Financing is a key challenge for non-residents investing in Florida.
For Canadians however the prospects are better: Currently there are several bank lenders who will lend on vacation properties and second homes at favourable rates and to 65%-80% LTV depending on lender and applicant. With some if the investor owns a single property and rents it these seems to be no objection.
However the search for bank lenders that will finance non-resident investors continues, condos posing a further challenge. So for those who own multiple units (as most clients do) or where the properties are clearly rentals financing remains an issue. We continue to check with various sources on a regular basis.
Of course there are private lenders who will lend at 9-13% however most find other alternatives.
Regardless of the availability of US financing, Canadian financing remains an attractive and low rate alternative. It is currently possible to borrow at some 3%-3.5% against Canadian real estate while at the same time earning 7% + cash return in the US. The investor pays the Canadian mortgage from the rents, keeps the spread (about the same as the mortgage payment) and owns the property so as to have the benefit of any gain.
Actual example: Recent Tampa harbourfront Condo
Cost investor: $ 90,000 USD
Net monthly revenue $ 611.75 USD after expenses.
To borrow $ 90,000 at 3.5% $ 450.56 CDN (and some of that is going to principal)
In some cases clients have bought foreclosures and resold them at substantial profit within a very short time. In these cases it is almost certainly better to finance the purchase in Canada. Even if US financing were available the fees of having to place and discharge a mortgage on the U.S. property would have been substantial. Short term money is also less expensive here.
As with many issues surrounding buying US property, there are special benefits applicable to Canadian investors and an equal number of pitfalls to avoid.
To speak to a Canadian Realtor with proven experience investing and managing properties in the US please contact me by phone or email.
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