Regular travellers to the United States often consider investing in a vacation home. After all, it makes perfect sense — you have a dedicated property in your favourite vacation destination at your disposal any time. And there is always the opportunity to generate revenue from renting the property when you’re not there.
But investing in a second property south of the border can get complicated if you don’t pay attention to the details, especially if you plan to generate rental income from it. Here, Alain Forget, director business development at RBC Bank, shares what to consider before making a move.
- Research the local market. If you plan to rent your property, compare to similar properties on popular rental sites , to see the going rates. Also, look at different online rental sites to get a handle on what others are charging.
- Get a clear picture of all the costs. Remember to factor in exchange rates when working out the costs of owning the property, including utilities, taxes and legal fees.
- Explore alternative markets. While Florida is the usual go-to option, Arizona and California are equally attractive vacation destinations, especially for people living in Western Canada.
- Talk to a specialist in international real estate. There are agents in Canada who focus strictly on the U.S. vacation property market. They have plenty of knowledge to share on the ins and outs of purchasing foreign properties. Some even host seminars to prospective purchasers on what they need to know when investing in a foreign property.
- Find a reputable property manager. They can help you find and manage rentals, as well as maintain the property and navigate the rental rules and by-laws.
- Get the appropriate liability insurance coverage. Additional insurance will be required when renting to tenants.
- Consult with a tax expert and/or lawyer. It’s important to work with professionals in matters relating to legal, taxes and estate planning.
Of course, there’s also financing to consider. Be sure to talk to your financial institution to explain why a U.S. mortgage could make sense and determine what will work best for you.