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Investing In Canadian Real Estate vs US Real Estate - Best Cash Flow + Appreciation - YouTube
Channel: Tavares & Rajasingam - Toronto Real Estate
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Unknown Speaker 0:00
Are you a Canadian real estate聽聽
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investor and not sure whether you should聽
continue investing in Canadian real estate聽聽
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or getting into the US market? Well guess聽
what, this video is going to be perfect聽聽
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for you. After watching this video, I'm聽
going to break down the pros and cons聽聽
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of investing in Canada versus the US. It's going聽
to be a big decision maker and a game changer聽聽
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in your investment portfolio. And it's聽
all going to begin right after this.聽聽
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Hi, everyone, Josh Tavares investor and Realtor聽
with exp Realty, it would mean so much you can聽聽
[33]
help us out and hit the like button, hit the聽
subscribe button and hit the notification bell to聽聽
[37]
get updates on our newly uploaded content. And if聽
you're looking to invest in real estate with high聽聽
[42]
cash flow, read appreciation have the ability to聽
scale for multiple properties at a low price point聽聽
[47]
hands free, click the link below. Let's聽
schedule a call and get you on your way.聽聽
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And without further ado,
Unknown Speaker 0:53
聽
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everybody, let's begin number one price point to聽
entry. Now let's start off with King investing聽聽
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as a Canadian real estate investor, you're聽
probably going to see property prices from聽聽
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I would say the low 200 1000s all the way to the聽
millions depending on where you're going. Now if聽聽
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you're in Ontario, you're going to pay a premium聽
based on the economic factors that take place,聽聽
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especially in southern Ontario purchasing rental聽
properties in Canada can definitely cash flow just聽聽
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knowing the right areas economically and price聽
point wise. But I will say they tend to be more聽聽
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expensive than the US counterpart the Canadian聽
real estate investors face, it is really hard to聽聽
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get the 1% factor to work in your favor, which聽
is essentially rent the rents adding up to 1%聽聽
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of the property price. If you can get within that聽
range, it is a sure thing that you're going to聽聽
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cash flow is below that, it's going to be a little聽
bit more challenging to cash flow. And that's聽聽
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essentially what's taking place in the Canadian聽
market today. With us real estate investing, there聽聽
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are many different markets that have excellent聽
economic fundamentals taking place as they would聽聽
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in the Canadian market, where you can find for聽
under 100,000. With it being such a low price聽聽
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point in many places in the US. It's fantastic. So聽
let's say you've got about $500,000 in equity, and聽聽
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you're going to purchase properties about 100,000.聽
In USD, you could purchase five properties聽聽
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with such a short period of time, with minimal聽
restrictions, all in cash, let's say from a HELOC聽聽
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or cash you have, we're here in Canada, you would聽
be very limited to find that you were sent to me聽聽
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by one if you're very very, very lucky in certain聽
other markets, too. But that's essentially it and聽聽
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you wouldn't be able to scale to purchase five聽
or so now number two population. Now in Canada,聽聽
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our population is a fraction of the US hovering聽
around 36 million people in Canada, where in the聽聽
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US you have over 250 million people in Canada or聽
less larger hubs a place like Toronto, Vancouver聽聽
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and Calgary where those are the areas that didn't聽
have the most populated have the most growth聽聽
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and tend to have the highest property appreciation聽
and rent appreciation were in the US you have over聽聽
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50 states. And within each state, you're going聽
to have at least one hub area that's going to聽聽
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have the bulk of the property appreciation rents,聽
jobs, economic growth, and so much more and within聽聽
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the US because there's so many hubs, you could聽
essentially shopped around to five different聽聽
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states that you can invest in. Because there's聽
a lot of states with a lot of economic factors聽聽
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working really well. With really low price points,聽
as we already listed with Canada, there tends to聽聽
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be a little bit less in terms of option. The聽
reason being is that of course we are a large聽聽
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country, but there's only so many provinces and聽
so many cities that have strong economic factors,聽聽
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with the strongest reason being Southern Ontario聽
with the difference of population, it means you're聽聽
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going to have a higher room for more renters聽
looking to get into the market, both Canada and US聽聽
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have very little supply very high demand. So as an聽
investor, no matter where you're going to go, it's聽聽
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still going to be fantastic in terms of the amount聽
of supply and demand as an investment have that聽聽
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work in your favor to have great tenants renting聽
out your great properties. Now to compare the two,聽聽
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if you're an investor looking to invest here in聽
Canada, it tends to be more prudent with more聽聽
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rules and restrictions. Now interest rates are聽
lower. But there are more implications making聽聽
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it more difficult for you to qualify to purchase聽
properties here in Canada as investors where the聽聽
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US market there tends to be less rules tends to聽
be a little bit easier in terms of restrictions.聽聽
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But the interest rates are rising now. So聽
something you want to set that to look out聽聽
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for when purchasing properties for your cash flow.聽
Now, if you're looking to invest in the US side,聽聽
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and you're Canadian, in the past, there聽
was significant barriers to entry. However,聽聽
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we have our own lender that works individually聽
with foreign nationals who is able to look at聽聽
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both sides of the coin, the market that you're聽
investing in, as well as the client profile of聽聽
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yourself as the investor and be able to piece聽
it all together and provide you financing聽聽
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up to 70 loan to value and upwards of almost聽
one and a half million combined total. And with聽聽
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how much properties are worth in some of these聽
places. That's fantastic. Because you can buy so聽聽
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much property for one and a half million dollars聽
US now it will see when interest rates rise and it聽聽
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becomes more challenging to qualify given聽
that we have many stress tests here in Canada,聽聽
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which makes it a little bit harder for investors聽
to get into. And essentially for investors there聽聽
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tends to be more restrictions than I would say for聽
individuals looking to purchase a home for their聽聽
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own primary residence. Now for property management聽
is Jordan investor who is looking to invest聽聽
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here in Canada, there are many different property聽
management companies, depending on the region that聽聽
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you're investing in, that can take care of your聽
property. And also you have the ability to drive聽聽
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the property, make sure that property manager聽
is taking care of your investment. Honestly,聽聽
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I totally agree with having about eight to 12%聽
of your gross friends going to ORS property聽聽
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management, because personally for us, we聽
don't want to have to go all the way to drive聽聽
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the property, to have to collect rents,聽
deal with maintenance, find contractors,聽聽
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that jobs already been done by property聽
management. So why try to reinvent the wheel when聽聽
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we can hire someone who's done already. Now you聽
still have to go about managing the manager and聽聽
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making sure things are done properly within a good聽
timeframe. Now, for many investors in the Canadian聽聽
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side looking to invest in the US, they may get聽
scared and say, Well, how am I going to be able聽聽
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to fulfill the actions of managing the property?聽
Well, guess what, there are many great property聽聽
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management companies that you can work with.聽
And we have access to one who has 450 Plus units聽聽
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already managed, that they're able to take care聽
of your property in a good standard for 10%,聽聽
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of gross rents. And that's something that's聽
fantastic, because personally, we don't want to聽聽
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have to drive over the border to take care of any聽
rental concerns you want it to be done for us. And聽聽
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for defeating to come out of our rents versus us聽
having to physically go on site and take time away聽聽
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from our family. And the property management team聽
that we're working with has a great reputation of聽聽
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working with investors as well in working with聽
tenants, and making sure that both sides work聽聽
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in harmony, we personal so many investors that聽
rather go to their property, and personally manage聽聽
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it, if they're not able to drive to it, that's聽
a concern. And for us, we're all about trying聽聽
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to find scalable rental properties that we can buy聽
more and more properties that have more cash flow,聽聽
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and have more appreciation and equity, that we聽
can scale with a better life for our family.聽聽
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Some investors are so focused on being in their聽
own backyard, that they're going to cap themselves聽聽
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at about two to three properties, instead of聽
having the potential to to get 20 plus properties聽聽
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with very creative, unique strategies. And as an聽
investor who's partnered with individuals, you聽聽
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definitely want to invest into having a corporate聽
structure. So then you're reducing liability聽聽
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in the event that something was to take place, and聽
a tenant or an entity was trying to sue you, they聽聽
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can only go after what you have in that specific聽
Corporation. And many investments get scared to聽聽
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want to invest in the US because they don't want聽
double taxation and Corporation concerns. However,聽聽
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with the US with the right structure in place,聽
working with the right cross border specialist,聽聽
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which we have access to, you have the ability聽
to only pay one tax and use credit from your聽聽
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US side onto your Canadian side tax return, which聽
is fantastic. And something that you want to work聽聽
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with a specialist across borders specialist who聽
knows exactly what they're doing on both sides,聽聽
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so you're not paying for double taxes. And you're聽
also represented accordingly. Now personally,聽聽
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I'm not an accountant, but I highly recommend you聽
speak with a cross border specialist. If you're聽聽
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looking to invest in us real estate, someone who聽
understands the US and Canada side. So then you聽聽
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can go on making the right decisions to have the聽
right corporate structure, the right tax entity,聽聽
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so you can go about investing and scale in your聽
portfolio. And the next comparable we're going to聽聽
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look at is the banking system. Now the banking聽
system here in Canada is very prudent and very聽聽
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stable, which is fantastic. And being able to聽
acquire loans and knowing that our financial聽聽
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industry is in good state. However, because of聽
times they're very prudent it becomes harder to聽聽
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obtain additional financing, where on the US side聽
would be a little bit easier. But you definitely聽聽
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want to work with someone who is investment聽
focused and has access to multiple lenders,聽聽
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not individuals who only have access to their own聽
branch or their own banks product offering. Also聽聽
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the key and markets are very conservative and聽
highly regulated. Now another comparable when聽聽
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looking into for Canada versus us real estate聽
investing is the corporate structure. And I聽聽
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know I've touched upon that already. But when聽
going about obtaining a corporation in Canada,聽聽
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it's going to be substantially more expensive聽
in the US it costs you a couple $1,000 Not聽聽
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only to form the corporation, but also costs you聽
multiple 1000s of dollars come tax return time.聽聽
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Versus you could also do that and also go about聽
independently owning it individually. However,聽聽
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in that regard, you're going to have a lot more聽
liability than being under a corporation. But聽聽
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it can it's a lot more expensive than in the聽
US. And by being in a corporation, it becomes聽聽
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more challenging to get financing for the A type聽
lenders and have the lowest rate now there are聽聽
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commercial lending, and be lenders and so on and聽
so forth, that'll invest into the property. But聽聽
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there becomes more restrictions when it comes to聽
three financing or any type of financing involving聽聽
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with the property in a corporate entity. Now the聽
US side order to create a corporation will cost聽聽
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you a couple $100 upwards about $500 USD, and聽
then it'll cost you about three to 400 bucks聽聽
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to go about filing your tax return, which is聽
a lot cheaper than the Canadian side that once聽聽
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you're in that corporate space with your rental聽
property, it becomes a lot more expensive.
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Unknown Speaker 9:41
So your cash flow definitely聽聽
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has to be on point on the Canadian side or in the聽
US side. It's a much lower cost. Another thing to聽聽
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look into when it comes to comparing the two is聽
from a developer standpoint, it becomes easier to聽聽
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go about developing in the US market as there's聽
less restrictions in some of the larger cities聽聽
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or in Canada, places like Toronto that There are聽
a lot more rules a lot more regulations and they聽聽
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take a lot longer to get back to you this can聽
lead to 10s of 1000s of dollars, if not hundreds聽聽
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of $1,000. More for large investors based on聽
restrictions based on the ability to comply.聽聽
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And based on timeframe, the last thing you want聽
to look into is the exchange rate. Now in the US聽聽
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side, the exchange rate is about $1.20 higher聽
than the cavion market. So, any type of costs,聽聽
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maintenance, insurance, anything as such聽
is going to be X amount more expensive聽聽
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in terms of when you're converting it. But the聽
funny thing is, is that even though it from a聽聽
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cost dollar perspective, it is more expensive in聽
the US in terms of conversion, but then the actual聽聽
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price range in the US in many counts tends to be聽
cheaper than the Canadian side. Even though the聽聽
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conversion rate is higher on the US side, then the聽
Canadian side, definitely something you want to be聽聽
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mindful of when you're going about investing聽
into the market, whether it's the Canadian聽聽
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or in the US side. All in all, both sides are聽
a great investment opportunity. Personally,聽聽
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we like now the US market given we've said before,聽
the ability to scale free cash flow and grow at聽聽
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low price points and we also provide a hands聽
free opportunity for other partners to get in聽聽
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and build a real estate investing portfolio.聽
Something that becomes very challenging to do聽聽
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here in Ontario and many parts of Canada as well.聽
I hope that video is super helpful, insightful and聽聽
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gives you all the information that you need to聽
know about comparing investing in the US versus聽聽
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Canada. I'm Josh DFARS. investor and Realtor with聽
exp Realty means so much if you can help us out,聽聽
[688]
hit the like button, hit the subscribe button聽
and hit the notification bell to get updates on聽聽
[692]
our newly uploaded content. And if you're looking聽
to partner to invest in cash flowing properties,聽聽
[697]
low price point great appreciation, click聽
the link below. Looking forward to getting聽聽
[701]
on a call and learning a little bit more聽
helping you grow your portfolio. Thanks聽聽
[705]
so much for watching. Take care
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