Canadians buying Florida property… what to consider
I must admit, the idea of owning a property in Florida sounds kinda nice… and who wouldn’t want to buy real estate at rock bottom prices…? We did some investigating to see if the opportunities are as good as we hear.
Here’s what we found out based on our inquiries and research:
- Property values are down between 50% and 70%…wow!
- But there are some challenges to buying and financing these properties…
- Most lenders don’t want to entertain offering a mortgage to foreign buyers…
- There is one Lender that will lend in Florida and a few other States to Canadians… up to 50% of the Purchase price with a minimum mortgage of $200,000CAD.
- you can also look at taking equity out from your Canadian property or paying cash.
- There is also a big concern with the Homeowner’s Association and condos..click here for 7 Questions to ask before buying a condo in the U.S.
Bottom line… house values have dropped significantly… they could drop even further but there is more potential for an increase vs a decrease over the next 7 years….. add in record low interest rates and a healthy demand for rentals and it’s probably a good time to buy in the Florida and other parts of the U.S.
Keep in mind that any real estate investment should come with a plan to hold for at least 7 years…(click here to read why)
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Steve Garganis View All
As an industry insider, Steve will share info that the BANKS don't want you to know. Steve has appeared on TV's Global Morning News, CBC's "Our Toronto" and The Real Life TV show. He's also been quoted in several newspapers such as the Globe and Mail, The Toronto Star, The Vancouver Sun, The Star Phoenix, etc.
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So you’ve got me in suspense. Who is the one lender that will lend in Florida and a few other States to Canadians?
Hi Mike,
Yes, there is one lender that will lend to foreigners, to buy property in the US and other countries… Lloyds TSB International. But I caution you, the lending guidelines are limited.. For a Canadian, that wants to buy in the US, there are better options…
Steve Garganis
Are you able to explain some of the options, please. Do you need to have 30% as a down payment or is it possible to have less?
Hi Tina,
If you are looking to finance the property in Florida or other parts of the U.S., and you are a Canadian, then you will find it challenging to obtain a mortgage from a U.S. Bank… Canadian Banks are not lending on U.S. properties…
There is one international lender that will finance U.S. properties for Canadians and other foreign investors… their qualifying is strict and it’s not very practical.. However, we are seeing some U.S. banks starting to offer financing to Canadians in select U.S. markets… only problem is those markets are not the ones you are reading or hearing about in the media.. Florida, Arizona and California are still depressed markets and it’s almost impossible to get a mortgage there..
The options for buying are as follows:
-use your own funds…
-pull out equity from your Canadian house and buy the property in cash. (most popular option).
-try to buy with the international lender that I mentioned… (keep in mind, they are very tough to deal with.. the property has to have a certain minimum value, and they are only lending around 50% to 70% of the purchase price…
-maybe buy in the markets where the values have not gone down as much and you may be able to find a US bank that will offer a mortgage… it’s possible but rare…
Best option to finance a US property is to come up with your own funds…borrowed through Canada..
Steve
Thanks Steve. We have the equity we need if we were permitted to go to the 95% as we were able at one time, but now with the 80% we are very limited. As well, we are stuck in a 5 year fixed mortgage for another year, which is proving difficult to get out of currently. Are you aware of a Canadian lender who is doing 95% mortgages?
Thanks again,
Tina
Hi Tina,
You may still be able to get out of your 5 yr mortgage but it’s probably too costly… as interest rates go down, mortgage prepayment penalties go up… and if you are with a BIG SIX bank then your penalties are guaranteed to greater than with any other lender… This little known fact is a well kept secret… the BIG SIX banks introduced some clauses in 1999 and 2000 that saw their penalty calculations increase the cost to getting out of their mortgages… effectively, they hand-cuffed the borrowers…
The banks continue to introduce new clauses that make it even more difficult for the average borrower to exit or refinance their mortgage without having to pay through the nose in obscene penalties…
Most recently, TD Canada Trust and ING decided it was in our best interest to register all mortgages as collateral charges…instead of conventional charges… this small changes limits your ability to switch lenders at renewal time, and by losing leverage, you lose your ability to negotiate…
Be careful, don’t get sucked into these so-called ‘low rate mortgages’… if it sounds too good to be true, well, you know the rest of the saying…
Steve
Thanks for this clarification Steve. The market I’m looking in is Austin, Texas, which may be one of those markets where financing is possible. Good economy with the state government, a big university, and a strong tech cluster. Also a great place to be with an outdoor sports orientation and a vibrant arts and music scene. Unlike the rest of Texas and the “sand states”, there was no big property bubble in Austin and no crash either, though there has been a gradual decline in values over the past three years or so. There are a good number of foreclosures and short sales on the market. The rental market is strong and many single family houses and condos can be bought for prices that can be rented at positive cash flow.
I am down there for one week out of every month for work, and will let this forum know what I find out about the ability of Canadians to finance Austin properties. If you happen to know that Austin is one of the favorable markets, please tell me now and save me some legwork.
Thanks,
Mike
Hi Mike,
Don’t know much about Austin, Texas.. sounds like a great place… if house prices were not hit as bad as some places in the US, then it’s probably a good place to buy.. you bring up a good point… not all cities in the US suffered big price drops… some markets just went down 10% to 20%… these markets are not starting to make a come back… they appear to be stable markets for real estate…
One place that caught my eye, from a personal note, is Ellicottville, NY. This small ski town has some nice homes that rent easily during the winter ski season.. and the banks seem to be willing to finance for Canadians up to 70% of the purchase price…
hope that helps..
Steve