Author Topic: Investing in real estate from abroad. How?  (Read 1445 times)

anotherone

  • 5 O'Clock Shadow
  • *
  • Posts: 16
Investing in real estate from abroad. How?
« on: June 12, 2017, 07:34:33 AM »
My long-term girlfriend and I are currently living in the Middle East (I'm a humanitarian worker, she's in development). We are constantly trying to think of the best ways to use the money we are able to save as perks of our respective career choices (she has a tax-free salary, I have rent-free living). We are still young (I'm 28, she's 26), but there comes a point when we don't want to have our home addresses be our parents' places. Therefore, one thing we are considering is buying property, but we are coming across several hurdles that we aren't quite sure how to overcome in order to take the plunge.

Some of our main logistical and/or mental roadblocks are:
  • Home for us is Canada (Ontario to be more precise), but we are not sure where exactly in Canada we eventually want to settle (likely options are Toronto - too expensive - or Ottawa - only if we decide on throwing the towel and signing up for government jobs - or Montreal). How can we choose a property if we can't even choose a city?
  • If we buy something now, we don't plan to live in it immediately as we don't plan to move home immediately. So does it become a rental? And if so, how do we manage that from a distance?
  • How can we know if we like a house enough to buy it if we can't look at it first hand? We go home maximum 1/year and not necessarily at the same time depending on work demands.

I don't think our situation is entirely unique, so does anyone have any experience in purchasing property at home while you yourself are living (at least semi-permanently) abroad?

daverobev

  • Magnum Stache
  • ******
  • Posts: 3384
  • Location: France
Re: Investing in real estate from abroad. How?
« Reply #1 on: June 12, 2017, 03:34:41 PM »
Don't.

Buy a REIT ETF. Vanguard has one. VRE.TO. It's not perfect.

Ontario is very tenant-friendly (overly so, IMHO).

Yes, it would be a rental. You would get a property manager (10% of gross rents). You would pay capital gains on any appreciation between purchase and converting it to a primary residence.

You won't get a mortgage. There are new rules on foreign ownership. Rent increases are capped for all rentals now. Anything round Toronto is insanely expensive.

Ottawa is better, but still not good. Buy a $300k house, rent it out for $1200-1500. Um. Then pay property tax, factor vacancy, maintenance, property management... And those friendly tenants trashing the place or at least not taking good care of it... And insurance.

Then you'll have to pay tax on any profit, in both Canada and where you live now (rental income usually gets taxed first by the country where the property physically is). There may or may not be a double taxation agreement.

I may be biased.

ChpBstrd

  • Handlebar Stache
  • *****
  • Posts: 1510
Re: Investing in real estate from abroad. How?
« Reply #2 on: June 12, 2017, 04:21:43 PM »
What's the urgency, and why not plan to rent and stay flexible at a time when both of your careers will be in flux?

You're not being lured into this by rapid appreciation and low interest rates, are you? Or is it a sense of romance around home ownership?

anotherone

  • 5 O'Clock Shadow
  • *
  • Posts: 16
Re: Investing in real estate from abroad. How?
« Reply #3 on: June 28, 2017, 11:15:37 PM »
Don't.

Buy a REIT ETF. Vanguard has one. VRE.TO. It's not perfect.

Yes, I am considering putting some money into a Vanguard REIT as an alternative (as soon as I use up the last of my TFSA contribution room).

What's the urgency, and why not plan to rent and stay flexible at a time when both of your careers will be in flux?

You're not being lured into this by rapid appreciation and low interest rates, are you? Or is it a sense of romance around home ownership?

There is certainly no urgency, one of the benefits of having a good salary and almost no living expenses. Certainly no sense of romance about owning a home. I've been trying to follow the madness of the housing market and to be honest yours and daverebov's answers have helped strengthen the voice in my head telling me that no matter the circumstances, now is not the right time for me to jump into home ownership.



Thanks to you both, I can sideline this idea for the time being and just keep stashing cash for when the time is right!

2Cent

  • Pencil Stache
  • ****
  • Posts: 652
Re: Investing in real estate from abroad. How?
« Reply #4 on: June 29, 2017, 03:15:31 AM »
The latest post in MMM's blog is a nice reminder that another recession will happen. If you have home ownership as a goal, just tell yourself that you're building a war chest to step in once the next recession hits. The sale will come if you can afford to wait.

anotherone

  • 5 O'Clock Shadow
  • *
  • Posts: 16
Re: Investing in real estate from abroad. How?
« Reply #5 on: June 29, 2017, 03:59:24 AM »
The latest post in MMM's blog is a nice reminder that another recession will happen. If you have home ownership as a goal, just tell yourself that you're building a war chest to step in once the next recession hits. The sale will come if you can afford to wait.

100%,. Add into the mix Canada's housing bubble could be bursting any day now, and I think it's best for me to wait.