Introduction 1

Part I: the Decision to Invest 7

Insight 1: The Economics Behind the US Market 9

What Trends Are Driving This Opportunity? 9

No Income, No Assets, No Worries! 10

How Big Is the Foreclosure Market? 11

The US Economic Recovery 12

New-Home Construction 13

The Rental Explosion 13

Prime Property Will Be in Hot Demand 16

Insight 2: Finding the Treasure with the Property Goldmine Scorecard 18

An Important Tool for Real Estate Investors 18

Property Goldmine Scorecard 19

Insight 3: Let Quality Research Drive the System 21

Getting Quality Information from the Internet and Other Sources 21

Insight 4: Dig for Specific Information and Ignore Generalities 26

The Market Today and Tomorrow 26

Insight 5: Jobs, Infrastructure, and Gentrification 29

Signs of Potential Economic Growth 29

Business-Friendly Policies Are Vital 30

Trains, Planes, Automobiles: Infrastructure Matters 31

Gentrification and Renewal 33

Insight 6: A Closer Look at Three States 36

Florida 36

Arizona 40

Texas 42

Part II: the Distressed Property Market 45

Insight 7: Learn to Identify a Distressed Property 47

What Causes Distress 47

Volume Sellers South of the Border 48

Resist the Temptation to Think You’re Different 49

What’s Behind the Discount? 50

So, There’s Money to Be Made 51

Insight 8: Understand the Fundamentals of the US Foreclosure Process 52

Foreclosure Defined 52

Insight 9: Commit to the Number One Rule, Then Get Your Options Straight 55

Three Ways to Buy 55

What to Remember about Foreclosures 59

Insight 10: More on Due Diligence 61

Five Market Fundamentals 62

An Extra Word on Vacancy Rates 64

More Market Facts 65

Insight 11: Avoid the Snake-Oil Salesman 66

There’s No Such Thing as ‘Leading’ or ‘Only’ Experts 66

Lender Scams 70

Housing Rip-Offs 70

Insight 12: Recognize That a Bad Area in the United States Is Very Different from a Bad Area Elsewhere 75

Define Your Bad Area 75

Be Realistic 76

Know What You Need to Know 77

Weigh Risks and Returns 77

Insight 13: Look for the Stability of a Good Neighborhood and Follow First-Time Homebuyers 80

The Benefits of Market Stability 80

What’s Your Investment Plan? 81

A Final Word of Caution 82

Insight 14: Choose Your Exit Strategy Before You Make the Deal 84

Identify Your Exit Strategy 85

Wholesale and Fix-and-Flip Options 87

Pick Your Partners Carefully 89

Choose an Exit Strategy That Makes Money 90

Insight 15: Know Your Financing Options and Obstacles 91

Portfolio Loans 93

Private Money 93

Leverage Your Canadian Successes 94

Insight 16: Understand the Real Estate Cycle 96

What Is the Real Estate Cycle? 97

Boom, Slump, and Recovery 100

Recognizing Cycle Shifts 101

Insight 17: Find the People Who Can Help You Find Foreclosures 105

The Not-So-Secret Way to Find Great Real Estate Deals 106

Understand What an Agent Can Do for Your Business 106

Getting an REO Agent’s Attention 107

Beyond the REO 109

Check Out the Wholesaler Market 109

Deal Flow 111

A Recipe for Success 111

Insight 18: Benefit from the Five Profit Centers of Real Estate 113

Natural Appreciation 114

Forced Appreciation 114

Positive Cash Flow 115

Mortgage Reduction and Leverage 116

Tax Deductions 117

Insight 19: What a Full-Service Real Estate Investment Group Offers 118

What Full-Service Real Estate Groups Do 118

Good Full-Service Real Estate Groups 119

Bad Full-Service Real Estate Groups 121

Insight 20: Analyze Your Deal 123

Understand the Property’s True Potential 123

Cash-Flow Statement 124

And the Final Number Is 129

Checklist for Entering US Real Estate Markets 130

Ask Yourself the Tough Questions 132

Part III: Renovations and Management 135

Insight 21: Work Smartly with Contractors and Subcontractors 137

Five Common-Sense Rules 138

Insight 22: Weigh Reno Must-Haves with Nice-to-Haves 143

The Kitchen: Put the Three E’s to Work 143

The Bathroom 146

Insight 23: Dial Up the Intellect (Dial Down the Emotions) 148

Emotion versus Passion 148

How Much to Spend 149

Exit Strategy 150

Look and Ask Around 151

Insight 24: Do the Big Four Renos on a Rental Property—Now 152

Make Sustainability a Fundamental Priority 153

The Big Four 153

Insight 25: Get Everything in Writing 157

The Six Golden Rules of the Written Contract 158

How to Handle Contract Changes 160

Keep It Simple 160

Insight 26: Curb Appeal: You’ve Got Seven Seconds to Impress Me 161

An Exterior Makeover 162

How Much Should You Spend? 164

Insight 27: Run If You Spot Any of the Top Three Reno Red Flags 165

Make Sure Your Project Is Efficient 166

Keep the Project Focused on What’s Effective 166

Stick to Economical Options 166

The Top Three Reno Red Flags 167

Insight 28: Hire the Right Property Manager 172

Zero In on Excellence: Seven Questions to Ask Potential Property Managers 173

Insight 29: Make Money by Delegating to Your Property Manager 177

Put Your Money to Work 178

Professional Property Management Pays for Itself 179

Insight 30: Set the Rules Up Front with Your Property Manager 180

Get Your Communications Plan in Place 180

Stick to Business 181

Use Technology Wisely 182

Insight 31: Be Smart about Rent Collection 184

From Delinquent to Delivered 185

It’s All about the Business 186

Part IV: Cross-border Tax Planning 189

Insight 32: Understanding US Tax Laws 191

Filing a US Tax Return 191

General Guidelines 192

Insight 33: Taking Title to Your US Property Investments 197

Limited Liability Corporations 197

Corporations 197

What Options Do Canadian Investors Have? 198

US Estate Tax 200

Gift Tax 201

Insight 34: Deal with Depreciation 202

Depreciation Recapture 202

Insight 35: Limit Your US Taxation if You’re a Canadian Snowbird 205

Residence Rules 205

Renting Out Your Property 206

Selling Your Property 206

Gain: Filing Requirements 207

Foreign Tax Credit 208

Estate Taxes 208

Review US Estate Tax Plans 211

Part V: Legal Planning 213

Insight 36: The Three Pillars of Real Estate Asset Protection 215

The Three Pillars of Asset Protection 216

Learn What Asset Protection Is and Isn’t 216

Perform Due Diligence 217

Insight 37: Develop an Asset Protection Plan and Be Prepared to Avoid Lawsuits 219

Case 1: The Vexatious Litigant 220

Case 2: The Cyclist 220

Case 3: The Toppling Toddler 220

Case 4: The Weekend Getaway 221

Stay Out of Court by Being Prepared 221

Insight 38: Counter Threats to Your Wealth with Foresight 222

The Top Threats to Your Wealth 224

Insight 39: Draw Up a Blueprint for Your Estate Plan 226

Probate 226

Adopt a Plan 227

Insight 40: Steer Clear of Asset Protection Fakes, Scams, and Planning Errors 233

Land Trusts 233

Limited Liability Companies 235

Understand Your Strategy: Probate versus Credit Protection 235

Offshore Trusts and IBCs 236

Homestead Exemption 236

Transferring Assets to Family Members 237

Part VI: Cross-border Banking and Financing 239

Insight 41: Understand Cross-Border Issues 241

Overcome Your Citizenship Issues 241

Insight 42: Familiarize Yourself with US Mortgage Financing 245

Loan Application 245

Investor Loans 247

Insight 43: Buy US Real Estate Property with Other People’s Money 248

Begin with People You Know 250

Keep Your Advisors Informed 251

Part VII: Insurance and Investments 253

Insight 44: Insure Your Investment 255

Find an Agent Who Can Shop Around 255

Areas of Coverage 256

Replacement Cost Value and Actual Cash Value 258

Making a Claim 259

Location, Location, Location! 260

Insight 45: Carry Insurance Beyond the Property Line: Medical, Auto, and Third-Party Liability 262

Medical Insurance 262

Automobile Insurance 264

Third-Party Liability Insurance 265

Appendix: Considerations for Buying a Second Home 266

Index 269

About the Authors 274