Q: I have been contemplating buying a rental property in the US for 4 years. For various reasons it has not happened. Mostly because I feel I need to understand the tax consequences, filing a US tax return, income from the US (withholding tax), structuring it properly from a trust perspective, inheritance taxes etc. I could pay someone to do all that for me, but I have always felt I need to understand every investment I own (including what happens when I sell it) since nobody cares more about my money than me. I find it confusing and not worth the effort if I am just buying one or two properties in the US. It is much simpler to own rental property in Canada and I have done that for 25 years so I know how it works as I have done it myself for that length of time.
I could refinance a paid off rental property, take $100K out of it and buy a property in the US. For the past couple of years it was very difficult for Canadians to get a mortgage in the US, so you basically paid cash for the US real estate. Or I could buy stocks that are exposed to US real estate.
I own a small position (2.5% of my stock portfolio) in Tricon Capital Group (TCN).
Would you view owning one rental property in the US valued at a $100K like owning one stock with a value of $100K? Putting $100K into one stock would represent over 30% of my stock portfolio, which I know is well beyond a balanced portfolio.
When you look at a complete investment portfolio (excluding principal residence), what % would you say should be represented by rental property? How do you factor in that one property alone can be worth hundreds of thousands of dollars which will overweight the sector in most portfolios?
I will consider buying more stocks that are exposed to US real estate, but I don’t want to put it all into TCN. I can buy more TCN, but are there any other stocks you can suggest that would meet my objective? I know rental real estate is a long term investment (been there done that, had the headaches), so I can wait it out for 10+ years.
p.s. I want deductions to compensate for my non-registered investment returns, so I am looking to borrow money to invest in either rental property, or dividend paying stocks, and deduct the interest on the borrowed money.
I could refinance a paid off rental property, take $100K out of it and buy a property in the US. For the past couple of years it was very difficult for Canadians to get a mortgage in the US, so you basically paid cash for the US real estate. Or I could buy stocks that are exposed to US real estate.
I own a small position (2.5% of my stock portfolio) in Tricon Capital Group (TCN).
Would you view owning one rental property in the US valued at a $100K like owning one stock with a value of $100K? Putting $100K into one stock would represent over 30% of my stock portfolio, which I know is well beyond a balanced portfolio.
When you look at a complete investment portfolio (excluding principal residence), what % would you say should be represented by rental property? How do you factor in that one property alone can be worth hundreds of thousands of dollars which will overweight the sector in most portfolios?
I will consider buying more stocks that are exposed to US real estate, but I don’t want to put it all into TCN. I can buy more TCN, but are there any other stocks you can suggest that would meet my objective? I know rental real estate is a long term investment (been there done that, had the headaches), so I can wait it out for 10+ years.
p.s. I want deductions to compensate for my non-registered investment returns, so I am looking to borrow money to invest in either rental property, or dividend paying stocks, and deduct the interest on the borrowed money.
