The Canadian Takeover of U.S. Real Estate

NEW YORK (MainStreet)—Canadian real estate investor Victor Menasce has bought and sold 30 American properties in the past two years, including houses and condos in the Sun Belt, Pennsylvania, Illinois, Florida and Arizona. He even bought a baseball stadium in New Jersey.

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"We see value in places that Americans don't notice quite so readily," says ottawa-based Menasce, who is author of the book The Great Canadian Takeover (CreateSpace, 2013).

In fact, international buyers purchased $82.5 billion in U.S. real estate last year up from $66.4 billion in 2011.

"The reason this is happening is because we're living in a global economy," said Rick Raddatz, a political commentator and founder of TheSolution.org in Denver, Colorado. "As international market places become integrated, we're discovering more efficient ways to work with each other. The internet also enhances global interaction,"

Menasce is one of many Canadians who are buying $19.8 billion of residential real estate in the U.S., according to the National Association of Realtors.

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"The trend is a result of a combination of factors including the devaluing of the US dollar, a strong Canadian dollar, an inexpensive U.S. real estate market and properties selling far below construction costs," said Menasce. Compared to the prices of homes in Canada, U.S. residential real estate appears to be on sale. The median sale price for a house is $353,000 in Ottawa, $510,000 in Toronto and $149,000 in Tampa, Flor.

"Initially, the impact is positive, because when Canadians buy a home, they also spend money on furniture, restaurants and other things, so it's positive for the U.S. economy, because there's more cash coming into the country," said Jenny Witterick, a chartered financial analyst and president of Sky Investment Council.

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While real estate opportunities vary from state to state, Menasce offers five tips for investing in U.S. real estate:

  • 1. Finding the deal- "We go to auctions and trustee sales on the court house steps," Menasce said. "There are also wholesalers in the market that specialize in finding deals who are paid a fee for finding a good deal through sellers."
  • 2. Figure it- "I want to purchase assets that are at a discount so that I can turn around tomorrow, sell and make a profit," Menasce said. "You make the profit by buying at a significant discount of 40 to 60%."
  • 3. Fund it- Locals have an advantage in financing. "American citizens can leverage housing projects with local lenders in a way we cannot," Menasce said. "Canadians bring their funding from across the border or partner with someone locally who can work with a lender."
  • 4. Fix it- The cost of improvement depends on the property. "We sometimes prefer more complex renovations because other investors are scared of them," Menasce said. "This affords us the opportunity to buy properties at a greater discount as a result."
  • 5. Flip it – A profit depends on whether an investor decides to sell or hold. "In either case, I want a minimum profit margin," Menasce said. "This margin ensures that I can refinance a property if I choose to hold it and the lender's loan to value ratios will be met."
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