Buying US property to rent

alexiworld
New Member



Joined: 15 Mar 2008
Posts: 5
Location: Vancouver

Posted: Sat Mar 15, 2008 1:24 pm

 

---

The US properties are cheap now . However, do you think it's worthy buying one and renting it to other people bearing in mind all taxes due to US and Canada?

I'm afraid that after paying taxes to both US and Canada, I will not gain much to pay the bank for the property mortgage .

I would appreciate if people with more experience on this can share their thoughts and provide some advises. Some rough estimates, percentages, examples are welcome.

---

Steven
CanuckAbroad VIP



Joined: 28 Sep 2007
Posts: 496
Location: Calgary

Posted: Sat Mar 15, 2008 9:01 pm

 

---

I assume by US taxes you mean the property tax, as there is a tax treaty that takes care of the income tax, you only pay that in Canada. It shouldn't be anymore expensive tax-wise than renting out property in Canada.

Frankly there have been books written on this subject.

It is a hassle because of:

1) annoying tenants, and you live a long way away;
2) annoying property management companies who charge you money and do a lousy job;
3) repairs and maintenance (which the management company will rarely do at a competitive price so you have to sort that out yourself);
4) figuring out a sensible rent level.

My mom owns a variety of property that she has built up over the years and her advice is always that you won't make as much money as you think, especially if the property is remote from you and you have to pay a management company and also, it's not usually worth the hassle for a single property. You get economies of scale if you own, say, a whole floor of an apartment block rather than just one apartment.

Being a landlord is an actual job, doing it as a hobby is complex. For one thing there are various landlord duties you are legally obliged to comply with. Which is why you need to use a management company, but charging rent and making money using a management company is tenuous.

Also, I'm convinced that a lot of these places that are going down the tubes at the moment aren't going to come back. They were only built because of dirt cheap mortgages. Buying distressed housing is not for the faint of heart.
_________________
Steve.

---