U.S. property exposure without becoming a U.S. landlord

by David Kitai10 Aug 2020

While buying into residential real estate and becoming a landlord wouldn’t put off most investors, doing it cross border can seem a more frightening proposition. Given the uncontrolled spread of COVID-19 across the United States, who knows when a Canadian investor might be able to cross the border and inspect a property they hold down south. At the same time, the U.S. property market is attractive, offering good tenants able to pay consistent rents and strong property value growth. One company has developed a means for Canadian investors to get exposure to this market, without having to become a cross-border landlord.

That company is call Wall Street Wealth Management (WSWM) and its founder, Jay Walsh, will be speaking at the upcoming Canadian Real Estate Wealth Investor Forum about just how it works.

Walsh gave CREW a preview of his talk, explaining that WSWM was designed for investors who don’t want the worry that comes with collecting rent, repairs, and evictions. Instead of investing directly in the properties, these investors invest in mortgages, funding other investors buying these rental properties at a 50-60 per cent loan to value.

“Another investor buys a house for $100,000 and an investor in WSWM is loaning them $50,000 or $60,000,” Walsh says. “The WSWM investor is going to get 9% rate of return.”

Walsh says that WSWM does all the paperwork, it puts the note in the owner’s name, and collects payments from the owner’s bank account to be distributed to the lender. He says it’s a smaller investment than buying a whole property that’s still collateralized by the home.

Even if a property does revert to the lender, Walsh says his team has an arrangement whereby they’ll buy back the property and pay the WSWM investor whatever was outstanding in their investment. In the unlikely eventuality of a default, the investor gets their money back in 60 days.

Walsh says a 9 per cent return is achievable in the sorts of urban properties purchasers through WSWM are buying into. WSWM investors aren’t flying blind, though, they get a menu of properties to choose from complete with home assessments, lease information, and neighbourhood rents. Prospective investors get to decide if they want to lend on one of those particular properties. WSWM’s team is there, too, to answer any and all questions that an investor could have.

The end result, Walsh says, is a consistent return and U.S. property exposure in your real estate portfolio without the sizeable barrier of buying a whole property and the risks of becoming a landlord.

“There are some people that are interested in investing in the U.S., but don't want to deal with the complexities of tax returns and dealing with tenants and property managers,” Walsh says. “This is the more passive, easier way to invest to invest in the United States and make US Dollars.”

Walsh will be talking through exactly how WSWM delivers for investors and how Canadians can get access at the Canadian Real Estate Wealth Investor Forum. To hear from him and other thought leaders in the real estate investment space, register here.

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