Many of our clients over the last few months have purchased a second home in Arizona in order to take advantage of the low home prices found there. Their timing maybe perfect since the Phoenix Business Journal just reported that the number of Phoenix foreclosures is now below the national average for the first time. (A somewhat dubious announcement but still very revealing)
Even more revealing is the fact that the current housing inventory in that market has fallen to just over 17,000 units from a high of 35,000 units 8 months ago. Things may be finally turning better for the Arizona housing market.
We believe a big part of the reason the Arizona market may be bottoming out is the strong rental market. Many of our clients are not buying these properties to live in, but are buying them as rental properties. The cash flow on the rentals properties in the Phoenix area is far better than most communities in Canada. For example, in Phoenix, generally, a good estimate is to expect from $2-3 per sq. ft. rent, based on a nicely furnished rental, in season. This means that a 1200 sq. ft., 2 bedroom condominium is likely to rent for $2400 – 3600 per month from November to April; and a condo like that would cost between $250,000 and $300,000.
But remember, the owner is expected to maintain utilities, local phone and cable and cleaning services, all of which can be arranged through a property management company.
So many of our clients are choosing to take the plunge and buy a US property, specifically in Arizona, we have interviewed several Realtors working in that area, so that we can recommend one that is both professional and understands the Canadian mentality.
So if you are looking for a realtor in the Scottsdale and Phoenix area please try Steve Russell at Keller Williams Arizona Realty (480-440-3474 or firstname.lastname@example.org). We have no financial arrangement with him or his company.
Financing a US purchase
Financing a home purchase in a foreign jurisdiction could be a daunting task. A typical Canadian attempting to get mortgage financing in the United States will require a down payment of between 20-30%, and will incur a fixed rate of approximately 6.5%.
We have a selection of products for our clients to use if they wish to tap the equity in their Canadian home in order to pay cash on a US property.
In fact, ING Direct recently launched a line of credit product suitable for this purpose. They chose True North Mortgage to be part of a pilot project during their LOC roll out at a rate of P+.65%.
Since we know many of you already have a mortgage with ING this could be an easy way to grab some cash to buy a US property.
As always, call or email us if you have any mortgage related questions.
The Staff at True North Mortgage