Canadians Investing in Southern U.S. Real Estate

With a strong Canadian dollar and the U.S. housing market in a slump, the time is right to send our loonies down south. For the price of a down payment on an average Vancouver house, Canadians are buying up homes in the southern U.S.’s distressed real estate market. A detached house in Vancouver might come with a bloated, $1-million-plus price tag, but in the U.S. Sun Belt the market is saturated with bargain properties.

Phoenix real estate | BCBusiness
Many single-family homes in the Greater Phoenix area are on the market for less than half of what they sold for in 2006.

With a strong Canadian dollar and the U.S. housing market in a slump, the time is right to send our loonies down south.

For the price of a down payment on an average Vancouver house, Canadians are buying up homes in the southern U.S.’s distressed real estate market. A detached house in Vancouver might come with a bloated, $1-million-plus price tag, but in the U.S. Sun Belt the market is saturated with bargain properties.

Investing in foreign real estate isn’t a novel trend for us northerners – snowbirds have spent winters roosting down south for years – but more than just fair-weather Canadians are spending their loonies across the border.

With the Canadian dollar hovering around parity and the collapse of the U.S. housing market, Canadians are seizing bulk real estate opportunities purely as investments, without the promise of balmy evenings in Floridian vacation homes. According to the National Association of Realtors’ report on home buying in 2011, the U.S. has seen an influx in foreign buyers, with the majority of those purchases coming from Canadians and focused in Arizona, California, Florida and Texas.

Vancouver-based Terrizona Investments is one local firm looking to provide Canadians with an easy entry point into the U.S. real estate market. Real estate experts Cam Good and Anthony Miachika started Terrizona to capitalize on the discount prices in the distressed southern market while giving Canadians uncomplicated access to the investment market. With a minimum investment of  $50,000, Canadians can buy shares in the American Homes Fund, a Canadian Limited Partnership managed by Terrizona that is bulk-buying homes in the Greater Phoenix area. “We’re buying a house that costs $75,000 today that sold in 2006 for $280,000. That same house will rent for about $970 a month, so it yields a positive cash flow from day one,” says Terrizona co-founder Cam Good.

According to a November 2011 report by Colliers International, the Greater Phoenix area is expecting an increase in renter demand, which bodes well for investors like Good, who rely on the rental market to occupy investment properties.

Although Good admits investing on your own isn’t impossible, it’s difficult – especially for those without real estate expertise and the market knowledge to make a smart and successful investment. Securing a mortgage, identifying the right areas to buy and myriad tax considerations make it complicated for Canadian investors to easily swoop in.

Good’s partner at Terrizona, Miachika, has been living in Phoenix, analyzing the local market. “We’ve created what we think is the easiest, simplest way for someone to take advantage of what is obviously a good opportunity,” says Good.  

When the American housing market rebounds – what Good expects to be in one to three years – the investment properties will be sold, the money will flow back to Terrizona’s investors and the American Homes Fund ends. For Canadians reticent to dive into the U.S. market, it’s not a matter of evaluating the situation. Investors know the time is right; it’s simply a matter of figuring out how best to approach the opportunity.