Canadians Biggest Foreign Buyers of U.S. Real Estate
(May 20, 2011 - CTV News)
The article went on to say, “. . . but four states - Arizona, California, Florida and Texas account for 58% of the transactions.”
A look at some statistics published by The Canadian Real Estate Association gives us our first clue. Below is a list of some of the largest Canadian cities and the average home price for 2010.
Vancouver, BC $679,000
Victoria, BC 506,000
Toronto, Ont 427,000
Calgary, Alb 401,000
Ottawa, Ont 325,000
Edmonton, Alb 325,000
Montreal, Que 303,000
Winnipeg, Man 223,125
With the average home price in Phoenix at $118,000 it’s easy to understand why Canadians are investing their dollars in Phoenix real estate. By digging a little deeper we find out something even more interesting. For the month of February, 2011, 70% of the total closed sales were REO’s and short sales that had an average home price of just under $95,000. With prices that low no wonder Canadians are taking advantage of our buyer’s market.
To top it off, the average rents for the area now exceed $1,000. Let's make some assumptions that closing costs would be $1,500 and rent-ready repairs were $3,000. By factoring a “back of the envelope” expense factor of 35% for income producing properties, the average distressed investment home provides investors with a capitalization rate (cap rate) of 7.8%! And that's average! While Americans are still wiping the dust off, Canadians are taking full advantage of a huge opportunity not seen in the United States in 30 years.
Another article by the Arizona Republic, "Canadians Now Top Out-of-State Homebuyers", points out that they expect Canadians to hold on to the properties much longer than what investors have done in the past. And for good reason! According to Arizona Department of Economic Security, the Phoenix area is expected to see net migration of between 2% to 2½% per year through 2019, an increase in population of just under 1 million!
What do Canadians know that Americans don’t . . .
“So let’s state it simply and forcibly: Housing is back”
(Fortune Magazine April 11, 2011 -Real Estate: It's Time to Buy Again)
In another recent article from the Phoenix Business Journal several experts agree that the market is still hovering around the bottom. However, with increased sales in March, a decrease in active listings and some sub-markets starting to show trends of leveling off, that may not be the case much longer.
Wholesale Homes mission is to help clients add real estate to their investment portfolios easily and effectively. That's why we created two investment models to fit each style of investor.
While the tide may be changing our goal has not.
Our first model is our "One-Stop Shop" opportunity. Designed for clients who are looking for higher returns and willing to take on a bit more risk. This opportunity is for the investor who may want to get involved in one or all the steps of the real estate investment process.
Our second model is our "Value Added Turn-Key" opportunity. For investors who are more risk adverse, out of the area or new to investing. We provide a Turn-Key solution, with a tenant occupied professionaly managed property where the investor makes money from day one.