The downside to U.S. partnerships

Douglas Gray, author of Money Making in Real Estate, said this type of financial partnership has become more commonplace since the collapse of the American economy.

“The relatively affordable prices and ease of financing the deal by partnering with someone local all sounds good on paper to investors,” he told CREW online, but “it is often all too good to be true.”

Victor Menasce, a Canadian real estate investor and author of The Great Canadian Takeover, recently stated that joining forces with US based investors is a viable way of getting around the financing challenges so many investors face in trying to capitalize on the depressed property values stateside. Locals have an advantage in winning those funds from American lenders, he suggested.

“American citizens can leverage housing projects with local lenders in a way we cannot,” Menasce said earlier this month. “Canadians bring their funding from across the border or partner with someone locally who can work with a lender.”

Gray, however, disagrees with this approach to local investor partnerships. “It may appear to be a quick-and-easy solution to investing in the States. There are so many micro details that need to be assessed given the high risk involved in dealing with people that you may not know.”

Gray said he is not aware of how successful these partnerships have been to date but is advising those who are considering them to “really consider the short- and long-term opportunities and obstacles and seek professional advice on both sides of the border.”

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