The high Canadian dollar and lower U.S. house values have some investors, including members of our Inner Circle service, seeing opportunity in U.S. real estate investing, particularly in the “sunbelt” states, such as Arizona and Florida.
Before you consider such a move, you should first make sure that buying a vacation property doesn’t leave your investments overweighted in real estate. What’s more, there are a number of other special risks and costs involved with buying and owning vacation property in the U.S.
Real estate investing: Here are 5 risk factors to consider when buying vacation property in the sunbelt
Beware of unexpected costs. For example, some states (Florida, in particular) can charge out-of-state homeowners higher property-taxes than state residents. As well, homeowners in states that face frequent hurricanes and floods (including California and Florida), often face high insurance costs. That’s why it’s a good idea to contact national and state authorities, insurance firms and other professionals to get a clear picture of all of the costs before you begin your U.S. real estate investing.
Take a skeptical view of bargains in the U.S. real estate market. Markets like Florida and California still face uncertain outlooks in the wake of the sub-prime mortgage meltdown, and bargains in these states may not be as appealing as they seem.
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How long do you plan to spend at your new home? You’ll have to budget for your home’s care while you’re not there, because vacant homes invite burglars and vandals. If you plan to spend shorter periods of time at your vacation residence (less than six months, say), and you’re not concerned about making a return on the sale of the property, you may consider renting, instead. This will help you decide whether you want to permanently commit to a community before you buy.
Any rental income you hope to generate from your property is dependent, in part, on the weather. For example, your property could be more difficult to rent out if your area experiences a prolonged stretch of cold or rainy days.
If you buy in a new condominium development, say, you could face the risk of your fees increasing without warning, and some new developments can go out of business before your unit is even built. That’s why you’ll want to make sure you focus your property search on established neighbourhoods. Another thing to keep in mind is that land-use controls are often looser in the U.S. than they are in Canada. That means your neighbourhood could change radically in a few years.
We continue to believe that ownership of a primary residence is all the real estate exposure that most investors need. What’s more, unlike your private residence, capital gains on the sale of your vacation property are not tax exempt.
If you have investment-related questions like these, or if you’d like to ask me about stocks you’re considering buying (or selling), you should join my Inner Circle service. Click here to learn more.
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The Successful Investor Inc. and its affiliate Successful Investor Wealth Management (referred to hereafter as TSI Network) know that you care how information about you is used and shared, and we appreciate your trust that we will do so carefully and sensibly. This notice describes our privacy policy. By visiting websites owned by or associated with TSI Network, you are accepting the practices described in this Privacy Policy.
This privacy policy is applicable to all TSI Network Visitors, Clients, Employees, Suppliers, Web sites, Management, and all other interested parties. Any links to or from our site are not covered by this policy. We encourage you to read the privacy policies of every site that you visit.
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We do not collect or disclose personal information, except when it is provided to us voluntarily by the site/store visitor with their consent.
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We are continuously in the process of improving our sites and services. If any new features or policies require a change to this current policy, we will post a clear notice of this change on pages of our site where the privacy policy appears. The principle behind this privacy policy is to collect information with your knowledge and consent.
What personal information do we collect?
The information we receive from customers helps us personalize and continually improve your online experience at TSI Network. TSI Network may collect personal information online for all legal purposes, which include, but are not limited to:
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Changes to this Policy
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TSI Network may revise this Policy from time to time.
Legal Notices and Disclaimers
The contents of this web site and our publications are based upon sources of information believed to be reliable, but no warranty or representation, expressed or implied, is given as to their accuracy or completeness. Any opinion reflects the Successful Investor’s judgment at the date of publication and neither the Successful Investor, nor any of its affiliated companies, nor any of their officers, directors or employees, accepts any responsibility in respect of the information or recommendations contained in the publications or on this web site. Moreover, the information or recommendations are subject to change without notice.
Information presented on this web site or contained in our publications is not an offer, nor a solicitation, to buy or sell any securities referred to on the web site or in the publications. The material is general information intended for recipients who understand the risks associated with an investment in any securities referred to in the publications or on this web site. The Successful Investor has made no determination regarding whether an investment, course of action, or associated risks are suitable for the recipient.
