growth is expected to skyrocket...

@Justin Gottuso, since 2016, just kept saving and learning / simulating on Excel.

Early 2019 I Skyped with a bunch of lawyers, accountants, banks, and YouTubers. Was ready to purchase a 4 unit in Windsor, Ontario all cash.

Then over analyzed and froze. A recession could be expected towards the end of 2020, where I will look into it again. Profit margins were way too low (2% - 3% ROI).

So now I’m waiting for a crash to get back into it.

@Karim, I’ve been adding some properties/rental income on my Excel to see which locations would give a descent return.

JLT gives good ROI, Marina does not. JBR gives good ROI, Palm does not.

International City gives the highest ROI to date.

I’ve plucked maybe 10-15 rental properties for each of these locations, and still adding more to see. I’m definitely looking into areas where it’s always a first pick for expats by default.

@Mike Lambert, very interesting points, and I imagine I’ll learn much more after more researching.

As an international investor, which sources do you rely on before investigating a potential market?

My home country's (Canada) cash-on-cash ROI's not going to cut it for me.... taxes are too high as well labor.

On top of that, I feel like I’m romanticizing the West to invest by default, by tradition. There’s a global shift of superpowers happening where the East will become the new place to be. All expected growth and megacities for 2030 - 2050 are all happening in the East. I think there was 1 western city on the list.

I have the globe to look into, and saw this website:

https://www.globalpropertyguide.com/investment-rating

Based on the ratings, Jordan could be the place for me to look into. It's the 4th on the list for the highest ROI. Was wondering if anyone had comments on the reliability of this website and if you knew about it.

As a plus from me though, parents-in-law already invest in land and rental properties there from distance. So I wouldn’t be just jumping into an unknown.

@Chad U., would that also include property taxes, or it should be separated?

The previous post was removed because I think the attached image was too large. I've now posted a smaller image. Unfortunately was not able to read comments to that initial post before it got removed...

Would like the forum's opinion before I contact my accountant again.

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While I'm waiting for my pre-approvals from RBC and HSBC, I'm starting to look up fourplexes and simulating numbers on Excel, see which properties are good investments and which are not, from Realtor.ca.

Problem is that as a Canadian citizen but non-resident, I need to have a minimum of 35% downpayment from the 3 banks I've contacted and on top of this, a 25% withholding tax. I don't know at this point if a mortgage broker could even give a better rate (such as a lower downpayment required, or if the 35% is the law).

Examples:

• HSBC (2.89% with a minimum of 40% down for 30 years @ 5 years fixed)
  • Five fourplexes allowed max
• RBC (3.18% with a minimum of 35% down for 30 years @ 5 years fixed)
  • Three fourplexes allowed max
• BMO (5.34% with a minimum of 35% down for 30 years @ 5 years fixed)
  • One fourplex allowed max

The downpayment I can handle if the Cash-on-Cash ROI is good enough, but the 25% withholding tax is taking all profits out. Maybe it's meant to be this way to discourage out of country investors?

Though I've read that if I was still a resident, I'd have to pay 25% gross in taxes anyways while non-residents can file to pay 25% of the net as a withholding. So it would seem that non-residents would have a lower amount deducted from their rental income. In my calculations, I didn't take any chances and just deducted from gross to be on the safe side. Also to see how it would look once I move back to Canada, but this 25% is a killer!

HSBC gave the highest ROI with that extra 5% downpayment and lower rate. Still negative in realistic terms, but the way I've figured how to make it a positive % is to find a fourplex costing me $140,000 with a gross monthly cash flow of $3,500 to receive a 6.34% Cash-on-Cash ROI... seems like no way this fourplex ever exists. Anything realistic between $300,000 - $400,000 in the best circumstances with the same monthly gross just ends me in the negatives ROI for all banks.

Am I missing something here?

@Roy N., I was told by a real estate investor friendly accountant (investor himself) that he has all his properties under a company.

But I might be looking at double taxation if I decided to do the same. Even if I never take the cashflow out and just leave it within the company, “as it doesn’t matter what you decide to do with the profits. Taxes might be the same”

It was an initial consultation so didn’t have all the answers right away, but was just something to be aware of.

So I don’t know anymore...

@Jay Hinrichs, lawyer told me that if I do decide to sell while being non-resident, I’d have to wait up to 5 months for the CRA to clear the paperwork. They’re using a very slow and old system.

“No one will want to wait 5 months after an offer before you end up giving the keys. There would be some difficult hoops to go through if you decide to not be a buy & hold anymore”

Did you have to go through something like that as well?

While I'm waiting for my pre-approval, I'm starting to look up fourplexes and simulating numbers on Excel, seeing which are a good deal and which are not from the MLS.

Problem is that as a Canadian citizen but non-resident, I need to have a minimum of 35% downpayment from all banks and on top of it, a 25% withholding tax.

The downpayment I can handle if the returns are good, but the 25% withholding tax is taking all profits out. Maybe it's meant to be this way to discourage out of country investors?

The way I've tested it out is that I'd need to purchase a $1,000,000 property and somehow get $10,000 per month out of it just to get 6%...

Is there something I'm missing here, or it's meant to be this way? I can't seem to get the Cash-on-Cash ROI above 1% in the best circumstances...

Ignore "Total Interest Paying", I'm just comparing side-by-side all the banks I've contacted. The below image shows the bank which would provide the highest ROI.