Investing in Canada Real Estate Vs the USA

In this video I want to share with you, and this is more geared towards my friends in Canada, but also for those in the United States that are at least strange as to what the differences are between investing in Canada versus investing in the United States in real estate. More specifically, I’m going to touch on some of the traditionally bred line-ups, but I’m going to go more on the creative as well, because that is been where we’ve seen most of our coin, and it’s been most productive in real estate, has been focusing on the most creative techniques, because traditional techniques, and there’s great videos on the differences between the two.

That’s pretty simple. You’re buying a dimension, and either you’re going to payment it out, or you’re going to fix it up and resell it. There’s not a whole lot of ability involved. For the majority of how we vest, we like to focus on targeting motivated vendors, people who have to get rid of their dimension, and then we try to come up with a creative solution, hopefully not having to apply much coin down or use our own recognition, and then find a way to make that deal into money.

The first thing that I want to start with, for those of you in Canada, is you’re going to be scandalized by how similar what I teach, specifically, I can’t vouch for everybody else that talks about real estate investing, but for what I teach, how similar it is to Canada. You can undoubtedly listen my spokesperson, that I’m from the United States. What we traditionally do in the United States, you can do it so much in Canada. It’s because most of the laws are basically identical, whether it has to do with property rights, and contract law, and everything in between. My hope in this video is that by the end you’re encouraged and you say,” Wow. All the stuff that I’m learning from Phil, I can do this right here in my own backyard, here in Alberta. Here in British Columbia. Here in Ontario .”

Differences

Population: This is just rough estimate. You get thirty four million in Canada, and you’ve got about three hundred million in the US. Already, you’ve got precisely a much smaller overall population.

Why is that important ?

When we’re focusing on making motivated vendor contributes, it is a function of population. You have to have, in my views, at the least between fifty and a hundred thousand people to really become a very successful on the market neighborhood. If you’re in one of those northern territories, where there’s no human beings up there, that might be a little bit difficult for you to apply imaginative real estate endowing strategies. If you’re in one of the main provinces, and you’ve got a decent population, you’ll be just fine.

• Responsibility: A main, main difference, and sorry if I pique anyone from the United States when I say this, but one of the main differences is, I’m going to call it fiscal responsibility. Americans have developed, over day, a extremely lackadaisical level of being responsible, as it comes to finances. We have the levels of foreclosure frequencies. We have a lot of defaults from our holders. Americans arnt good at saving money and empty their statutes. They do a really bad position of that, where as Canadians? Canadians are very fiscally responsible by comparison. Canadians save money. They pay their statutes. They try to avoid debt whenever possible, where as Americans are like,” More debt, please !”

 Banking

This means that you’re less likely to get any great opportunities in Canada from situations like foreclosures or short auctions. That is so child, so minuscule, almost not even want to talk about it. To get even further, first of all, the style the Canadian banking system wreaks got a lot different. Basically, ninety percent of all mortgages are controlled by the five major banks in Canada, RBC, Scotiabank, you know the respite. I have a register right there. I don’t know all five off the highest level of my intelligence. What discontinues up happening is, they have much more stringent underwriting guidelines, and so they organize lends that people are able to afford.

This is kind of cool. Those in the United States would find this fascinating. United States, we have thirty year, fixed interest rate lends. They’re thirty year amortized lends, and the interest rate abides fixed for thirty years. It doesn’t work that style in Canada. They may have it on a thirty year amortized loan planned, but after five years the loan adjusts. They have ARM lends, and so that in of itself really demonstrates that, apparently when the underwriters are looking at lends in Canada that they’re evaluating,” What’s this person going to do five years from now, and what’s it adjust ?”

Much more responsible in the pay, from the fiscal responsibility back, for the actual borrower, but then from the lender back, they’re likewise very responsible in whom they lend money to. There’s a lot less of the gives, like we have in the US. We have the FHA, where they admit three and a half percent down payment for first time dwelling purchasers, and FHA borrowers. Those situations don’t exist in Canada. It is necessary that beings have to have a real down payment, and they have to really is the possibility of make money, and they have to be able to show their income on a loan account, and those sorts of thing.

in Canada Target Motivate Sellers

I’ve hit that moderately hard, but you get that. Foreclosures, short auctions , not really a portion of the overall investing programme in Canada. Tax deed auctions, those situations don’t really lie either. Plainly, sometimes beings don’t pay their taxes, but certainly, it’s just so much smaller. That’s not where the possibilities of is. The opening is in targeting motivated dealers, but not the ones that are motivated by foreclosure, short marketing, or tariff marketing. That’s not where it’s done.

I tell you, a lot of which is something we do in the US doesn’t revolve around this either, think it is or not. I entail, yes, we have our short auctions, and yes, these foreclosures do wheel through, but by and large, we’re targeting the dealers of property that really need to get out. Perhaps it’s an legacy, maybe they are only own it a while, they just trying to get rid of it. Whatever the occurrence may be.

Creative Techniques For Canada

Canadians, more fiscally responsible. There’s obviously really a far smaller person. What’s shocking is how many imaginative techniques you can do in Canada. Yes, you can do subject to’s. Yes, you can do rental options. Yes, you can do throws. Yes, yes, yes, yes, yes, you can. Anybody who tells you you can’t apparently doesn’t know the law. I’ll tell you what I love about what they can do in Canada that you can’t do in the United States. I may have run out of room, so I’m going to delete this, but you get that lesson right there.

I’ll tell you what I perfectly adore. Flips. When you flip the spate, because what you can do in Canada, which is really cool, it’s called a bounce send. A little background. In the United States, we have something called a deed. We have a speedy pretension deed. We have a warranty deed. In California, we have a award deed, and there’s a agreement and sales deed, who the hell is kind of between a speedy pretension and a warranty. All these deeds. Right? Doesn’t work that way in Canada. Canada has either a[ inaudible 00:07: 49] send, or they have a court ordered send. They’re just assigning designations. There’s only one way to do it. Any occasion you give a deed in Canada, you’re compensating send taxes.

Skip Transfer

You want to try to avoid transfer taxes, specially British Columbia, very costly send tariff province. This is cool. If you’re going to be buying and then selling, we use the phrase A to B, and then B to C. You’re B. That’s who you are in this little example, as the investor. If you’re buying from the dealer A, and then you’re reselling to the new customer C, what discontinues up happening is you can do a bounce send, and get immediately from here to here , not paying off send tariff, and you get the money in the middle, and you don’t have to use transactional funding, and they don’t have to know how much you paid for it, or how much you sold it for. It’s awesome.

We don’t get to do that in the United States. We have to do two closings, “re going to have to” get transactional funding. You’ve got transfer taxes. You’ve got the transactional funding costs. Actually, Canada has a huge benefit when it comes to throws, because you don’t have all the expenses. It still means you’ve got to get the spate under contract, and then resell the property and find a new customer, but it avoids a lot of the expenses. I adore that.

Legal Entities

A drawback to Canada is law entities. Legal entities is a little bit of a impediment. In the United States, we have something called a LLC. Limited Liability Company, wreaks enormous for real estate investors. It can be taxed as a sole proprietorship, as partnership agreements, as a S busines. You get the benefit there, but it’s pass across. The income flows immediately to personal.

That does not happen in Canada. If you want to set up a legal entity in Canada, you have to set up a corporation, or you can do a limited partnership, but that doesn’t really fit if it’s just person or persons, right? It’s a corporation, and here’s the thing, the lowest tax income bracket for a corporation is twelve percent, from what I understand. Again, I’m not an controller. That means you’re being double taxes. If you’re doing batches out of a legal entity in Canada, and in most cases you’re doing a corporation, you have double taxation. You’re getting charged at the corporate degree, and then whatever’s left goes back to you personal, and you have to pay tax on that as well. Plus, Canada, buy in big, especially for their higher income earners, has a higher tariff bracket as well. Canada has really high-pitched income taxes in comparison to the United States.

What you can do here, one alternative is you can maybe get what’s called a general liability insurance policy from an insurance agent. You still do your investing in Canada from a personal name, but you likewise have that liability protection with that insurance policy. That can play a role. Unfortunately, Canadians, you have the double taxation. You save money here, and you give it to the government there. There you go.

Similiarities

Shockingly, outside of what I’ve just talked about, it’s amazing how many techniques that I talk about in my videos that are applicable immediately to Canada. Like I said, subject to, the lease purchase throws, all those imaginative techniques, they all piece and you can definitely do them. Unquestionably want to get your contract. If you get a contract from the United States that’s from a real estate investor, certainly have a regional attorney there in you province. Go through that document and make sure all the remedy usage “re there”. Again, I brought up that example of a deed. In most of the contracts in the United States, we talk about how that the seller is going to provide a clear deed and a warranty deed. Plainly, in Canada, you wouldn’t applied that in the language.

Right there, I’ve summarized most of what is an important part of which is something we do in imaginative investing. Plainly, there are extraordinary changes from other views as well. One circumstance be taken into consideration, in Canada there wasn’t much of a real estate bubble explode. Specific, I’m thinking of Toronto when I’m talking about this. Toronto has just boomed. In information, right now it’s kind of like California, like San Francisco, or LA. Toronto, it’s really high-pitched, really expensive real estate prices, since they are, again, they didn’t have the large-scale run up in the real estate appreciates, because they’re very punishment in their lending practises, and then the borrowers were punishment in what the hell is bought.

Bonus Tip

Another little thing be taken into consideration. In Canada, “were not receiving” stake reduction for your dwelling mortgage on your income taxes. Canadians aren’t as incentivized to have a big fatty mortgage on their home loan, or on their primary mansion. They’re much more likely to want to pay the thing down, where as in the United States we get an interest reduction. Coupled with low interest rates, fixed interest rate loan of thirty years, and a stake reduction, we Americans, we are incentivized to maintain large-scale, fat home mortgages on our primary residences, where as Canadians are not. They’re more likely to pay it down. It means that the batches that you work on are more likely to have equity, which can actually be a good thing. Right? It can be a great circumstance, if the thing’s already get equity, so you’ve got more potential options.

How This Can Help

A thing I like about this, is the majority of Canadian investors don’t know that you can apply these techniques that we talk about in the Government, you can apply in there. They don’t realize you can do situations like bounce transmits. They don’t realize you can do subject to’s, rental options, and those sorts of things. They’re unaware of that, so what that means is, you Canadian investors have less rival. That’s a beautiful circumstance. In the United States, there’s plenty of rival for doing these batches, but you’ve got less rival in Canada. I’ve always been a big fan of less rival in our business, because it allows you to negotiate better are dealing here with dealers, because there’s not a cluster of other beings hounding that same dealer. That’s a huge help, as well.

In Canada Tenants Pay Better

Since your real estate prices have steadily gone up, it is necessary that from the perspective of owning a long term rental property, you have less hazard of there being a ended throw downward like there was in the United States. Too, renters tend to pay. Not ever, there’s obviously objections, but Canadian renters tend to have a much better pay percentage, or less of a default value pace than the United States. If you’re looking at maybe owning apartment buildings, or some larger residential sort owneds like that, that can be another benefit there in Canada, that you’ve got the stability of just knowing that renters tend to pay better. On the other side, particularly with apartment buildings and what not, you’re not going to get as much cash flow, because the value of the property is going to be a little bit higher, because of the stability of the tenants there in Canada.

Conclusion

What’s my overall evaluation? I think you Canadians have a tremendous opening. I think you should be jumping on that opening. I think you should master the skill of imaginative real estate investing, and become world markets captain in your expanse, and you’d have less rival, you’ll make a killing. You can flip deals with the bounce send and have less of a problem there. If you get the right liability policy, then that’ll solve your liability questions, and not have to run all those revenues through a corporation