Wholesaling has always intrigued me but here in Canada the deals don’t exist here as they do in the U.S., so the same money that you can make in the U.S. doesn’t always exist here. Furthermore, you can buy 2-3 properties in the U.S. vs. 1 property in Canada.
This article speaks about investing as a Canadian but the same rules apply for any foreign investor!
Wholesale Real Estate Investing
Not knowing much about wholesaling, I dove into researching different companies in the U.S. and also spoke to various wholesalers, who I am very grateful to for sharing their knowledge and experiences.
Thus with a mission, just over 2 years ago, I went to Florida to investigate how to wholesale. I met up with a company in Tampa, called Homes4Income, owned and operated by Jorge Vazquez. Jorge took time out of his busy schedule to show my friend Sandy and I around the area. Prior to coming to Tampa, I had done intensive research into things such as GDP, population growth, employment, vacancy rates, foreclosure rates, unemployment rates compared to the county and the state, as well the number of renters vs. buyers in each part of the county.
Jorge showed us the areas that had strong rental demand, low vacancy rates, the tenant profile we wanted (paying and not Section 8) and the highest cash flow possible. We chose to stay out of Section 8 housing as the areas that were Section 8, had the worst tenant profile and the state of the homes were not habitable in most cases. I was interested in purchasing a home that would eventually appreciate so if wanted to sell it down the road, I would be in a better position to do so.
Out of the companies we had researched, met, and investigated, we found Jorge’s team to be the most professional. Not only was he able to offer us the lowest wholesale fee, but he also was able to help us with property management, contractors to renovate the property so that we could get a great tenant, and financing through hard-money lenders.
Financing Florida Investment Real Estate as Canadian
The only drawback to buying in Florida as a Canadian came down to financing – with no prior experience or properties to provide collateral, banks were no longer willing to lend to Canadians at will. Thus the only viable option at the time, were Hard Money Lenders, with rates from 12-15% and lender fees from 1-3%. Knowing the numbers enabled us to make quick decisions, as there was stiff completion for these properties.
Doing our due diligence on the ground backed up our research so we were well prepared to make an offer, when the opportunity came around. I must admit that Sandy was more prepared than I was as she was able to source financing and funds through her U.S. boyfriend, who could get U.S. financing. When we came across a great property, she did not hesitate, as she was able to buy the property for cash and did not require financing.
The Numbers & Monthly Cash Flow
On Sandy’s subsequent purchase, she required financing with a HML (hard money lender), so here is what those numbers looked like:
Two years later she was able to refinance for a lower rate at 4.5%, which meant her cash flow increased by $468.75/month.
U.S. Wholesale Real Estate Investing Builds Financial Freedom
Can you get these numbers in Canada? I don’t think so! I am currently restructuring my portfolio and my private lending deals so that I can wholesale in Florida, as I see how wholesale investing in the U.S. can help me build financial freedom!
Are you interested in learning more about how to obtain financial freedom through wholesale investing in the U.S.? Here are some tips to keep in mind:
- If you don’t have properties in the U.S., you will most probably need HML financing, which can make or break your cash flow – at least when you first purchase the property or are able to refinance;
- Not all areas in Tampa will provide you with good properties or good tenants- make sure you do your own due diligence and investigation in the market – Jorge and his team are great guides and can help you with this as they did with Sandy and I;
- Buying wholesale and then doing a rent-to-own can help a family obtain home-ownership and not just a great home to rent!
- Once you have more than 5 properties, you can get a bulk refinance – I did this for a client in Canada with 15 properties that were all financed with HML at 15% – he was negative cash flow and after we did a bulk refinance, he got 6% across the board, which gave him excellent cash flow. He keeps purchasing and now that he was able to get bank financing, can get bank financing on the subsequent purchases as well.
Having done Rent-to-Own, Buy & Hold and Private lending in Canada, I am ready to take the next step to wholesale investing in the U.S.
Financial Freedom here I come!