U.S. Real Estate Market has more Canadians Heading South
Devalued Property Luring Snowbirds
BY CLAIRE BROWNELL, THE WINDSOR STAR NOVEMBER 17, 2011
Contact Amy Koch for More Information on Arizona Real Estate Opportunities. 602.386.7343
The southern American sun and bargain basement housing prices are beckoning Ryan Deters’ father and many other Canadians, who are diving into cross-border real estate in record numbers.
“Someone who’s earned an average income over a long time and deserves a little bit of fun in their retirement can still afford something in a warm climate, like Arizona or Florida,” said Deters, an associate agent with Co-Operators Insurance in Windsor, who is helping his father look for a home in the U.S.
“There are a lot of properties down there that just kind of fit that bill.”
The collapse of the American real estate market over the last few years and the improved value of the Canadian dollar has resulted in a record number of Canadians snapping up severely devalued property south of the border.
Real estate in warmer climates is particularly popular among snowbirds looking for retirement homes, but others are buying for investment purposes, hoping to sell at a large profit as the market improves or to renovate and flip the home.
Darrin Lewis and his business partner Kim Spirou are taking advantage of the demand by opening the Sunshine Property Shop, a new Windsor consulting business that offers advice to would-be American property owners looking for the best deal. Lewis, who has worked with financial institutions on both sides of the border and says he’s very familiar with American real estate, said he started the business after being inundated with requests for advice from family and friends considering buying in the U.S.
Lewis’s business model is to offer advice on all aspects of the property purchase from start to finish, from finding a place to tax advice. He guarantees clients he’ll find savings that are equal or greater than his fees, which can run to about $2,500 for a client looking for a condominium, by negotiating with banks, real estate agents and other people involved in the process.
“There’s a need out there. People want to, but they’re scared or don’t know how to do it,” he said. “There’s just so much of the unknown. You don’t want something to come up that you’re not familiar with, you’re not aware of and you get taken advantage of.”
It’s clear from some of the properties on Lewis’s watch list that there are also huge bargains to be had.
Among those properties is a two bedroom, two bathroom townhouse in Fort Myers, Fla., that was last sold in 2006 for $195,000 and is now listed at $44,440. A 1,796 square foot house in Scottsdale, Ariz., with four bedrooms and two bathrooms was last sold in 2007 for $390,000 and is now listed at $200,000. A Stuart, Fla., beachfront condo with 1,108 square feet was last sold in 2005 for $485,000 and is now listed at $147,500.
However, it’s important not to let the dollar signs lighting up in your eyes blind you from seeing the potential pitfalls. Terry Ritchie, a cross-border financial adviser and author of The Canadian Snowbird in America, said anyone looking to make a quick buck flipping houses may be in for a shock.
“There may be those opportunities, but there may not be quite as many of those as we’d like to believe,” he said. “If you want to buy as an investor, then you’ve got to stay in for the long term.”
It’s still possible the American real estate market hasn’t hit bottom yet, currency fluctuations are hard to predict and it’s not easy to do a major renovation on a house in Phoenix from Windsor. Ritchie said the best strategy for buyers who aren’t planning on moving in right away is to buy and hold – for years – while renting the property out.
It’s also important to be mindful of tax consequences.
For example, some U.S. senators are proposing legislation that would allow Canadian snowbirds who own high-value property to stay for longer than six months. That may be appealing to seniors who want to extend their golf season, but it would mean filing a U.S. tax return and losing Canadian health care.
Lewis said there are other details people might not think to investigate, such as whether the condominium association they’re buying into is on the verge of bankruptcy or whether the home contains toxic Chinese drywall that needs to be removed at a prohibitive expense. In addition, Canadians buying property at foreclosure auctions may find they don’t get their bargain property after all if the original owner comes up with the money within six months.
Ritchie said Canadians who don’t know where to start should talk to people they know who have already taken the plunge. Research is very important, but try not to get overwhelmed or wait for the perfect time, he said.
“I can’t tell you if we’ve hit bottom and I can’t time the dollar. All I can tell you is there are lots of great opportunities to buy.”
© Copyright (c) The Windsor Star