All Forum Posts by: Yousef Reda

Ive read several discussions here on BP and would like to summarize the learning points from them. 

As a canadian buying in the USA 
PROs:
Access to a real estate market x 10 that of Canada. 
Much better rent to value deals
Potential for better cash flows
Cash flows will be in US dollars 
US already has had a correction and Canada is due for one
Larger network

Cons:

- Have to consult a cross border accountant, lawyer and tax specialist which can be pricey(Quoted to be 350-1200$)
- If you buy a property in the US personally without an entity there is a 30% tax u have to pay which can be circumvented by filing US tax and claiming the rental income
- Will probably need to buy an LLC or LLP(im still learning the difference with these two) and dont know what situations would benefit the best for this.
- The exchange rate is bad for Canadians which some people point out if you repatriate the income from US it will be gobbled up by the FX people here in Canada and may benefit CRA and IRS which im also trying to sort out how. 

This is the wisdom I have picked up if anyone else has anything else to add or things to comment on please add! 

Sharing is caring people lol 

@Shahriar K. Great inspirational story. Job well done and thanks for the information!

Hey why does it matter that the canadian dollar is weaker then the US? If you buy the property with Canadian dollars your cash flow will be in US dollars so your return will be higher. Also when you sell the property it will be worth higher. Im not understanding what the hesitation is, because you and @Roy N. both mentioned this. Any of your input is highly appreciated !

Last question if im thinking of buying US property just 1 triplex for now would it better to do LLC or personal?

@Roy N.

check this out 

https://www.youtube.com/watch?v=JKgn4Al5BgA

also this

http://www.canadianrealestatemagazine.ca/news/u-s--investment-offers-more-cash-flow-than-canada-188357.aspx

Im not finding a lot of cash flow properties in canada but I am in US. Also the cash flow we will make is in USD which converted to canadian is much  better then calculated!

@Dante Pirouz @Karen O.Thanks! Im backing out of yet another deal because it is a long distance investment and you and multiple other people are forecasting a lot of headache to come. You know in thinking about it more deeply, if someone gets a random person to do the property management with no pay it definetly would lead to subpar management of the property. 

@Tom V.Thanks I will factor that in future investments. I did ask for an appraisal but she didnt have one. Tom its already hard finding deals without the capital expenditures, with that it would make it even more difficult. Point taken though thanks. 

@Ned Carey Thanks for the input. Wouldnt it make more sense to include the financing expense aspect to NOI. You are correct though about this.

Keep in mind im in Canada so our finances are somewhat different. Its a 4 plex that has 4 tenants already been living here for a few years. Yes it is zoned for that and legal. Vacancy rate I used was from actual numbers I pulled from the cities housing database. The rest of the questions you asked I didnt have a chance to ask them. However definetly good to know for the future. How do you estimate capital expenditures?

@Ayodeji Kuponiyi lol oh well way more deals out there

@Nick Kutschke Thanks for your input. Economy in calgary is in a mild recession so property prices have dropped. Especially for higher end buildings some have dropped over 36%. It is likely to start rising in the next few years. So I was looking at potential deals here. My dad and brother are in the area also. 

@lynn 

@Lynn Burgess did you look into properties in Quesnell? What do you think investment properties are like over there

@Eric Raio Number one rule by famous investors including Kevin Oleary. Do not time the market. You make most of your money from the initial buy(The deal). If you get a property that will give you a positive cash flow after calculating all your overhead and gives you at least >10% ROI. You are good to go. If you keep waiting to time the market you will never be able to indulge in the benefit of real estate!

@Jonathan Gilkeson   I heard kansas is up and coming. Warren Buffet is putting a lot of investments here. Rental income has been steadily increasing and property values are slowly increasing too. The rent to house value ratio is great in Kansas. Population growth is decent here. 

Okay location is in a small CITY!, however looking at the microeconomics and the city seems to be appreciating  slowly per year. The vacansy rate is around 2-5% over the last 3 years. Here is the numbers.

Rooms: 6 bedrooms 2 bathrooms

Tenants:

3 tenants

Unoccupied rooms: None

Rent for tenants:
2825$/month = 941$ each

Average yearly Income: 34, 200

Property Listed Price: @$299,000
Offered Price: $290,000

EXPENSES

Taxes: $1722 per year = 200

Insurance: 200
City water 150

Lawn 160$

Estimate for Vacancies: 5% 142.5
Its actually 5.2%
Repair: 7% 170

Property Management (10%) 285-> She told me she can have a friend watch and care for the property for me

Mortgage: 5% down(14,500) at 2.3% for

1206(adjusted)

Expenses total: 2228.52$/month

Cash flow= 596.48

NOI: 7157.76

ROI = NOIx12/14,500 = 49%

Okay guys so Looks like my Cash flow and ROI is GREAT. Please confirm I did numbers right. The other thing is this will be an out of state purchase. Thirdly she told me she has an older couple friend to care for my real estate who lives in the area and is reliable.

I dont want to miss out on a deal since everytime I find one someone steals it from me!! Shouldd i trust her friend to watch over property.