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Canadians Buying Property in Florida – The Tax Issues

My wife asked me the other day about my thoughts on buying property in Florida.   As an East coast Canadian, I must say that the fantasy of owning property where it’s sunny most of the time is quite appealing.  Not only that, this seems like great timing as the Canadian Dollar is slightly greater than par, and the Florida real estate market is in the dumps.   Snapping back to reality, my thoughts immediately focus on the financial implications of owning property in Florida (or the U.S in general), specifically the tax issues.

With that, I dug into my tax books and did some searching over the net to come up with the basics of tax issues when owning property in the U.S.  I’m not a tax professional, so these are some basic guidelines to give you a starting point for further research.

Rental Income

If we were to buy a property in Florida, we would likely only be able to visit once a year for a few weeks at a time.  For the rest of the time, instead of letting it sit idle, the ideal situation is that the unit could be rented on a weekly or monthly basis.  Sounds like a great idea with the potential for capital appreciation, but there are U.S tax rules to be followed.

For one, U.S based rental income would require the investor to file a U.S tax return every year which is a drawback in my eyes.  The rental income is subject to a 30% withholding tax which is not included in the U.S/Canada tax treaty like when receiving U.S dividends (how investment withholding tax works).  To get around this, KPMG recommends to file the U.S return with the election to pay tax on net rental income.  The Canadian, in this case, will receive a tax refund in the amount that the withholding tax exceeds the tax payable on net rental income.

Capital Gains

Next question is, what happens when I sell?  You guessed it, capital gains tax.  The sale of the property results in a 10% withholding tax which is offset by the capital gains payable when filing the mandatory U.S tax return.  According to KPMG, the maximum U.S tax rate on capital gains for assets held for more than 12 months is 15%.  There are some rules around reducing the withholding tax such as applying to the IRS, well before closing, on the basis that the expected tax liability will be less than the 10% withholding tax.

Property Tax

This is a hot topic for non-resident Florida home owners as there is a two-tiered system.  Both tiers pay the same property tax rate, but there are differences in the home valuations on which the property tax is assessed.  The largest difference is in the amount that the property taxes can increase year over year.

As the Florida market is at a low right now, one can only assume that it can only go up from here, but what if market values increase by 20% in a year?  A 20% increase would be a pretty steep property tax grab.  In this case, resident Florida home owners will face a maximum increase of 3% a year, and non-resident home owners face a  maximum home assessment increase of 10%.  In addition to this, I believe that resident homeowners pay their property tax based on the assessed value minus a fixed amount thus leading to a reduced assessed value.

Estate Taxes

This is where it can get a bit tricky as the U.S has estate taxes.  According to KPMG though, Canadians will not be subject to U.S estate taxes unless their worldwide gross estate exceeds $2M USD (2008 numbers).   Even if there is no estate tax payable, the estate must file a U.S estate tax return if the property is worth over $60k.

There are obviously many many more details to U.S taxes and property, so best to consult a qualified tax professional for the finer details.

If you have property in Florida, or doing research towards buying one, I would appreciate any additional information that you can provide in the comments.







200 Comments, Comment or Ping

  1. 1. Future Money-Bags

    Couple questions;

    Why Florida? Do different states have different tax rules?
    Or would it be generally the same wherever you buy in the states?

    I have thought of this before as well, but due to inconvenience and living on west coast, and confusion, I have never looked into it much. I hear of many properties that are being foreclosed for under $50k in southern states.

  2. Florida would work for us as it’s “relatively” close to us (we’re on the East Coast), it is warm, has beaches, and Disney World (we have kids). Yes, I’ve seen listings for decent condos for $50-$60k, at least they appear decent from the pictures!

    Yes, Florida is unique in its two-tiered property tax rules. I would assume that each state would have their own rules.

  3. 3. Echo

    Wow, it’s certainly tempting to pick up a nice vacation or rental property when they’re that cheap. I don’t like the idea of not being around to check on it though. Something about severely depressed real estate makes me a bit paranoid of crime, etc.

  4. 4. Mike

    If you bought in Florida and did not rent it out what are the pros and cons? Can you write off interest against it even though it does not produce income?

  5. @Mike, I would need to defer that question to an accountant. In Canada, you can only deduct rental expenses if the intention of the property is for investment purposes that generates income. However, in the U.S, interest is deductible, but I can only assume that would only be useful if you had U.S income.

  6. 6. Dave

    I live in SW Florida. For your needs, buying a condo in Fla and renting it does not make much sense. If you spent the winter in Fla, I would say go for it. It would be a great lifestyle and an excellent long term investment. Renting weekly/monthly will be difficult unless you are very near the beach. If property taxes increased dramatically, it was because the city/county was having great difficulty or property values rose dramatically. Neither are likely in the short term. If property values rose dramatically, good for you. Condos are a good move for snowbirds but, beware of buildings with owners that are not paying the condo dues.

  7. Dave, lucky you! In your opinion, which areas of Florida offer the best value in terms of real estate/location (close to the beach, major airport etc)?

  8. 8. Sarlock

    I owned a house in Florida for about a year, just sold it in January for about what I paid for it. We lived in it for about 2 months after we purchased it, had a great time escaping the Canadian winter but then couldn’t find a renter for the rest of the year. The rental market is heavily saturated, and, as mentioned above, unless you are located in a highly desirable part of Florida (near a beach, etc) you will have a lot of difficulty finding renters. But, then, you’ll also be paying a lot more than $50,000 for such a place as well.
    There are property taxes, condo fees, fees to a property management company to take care of your place and its renters (you don’t want it sitting idle for weeks/months at a time without anyone to check on it–you’ll nullify your property insurance, and you’ll also need someone to take care of rent and maintenance issues-if you’re paying a low dollar for your place and renting it for cheap, you’re going to get the types of renters who won’t pay you…) If, like in our case, you are buying a house, then you also have to deal with outside maintenance, the lawn needs cutting 12 months a year, you need to pay for pest control, the list goes on.

    For the past year, between property taxes, electricity (can’t turn it off, you n eed to keep the air conditioning on during the summer or your house will rot inside from the heat and humidity there and a/c is expensive), lawn care, pest control and other miscellaneous expenses, we paid over $10,000 to own the house for a year (not including any interest/opportunity cost of the money). So, essentially, we paid $5,000 per month for the 2 months we lived there for the luxury of having a house in Florida to stay in. For that kind of money we could have rented a beautiful house right on the beach and had none of the headaches.

    Unless you’re going to live there for several months per year, I wouldn’t recommend it. It’s a money trap. (that, and it will probably take 5-10 years before Florida real estate appreciates in value)

  9. Thanks for the insight Sarlock, that’s exactly the type of opinions i’m looking for.

  10. 10. Dave

    Best value, hmmm.
    I would guess waterfront. It is a very limited commodity. But, you will spend >$300K US and have high maintenance and insurance costs(or pay cash and self insure). Next best is probably short easy walk to the beach.

  11. 11. Julia

    This seems like a great timing to invest in Florida, thanks for all the advice.

    My main concern is about the weather over there. Sure, year round on average, it’s nicer then anywhere in Canada. But when it gets bad it gets very bad, especially during hurricane season. Simply make sure to be covered.

    Otherwise, it is certainly appealing.

    Thanks

  12. 12. Amit

    I have a property in Houston, Texas and have had no problem renting it out for the last 6 years. There are many things that I can mention from my experience.

    a) Property Management:- As Canadians we are not allowed to work in the US without a proper visa (example, a NAFTA-approved job, hence eligible for a TN-1 at the border or an H1B visa for highly skilled jobs). So, “collecting” a rent is considered a job in the US. Hence, you can’t physically go and collect rent or show people your house to rent it out, can’t change the light bulb or even clean the house. If someone reports you doing so you could be banned for life from entering USA. As a result, if you decide to rent a place in the US, hiring a property manager in the US to take care of your property is an absolute must. Luckily, for us, we found a property manager in Houston who only charges $100 per month to take care of the property. Some of them charge 1% of the rent.

    b) Taxes:- Property Taxes are higher in Texas (school fees form the most part). We pay $6000/- per year in taxes. I believe Florida also has higher property taxes. Income Tax:- not sure about Florida, but Texas has no state tax. Something to consider while filing income tax returns when you rent a property or sell it. California has higher state taxes. Because of this we only have to file 1040NR every year. Ideally, if there’s no other income you have time till October 15th for non-residents to file the tax return for last year. There’s a net rental income reduction form 4224 that you can file to not have any withholding if your expenses are >30% withholding tax. For sales of the rental property, if the sale price is <300K then there's no 10% withholding either as long as the buyer of the property uses it as their principal residence and not as a rental property. Whatever tax you do end up paying to IRS, you can always claim the foreign tax credit when filing Canadian tax return. I have never had any issues with this in last 6 years.

    Only one issue is that there's no website that allows you to file 1040NR, so you have to fill this form manually and can't use TurboTax or any other tax software. All of the software only allow users to fill 1040 form and do not work for non-residents. But, if you don't have any other income, this form is simple to fill. Just like Canada, you can deduct all mortgage interest, property taxes, other expenses while filing your return.

    If I remember anything else I will add more to this topic. I am not a tax specialist so if any of the above information is incorrect, please feel free to correct me.

  13. 13. Amit

    In Florida, you also must buy Flood Insurance, and Termite Insurance. I am not sure if you have Hurricane insurance available, but I guess if it is, you will need that too.

  14. 14. REExpert

    It is funny how clueless Canadians are when it comes to the idea of buying a place in Florida. Everybody assumes they can “rent” it and that now is a good time to buy because prices are low. Prices are low because the real estate market was the biggest real estate bubble in history. Prices will never go back to their highs for another 25 years. Forget about making a capital gain. In addition, property taxes will have to go up as Florida is in dire straits financially and has no other sources of income. You can bet that protecting foreign property owners will not be on their list of things to do. I haven’t even mentioned the myth of “renting” your home. There are so many “rentals” available that the price is ridiculously cheap. You can rent a 7 bedroom mansion for $3000 a month. Also, nobody goes to many parts of Florida after May 1st until early October, so forget about trying to rent at those times unless you are next to Disney land. The ONLY way it makes sense is if you live there for 6 months of the year and you can find a real deal on a house. BUT, don’t be fooled by the BS that you can go down and buy a house in foreclosure. It sometimes takes months to even get a response to a written offer – and they might say “NO”. Florida is a real mess right now and if you don’t know what you are doing then you will end up throwing away your money and walking away in a year’s time. You have been warned

  15. I looked at buying American real estate a couple of years ago, mostly in the Houston or Phoenix areas because I’m in Alberta. I had the very same thought process as Frugal Trader. I know a LOT of old people who like going to Phoenix every winter.

    Like others have said, renting out a property is tough unless you’re in an area where visitors want to be. Renting to locals is slightly better, but there’s a lot of spare capacity out there.

    There are great property managers, and not so great property managers. The bad ones can turn a decent deal into a bad deal. If I’m 2000 miles away, how do I really know what’s going on down there?

    For those reasons, I decided not to buy. If I want to go down to Phoenix, I’ll just rent someone else’s place. :)

  16. 16. DavidV

    I’m interested in buying a straight up rental property in the US. Although rents are not super high, with property values so low you can get a nice return on investment.

    However, I agree that there are a lot of risks. I’d love to hear more from Amit with respect to his experience, it seems that he’s buying just to rent as well.

  17. 17. UpTooLate

    Thank you for the interesting comments. Especially, Sarlock and Amit. We have looked at buying a place in the States several times in the past and, I think fortunately for us, have decided to forgo it and just rent. The tax and estate issues are very daunting and the likelihood of turning a profit on renting the place out seems very low. It would certainly be nice to have a place with our own ‘stuff’ and familiar surroundings but the tradeoff is lack of flexibility to go other places. We just returned from Florida and are lucky enough to have good friends who are residents there. One couple (they live in Ft Lauderdale) with similar tastes to ours has recently been looking for a place in the Tampa area and they are talking about 300K and up. A bit rich for our blood even for a place we might spend 3 or 4 months in a year. As mentioned above, one can rent some pretty amazing places all over the world for a month at a time for very affordable prices. This implies to me that buying a place in the sun isn’t likely going to have a positive impact on net worth. Ultimately, we decided to maintain our flexibility and let others worry about upkeep, management and tax/estate issues. Cheers.

  18. 18. Amit

    Just to add to my previous post. Ours was our principal residence in Houston before we immigrated to Canada. We had trouble selling the place. It was very difficult to find a buyer for months but it was very easy to lease it out (I still don’t know why). Even today the thought that when the current tenant leaves we may not be able to lease it out or sell it keeps us awake at times. Though, we have been lucky so far and the place has always been leased out.

    We had one trouble once when one of the tenants decided to not pay the rent for the last month, did some damage to the countertop in the kitchen and left without any forwarding address. Luckily our loss was covered from the deposit that we had taken from the tenant before the lease had begun.

    A few more things to consider:-

    a) Capital appreciation: We bought the property at 143K back in 2000. It’s value in last 11 years has “grown” to 161K. So, there’s very little capital appreciation in the property. Thankfully, its price hasn’t gone down like it has in various parts of the US (or crashed like in Detroit or Florida for example), but then it hasn’t gone up either. All of our profit is via the lease.

    b) Financing: Because we bought the property back in 2000 as our principal residence and converted it to a rental once we moved to Canada, hence while we were living there it was easy to get financing for it. But, now that we are in Canada, and since the property still has a mortgage on it, we are unable to refinance it. Canadian banks want to finance property only in Canada, while US banks need you to be US resident to be able to provide financing to you. So, if someone is considering buying a property south of the border, I suggest that you do 100% downpayment.

    If you know someone who can refinance a property in US for Canadians with ~30% downpayment, then please post their reference in here as that will be very useful.

  19. 19. FrancoisB

    for canadian bank offering morgtage in the usa, here’s the list

    http://lesoleildelafloride.com/298/Editorial/editorial_english

    my dad owns a condo in century village in west palm beach, it’s like 6 miles from the beach but it’s a 55+ place. Condo’s are dirt cheap right now you can get a decent 1bed 1.5bath corner unit for 15k some even go for 5k. condo fees and taxes is like 350$ per month,.
    He rented it for last 10 yrs to french canadian just to break even till he’ll retire. one renter a year 4-5 months(can’t rent to more than 1 a year)

    worry’s me a bit cuz i don’t think he ever filled anything to irs…

    anyways you guys can check it out on zillow tell me what you think

  20. 20. Corey

    Great info and great article FrugalTrader! I just came back from PHX and wow, the prices and the houses are VERY tempting! As an ex-east coaster (now in Calgary) i’m talking to my parents (60+) to look seriously at Fla.

    What are people’s thoughts on setting up a American company (simple sole-proprietorship or LLC) to buy a property?

  21. 21. Ovi

    @ Amit

    While looking for a property in FL, many advised us to buy with cash. One day we were driving through Ft. Lauderdale and stopped by the local RBC bank. Larry, a senior mortgage loan officer was kind enough to talk to us and demystify all stories floating around. RBC is able to offer a mortgage to Canadians based on your Canadian credit score. He advised against buying with cash as – in the current FL housing market – cash buyers may get in trouble especially due to existing liens (equitable, general, judgment, voluntary, involuntary liens).
    100% downpayment is definitely not a wise decision.

  22. 22. Steve C

    @Amit

    You certainly can do work on your own house if you own it, and you can collect the rent yourself. In my father’s condo complex in Florida the owners are about 50% Canadian and 25% British. They all do lots of renovations on their own condos, including installing completely new kitchens themselves, etc. Working to maintain or improve your own property is perfectly legal, as it is here in Canada for Americans to do work on their cottages or even rent them out.

  23. 23. Steve C

    @Amit

    I have been looking at some condos in Florida and was put in touch with a US branch of RBC (Royal Bank of Canada) in Fort Myers. They looked at my credit (I own a house worth about 850k and a cottage worth 400k) and they pre-approved me to buy a 100k condo as long as I put 25% down.

  24. 24. Amit

    @Steve C: I have been told by a lot of tax planners that this isn’t true. People have gone to jail for attempting to collect rent themselves or even for mowing the lawn in the house that they rent out. Of course, this only applies to people who are not US citizens. If you own dual citizenship then you are allowed to do the work yourself, but if you don’t own US citizenship, then you may end up in jail and banned for life from entering US if you attempt to do “any” work in the house that you own that you are attempting to rent to someone.

    Of course, if you are buying a property that will be your vacation home and you are not doing the work to put the house on market, then you are allowed to work.

    Check http://www.centa.com as a very good resource of what Canadians are allowed to do on a rental property in US. They have very good information in forums and prior archives including cases when people were sent to jail for attempting to work and when a neighbour reported them to the authorities.

  25. 25. Amit

    @Steve C. Thanks for letting us know about the RBC US branch. That is really helpful. I will keep them in mind when it’s time for me to refinance my property in Texas.

  26. 26. marina

    Hi
    We bought a house in Florida about 18 months ago for $104,000 USD ,it is on the gulf side and in 2006 the builder was selling them for $235,000.
    We are able to spend 8 weeks a year there and we allow friends and family to go there and they pay us some money to offset costs when they go and stay there.It does cost about $9000 a year in taxes ,maintenance fees ,utilities and Insurance but we bought with intention of this being our retirement home in 10 years.In 2011 we have 20 weeks booked up with our friends ,family ,even our bank tellers are going to stay there.We are only getting on average $500 a week for a 1900 sq ft 3 bed/3 bath house but it helps .We don’t ask for a specific amount but we do tell them what the monthly costs are on the house and no we don’t declare the income.
    Our friends and family are happy to get a great deal and we are happy to have help offsetting the cost.
    Our house is probably only worth $90,000 right now but we paid cash for it and have no intentions to sell it.

  27. 27. Steve BQ

    After reading everything on this board, I can only conclude that although real estate prices are pretty low in Florida, the many headaches that come with buying a property are just not worth it. For the vast majority of Americans living in Florida, the question would be a no brainer – buy. But for the rest of us Canadians that have full time jobs here in Canada, it’s much too inconvenient.

    I believe American real estate wouldn’t be performing so poorly if there weren’t so many hurdles for international investors to buy a piece of the American Dream.

  28. 28. Northern Alex

    Just noticed that my accountant published some info in the Canadian Real Estate Magazine about buying properties in the US. Here a link: http://tinyurl.com/4xwngvw

    I was very tempted to buy something, but the hassle which comes with it makes it not worth it for me.

    So I would rent now a friends Condo in Florida for a week or two and know, I don’t have to worry about it!

  29. 29. Caroline

    There seems to be alot of issues regarding renting your property in the US., However if you rent to fellow Canadians as Marina mentioned she does, I would believe that you would not have to file that you have made any US income, because your income would not be US generated income. Also how would there be any records of you collecting rent if the property is just rented to friends and family? Is it correct to assume that you would not have to claim this income? Just wondering how all this would work.

  30. 30. Carmine

    Can a Canadian get a home equity loan on their American Property?

  31. 31. Gary

    We bought a nice little house in FL two years ago for 45K cash. It was fanny mae and had a 150k mortgage on it before foreclosure. We do not rent or let anyone use it. Our expenses for everything incl insurance and taxes run about $300 a month. That’s cheap when you consider we were paying 500 a month for a mobile in a rv park and didn’t own the land. My question – we have no kids in school and are canadians – can we apply for a exclusion of school taxes on our property taxes? I see on my tax assessment forms that we can apply for certain exclusions but no specifics. I don’t want to make a big fuss with the tax people.It is about 2 or 3 hundred however.

  32. 32. Rob

    Hello everyone.
    I came late to the party, but as a native Floridian, living in the Fort Lauderdale area, and licensed real estate agent, I can provide you with honest feedback and will tell it like it is. Don’t worry, I am not here to sell you anything. As a matter of fact, I currently have my real estate license inactive, so my purpose is to give you the facts coming from someone who was born in Miami and lives in Broward.

    As a side note regarding the taxes, Florida residents get a break on the taxes if they homestead the property, meaning it is the primary place of residence. The tax can’t go above 3% per year for homesteaded property. You might want to consider buying an inexpensive property since prices will eventually be going up. There are three mega casinos being discussed for Dade and Broward counties, one of them a 3 Billion Dollar behemoth of a casino and entertainment venue. Once that happens, property values will go up, especially those near the coast. And once south Florida get those casinos, the rest of the state will follow and property will have to go up because there will be a demand, especially from foreign buyers. You heard it here first.

    If you want to contact me, you may do so **** by replying here.

  33. 33. Rob

    Marina,
    Be careful. 20 weeks at 500 is $10, 000 which gives you a $1000 profit. I am not an accountant or tax attorney, so I don’t know what the rules are for foreign investors with US income properties but here in the US, income is income. Flying under the radar is fine and truthfully, I hope you continue to make a buck and pay for your property, but here are a few concerns that I have for you:
    1. What if someone you rent to blows the whistle and reports you for whatever reason?
    2. What if a condo commando finds out what you are doing and sees the people coming and going and decide to make a stink about it?
    3. What if something happens to one of your tenants, get hurt on the property or the common areas? Or, what if one of your tenants bring in guests and they get hurt on the property?

    Look, I hate to rain on people’s parade, but in today’s world you can’t be too careful. You are running your property like a business and should be cognizant of possible pitfalls.

  34. 34. Marina

    My house is not a condo , we pay somebody to take care of the garden etc ,sorry if using the maintenance words left intention it was a condo.And my friends pay about 1/3 of going rate for the house.They are staying in my house for a week or two not taking up residence :) I doubt my sister will tell IRS she paid me 400.00 to cover the expenses last week :) If you buy in a property with management on site you have to deal with all the things you are speaking of but as posted we just get a reasonable amount of money from people who we know personally to offset our expenses.I do have house insurance if anyone gets hurt.If i were running it like a business I would be charging $1360 a week on property vacations website :)

  35. 35. Mike

    I’m also Canadian and have been perusing the Disney area condo market for the past 6 months. My wife is keen on buying a place for ourselves to use a couple of times a year, more so as retirement approaches. I was in Orlando last week to eyeball a few resorts. Originally I did not want to rent, but the high HOA fees at the resorts we’re considering will mean having to rent, to at least recoup some of the costs. Realistically, if I could net half of my annual expences, that would be fine ($4000 net would work). I realize the rental market is saturated right now and places are renting for $70 a night. With an onsite management company taking 40% off the top, that doesn’t leave a lot left. My question is; how much more of an income tax hit will I take in Canada? I would file a US return, but my concern is how much more comes off my bottom line?

    I like the idea of property ownership in Florida, despite many nay-sayers who say it’s a huge mistake, a money pit and so on. While I’m wary of the financial pitfalls, I’m willing to take the risk, if I find the right property. Thanks for reading.

  36. 36. Mike

    I think I found the answer to my previous post, that being a foreign tax credit. I’m still interested in hearing from anyone in a similar situation, or considering taking the plunge. High HOA fees are a concern, as both HOA and property tax will steadily increase

  37. 37. Jim

    We currently submitted an offer to purchase on a condo in the Kissimmee area. I had the same concerns at first as most of the nay-sayers here, the hassle with taxes, HOA fees, property management, renting, insurance, etc. I had to realize that this investment is long term (>5yrs) and possibility of the ongoing monthly costs not being covered by rental income. I believe the FL housing market is at a very discounted level, if not, at rock bottom. The recent high demand for long term rental might have some investers re-thinking about FL real estate. I guess even people who have been foreclosed upon need a place to live, but can not aquire bank credit to purchase again. Since I consider this to be first, an investment, and second as a sporadic vacation home. I selected a FL area with a better year round rental potential due to close distances to Disney, Universal, Sea World, LeggoLand, etc.
    The offered price is a little more than what I paid for my summer park model trailer at a local trailer park resort, and the yearly site fees are the same as the HOA condo fees! And as a previous poster said, I don’t own the trailer site.
    I recommend if you are interested in buying in FL to see the property first hand, and enlist a certified home inspector if you are not savvy with building components. There was a lot of disapointments down there when we were looking….buyer beware.

  38. 38. SteveG

    Looking in Florida I found this feed interesting, esp since I ended up “managing” a condo a few years back after a sudden family death.
    As pointed out, if the property is your personal residence, doing repairs and improvements is perfectly legal; UNLESS you make a habit of it; that is fixing and reselling.
    For renting I would suggest you try to rent to Canadian “friends”. As pointed out the short-term rental market from May-Oct is non-existant. And buying and having a long-term renter places you in the business category.
    Also beware of the rental conditions IF you buy in one of the many communities governed by an HOA (Home Owners Assoc). They will rat you out if you break the rules, because most have nothing better to do.
    Property managers are tough. I had one who rented the place and I never knew, they pocketed the income. Install a hidden web cam if you are going to take this route, focused on the main entrance.
    Escrow agents!! lawyers and bankers in the US are not trusted like here, so an escrow agent is used to handle the ‘safe’ transfer of funds. Make sure you understand the charges AND the flow of funds AND the release of those funds.
    HOA’s. Several of these are hurting, be sure to ask to see the financial statements (preferably audited by a professional) for the past few years. Ask who provides the various services included in your fee, and call them to ensure they are being paid. Some pay for insurance but it usually only covers “exterior”, and be sure to understand what is covered. I lost several roof tiles after a storm a few years back, and discovered that was not covered by either the exterior insurance or the 50yr warranty, because both excluded “hurricane” damage, and hurricane insurance is separate. Also “flood” insurance is mandatory in certain low lying areas, so know if your property is mandatory or not, because it can be pricey.
    And as some noted, rentals are currently affordable (and negotiable), so if you just need a place for 2 months, renting maybe the best option, because prices are not going to recover overnight, and taxes and services for the non-resident owner can easily exceed the cost of rent without rapidly appreciating capital gains.

  39. 39. Derrik.s

    I’m from western Canada and my wife and I have been looking into a vacation home property to buy in the orlando, kissimme area. After research into it, and meetings with a lawyer and reading multiple posts on the internet. I have come to the conclusion that currently buying a house in Florida is not a wise idea. The crazy yearly property value tax hikes for out of country U.S property owners, the costs like ( Mortgage payments, intrest, multiple insurance’s, power bill, pool heating bill, hoa’s, Lawn care and pool care, termites and other bugs, A/C running 10 months of the year, repairs, paying a property manager to take care of it when your gone,, and if you decide to rent it out you have rental company fees which take a cool 40% off the top) just to name a few of the headaches that come with owning a home. After talking to many people, for example on a $150,000 dollar home with a pool your gonna pay about $13,000 – $15,000 a year to just to own that vacation/rental property, that is not gonna go up in value for at least 10 years. And when it does go up in value your damn property tax is gonna go up huge too so your not ahead in the long run anyway. My advice if you want to invest in something, invest in something in canada theres lot’s of property to be bought in places like saskatchewan that are suppresed right now and will eventually go up. As for your vacation home just rent it, let some other poor sucker worry about all the costs and headaches so that in 5- 10 yrs he/she can say I bought a house that was worth 150,000 and now is worth $250,000 but i didnt make a dime off of it, and it was a hard lesson learned.

  40. 40. Vlad

    Thank you , you all, you just saved me 100K, I was thinking about buying a condo in FL, but after reading all the post decided not to go this rout. God bless the internet

  41. 41. Sam

    Are there any suggestions on buying a vacation property in south America instead of the US?

  42. 42. Mookster

    I absolutely agree with Derrik.s. I live in Calgary and have been researching Phoenix real estate for over a year. When you look at the carrying cost of holding US property it is very difficult to make a case for ownership. I will admit that just 3 weeks ago we put an offer in on a property that seemed too good to be true. It was a short sale listing in what can only be described as an ideal location. In fact, it did turn out to be too good to be true. We offered about 20% above the list price and were blown out of the water. I don;t know what offer was accepted but suffice it to say that it was substantially higher than list. Emotionally we really wanted this place but financially it just didn’t make sense unless you could capture it for a “too good to be true” price. But that only happens in fairy tales.
    If you can capture a property for substantially less than fair market value it may make sense as your future capital gains could easily offest the costs of carrying the property. The key words are fair market value. Don’t be fooled into thinking that just because a 2000 sq ft house is 1/4 to 1/2 of what you pay in Calgary or Toronto or Regina you are getting a good deal. The price of housing in Canada is irrelevant to your decision to purchase in the US. It is the local market that matters. Always compare the cost of ownership with the cost of renting.
    My advice. Forget buying, rent a place, take the cash that you would have invested in US real estate and buy a high quality high dividend yield stock, sit back, and relax.

  43. 43. Mike

    Here’s the counter view to the previous few posters:

    I previously posted here a few months back. We finally closed on a condo the other day. My journey began last April after our visit to Disney World. Since that time I spent countless hours monitoring the real estate market, as well as researching everything thing I could about ownership, market speculation, and so forth. In Sept I flew to Orlando for 3 days and eyeballed several Resorts in the Disney area. I then spent the next few months glued to the area condo market.

    Long story short, after offers on 3 different properties, we were successful.

    Purchase price was $75,000. The condo was built in 2007, at that time it was purchased for $280,000.

    Will we ever see $280,000? No way. Will we see steady property value increase? Absolutely. It’s already occurring.

    Although there still are a lot of good deals popping up, the prices have already increased. Jan – Feb of 2011 seems to have been rock bottom (for Orlando/Kissimmee area anyhow). More often than not in the Kissimmee/Davenport/Orlando area, properties are now selling for the asking price, and many are selling for over.

    Monthly HOA, property tax, insurance, etc. are expensive. Don’t think for a minute having your condo in the rental pool will cover this, it won’t. The market is too saturated. Of course if you buy in a very high end area/resort, you may have different results. Although we have onsite rental management at our resort, we are not opting this route. Family and maybe friends will use our place. If we run into some financial difficulties, maybe we’ll change our minds. It’s nice to have this option just in case.

    The point I want to make is that you should buy only if the primary purpose is your enjoyment. If not, there’s better options out there. Our condo is for our family, and as we approach retirement, we will use it more and more.

    After wavering on the decision to buy for almost a year, it came down to this:

    For Canadians especially, we will never see this type of opportunity again: 1. amazingly low property prices – 2. Cnd dollar above par – 3 .lowest mortgate rates on record.

    If in 2 or 3 years we decide the maintenance cost is just too high, or we find we want to vacation elsewhere, we will sell and make our money back, no problem. We don’t plan on this. If anything, we may flip to a Residential condo community in 3 years or so. Getting in the market now makes sense.

    My advice, if it’s for your pleasure and use primarily, consider it. If it’s something else, keep searching. Good luck.

  44. 44. Ken D

    I want to buy a condo in Tampa FL. Is it true that in Florida as a none US citizen, I am not allowed to do any renovation or repair on my own condo?

  45. 45. Sasha

    What about buying a lot or vacant land instead of home/condo in Fla as an investment?

    I am not speaking numerous remote inland underdeveloped places.
    I saw lots of lots inside cities and downtowns that supposedly appeared after demolishing old, hard to repair houses / or after hurricanes.

    Since the idea or renting you property is not really working anyway in current market condition, may be I will be better off by abandoning any rental opportunities at all, and also by dropping lots of other monthly expenses costs associated with house/condo? I would also minimize property taxes since the value of the land 2-3 lower than with a house on it.

    What would I pay annually in that scenario? Property taxes and Lawn control? that is it?

    No Flooding / Hurricane / Termite insurance, right?
    No City water / Hyrdo / Air conditioning expenses
    No HOA / Condo fees
    No hassle with renting it out / taxes on income

    Thinking it is a long term investment, I can wait next 10-15 years before the right time comes, while keeping all these costs during all these years at minimum. But when market is in better condition, I can invest another amount to build a house on my land to sell it short after at much better price.

    What do you think about this plan?
    Is something missed in it?

  46. 46. Rick

    I got to this party a bit late, but for what it’s worth, here’s my 2¢.

    We were exposed to the Florida real estate market while on vacation about 2 years ago – we saw what appeared to be incredible prices for very nice properties. We later learned that almost any price could be advertised for a short sale to entice buyers but that bore no relationship to the price the bank would accept (which was typically within 10% of fair market value). We also learned that short sales could take anywhere from 4 to 12 months to complete with no guarantee that your offer wouldn’t be topped by a better one.

    We spent 3 days house hunting with a real estate agent recommended by a friend who had bought a few months earlier. We were looking for a nice 3/2/2 bungalow with pool in a decent area of SW Florida to spend our winters. We saw over 20 homes which ranged from disgusting (mold, damaged, neglected) to pristine. On our last day we had our cash offer accepted on a 1,500+ sq. ft. home with everything we wanted.

    We found a nearby property manager who checks weekly, sends us photos, and ensures the lawn and pool are maintained year round. Approximate monthly costs for insurance, utilities, property management, TV/internet/phone are $600 when we’re here and $400 when we’re not (reduced utilities). Additional annual costs are approx. $400 for lawn fertilizing/weed spraying, $400 for pest control (highly recommended unless you adore cockroaches) and property taxes just under $2,100. Your mileage may vary.

    We spend from late Oct. through late April here. Our children and grandchildren take turns visiting. We derive significantly more pleasure from spending our winters here than we would from reading monthly statements had we left the cash invested in the market. If the real estate market goes up over the next 5-10 years that would be an added bonus, but we’re enjoying our investment daily in the meantime.

    As for the rental market, our very unscientific survey conducted by walking around the neighbourhood and talking with people indicate that it’s quite saturated with lots of rentals begging for customers.

    Bottom line as we near the end of 2 years owning a place in Florida is that we have no regrets.

  47. 47. Julie

    For the past 2 years I have considered purchasing a condo in Florida, mostly
    as an investment. Yes, at this time & circumstances of my Iife I like to travel the world (2 or 3 times a year – for 1-3 wks. at a time), rather than to just pick up and spend a couple of weeks in Florida. Although I have adult children with young families, this investment would give them great opportunity to vacation at little cost.
    Recently speaking with my accountant he suggested for me to consider exactly what I’ve considered for the past 2 years. Now bringing my son on board with this idea (he is the one that iniciated my thoughts in the beginning), he is very keen and we do have agents looking for us. I have heard and believed that this decidion is more positive than negative. After reading all the above postings and valued information I now have mixed feelings on proceeding in this direction. The initial cost and necessary costs to follow are fine, it’s when we are not there I was hoping to rent the
    unit out to help with costs BUT I don’t want to be hit with
    expences that will exceed the cost of the property over the next 5-10years.
    I do believe that I need to consult with a cross-boarder accountant & lawyer.
    Thank you all for your valued information (although it’s made my head spin)
    I do appreciate it. Julie

  48. 48. Cathy

    I am curious. What do people do in phoenix in the winter? If you dont play golf wht the hek do you do? Sit around your pool and drink?
    At least in florida ther are towns like naples where people are sill living large – there are beaches – lots of resturants nd outdoor dining and bars and great shopping. Who the heck wants an 80,000 condo in phoenix?

  49. 49. Cathy

    Sasha – unless you are talking about a parking lot what’s missing is income.

  50. 50. Cathy

    We rent in florida for 2 months every year. Costs 11,000 in rent. We could buy a comparable place for 400,000 with annual costs of 15,000. We have the cash invested in bonds that pay around 4 percent, which pays our rent and entertainment while away.

    This is the reality of buying in florida. The costs are high high high folks. Insurance is crazy high – higher still for cnadians. Even if we buy a place our cash outlay will be more than renting. ( unless we try to rent out for the rest of the year)

    There are thousands of rentals available. The only reason to buy if if you believe property values are about to rise again in florida. Do you think that?!!

  51. 51. Gary

    We bought a small house in florida 3 years ago for 45K. Taxes are 1100 and insurance is 1200. The other costs like mowing and house sitter are only 600 a year. We just love it and come down each winter from Jan-Ap. I have no interest in renting it. Canadians are grabbing up houses like crazy down here = about 25% of home sales. Don’t even think about trying to get a house down here now. You had your chance a few years back. You can’t get a bid in fast enough or high enough to get one now. You’ll just get frustrated. Just forget about it and keep paying the high rent to lease something down here. The market is just crazy down here now. Everything has it’s ideal time – you needed to get n on this just after the crash. To late now

  52. 52. Cathy

    The prices in florida (at least in the desirable area of naples) are still rock bottom. Sales have picked up, but prices have not. And, in all probability it will be a decade before prices come back, if at all.

    Deciding whether it is better to rent or buy a vacation home is quite different than a year round home. Owning is a 12 month cost (plus the cost of keeping a vacant house in canada) for a 2-6 month occupancy. If you only want to be in florida for 2 months, buying doesnt make sense. If you want to be there 6 months, it doesnt make sense to rent.

  53. 53. Gary

    ya well – the listed prices are just to get you to bite and bid. Just try to get one for the list! You won’t have a chance. Right now you need to bid 25% over the list to have any chance at all

  54. 54. Pierre

    I am an former Eastern Canada resident who has been living in Naples, FL for 10 years and I am a Realtor here.

    WOW, where do I start? I can’t address all the issues but here we go.

    There is a lot of information here, some good, some bad and some totally wrong.

    First, Naples did have a HUGE real estate bubble. It was the first to go down and one of the first, if not the first to come back. For those who keep count, we saw the market bottoming out in March/April 2009 here in Naples. It stayed there for quite a while. Long enough to clear up a lot of distressed properties. In the Naples area, in 2010, 1884 properties sold for less than $100k, 1729 in 2011 and 629 as of May 31, 2012. As of June 8, there is only 369 properties listed for less than $100k. Total inventories are less than 50% of what they where at their worse. Thanks to all the Canadian buyers!

    Second, it is possible to have a positive cashflow on a rental property. A client of mine bought a house in March, 2012 for $102k and it is rented for $1,300 per month ($15,600) EXPENSES: Taxes $1,250 Insurance $1,180 No Association fees, no maintenance fees. Gross return about 13%.
    Another client bought a condo in 2011 for $56,000, it is rented for $900, condo fees are $1,212/y, Taxes $625, No management fees. Gross return 15%. Similar units are selling in the $80 to $90,000 range, right now.

    There is a shortage of rental properties and rents are going up.
    People say that property values will stay low for the next 5, 10, 25 years, they are the same people who were predicting that prices would keep going up forever, like meteorologists who can barely predict what the weather will be like tomorrow, I don’t listen to them.

    Every market has opportunities, it is to the wise to recognize them.
    There are 3 kinds of people, those who are in the parade, those watching the parade and those who don’t even know that there is a parade. WHICH ONE ARE YOU?

  55. 55. Cathy

    Pierre – your naples is not the one i visit. I visit the one with the gated communites and people with lots of money.

  56. 56. Wilma

    So Pierre, is it illegal to find my own renters and collect rent on my Florida property, and not have it considered a “job”, or must I hire a property manager? In the past, I’ve filed my own FL state tax and County Bed tax on my rental income (total of 11%) Add that to the list of costs that eat into you rental income.

    Also the folks that leave Canada in October and don’t return from Florida until April. Are they allowed to stay in the US 180 days OR should we all be using the IRS formula of the three previous years (3/3 + 2/3 + 1/3 = ? divided by 3 =? days)

    I used to own, and am now looking to purchase again, but working with realtors / title companies / sellers certainly reminds you the US is a “foreign” country…. long hard learning curve getting used to all the terms and the lack of anything being legaly binding — people walk away from property “under contract” at the drop of a hat.

  57. 57. Pierre

    Cathy – I also deal with gated communities in Naples, Ft. Myers and the whole East Coast of Florida from Palm Beach to Miami.

    Wilma – It is not illegal to find your own renter, collect rents and even paint and do “cosmetic” renovations to your unit.
    The bed tax applies to leases of 6 months or less and varies by county, some are 10%, others 11%. That bed tax is paid by the renter, so no cost to you and you get a discount from the taxing authorities for collecting it.
    I am not an Accountant nor an Attorney but here is some basic info about residency; according to the IRS, if by using the formula you refer to (called the Substantial Presence Test) you end up with more than 183 days, for taxing purposes you become a US resident and must file a US tax return that includes your worldwide income. There is a tax treaty between Canada and US to mitigate taxes paid in the US but a tax return must be done. Check with an Accountant specialized in cross border taxation.
    As far as walking away from a residential contract, it is not that easy. It depends on the contingencies in the contract. You may be liable to lose your deposit if the contract is not drawn up properly.

  58. 58. Pierre

    Here is a great book for Canadians who would like to purchase a property in the US. It was written by one of my friends, Robert Keats, “The Border Guide, a guide to living, working and investing across the border”.

  59. 59. Cathy

    Pierre – you have highlighted another expense in buying us property – professional fees. First legal fees to buy the property under corporate ownership ( to reduce estate taxes) and accounting fees to file your us tax returns. And of couse the estate tax rules are changing every year and are set to change again in2013 so i wouldnt recommend skipping the legal and accounting advice. Fun in the sun!

  60. 60. Denise

    We are new property owners in Florida and are in the process of getting our first tenants. Our property manager seems concerned about using the standard FAR BAR lease agreement because of the number of law suits. He is suggesting we get a lawyer to draw up a lease agreement. I am concerned about the cost of doing this for every tenant. Does anyone have any experience with lease agreements that they would like to share?

  61. 61. Pierre

    Cathy – I do not advocate skipping the legal and accounting aspects of buying and renting a property. What I said is that I am not an Attorney nor an Accountant. I highly recommend that everyone do their due diligence and decide for themselves if they need the advice of a professional.

    By the way, buying a rental property under corporate ownership may not be the wisest choice, tax wise. Other ways could be better depending on an individual’s tax situation.
    That is why I highly recommend the book I mentioned in #58.
    If you need a copy, let me know, I’ll be happy to send you one.

  62. 62. maria

    Hi, I am an investor in Florida and an attorney in NY/NJ. I have 8 condos in miami that i purchase thru a foreclosure sale. I rent most of these out and manage these myself from NY (I have a crew that fixes problems if they occur). You should be fine with a standard FAR BAR lease. It is pretty simple to evict a tenant in florida, and in most cases takes no longer than 6 weeks. make sure to take at leat 1 month security. Good luck!

  63. 63. Pierre

    Maria – You are right, renting property in Florida, especially now, is easy. All you need is a good relationship with someone local, like a Real Estate Agent or Handyman that takes your interests at heart.The Far Bar lease agreement is commonly used and simple to understand. All the best.
    If you rent for periods of less than 6 months, don’t forget to collect and pay the “Bed Tax”. The State and Counties are tight on money and will do whatever to collect all than they are entitled to. The penalties for not reporting and paying the tax are pretty stiff!

  64. 64. maria

    Pierre – i am actually selling one of my units in bal harbour, it is a one bed, one bath in the Plaza builiding (10185 collins ave). The unit has been gutted and needs complete renovation. I am looking for a quick cash sale and the unit is priced accordingly. This is the builiding right next door to the famost bal harbour tennis club. Please let me know if you know of anyone looking in bal harbour. thanks!

  65. 65. Pierre

    Maria – What is the unit number? There are a few listed in that building. Is it listed? You can find me easily on Google. Pierre Fregeau

  66. 66. maria

    Pierre – unit 203…its listed for 279K but i will accept 205K.

  67. 67. Pierre

    Maria – I will go see it, take pictures and send them to my contacts. I see it is listed at $289,000.

  68. 68. maria

    Pierre- i can email you the pictures if you’d like, please let me know

  69. 69. Pierre

    Maria – That would be nice, but I need to go see it in person. I know what my clientele is looking for. I always take a ton of pictures and give them my professional comments. Also, as a comparison I will visit all the other 1/1 in the building.

  70. 70. maria

    ok, that sounds very good. please let me know when you want to see my unit as it is locked, and i’ll arrange someone to meet you there. thanks!

  71. 71. Veronica

    Hi Everyone,

    I just purchased two homes in Florida. One a short sale which closed in 10 days and another one was a Forclosure and it will be closing this week which will be 2 weeks from my offer date. I believe that finding the right agent is key in all this. If you have the cash sitting in the bank then it is a good investment. I am paying about $600 each for insurance, lawn care is $50.00 a month ($600.00 a year) for each house, property taxes is about $1,000.00 for each house as well. We are in a really nice area of Spring Hill and I can’t wait to get back down there again to start enjoying.

    I am extremely lucky that my agent is also doing property management and has come to me from a few family friends that have more than 10 homes between 3 brothers.

    Do your homework and if you want my agents name and number. I will post it.

  72. 72. Denise

    We have a great agent who is also our property manager in Fort Myers area. We are looking to invest in the Tampa area and we are looking for a good agent and property manager.
    Which area are you investing in?
    Denise

  73. 73. Robert

    Hi Veronica,

    If your agent works in naples and surrounding areas I would be interested in having his/her contact info.

    Thanks

  74. 74. Veronica

    @ Robert, My agent works in Spring Hills and her contact information is Christine Wilkins from Waterfront and Perferred Homes #727-967-1876. She is honest and has made buying a house from Canada easy.

    Veronica

  75. 75. Denise

    Spring Hills is near Orlando.
    For Naples you could try our agent in Fort Myers
    Pat Morris pmorris@marketamericarealty.com
    239-989-3362
    He is very professional but easy going. He understands what investors are looking.for.
    We have used him to buy 2 properties so far.
    Denise

  76. 76. Pierre Fregeau

    Veronica – you are right, a great Agent is important. You need someone who knows the market well and can respond quickly.

    Here in the Naples area, the inventory is so low that in many cases the offer I make for my client is just one of many. In situations like this, it is extremely important to react quickly when the right property comes on the market, to have clear goals and clearly communicate those to the Agent.

    Just had a client this week whom I presented a property that fit her investment needs. She thought about it for too long (38 hours), it is under contract.

  77. 77. Kirk

    Don’t be fooled by all the negativity on these boards. It is like anything else in life, if you know what you are doing you will be successful. I have a friend who has been renting condos in Florida for the past 4 years and it was the best decision he ever made. They will go up in value but if you are a real estate investor you invest for cash flow, appreciation is only to be consider a bonus. Real estate is cyclical and always will be. Don’t be fooled by all the great prices, if you buy in the wrong area you will not be able to rent it. Run a teaser ad in the area you are considering buying and see what kind of response you get.

  78. 78. Will

    Fascinating to see the level of negativity wich usually comes with the unknown. The reality is, if you have worked out the financial bugs to owning a cottage north of your home, then a Florida vacation home on average will turn into a much better solution with the current financial climate.

    Bought a place 2 yr ago with some hiccups, however much less than buying a home here in Ontario. Foreclosed home was a dream to complete and maybe I was a lucky one. Transaction was smooth with money sent through TD Bank ( no mortgage however) Title insurance simplified everything that put me at ease with the risk.

    What I find most fascinating is the cottage industry formed in the south west region due to all the snowbirds. Even residents look forward to foreigners spending their money locally and more importantly propping up their real estate value. We bought, cleaned up the place and the neighbors were estatic. For a small fee they take care of the house when it is empty.

    Renting is not going to work well for a while, but even so rent for 6 weeks of the year, you can take a bite out of real estate taxes just to break even. A lot of interest for just staying a month during winter season albeit low. Cost $5k yr to maintain including taxes. Insurance is high due to hurricane coverage.

    Dropped in a couple of wireless Dlink cameras over Internet connection and watch the house at any moment.

    Cheap flights out of Niagara New York, averaged $260 there and back. 3.5 hr direct flight.

    Clothing and essentials are all there so we back nothing but what is on our backs. A travelling dream. While there we book last minute cruises to get a change of scenery.

    I have 15 years to retire, and cannot wait to stay the season!

    Best decision we did. So far so good.

  79. 79. Cathy

    Will – you can book last minute cruises from canada – you dont have to buy property in florida. Now you have 2 properties vacant while you are cruising.
    That is the biggest expense for you. Would be far cheaper to stay in a hotel
    And check out when you need a change of scenery.

    Bottom line is – you bought the property to make money. Why isnt renting it out going to work?

  80. 80. Will

    Cathy, You are right, it is not a prerequisite to buy for discount cruises. It is just the convienience that is offered as you take 3 weeks off and as you are ther pondering about something inexpensive to do, the options are more readily available as you just pull up in a cab within an hour.

    My parents and their friends have established just that kind of lifestyle and wouldnt trade it for 10 more years of life. :)

    As for being vacant, I am not sure why that matters in my personal case. Not maximizing the usage of an asset doesn’t mean I am losing out. My car sits in the garage through the evening hours so a week here or there on a cruise doesn’t stress my cash flow. Maybe home exchange is the option for many? Florida is a high demand globally and trading for Europe time may work for many?

    As for renting, the market is tough and agressive so trying to guarantee steading income shoud not be in the equation, especially when I want to use personally from time to time. If you get a good management company to support short term rentals ( in my case/requirement) then great. I have spoken to many ho are doing this with succes, however it dried up over the last 3 yrs waiting for a comeback.

    As for capital appreciation, it is doing better than my stocks which is flat ( better than many ) and interest, make more lending to family. ( the good ones).

    Stopped staying in hotels over the last 10 yrs whenever possible. Renting homes or condos is better money spent when traveling. We like cooking, so having the facilities available reduces eating out continuously. ( and adding an addition 5 lbs ). Shared a home for $1k per night in Maui with 2 other couples. Cost less than a night at a decent hotel, however the luxury of the home was beyond hotel offerings.

    In the end, travel options are uniquely available with such a property and can be surprisingly successful beyond a dollar for dollar comparison. I wouldn’t have been as excited by the purchase of the golf clubs made by my wife because of the Colour, but she did say it was priceless and I learned not to argue with her on the topic.

    Cheers!

  81. 81. Cathy

    I stayed at he 4 seasons in mauii for 750 a night. Money well spent. I would certainly consider buying in florida too. So far it us easier to rnt – but hat could change.

  82. 82. Veronica

    Hello everyone, just wanted to come and post an update on both properties. I went down September 2 – 9 and just sorted out a few things with the homes. One needed a bathroom floor installed and a tree trimmed. We got it done. Boy was I surprised when Christine contracted me two days ago to tell me she has rented the one house I wanted rented all year. Got exactly what we wanted and the other which will be seasonal is already rented as well. I am so impressed with Christine Wilkins and working with her has made me want to purchase more properties.

    I hope you do not look at all the bad one this site and see that there are some really great experiences some of us have had.

  83. 83. AZyearn4more

    I beg to differ with Mookster because I just bought a place in May in AZ which was a short sale. The deal with short sale as most people know is you have to be ready to wait on the bank for approval. This process can take up to six months. I had to wait about four months and got price I offered (70K) two storey home. I was able to complete this process without physically present in AZ. The rental market seems tight right now but I was able to rent this place out in Oct and so far I am loving it. Judging by my experience, you have to arm yourself with information before you jump into buying. I will be looking another property soon. I am in for investment purpose, I think there is better opportunity to make some money just renting out – 850 for a 3bdrms.

  84. 84. Veronica

    Hey AZyearn4more

    We got back from Florida in September and October 1st my house (2 bedroom) has been rented. I am too itching for another one. I think it’s a great investment. Congrats on yours!

  85. 85. Martine

    I am interested in buying a vacation spot mainly for myself and husband to just go whenever we feel like it, be it a long weekend or a week or 2. So renting it out is not what I am looking for. I want it available for when I want it. I would share it with friends and family, I don’t want to get into paying taxes on rental income, but having friends in the place might keep it looking lived in and have someone there on a regular basis. I just think the prices are very good at the moment and it seems to good to pass up. We are just not sure of all the pros and cons but I am definitely going to put a lot more thought into this, it would be a dream come true. I’m glad I found this site tonight, it answers some of my questions :)

  86. 86. Pierre Fregeau

    Hello Martine

    You are certainly making a good choice. Yes the prices are good if you compare them to what they were a while ago. Here in South Florida, the inventories are very low and prices have either stabilized or are going up in various communities. Every community has its rules about visitors and rentals. Just ask before you commit and do read the condo docs that must be given to you.

    The great majority of my clients are from the Midwest, North East and Canada and all have similar questions and concerns.

  87. 87. BILL STEVEONS

    JUST BOUGHT 2 BEDROOM, 1 BATH CONDO IN FORT MYERS, $65,000. UP FROM $49,000 IN 2010. STRAIGHT PURCHASE, TAXES APPROX $800 YEAR, UP FROM $700 IN 2011. CONDO FEES $222 MONTHLY, DOWN FROM LAST YEAR. OUTDOOR HEATED POOL , BILLARD TABLE, WEIGHT ROOM AND CLUB HOUSE, MANANGED FOR $500 YEAR, RENTER PAYS $725 PLUS POWER ( BILL LESS THAN $40 MONTHLY) WATER INCLUDED. INSURANCE $400 YEAR CLOSE TO EDISON MALL.
    GREAT PEOPLE LIVE THERE. OWNERS AND RENTER HAVE TO HAVE POLICE AND CREDIT CHECK, ASSOCIATION HAVE VERY GOOD FINANICALS

  88. 88. Kevin

    Hi Bill, did you have to set up any sort of company to do this for tax reasons..
    Has any one bought any multfamily properties, or several single for revenue purposes, if so what hoops did you have to jump through?

  89. @Kevin and @Bill,
    Here in Florida it is not uncommon for American investors buy properties in the name of a Limited Liability Company (LLC) but, Canadians should be aware that taking possession in the name of an LLC in Florida will create a double taxation for them.
    It is best to consult with a tax expert to find out the best way to take possession, especially if one wants to avoid probate and future issues with estate taxes for wealthy individuals.
    I can provide the name of experts in that field, just find me on the Web.

  90. 90. Cathy

    @pierre. You are obviously quite knowlegable on this subject and you are correct. But for the sake of avoiding needless tax consultations, people on this site should know that generally speaking if you have worldwide assets less than 5 million, you can simply own us property personally. It is unlikely to create problems for people buying 100,000 dollar condos.

  91. @Cathy,

    As I am not licensed to practice law, my intentions are only to alert my clients about to potential pitfalls of incorrectly taking possession of a property.

    You are correct Cathy but, always keep in mind the “infamous” probate. Even small investors should look at US revocable trusts and other instruments to prevent the probate. It is not expensive and down the road it can minimize the headaches.

    As for my Canadian clients with more than $5 MM in worldwide assets, I always refer them to the proper experts.

  92. 92. John Bennett

    In October, 2012, we purchased a foreclosed condominium in the Flagler/Palm Coast area — after two years of thinking, looking, planning and dreaming. It’s a reasonably high-end property, direct oceanfront, 1,400 square feet, 3BR/2BA. Original pre-construction price in 2004 was almost $600,000, and at the peak was commanding $800,000+. We picked it up from the bank for just over $300,000. We’re from Ontario, but are quite familiar with the area.

    Our goal is to use the property ourselves for a month or so a year, and rent it out for short-term vacation rentals at other times. We’re managing/marketing it ourselves, using VRBO.com (Vacation Rental By Owner). Combined with a good local team (handyman, cleaning crew, etc.), this allows us to avoid the 30%+ that a property manager would cost us.

    Carrying costs for the unit are on the order of $13,000 year, including electricity, phone, internet, insurance, taxes and condo fees (which are $600+/- month alone, because it’s a double-gated community, and has three pools, two recreation centers and lots more.

    In two months of advertising on VRBO, we’ve already secured over $26,000 in short-term rentals, and I expect to hit almost $35,000 by year-end. The unit will be cash-flow-positive from day one, even including cost of financing.

    Contrary to opinion here, our high season is the summer: Memorial Day through Labor Day. There is huge demand in the southern US cities (Atlanta, Columbia, Charlotte, Orlando) for oceanfront/beach vacations in the summer when the kids are off: We even have renters coming from other parts of Florida in July! In the winter, it’s Canadians and northern US residents. Quiet season is April/May and October-December, but we still have renters throughout that period: Ideally, we want to be down there ourselves in November/December, so the fact that it’s a bit quieter is fine with us.

    Yes, there are tax considerations: You have to be organized and stay up-to-date with the rules. In general, though, it’s a simple matter of filling out two tax returns, one for the IRS and one for the CRA. Good computer software helps, and there are great publications available: I highly recommend “The Border Guide”, by Keats-Connely.

    At the end of the day, it comes down to the old real estate adage: Location, location, location. If you want rental income, you need to be in a desirable area. Prices will be higher, but the rewards will be as well.

    I do believe that this is an unprecedented time to buy real estate in certain US states: As other commenters have noted, it’s a perfect storm of low property prices, historically low mortgage rates, and low US dollar. I doubt we’ll see this combination again in my lifetime…

  93. 93. Amit

    Thanks for the excellent post @John Bennett. Can you please let us know which computer software do you use to file the non-resident taxes in USA? I have been using hand-filled paper-returns for last 8 years for my rental property in Texas. So, if you could let me know a software that I can use for the IRS taxes that would be great. From what I know TurboTax doesn’t have 1040NR form, or has that changed?

  94. 94. Veronica

    @ John Bennett – It’s our first 8 months owning. How do I file my taxes for owning property in Florida? Is there a website I can read. My property manager says I can file in Canada for the US taxes. I want to make sure I am doing the correct filing.

    Thanks

  95. 95. John Bennett

    @Amit, I didn’t mean to imply I have US tax software: Sorry. I use Canadian tax software for my Statement of Real Estate Rentals, and fill out the US one by hand.

    @Veronica: Your best bet is to review the IRS website, or take a look at the the Keats-Connelly book “Buying Real Estate in the US”. There are also services that will take care of this for you, and you may find that you only need to use them once, and use the filing as a template for future years: That’s what a friend of ours did who owns a ski property in the Finger Lakes in New York.

    Resources:
    Keats-Connelly: http://www.keatsconnelly.com
    Cross-Border Tax and Accounting: http://cbta.net/

  96. 96. Kevin

    Veronica,Amit and John did you purchase and are you holding these properties through an LLC. If not are you worried about any liability issues if they were to arise? Thanks everyone for your input..

  97. 97. Veronica

    @ Kevin – Hubby and I purchased it directly from the bank.

  98. 98. Beanie

    @ Cathy, while you may have some valuable info to share – your negative criticism of other comments, overshadow what you may be trying to say.

    For everyone else thanks for posting your feedback – positive experience or not its great to learn from your first hand experience. My position is a little different, me & hubby are in our early 40′s – tired of the rat race and the negative way Toronto has changed. I am now convinced that the North American Dream is really the bank’s dream. Today what really are the chances that couples in our age group can actually pay off a mortgage in 25 yrs?? a small % I would think- we work for the bank & govnt (I used to make $150 just to see the govnt take half my paycheque). My thought is more along the lines of a better life experience. We want to sell our house here and hopefully my hubby’s business, buy a home cash and live mortgage free in Florida – this would give us the ability to travel more with our 2 kids (age 13 & 10) and offer a better lifestyle change (outdoors). I wouldn’t mind paying for a private health care plan, here you wait hours to see a Dr. and I believe that my kids would have better opportunities for sports/Arts etc – this generation of teachers are all about what’s in it for them so our kids miss out on the basic things like sports teams, concerts etc. My Parents are U.S residents and I work for a U.S company – trying to see if any of those avenues will work to get us down their legally.

  99. 99. Ron A.

    Hi Everyone,
    I am a licenced Realtor (The Keyes Co.) in Southeast Florida (West Palm, Ft. Laud & Miami) as well as a licenced Realtor in Toronto (Homelife). I specialize in Canadians buying properties in Florida. I was born here in Toronto, but have lived in Fort Laud for 20 years so i know a thing or two about that market. Since most of my clientele are Canadians, i travel back and forth quite extensively. I must say that it is very interesting to hear everyone’s different opinions about owning in Florida and it’s been quite funny to see how opinions have changed since this thread was started in 2011. Buying in Florida for vacation or rent has been quite successful for my clients as well as me since i have a few properties myself. I have set up a full network of vendor’s so that me and my clients have no worries about landlord duties. I will be subscribing to this post with email updates just in case anyone has questions or needs to pick my brain a bit :).

  100. 100. Kevin

    Hi Ron, I have asked the question earlier and really haven’t gotten an answer so maybe you can help. I am possibly interested in buying multi-family revenue property possibly in Florida – As a canadian would I have to set up a canadian Company and a US company to set this florida property up in. Register it in the US Company which will be owned by the Canadian Company. I’ve heard this is the most tax efficient way to do this, but also the most costly to set up. I’m looking for your input on this – is this true? Are there other way to set this up that are as tax effiecient. I realize you are not a Tax lawyer, but maybe you have come across this with dealing with so many investors. Any info you can pass along would be much appreciated..Thx

  101. 101. Denise

    The personal tax rate is low
    The US estate tax threshold is currently $5 million.
    Get higher liability insurance

    We set up a complex legal structure, it cost a bundle to set up and high annual cost for multiple tax returns.
    But nay be worth doing if you are investing a lot of money

    Denise

  102. 102. Kevin

    Hi Denise, do you mind me asking what the costs were to set this up? At what point investment wise would it be worth doing – anything over 200,000??? or anything over 500,000 and up?

  103. 103. Denise

    It cost $16,000 in one time legal fees to set up the structure. I don’t know exactly what the annual tax prep and entity renewal fees will be yet as this is our first year but I was told to expect $5000.

  104. 104. Cathy

    Gee, ive been accused of being negative on this site, but yikes anyway.

  105. 105. Cathy

    My advice ( which is anything but negative) is for people owning 100,000
    Dollar condos simply own the property personally. And why is this
    advice negative beanie ( you are well named)

  106. 106. Denise

    That’s why I suggested you may want to own the properties personally and get higher liability insurance for personal liab protection.

  107. 107. John Bennett

    Kevin, I notice that my reply to your original message never did show up.

    We opted to purchase personally, and increase the liability coverage on the property: I have a $2,000,000 umbrella policy that covers me worldwide, and that is applicable to our foreign-owned properties. Note that the insurance also covers attorney fees if we were sued: In an LLC or LLP, the asset is protected, but you would still have to pay out of pocket for legal fees.

    if you’re considering alternative ownership structures, I’d highly recommend reading “Buying Real Estate in the US” (http://www.buyingrealestateintheus.com/) by Dale Walters, a principal at Keats-Connoly, a cross-border accounting firm. He discusses the pros and cons of the various ownership structures. Pitfalls to watch out for include getting double-taxed, and high setup and ongoing fees.

    Good luck!

  108. 108. Ron

    Hi Kevin,

    I noticed you mentioned about possibly purchasing multi revenue properties. By this did you mean purchasing a residential property which contains more than 4 units…known in the US as a fourplex? If so, any properties consisting of more than four units are considered commercial properties and the taxes can be quite different.

    Most of my clients purchase residential properties containing 4 units or less and if this is the case, i would recommend what Cathy and Denise have said by owning the properties under your personal name. It is not necessary to open an incorporation to purchase property in the US. Incorporations in Canada and the US may be subject to higher taxes than owning the property personally.

    In terms of taxes on those properties, bear in mind that the US government asks you to pay taxes on your net gains (eve if you are Canadian). Last time i checked, it was around 15%. But, since there is a tax treaty between Canada and the US, you can utilize your US taxes paid as a foreign tax credit towards your Canadian taxes which should help alleviate being double taxed.

    However, I would suggest that if you intend to purchase more than 10 properties that you atleast look into opening an incorporation. Some of my clients have opened a trust company, holding company and even a reit. I believe they have done that because it protects their properties under a corporate umbrella rather than being held personally liable.

    Please note that everyone’s financial situations are different, so what may be the best alternative for you, may not be the same for others. I would suggest you speak with a lawyer or an accountant prior to buying anything to ensure you are doing what’s best for you.

  109. 109. Kevin

    Thanks everyone for your responses. Ron you are correct I was referring to possibly buying multifamily. Not sure yet though just beginning to have a serious look. Denise do you mind me asking did you purchase more than one property or multifamily to set your structure up this way?

  110. 110. Denise

    When we first met with a lawyer we had already purchased 2 properties, one a townhome and the other a duplex but had not yet closed. We were trying to determine how to take title. He was very clear that based on our circumstances we needed to set up a cross border 2 tiered limited partnership structure. We were shocked at the cost but decided to proceed anyway because we didn’t think there was an alternative. I then found out that the annual fees to administer were going to be in excess of $5000 and that’s when I got really mad. They did not give us the full story. They still stand behind the advice they gave but if I was going to do it over I don’t think I would go to all the trouble and expense. We subsequently purchased 2 more properties so now we have 4 properties and 5 tenants. Your situation may be different than ours so I suggest you get your own legal advice.

  111. 111. Kevin B

    I too heard about LLCs but opted to keep my Florida rental properties in my name with 1,000,000 liability coverage on each. I had 2 accountants tell me not to bother with the LLCs.

  112. 112. Kevin

    Denise and Kevin thanks for the feedback. I have heard both sides of the story, so was curious as to what others were doing. This helps, thanks again..the 2 tier and the annual fees are the killer..I guess if it makes no difference tax wise over the years it would make sense to go the other route..

  113. 113. Ana

    I echo John Bennett’s experience. We bought a rental condo in Hilton Head Island, SC, September 2012. Buy on the beach, and you’re sure to rent it out. It was purchased for $450K in 2008, we bought for $175K as a foreclosure, and it’s right on the beach. We also advertise on vrbo.com, hired a local property manager & his cleaning crew, and we do shortterm rentals. Our busy time is June – August, and we are on track to earn $30K in rental income, our expenses are $12K, our mortgage payments are $9K, and management fees about $6K. We go down 3 times a year, for 10 days a stay, so we get a free vacation, we build equity in our condo, and plan to retire down there in 10 years, and plan to have the mortgage paid by then. Prices are starting to increase, now is the last chance to buy before exchange rates, mortgage rates, & housing prices all increase.

    Sure there are sales taxes & income taxes to be on top of, but overall, the process is fairly straight forward, and is a wise investment, only if you buy in the right area, look at Hilton Head, it’s closer than Florida. We chose this place as we can do the drive in 16 hours from NF, Ontario. Keeps our costs down when travelling there ourselves. If you can afford a southern condo, I would highly reccomend buying now.

  114. 114. Claudia

    If I don’t intend on occupying the property, I’m looking to resell it, can I do my own improvements (cosmetics only) in the condo. And is that the same for every county/city within Florida. I’m from Canada and I just want to make sure I don’t get deported because I’m painting a wall :) I heard it was something about labor laws, but I’m not sure if this applies in Florida. (I’m looking to invest mostly in Pinellas County and Tampa.

  115. 115. Ana

    I’m not sure legally, but I think it would not matter that you’re just buying to resell. I think the idea is that you are taking a job away from a US citizen. You should be fine to do it yourself, unless there is someone in the building that is an a** and reports you. Maybe don’t mention to people you are Cdn. Good luck!
    Ana

  116. 116. Ron

    Hi Claudia,

    I am a Realtor in Florida as well as here in Ontario. Funny enough, i get asked the same question that you are inquiring about quite often from my canadian buyers.

    If you are working on your OWN property, there should absolutely no issues with that. When i say own, i mean the inside your own unit since it is a condo, the condo association should cover the exterior and common areas, so there is no reason to do any work outside your unit.

    I hope this helps!

  117. 117. FrugalTrader

    @Ron, I asked this another reader earlier, but where do you see the best value in Florida? We were in the Kissimmee area and some of the resorts close to (but outside) Disney appear to be very popular with renters.

  118. 118. Pierre Fregeau

    @FrugalTrader

    I am one of the few Realtors that covers all of South Florida, the East and the West coasts and I can tell you that the markets are very active all over South Florida. As far as looking for the best value, it can be a little tricky. For instance, it does not mean that a $50,000 property will be a better buy than a $200,000 one. The lower priced one might gain 25% over the next 10 years while the other one might double in value. Miami, for instance, has seen some tremendous price appreciation over the last 12 – 18 months, that is a lot better than in the Orlando area.
    In my opinion, go where the demand is far outstripping the offer and I am sure that @Ron will agree with me that the demand is quite strong down South Florida and the main reason is that the Baby Boomers had a tough winter up North and they don’t want to stay where it is cold. Where is it warm enough for them? South of Palm Beach on the East coast and South of Port Charlotte on the West coast.
    Pierre Frégeau, Realtor, Born in QC but living in the US for 29 years!

  119. 119. Ron

    Hi FrugalTrader,

    It really depends on what you are looking to do with the investment. If you’re looking to do a vacation rental with it, then Orlando/Kissimmee is a good area. Just bear in mind that with a vacation rental, you will usually have to hire a property management company to promote your property for rent. These companies can charge an upwards of 25% or more to do so. Also, if your property is not rented for a few months, you will have to carry those costs. Don’t get me wrong, a vacation property can be really profitable IF it can stay rented consistently.

    On the other hand, if you decide to do a traditional rental (1 year lease), i would not recommend Orlando. Orlando is very tourist driven so a vacation rental makes sense, but not for a traditional rental. Also, the amount of rent you can charge in Orlando is far less and your capital appreciation is a lot lower than in Southeast Florida (West Palm, Fort Laud, Miami).

    I hope this helps! If you would like more information, please let me know and we can talk. Thanks!

    Ron

  120. 120. FrugalTrader

    How much do property managers charge on a monthly basis to manage the property? I noticed that most of the condos in the resort we were staying in were using property managers.

  121. 121. Ana

    In my experience property managers charge a percentage of your rental fee.
    Anywhere from 10-25%. It depends on what they include, such as cleaning, marketing/rental bookings, and being the contact for your guests, if anything goes wrong. For example, if you charge $1000 for a weekly rental, the property manager that does everything for you, keeps 25% or $250.
    Hope that helps.
    Ana

  122. 122. Ron

    Hi Everyone,

    This forum has been a bit silent for a few weeks now lol. I just wanted to kickstart things again. If anyone has any other questions about buying or investing in Florida property, please let me know. As most of you already know i am a Realtor in Florida as well as in Ontario. I specialize in Canadians buying property in the US. I contain a wealth of knowledge so feel free to pick my brain :)

  123. 123. Kevin

    For those of you Investors that have revenue property in Florida and are using a property management company just curious how that is working out? Are they saying and doing what you are paying them to do? Being so far away how are you clarifyng any work/repairs that are required? Also those of you that have properys in your own personal name and carry additonal liability insurance, can anyone recommend a good insurance company? Appreciate all the comments.

  124. 124. Kevin

    Ron do you deal with any Auction or forclosed propertys. I know a fellow who bought a forclosed duplex for 40,000 put in another 20 for renos and is cash flowing 900/month. This is in the Orlando area and I believe he just bought this spring. He went thru a Company called CanInvest, but they want 7500 to join their “club” but they have access to these types of propertys and have the rehab guys in place as well as property mgmt? They are in the Orlando-Fort Myers Cape Coral areas. Do you know if these types of propertys still exist as this guy I know doesnt seem to want to give out to much info..Or are these getting harder to come by. Since you asked I’m throwing it out there. Thx

  125. 125. Ron

    Hi Kevin,
    This will be a 2 part answer:
    Part 1
    I would be extremely weary of any group or club asking you to give them money in order to be a part of them. This is not standard practice of Real Estate, so proceed with caution. I have never heard of CanInvest, but i have encountered a slew of other companies promising that by joining their organization, they will give you secret access to property and help you buy property in Florida. I have found that most of these groups have a few things in common 1. Most of them are not licenced realtors in Florida – which means that they can’t do anything to help you purchase the property because only a Realtor can do the contract for purchase. 2. They tend to steer their clients in a direction of properties that are more beneficial for them – basically, a lot of these groups have certain properties and developers they are working with in Florida that have agreed to kick them back (montarily etc..) for sending buyer’s there way. What that means is that they will pretty much only show you what they have available not what’s actually available in the market.

  126. 126. Ron

    Hi Kevin,

    Here’s part 2:

    I get these types of questions all the time. Everyone has seemed to have “heard” of someone who bought a house, condo or multi-family for next to nothing lol. Simply ask yourself this question; if it walks like a duck, quacks likes a duck…chances are it’s a duck!! It doesn’t matter how bad the economy is, people don’t simply “give” things away these days, especially banks and the cities who are auctioning these properties.

    Now, i’m not saying that it’s not feasible to buy something for $ 40k in Florida, but where is it located? is it in a dead area that has no population growth or is it in an area that even on the brightest days of sunshine…you still wouldn’t want to drive down that street lol! Ask yourself:
    1. Would you want to own a property like that?
    2. Bad neighbourhoods are still bad neighbourhoods regardless of the economy so the capital appreciation will be non-existent. Is that ok with you?

    As for foreclosure’s (REO) yes, i have access to them. Sorry to burst any group or organization’s bubble, but all foreclosure’s can be obtained by a licenced Realtor. So they have no advantage over me :).

    As for Auctioned properties. it is the definition of buying As-Is. They make no warranties on the property including if the title is clear without liens or blemishes.

    I have structured my Canadian clients with an investment that requires no property management…so you can put that 10-25% back in your pocket!
    If you want to learn more, let me know and we can speak further. I hope my answers helped you. Thanks!

  127. 127. FrugalTrader

    @Ron, what is the process for purchasing a short sale in Florida?

  128. 128. Ron

    @ FrugalTrader

    It is a pretty lengthy process to explain. The key points to know about buying a short sale is:

    1. Timeframe – give yourself 3-6 months in order to close on the short sale.
    2. The lender(s) (bank) holding the mortgage(s) makes the decision on who and for how much they will sell it for not the owner.

    Since a short sale can be looked at as a pre-foreclosure, It is important that you have a knowledgeable and experienced Realtor that knows how to navigate a short sale and what to look for.

    If you would like to know more, please let me know and we can arrange a time to discuss. Thanks!

  129. 129. Will

    Hi Kevin

    Don’t get discouraged by Ron’s statement. As an agent he has a perspective that goes beyond simply trying to provide advice it seems. Scaring people into a relationship does not work.

    I wrote my experience here and it maintains still a net positive.

    Yes the deals are not as good as they were, but still look for the markets that have just begun lifting. The economy was bad and the locations did/do come back. Since the last year I have seen a net increase in the area of purchase of upto 30%.

    This is nuts be because no one was buying and the foreclosures were still so high. A number of friends have now regretted, but still looking to drop cash down to pickup for the long term.

    Good luck.

  130. 130. Kevin

    Ron, thanks for your reply. I did speak with another realtor a few days back and he had said that cap rates found in Altanta on single family than what can be found in Florida. He said that most of Florida in his opinion has been over bought and it’s harder to get and 8-10% cap rate. Would you agree. In a decent area that has everything going for it, location, growth etc in your opinion what sort of cap rate is decent – I know it’s a pretty broad based question. I’m not sure if you have heard of mark Ford – Palm Beach Letter, he’s says that he would not pay more than 8x yearly rental for a property and it has to generate a 10-15% return after expenses – then he can sleep well at night.. Not sure if those still exist….Thx

  131. 131. Kevin

    Will, it doesn’t discourage me I like to hear from all sides and perspectives.. Do you mean prices have come up 30% or sales have come up 30%? What area and type of property did you buy? Thx

  132. 132. Ron

    @ will
    Im not trying to scare anyone into a relationship. Im not sure where you got that info from what i was saying. I simply said that groups or companies asking you to pay money to join their investment group is not a good move. Also, i told him to beware of where he is buying. If anything, i totally agree with you that 40k properties are very hard to come by these days. That boat left in 2009/10. There are still great properties to be had, but as an investor you have to be realistic about what you’re going to pay.

    As well as being a realtor, i own several investment properties netting me a great return, but i didn’t pay 40k for them. Will, if you want to make a good investment you would try and buy a property that grows in capital appreciation and nets you good ROI on your rental income.

    As an example, im not sure where you live, but why would buy an investment property in trenton when you would get a better return from buying in the greater toronto area? Its simply known as location location location. Now if you want to buy a vacation home…who cares where you buy because your not concerned with capital appreciation or rental income.

    I’m not here to stir the pot….just a thought :)

  133. 133. Will

    Hi Kevin

    Listing prices up 30%. ( foreclosure pricing as well )
    3 bedroom detatched home in Cape Coral.
    A lot of cookie cutter homes that have very little differentiation.
    Some banks have not moved the prices higher as they are just trying to get rid of inventory, however these homes are being grabbed within days of release.

    The abandonment of the properties has declined with the inventory being cleared so the appearance of an apocalypse is rare which turned seemingly bad areas into normal neighborhoods. Those that took the risk in these areas have strong capital appreciation.

    Ron is correct that $40k is tough to come by, but they still do exist. Note that I am only speaking about my experience in the southwest Florida area. Urban density is much lower than the major cities and thus crime much lower.

  134. 134. Gary

    Now I can say – I told ya so but you wouldn’t listen. We bought a really nice home in FL back in 09 for 45K when people on here were crapping all over the idea of buying down there. So there you have it; now you’re chasing rapidly rising prices and extreme difficulty finding something to buy.

  135. 135. Mike

    I thought I’d add an brief update of our experience. It’s been just over a year since we purchased our condo in west Kissimmee. I continue to watch the area market daily, so I’ve seen the supply and demand shifts, and gradual price increases.

    We purchased our condo in March of 2012 for $75,000 The Average selling price for a Caribe Cove condo so far for this year is around $110,000 and higher (for a 3/3). Had we purchased a year earlier, these condos were going for $68,000!

    So the value is increasing, as are the neighbouring resorts. Single family homes in the area have risen quite a bit also. When I was looking in 2011 you could pick up a plethora of relatively new homes in Poinciana for instance, for around $50,000. Not so many anymore, except for the occasional short sale. And when you do see the occasional property go for was what seems like a ‘song’, remember, there’s a good chance it sat empty, deteriorating for a few years now. Although we considered the odd short sale, we never went that route. For us that was putting all our eggs into one basket, being stuck waiting on the bank, when other properties were popping up around us. We went with a bank foreclosure, and it was a straight forward process, less complicated than buying in Ontario.

    Our condo is not in the rental program, although Wyndham Vacation Properties recently took over management of the resort. The condo is for personal use, and some relatives/friends, or the odd referral. Here’s a brief pro/con breakdown (one year after purchase):

    Pros

    30% increase in our property’s value
    HOA fees actually reduced this year by $50 per month
    we absolutely love the condo and the resort. our friends and family have all enjoyed their stay and will be coming back

    Cons
    Expences are high (I knew this going in). Factor in monthly HOA, Insurance, Property Tax, Management, electricity, we are at almost $10,000 per year.
    Property taxes will rise. Currently our condos (and most in Florida I imagine) are being taxed at low assessed rate – ours at $60,000. Eventually when they reassess, taxes will rise again.

    Now again, if you in a decent rental program, you can carve away a huge portion of your monthly expences. Also, Caribe cove has a high HOA, so your results may vary.

    In conclusion (or until my next post), we’re very happy with our decision. There are still lots of properties left, and although prices are up, that’s only to be expected as the market slowly recovers.

    Good luck!

  136. 136. Ron

    Hi All,

    I am glad to see that everyone has resumed posting on this site and that people have had great experiences with their purchases!

    @ kevin – I have heard some people mention that the city of Atlanta and its’ surrounding suburbs are netting a good rental income. However, i am not sure about the cap rates in those areas. I can speak of my areas of expertise: Palm Beach, Broward (Ft Laud) and Dade (Miami) – Southeast Florida.
    I usually don’t like to talk about my personal finances online, but i think that in this instance, it will help clear things up. I just recently purchased another investment property which i closed at the end of March 2013. I paid $ 125k for a 3 bed 2 1/2 bath townhome in the fort laud area. Here is my breakdown:

    Cost -
    Include taxes, insurance and HOA/maint fee – $ 650.00/month
    Rental –
    I secured the renter and they moved in May 1st – $ 1,450.00/month
    TOTAL NET: + 800.00/ month

    Cap Rate:(800X12= $ 9,600/ 125,000) = 8%

  137. 137. Kevin

    Ron cap rates are betwen 8-9% . Really decent rehabbed homes in nice areas going anywhere from 90,000 – 160,000, Rents are appropriate to that , anywhere from 850-1500. Property taxes and hoa’s are quite low. When you buy these they come with a one yr warranty and a renter in place on a 3 yr lease with option to buy the property at 50% over what you would pay for it.
    So there is an exit strategy if you want that option as not all are given the option to buy. You mentioned that you set up the propertys for your clients without property management, could you explain how that works? The property you just bought was it rent ready or was there some work that needed to be done..Thx

  138. 138. Ron

    @ kevin

    This property required a little TLC (carpet, paint), but that was about it. the reasoning for hiring a property manager is to collect rent and handle any maintenance issues. I have things put in place for my clients to handle those issues. I created this strategy with Canadians in mind because we all live here and are absentee owners. My clients don’t have the flexibility to fly down every time there is a problem or to collect rent, but that’s no reason to pay a property manager to do those things if you don’t have to. I am not willing to go into too much detail online…i’m sure you can appreciate that. I know that’s not exactly what you asked for, but i hope that helps atleast a little bit. Thanks!

  139. 139. Kevin

    Hi Ron, thanks for the info, can you give me your opinion on Lehigh county/acres in Cape Coral? Thx

  140. 140. Ron

    @ Kevin,

    Lehigh County is on the west coast of Florida in close proximity to Fort Myers. It all depends on what type of property you are looking for, vacation property or investment? If you are looking for a vacation property than it would be ok to buy there. However, if you are looking for an investment to give you the best rental income and capital appreciation possible, then i wouldn’t recommend it. For an investment property, you have to be where there is a high concentration of people and unfortunately lehigh county doesn’t rank anywhere near the top as opposed to other cities in Florida. So, the questions remains….what is it that you’re looking for? I recommend my clients buy an investment property first. Because the net income received is really good, it usually allows them to purchase their second property as a vacation home and the investment property covers or almost covers both places.

    Hope that helps :)

  141. 141. Kevin

    Ron looking for investment, possibly even multi-family. My email is ktbecker AT shaw DOT ca Let me know what areas you would recommend where I can still get a decent cap rate and appreciation. Thx

  142. 142. Ron

    @ kevin

    You got mail :)

  143. 143. Merlin

    I am looking for Short term Rental options in Florida ,Is the Disney area the only area these are permitted?

  144. 144. Pierre Fregeau

    Clarification on post 140.
    I know of Lehigh Acres which is in LEE County just East of I-75 and Fort Myers. It is a blue collar town where many of the construction workers bought homes during the boom years. The purchase prices were much much lower than in Fort Myers and Naples. When the construction industry collapsed, the town quickly emptied as construction workers left the area, not able to pay the mortgages. There were and still are a lot of foreclosures and short sales in the area.
    It is not recognized as a vacation area. Now, it is a considered a dorm for people who work in Fort Myers. It is slowly and painfully coming back.
    A 3-Bedroom home with a.2-car garage rents for $700 to $950 per month and one can still pick up one of those less-than-10-years-old houses for about $90,000. They were selling in the $40,000+/- at some point and in the $250,000 during the boom years There are still some of those selling in the $50′s but they are in areas were the A/C Units and water treatment systems tend to walk away!
    I would stay West of Sunshine Blvd.

  145. 145. Ron

    @ Merlin

    I don’t really deal with short term vacation rentals, but i am asked this question a lot by people looking for this sort of thing. Check out http://www.vacationrentals.com
    I have referred several people to this site and have received great feedback from them. Also, they have rentals across the US and numerous different destinations across Florida.

    I hope this helps! Have a great day!

  146. 146. Eric

    Really glad I stumbled upon this web site! Tons of useful info.
    For the realtors on this forum, I am also looking to buy my first property in Fl. Please email me any good opportunities you have to “encsu AT hotmail DOT com”. I am looking for long term rental in a good area, 10+ cap rate would be nice, but will consider 8 – 10% as well, potential long term appreciation is also a must.
    Thanks in advance!

  147. 147. Ron

    @ Eric

    I am a Realtor in Ontario and in Florida and specialize in Canadians buying in Florida. I will reach out to you with a few questions i have so i can get a better idea of what you are looking for. Thanks!

  148. 148. Merlin

    Ron what is your email address please?Did not realise you are Canadian .

  149. 149. Ron

    @ Eric

    I sent you an email…thanks! :)

  150. 150. Ron

    @ Merlin

    Yes, i am Canadian so i can provide you with the info you need to from a Canadian perspective :).

    Have a great evening!

    edited: Sorry, we do not allow the solicitation of business in the comments.

  151. 151. Ron

    Hi Everyone!

    It has been over a month since the last post…and i hope everyone is doing well! I would like to kick start the conversation again lol. I just got back from Florida last week and successfully wrapped up 7 properties for my Canadian Investor’s. the market in Southeast Florida is Crazy! The window for purchasing an investment is quickly closing! On average, my clients are getting a return of about 8-10% cap rate.

    Anyone else have any new experiences to share about their investments in Florida? I love hearing successful investment stories :)

  152. 152. Gordon Gibson

    Hello

    Question from a “newbie”

    I’ve been thinking about buying for the past 2 years, and seen values rise (and the $C weaken) without acting – so much to consider…

    Condos scare me – I like the idea of having full control over all the decisions. So my plan was to buy a detached home in the $150K – $250K range – 3 bedrooms, 2 baths so that all of the immediate family could be confortably lodged. Capital appreciation: my time frame would be at least 10 years, so I doubt that I would get very badly hurt. Rental: nice to have, but the notion of having to file with the IRS is pretty intimidating.

    My two questions to the people on the ground there:

    1) I have been looking at the area around Indiatlantic – Daytona Beach and it seems like you can find the odd single dwelling located a couple of blocks from the Ocean (not the Grand Canal) for under $200K – with fixer-uppers for $150K of a bit less. Is this realistic? Is this a “desirable area” to buy in for the long term? My thought was that being an hour or so away from Orlando, there woulde be rental potential for people who wanted to spend a couple of days at the parks and a couple of days at the Ocean.

    2) Do property management companies handle single family dwellings, or do they limit their activities to condos?

    Thanks in advance

    Gordon

  153. 153. Ron

    Hi Gordon,

    I am a realtor in Southeast Florida (west palm, fort laud, miami) as well as in Ontario. I can’t really give you market specifics about Daytona Beach because its a little out of my market area. However, i will tell you from a geographical standpoint that buying in Daytona in efforts to get people that want to visit in Orlando too is probably not going to work. Daytona is a bit too far away for people to vacation there and go to Disney. Rather, set your sights on buying in Daytona and doing a vacation rental for tourists wanting to come to Daytona. In my honest opinion, if you want to do a vacation type rental, then i would stick to the Orlando area because you stand a better chance to have it continously rented by tourists.

    As for property management, they will take on a single family (detached) home and manage it for you. they usually charge around 15-25% to maintain and market the property.

    As for capital appreciation, you will definitely see capital appreciation over time. Right now in Southeast Florida the market is up around 20%. however, being that Daytona is a smaller city, your capital appreciation will be less. I am not sure of the actual numbers, but if i had to guess…i would say 5 maybe 10%.

    I hope this helps…if you have any more questions, fire away lol.

    P.S. – don’t be intimidated by the IRS for paying taxes, there’s not much work involved. All of my clients do it and no one has reported any trouble to me.

  154. 154. Marianne Elia

    We’re Canadians looking to buy in Key Largo. Have stayed at Kawama Yacht Club over the past few years. Is this a good time to buy?

  155. 155. Gary

    You missed the opportunity in the keys – prices are back up to pre-crash levels. You won’t get any investment opportunity out of it now. Forget about it and keep renting. You snooze you lose as they always say.

  156. 156. Cathy

    Gee gary – are you saying your property value wont be going up? That’s too bad.

  157. 157. Gary

    i said keys – we’re not there we’re on the gulf coast – we bought in 09 and our property has doubled in value

  158. 158. Pierre Fregeau

    Many postings here ask a similar question.
    Will home prices go up or down in South Florida?

    The problem with that question is that one normally does not buy a home with the intention of flipping for a profit in a short period, some people do that, but normally we buy a home to enjoy it and if it goes up in value all the better.
    So, will prices go up or down or stay the same in South Florida?
    I don’t know and no one knows, even the “Experts” got it wrong in ’06 – ’07. But I can tell you that prices are still 40 to 50% below the top in most communities.
    It’s all about Location, Location, Location. Some properties have doubled since ’09, just ask @Gary, but others are up only 20%.

    I am one of the few Realtors in South Florida who covers both coasts. Palm Beach to Miami and Naples/Fort Myers/Cape Coral. (Google me)

    In ’09 and ’10, I was begging my buyers to get off the fence telling them that prices had bottomed out and there was an opportunity to make some moneys in the years to come. I am happy that @Gary got the message.

    Remember – Real Estate is a long term investment. Buy what you like, in the right location and you should do fine. Market forces are changing dramatically, for instance, look at the influx of baby boomers in the South and it will be accelerating. That did not exist in the past. The South should therefore benefit from it to the detriment of the North. I would put my money on Real estate prices going up in the South unless the Government does something stupid… nah, they wouldn’t do that…

  159. 159. Bobby

    Im seriously thinking about buying in Florida. I want to purchase a single detached on the Gulf Coast, Naples, Clearwater, Sarasota. Questions… I only want to spend $100K, I would prefer a gated community or near the beach, is this unrealistic, or are there properties out there??
    Bobby

  160. 160. Kevin

    Hi Bobby, I think those deals could be long gone! Unless you find something on Fanny Mae or an aution site but you need to be careful with those. Maybe Pierre can chime in and make a comment on this..But something nice in a gated community could be a hard find imho..

  161. 161. Pierre Fregeau

    @Bobby
    Single family under $100,000 in community or near beach?
    Hummm… There are some in Clearwater, Venice, South Venice, Rotonda West, Cape Coral, Fort Myers and further inland in Port Charlotte and North Port. Forget about Naples.

    Yes there are some houses under $100,000 but you may need a lot of elbow grease, they may not be in a community, you may not like the areas or it may be too far from the ocean. At those prices, you are scraping the bottom of the barrel.
    You would have better choices in condos, in better areas.
    Read my previous post.

  162. 162. Pierre Fregeau

    Thanks @Kevin

    You are right, for the most part those properties are gone. What is left, is left for a reason or another.
    There are still some decent condos not too far from the beaches for under $100,000 even in Naples (although, not that many)

  163. 163. gary

    ya missed the window – we got a 2br/2ba for 40K in 09. You’ll need to pay well over 100K to get anything decent now. May as well forget about it.

  164. 164. Migel

    If you haven’t looked here already, try http://www.myfloridahomesmls.com. You can choose any area, type of dwelling, etc. While the market has slowly improved over the past 2 years, Canadians are still buying as there are still decent deals out there, especially if you are flexible on location/type of property (home/townhome/condo). We purchased our condo in early 2012 and are very happy. Best of luck!

  165. 165. Cathy

    @gary In your post 134 you say you paid 45k. Maybe you didnt get as great a deal as you wished?

  166. 166. David

    I think Gary did well. We bought a couple of condos in 2011 for 22% of the price they were when they were built in 2007. Short sales they were and the deals almost collapsed twice but in the end it was worth it. I agree with Gary that those times are gone but if you’re not concerned about renting it out and covering much of your expenses then there’s still time to buy something. If it’s about enjoying it rather than making money off it and if you can afford to cover the costs-it’s a nice thing to have if it works. If it doesn’t, walk away. All the best, David

  167. 167. ND

    Next month I am thinking to buy property in South West Florida (Cape Coral)

    I am buying property for short vacation rental and my own use.

    Is this right time to invest and easy to find short term rental ?

    Any help would be appreciated

  168. 168. Pierre Fregeau

    @ND
    Cape Coral still has “affordable” prices and one of the reasons is that it does not have a beach. You have to cross the bridge to go to Fort Myers Beach.

    Cape Coral is a great area for boating with its canals, as long as you are not too far in. As far as short term rentals is concerned, unless you have a house or condo on a canal with boat access, it might be a little more difficult to rent short term. Yearly rentals are more the norm since Cape Coral is kind of a sleepy town for Fort Myers.

    As far as timing to invest goes, refer to post 158.

    People who could not get off the fence last year are paying 20 to 30% more this year. Here is a good article to give you some ideas on the expected growth in the Naples area: http://www.naplesnews.com/news/2013/oct/01/naples-marco-market-no-1-in-home-price-forecast/

  169. 169. ND

    Thanks for quick reply, I am also considering Naple.

    How much taxes, maintenance, insurance in Naple area ?

    Easy to find short rental in Naple ?

  170. 170. Pierre Fregeau

    Naples is a different story than Cape Coral.

    Prices in Naples will be higher. But short term rentals are easy to come by.
    Real Estate taxes are lower in Collier county then Lee county. Approx. 1.2% vs 1.5%. Maintenance and insurance should be comparable for equivalent properties.

    There are more cultural things to do in Naples. The beach is easily accessible as opposed to Cape Coral or even Ft. Myers. As owner, you get free pass to park at the beach.
    Naples is a very safe city.
    Naples is in the top 3 cities in America with the most millionaires per capita.
    There are 91 golf clubs.
    There are still a “few decent condos” under $125,000.

  171. 171. Juergen

    With our new MLS now we have access to Naples but the condo fees are so high over there , its like a second rent. I was searching for myself and it just makes no sense. In Cape Coral you might be driving a bit more but get the Best Bang For Your Buck :-)

    Realtor in Cape Coral

  172. 172. Pierre Fregeau

    @Juergen, no hard feelings, but I tend to disagree with your approach.

    I am not here to defend the merits of any cities that I cover and I cover more cities than one can imagine, from Palm Beach to Miami and Marco Island to Cape Coral and sometimes beyond.

    First, the condo fees are not outrageously high in the Naples area unless you get into high end properties or golf communities or communities with guards at the gate. You can find condo communities in Naples, with similar fees that you would find in Cape Coral (in the low $300/month) or even lower. But beware that you often get what you pay for!

    Second, you cannot compare Cape Coral to Naples nor should you compare Naples to Miami or other cities. Each city has their advantages and some disadvantages. The lifestyles are quite different. Some people feel more comfortable here and some feel better somewhere else. That is human nature.

    If I have clients interested in Cape Coral, I will show properties in Cape Coral and bring all the advantages of living there and if they change their mind and want to buy in Boca Raton, I will bring them there and tell them a totally different story.

    What might be the Best Bang for your Buck in Cape Coral might not be of any interest to many other people. It’s not just the Buck that counts, you also have to live there and/or rent that property.

    I even sold homes in Lehigh Acres with no HOA fees. This is what these people wanted and that is what I sold them. No fees, no community pools, no gyms, no gated community, no fancy stuff, but they are happy.

    REALTORS are there to direct buyers to where they will be happy. And this is especially true of Foreign Buyers, which I mostly cater to, who often have only looked at glossy magazine pictures or fancy websites of a certain area. It’s up to us, REALTORS, to help them find the lifestyle that they are really looking for. A house is a house and a condo is a condo but the neighborhood or city can really cramp one’s style.

  173. 173. Cathy

    @pierre. I also find the fees very high in naples. I find there is an unfair distribution of the condo fees, especially in the gulf front condos, but elsewhere also. The fees for these condos are 3500 to 4000 a quarter, the reserve funds are non existent, and the 800 sq ft condo facing gulfshore dr pays Exactly the same fees the 4000 square ft penthouse. Quite the bargain for the penthouse – not so great for the sucker in the little condo with no view.

  174. 174. Cathy

    But, i wouldnt buy anywhere else in fla.

  175. 175. Pierre Fregeau

    @Cathy
    Now you are looking at the fees for condos on the beach. Of course they will be high and they might not be distributed proportionately and fairly between the units, but that is not the norm for all of Naples.

    There are many condo communities, not on the beach, that have reasonable fees and distributed proportionately. Take for instance, Turtle Lake which is 2 + miles from the Gulf, the fees are $320/Mo. for the 2-Bd and $254 for the 1-BD. Furse Lake, $295/Mo. Berkshire Lakes, $290 +/Mo.

    What people are buying in Naples is the quality of life, the greenery everywhere, proximity to the beaches, the security, the warmth… I agree with you, nowhere else quite compares, but even with that, it’s not for everyone.

  176. 176. Cathy

    For 320/mo fees you could buy something in pelican marsh that might actually appreciate someday. I dont think 320/ mo is low fees for a 100,000 condo.

  177. 177. Pierre Fregeau

    @Cathy,
    Paid $53,000 for one of those condos 2 years ago, now selling upwards of $110,000 to $125,000+. And as a bonus a positive cash flow.

    I don’t particularly like Pelican Marsh (St Croix, which is in same price range) because there are way too many annual renters, also, many of the balconies are on the parking lots vs golf course for Turtle Lake and the community is too close to Walmart, LOL

    But once again it is a matter of tastes and opinions. If you want to buy in St Croix, I’ll sell you one, if you want Port Royal, I’ll take you there…

    All the best!

  178. 178. Cathy

    That’s impressive pierre – no doubt about that. Just for the record, I wasnt talking about st croix but egrets walk and these are not 100,000 condos.

  179. 179. Pierre Fregeau

    Ohhh Cathy… Egrets Walk, just behind Mercato and which I like, is not in the same league. You can’t compare the Barron Collier Cougars with the Miami Dolphins!

    Sweet dreams!

  180. 180. ND

    There are still lots of inventory in southwest Florida. You can find decent single family home under $100K. Check realtor.com

  181. 181. Pierre Fregeau

    @ND
    Here’s the lowdown on single family homes in SW FL:
    Naples 20
    Bonita-Estero 10
    Fort Myers+ 158
    Lehigh Acres 230
    Cape Coral 60

    Yes you can find some decent homes but most of them are in neighborhoods that most people would not consider a vacation area or not even safe to live in.
    A great number of these homes are in need of repairs or are old, not decent.

    In Lehigh Acres for instance, there are many homes listed for as low as $39,000, but take a look, the slab is there and 3/4 of the blocs are up. That’s it. Can’t call that decent.
    Many of the homes under $100k in Fort Myers are in high crime areas.

    Let’s be real and logical for a second.
    How can you expect to pay less that $100,000 for a decent single family home in a great neighborhood and close to a beach?
    It does not make sense.
    And I still get clients asking me to find a condo on the beach for less than $100k… Dream on…

  182. 182. Monique Barrette

    We have a home in Florida that we live in for the winter only. We are looking at our wills and who would have the house when we are gone. Can you tell us how long the US would withhold money from the sale of the house and what percentage? Oh sorry we are Canadians.

  183. 183. aq

    Pierre,

    I will be contacting you tomorrow.

    Many thanks,

    AQ

  184. 184. Pierre Fregeau

    @Monique
    I would certainly seek professional advice. Do not go by what people may tell you in forums like this. Each situation is different.

    First, as a general rule, a will has no legal effect until it is probated. The probate is the process of legally establishing the validity of a will before a judicial authority.

    So if you own a property in Florida, your will, whether Canadian or US, must be probated in Florida. There could be delays that can range from months to years. Your heirs might not be able to sell the property immediately.

    Let me know if you need a professional. Remember that a Canadian Lawyer may not necessarily be versed in specific states probate rules.
    pierre at SouthFloridaHomes dot CO

  185. 185. Caroline

    Very interesting info posted here – I too have been considering the purchase of a small condo in Florida, and have come to the conclusion that I would have to generate some rental income to offset monthly costs. I am wondering if anyone is familiar with any of the resort vacation properties on Hutchinson Island? There seem to be units rented primarily over winter months to vacationers with prop mgmt services available. This is what I’m hoping for over the next five years until I would be able to use the unit myself for winters away from ontario cold.

  186. 186. Pierre Fregeau

    Caroline,
    Hutchinson Island is a very nice and lesser know area of Florida. It is certainly worth looking into.
    Other than having been there, I do not have any expertise in that area.

    Some people think that they need to rent their property by the week like in a resort vacation type to make money. That is not true. First, the management fees tend to be high and the property, by being overly used and having a constant turnover, deteriorates faster.

    An alternative is you can rent yourr condo for 4 months during the winter months and that will pay all your annual carrying costs. Then you can enjoy your property for the rest of the year. You can find and screen your tenants yourself by using sites like Kijiji in Canada or a very popular website like VRBO dot com (Vacation Rental By Owner). The management fees will be lower. Tenants will rent from 1 to 4 months and sometimes up to 6 months. The property will not get the same abuse as in a vacation resort area. And that can be done anywhere in South Florida. You may also give it to a management company to take care of everything.

    Good luck!

  187. 187. Caroline

    Pierre
    Thanks for the good suggestion. It certainly makes sense to rent out on a monthly basis for three or four months or longer instead of weekly tenants, and as you suggested then the condo is available in off-peak times for family use.

  188. 188. Pierre Fregeau

    Caroline,

    You are welcome.

    I never encountered other people with positive experiences with resort vacation rentals. I would like to hear from some of our readers who had positive experiences.

    Happy New Year to all!

  189. 189. la_Violette

    Hello
    We are too thinking of purchasing in FL. I know we missed the opportunity in 09-11, but was not the right time for us back then, we purchased in Canada instead..anyways . the idea never left us and we are at the beginning of out project now. We as a previous poster are fed up with the winter and the high income taxes in Canada so purchasing with be a phase one of a long term project of eventually moving in US. For now we are looking for an investment opportunity that we would be able to use ourselves one out of 4-5 weeks, close to the beach and ocean view . We loved the beaches in the West and we stayed In Longboat Key which we loved… so question is about Sarasota.. is it a good place to invest, what would be the cap return and etc? Any info would be highly appreciated hanks!

  190. 190. Pierre Fregeau

    Good Day la_Violette,

    First, let me say that if I had a $1 for every time a client asked: “is this a good place to invest?” or “will I make money there?”, or “will the market keep going up?” and many similar questions, I would be wealthy!

    The first thing to establish is your fundamental reason(s) to buy a property and your time frame for holding that property. Is it going to be strictly for your enjoyment? or will you be renting it out seasonally or annually or keeping it empty and flip it when appropriate?

    There is money to be made in real estate, in just about any area in Florida.

    But it might take more time to realize that potential in specific neighborhoods. If one can afford to wait 20 years, they will most likely make money with a shack, albeit for the value of the land. But in today’s world of instant gratification, who wants to wait 20 years, let alone 2 years!

    So, in that context, Sarasota is a good place to “invest”. The cap return will depend on the type of property, location and rental strategy.
    BEWARE of the ones who will tell you that they made 10% return or 12% or 5%. Each situation is different and you may not be able to replicate those results. Do your own due diligence.

    Unless you are a full time real estate investor, buy something that you like, in a location that you like and enjoy it. If you rent it out, it will help with the carrying costs. Eventually, it will potentially give you a nice return.

    Good luck!

  191. 191. John Bennett

    Hi all,

    I thought I’d post our one-year update. Back in comment #92, I noted that we’re from Ontario, and had bought a foreclosed oceanfront condominium in northeast Florida in October 2012. Our intention was to use the property for a month or so a year ourselves, and rent it out the rest of the time.

    Since it was a foreclosure, we put a fair amount of work into the condominium to bring it back up to standards: New tile, carpet, furniture, paint: A fair amount of hands-on work, and lots of shopping, talking to tradespeople, and fix-it jobs. It was a bit distressed, but the location was fantastic, and the amenities of the complex were world class. We put it on the rental market in March, 2013 using VRBO.com (Vacation Rental By Owner). We chose to forego a property manager (and save their 20-30% cut) and manage the bookings and rentals ourselves.

    As with everybody else here, we were attracted by the low US$ (at the time), the depressed property market, and the possibility of taking free vacations in our vacation/investment property.

    So far, it’s been a great investment, and a really fun project. Gross rents far exceed our direct costs (including finance), and we are looking at a cap rate of 9 or 10%. We’ve met some great people, we’ve hired some fantastic local help to clean and take care of the inevitable issues as they arrive. And we get free vacations… ish.

    However, it is a *very* hands-on investment. We handle all the advertising and bookings ourselves, we take care of all registrations at the security gate, we talk to our guests both before and after they rent the property: Essentially, we’re running it as a business, and it’s partly because of that that it’s performing very well. I’d estimate I spend about five hours a week on regular basis dealing with inquiries, bookings, paperwork, etc. Some weeks, nothing. Other weeks, chaos… :). But it’s great fun.

    We have met other owners in our complex who have chosen to go the management company route: They bought the property, but have passed on all the day-to-day work to a local property manager. It has also worked well for them, although the return on investment is much less. But, they use it themselves for four months a year, and their rental income completely covers all costs, with a small cash return as well.

    You will have to deal with tax issues (both Canada and the US), compliance issues (licenses from local governments, etc.), paperwork, accounting, customer service, politics (in our case, HOA stuff mostly), and the occasional surprise. If you’re buying a condominium, you will need to do lots of due diligence to determine the financial health of the condominium/HOA corporation — too many foreclosures means that *you* will be footing the bill for all of the common area expenses, because your neighbors have disappeared. We did lots of reading on the internet (two years’ worth), but nothing takes the place of knowledge on the ground. In our case, finding a really excellent real estate agent was key.

    But it has been a really enjoyable process. The monetary returns have been well above the amount we budgeted for, and both the US dollar and property market have been recovering as expected.

    If I have any words of advice, it would be “Choose your location wisely.” Yes, I know, it’s the old “Location, location, location” mantra. But there are an infinite number of properties for sale in Florida, and the vast majority of them are completely unsuitable as investment properties. You can easily find properties for $50,000 inland away from the coast, but you will never find a renter. We started out being attracted to the possiblity of purchasing a $75,000 condominium about two miles from the beach. In the end, we paid over $300,000 for a prime-location oceanfront unit. But it has paid off in spades.

    And then, in a mid-life-crisis-fuelled-bit-of-insanity, we bought a second one. Because, of course, we’re now experts in the Florida real estate market.

    Maybe. Maybe not. But both units are doing exceptionally well, and both have been a great, and successful, real estate investment. But that’s it! No more! Except… Spain is looking pretty undervalued these days…

    Good luck. Do your homework. There is no magic involved, but you do need to know what you’re getting into.

  192. 192. Gordon Gibson

    Hi. Could I ask where in North East Florida you ended up buying? I have been looking (online) in the Daytona Beach area (including Indialantic, Satelite Beach, etc.) and the prices certainly still look attractive.

    My rational is:
    1) Lots of cheap flights into Orlando – including from Montreal where we are located
    2) The Daytona Beach area is only about an hour’s drive from Orlando
    3) From the shorter-term rental perspective, there might be people who were interested in spending a week in Orlando at the parks and shopping, and another week or so on the beach not too far away.

    A few people have told me that this is a stretch – not many of the tourists drawn to Orlando would be interested in renting an hour away.

    Your experience renting seems to have been positive. I am curious about where your rental is located, what the average rental period is (a week, a month?) , and how much traffic the VRBO site draws.

    I am tempted by going the “single family dwelling with a property manager” route instead of a condo, in order to avoid all the HOA hassles. Also, we have a large dog – and it looks like many condos have no pet or small pet only policies.

    Any thoughts on this?

    Thanks

    Gordon

  193. 193. John Bennett

    Hi Gordon,

    We bought in Palm Coast, about 30 miles north of Daytona. Much quieter, less developed, and attracts a significantly older crowd than the Spring Breakers in the major beach towns.

    I think you’re spot on about people wanting to visit the parks and the beach. We have people that use our place as a base, and although most are looking for a beach vacation, many visit the parks for a day.

    Rental periods are typically a week in summer, and up to two months in winter. October/November is the only real slow season, and we’re booked out about 325 days a year. We already have confirmed renters for 2015!

    VRBO has been an excellent advertising medium. Typically, we’ll get four or five inquiries a week, unless we’re mostly booked, in which case it drops off. You pay for higher placement in their search results, but it’s worth it. We tried at least four other vacation rental sites, and none hold a candle to VRBO.

    Condos vs. Houses. No real opinion here, except to say an oceanfront condo was affordable… an oceanfront house wasn’t. For my money, the oceanfront wins every time, and is a prime factor in our occupancy levels.

  194. 194. Gordon Gibson

    John,
    Thank you so much for great answers. If I may, I would ask one further question if I may.

    It relates to the definition of “Oceanfront”. I have been operating under the assumption that a single family dwelling a block or two from the beach would qualify…sort of, but appreciate that for many, oceanfront probably means being able to see/hear the ocean from the balcony.

    I realize that I may be wrong here…but the question is how wrong. Don’t want to put you in the hot seat, but how big of a discount do you think applies to a larger, more private single family dwelling with a pool compared to an “on the beach condo”?

  195. 195. Cathy

    I think a renter would say that oceanfront means nothing between you and the ocean.

    A landlord may have a different idea.

    But a single family home ” near” the beach is very desirable. Why not just call it what it is?

  196. 196. John Bennett

    Gordon,

    Cathy’s right: Oceanfront means right on the ocean, arguably without even a road separating you from the surf. “Ocean view” is the next best. If your house is a block or two from the ocean, you would definitely be misrepresenting it if you advertised it as oceanfront..

    Comparing a single house vs. a condo. Well, the market is somewhat different. We get couples and small families willing to pay a premium for being able to sit on the balcony and see the sunrise and moonrise over the ocean, watch the dolphins, etc. I think a larger house with pool will accommodate a different demographic, and a great deal depends on the amenities of the house. I can’t give you a hard and fast rule, except to say that the different levels of desirability are probably reflected in the purchase price, all things being equal. Of course, things are never equal.

    There are some great US real estate sotes that can help you get a feel for pricing differentials.

    If you haven’t checked out zillow.com, take a look. Great info to help you compare property values, prices, recent sales, etc. Careful, though… you may get hooked!

  197. 197. Cathy

    We always rent a house because we have a dog. Even when pets are permitted in condos for owners, they are usually not allowed for renters.

    For real estate information in real time (hourly), try homesnap. Know what’s happening before your agent knows!

  198. 198. Gordon Gibson

    Cathy and John,

    Thanks again for great comments. My intention was never to misrepresent 1 minute walk to the beach as ocean-front, but rather get an idea of the relative drawing power of each for renters. But I think you are right – the selling price is probably a pretty good barometer.

    Zillow is pretty addictive. I’m almost afraid to take a look at homesnap!

  199. 199. jeancharlesbedard

    we have buy a lot on r.v. park and we have sell it they title business will keep 10% of the amount for tax
    is there somebody that could tell me what to do to recuperate my money as i am a canadian and i dont have any tax to pay in u.s. except in canada

  200. 200. Pierre Fregeau

    Jean Charles,
    Si tu as vendu en 2013, tu dois produire un rapport d’impôt Américain avant le 15 Juin 2014, pour récupérer ton 10%. C’est aussi simple que ça.
    Si tu as vendu en 2014, tu devra produire un rapport en 2015.

    Tu pourrais avoir à payer de l’impôt américain si ton gain en capital était suffisant élevé. Si tu paies de l’impôt aux USA, tu obtiendras un crédit au Canada pour ce que to paierais aux USA..

    Pierre

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