Joe Waddell got the best cross-border bargain of his life last year — a three-bedroom, 1,700-square-foot condo for just under $120,000 (U.S.).
The Fort Myers property is just 15 minutes from southwest Florida’s gulf beaches, within an easy drive of Miami nightlife and, better yet, about two hours from Disney World.
But Waddell, 45, his wife and 11-year-old daughter won’t actually be using their sun-and-sand getaway for a few more years.
Instead, they are among the growing ranks of Canadian “endvestors” — investors who’ve been snapping up deeply discounted bargains south of the border with the intention of renting them out until they retire.
“These are people who get it,” says Wayne Levy of Florida Home Finders of Canada, which has helped thousands of would-be snowbirds like Waddell.
“They understand that if they don’t get a foot in the water now, there’s a good chance they won’t be able to afford a second home when they actually want it.
“These aren’t people looking at quick flips. They’re prepared to buy and hold.”
In fact, there are still so many deals to be had, Waddell has wondered about buying up more given that the decline in Florida home and condo prices appears to have leveled off. In many cases, properties are selling for less than it would cost to build them today.
The new condo he bought in the gated Palmetto Cove development has granite counter tops (even in the laundry room), two bathrooms, a gym and an outdoor pool. Similar units sold for $260,000 before the sub-prime mortgage chaos and the collapse of the U.S. housing market.
But just as importantly, Canadians are finding an exceptionally strong market for rental properties, fuelled by thousands of Floridians who lost their homes and can’t qualify for mortgages.
That combined with a strong dollar and low interest rates convinced Waddell that buying in Florida was not only a sound investment but a sure retirement plan — even if means having to file taxes with the dreaded Internal Revenue Service.
“We know we can’t use it for a month or two now,” says Waddell, a window and door salesman who lives in Oakville, “but it’s not costing us a thing right now. In fact, we’re making money.”
The family renting the condo is paying $1,050 a month and, even when maintenance fees are factored in, Waddell says he’s getting a 6 per cent return on investment, “much better than the stock market has been doing.”
Florida Home Finders holds regular seminars for Canadians wanting to buy in Florida — the last one for this year is Wednesday night at Edwards Gardens — and Levy estimates that 75 per cent of Canadians buying now plan to rent their properties out.
Toronto tax lawyer David Altro, who is also licensed in Florida and author of the book Owning U.S. Property the Canadian Way, warns that this isn’t a get-rich-quick scheme and can be quite costly if buyers don’t understand the tax implications on both sides of the border first.
He also recommends a cross-border trust for any properties over $100,000, which can add thousands to the upfront purchase price but save far more on estate and other taxes down the road.
Florida realtor Michelle Ross says many hard-hit Floridians now calling her to list their homes are urging her to market them specifically to Canadians.
The demand by endvestors remains so strong that, like many Florida realtors, she’s expanded her business to also offer tax experts and property management services so that distant owners don’t have to bother vetting tenants, collecting rent and dealing with maintenance issues from afar.
“It’s heartbreaking, it’s unfortunate, but this is a win-win situation for everybody,” says Ross who will be holding seminars on Florida Real Estate Nov. 30 at the Fairmont Royal York. “It’s great for the Florida economy that Canadians are able to pick up good deals, and that they are offering Floridians who can’t afford a home a place they can rent.”
By Susan Pigg