Always confer with your attorney/CPA prior to buying real estate in the U.S.
In addition, a reading resource Brad recommends is called “The Canadian Snowbird in America” written by Terry F. Ritchie and Brian D. Wruk. This book addresses practical issues and details financial insights for Canadians looking to spend significant time in the U.S. and/or looking to purchase real estate in the U.S. The authors, Mr. Ritchie and Mr. Wruk, specialize in helping Canadians winterize in the U.S. with tax, financial and investment planning matters.
At present, mortgage financing in the U.S. for Canadians (and all foreign nationals) is very limited, and the availability of such loans and rates changes frequently. When available, it is often more expensive than Canadian-based financing. Many of Brad’s Canadian clients who chose to finance their purchase, secured financing in advance, in Canada. However, Brad can recommend several U.S. brokers who may provide financing to Canadian buyers.
If you’re financing, it is mandatory that you get “pre-qualified” or “pre-approved” in a “pre-approval” letter from your bank prior to looking for a property. This will help you understand the lender requirements, acquire an estimate of your payments, and therefore determine what you can afford or wish to spend.
If you’re paying cash, you will need to obtain a “verification of funds” letter from your bank verifying that you have adequate accessible funds in U.S. dollars for the amount needed to purchase the property.
There is a very large inventory of properties for sale in La Quinta and the greater Palm Springs area, making this truly a buyer’s market. There are many great values in foreclosure properties, REO (bank-owned) homes, properties being sold as short sales, and traditional listings offered for sale at prices not seen for many years. No one knows for certain how long this buyer’s market will last, but until the general U.S. economy improves, you can expect to see continued pressure on home owners in financial distress who will have to sell their homes.
If you are looking to buy a foreclosure, REO (bank-owned) or short sale property, Brad can help you find it. Brad is well-versed in distressed property sales having a lot of hands-on experience and also having earned the SFR (Short Sale & Foreclosure Resource) designation which is the only distressed property certification for real estate professionals that is both recognized and endorsed by the NATIONAL ASSOCIATION OF REALTORS®.
Listed below is a brief description of the different types of “distressed” sale properties you will currently find scattered in certain La Quinta and Palm Springs area communities.
Short Sale – a short sale occurs when a home owner is in foreclosure but is sold before the property goes to public auction. Under a short sale, the home owner’s lender must agree to accept less than the amount owed on the property.
Foreclosure – a foreclosure property is a home in foreclosure and a Notice of Default has been filed in the public records. It means the owner has stopped making mortgage payments and the lender has given notice that unless the payments are brought up-to-date, it will sell the property at a public auction.
REO – an REO (real estate owned) property is a foreclosure property acquired by the lender, through a foreclosure action, when no one at the public auction bid enough to satisfy the lender’s requirements. REO properties are later sold by the lender either through their own real estate departments or through real estate brokers.
These types of sales can present great buying opportunities however the sale/purchase process can be more complicated than a “traditional” sale. Short sales, in particular, by their very nature are complicated and are unique to the specific mortgage holder(s), specific property and specific seller – and can take 3-4 months to complete. On the other hand, there is typically less uncertainty in buying a foreclosure or REO property – and the process can go quickly. And as a rule, all distressed properties are sold in “As Is” condition.
Property taxes, at present, are based upon the purchase price of the property, and are to be paid annually in two installments to the County of Riverside, California. The tax is approximately 1.25% of the purchase price.
Home Owner’s Expenses – Single-Family Homes (Non-Gated)
Maintenance Expenses – pool maintenance should be approximately $100 per month. Landscaping/gardener services around $100-$200 per month, depending on the size of your property and the scope of the work required.
Utilities Expense – includes electricity, gas, water, trash/recycling pick-up, telephone and cable. All of these expenses will vary according to usage and the size of your property. Brad will provide you with a list of telephone numbers for the community in which you are buying.
Insurance Expenses – insurance expenses will vary according to the profile of each property and specific insurance coverage. Brad can provide you with contact information for local insurance service providers.
Home Owner’s Expenses – Single-Family Homes (Gated) & Condos
Home Owner’s Association (HOA) Fees – HOA fees will vary per property – and fees, in general, will range from less than $200 up to $600 or more. The amenities provided by the HOA at a particular community will determine the amount of the monthly fees. These fees and services provided by the HOA will typically include grounds and community pool maintenance, common area maintenance, trash/recycling services, and gate maintenance. However, some communities include standard cable TV, exterior maintenance, roof maintenance, employ guards at the gate house and tennis courts. The more services included, the greater the cost will be.
Utilities Expenses & Insurance Expenses – both utilities expenses and insurance expenses would apply in the same manner as outlined under Single-Family Homes (Non-Gated).
Property Rental, Property/Rental Management & Special Services
If you decide to rent your property as a vacation rental, it is required that the rental income be reported to the appropriate taxing authorities, both the U.S. government and the State of California. If you want specific information on this matter, Brad can put you in touch with a local tax attorney or CPA.
In addition, Brad has strong rapport and solid relationships with a long list of all types of service providers (including property rental and property management) and can put you in contact with providers of whatever special services you may need.