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.

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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.

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.

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?

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.

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)

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.

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

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.

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.

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

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. :)

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.

@DaveV I too have purchased in Florida for the purpose of it being a rental property. I started 4 years ago purchased my first (house) property and it has been rented ever since. Just picked up another house and it too has been rented ever since. My plan is to have the renters basically pay back my investment and in 10 years I will retire early and live there for 5 months and here for the rest of the time. The original house my renters have asked if I was willing to hold the mortgage. Win/Win situation. :)

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.

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.

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

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?

@ 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.

@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.

@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.

@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.

@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.

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.

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.

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!

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.

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

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.

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.

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.

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 :)

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.

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

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.

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.

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.

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

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

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.

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.

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?

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?

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.

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

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?

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

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?!!

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