FAQ

SHOULD I BUY THE PROPERTY IN MY NAME?

There are a number of ways to hold US real estate, including owning property directly as an individual or indirectly through a corporate vehicle/entity. Generally speaking, our clients have found that a US based Limited Partnership (LP) is a well-suited vehicle to own US rental properties. However, this is an area that requires specific advice depending on the individual circumstances of the investor. At USProperties.ca, we understand the need for specific advice and this is why, as a client, we make sure that you have access to our network of cross-border specialists to help answer these questions and give you the best advice possible.

WILL I NEED A US LAWYER?

If you decide to use a US corporate vehicle for owning your US rental property, you will need to engage a local Michigan lawyer to help you with entity formation. This is a straightforward process that generally takes around 2 weeks to complete and costs approximately $1,500 USD (which includes one year of tax filing in the US).

WILL I BE DOUBLE TAXED?

Most of our Canadian investors want to know about the tax implications of owning US real estate and whether they will be “double taxed”. While this question requires specific tax advice depending on the investor’s individual circumstances, we can say generally that there are various structures that can be used to minimize taxes and to prevent “double taxation”. As our client, we will make sure that you have access to our network of cross-border specialists to help answer these questions and give you the best advice possible.

WILL I HAVE TO DEAL WITH TENANTS?

For our own properties and for those of our clients, we work with an external property management team who oversees our properties with the highest level of professionalism. Because we are their biggest client, we get top notch priority service. And as our client, so will you. The property management fee is 10% of the monthly rent, deducted on a monthly basis from the gross rental amount collected. Along with rent collection and remittance, you will never have to speak to a tenant, unclog a toilet or arrange for repairs. This is handled entirely by the property management team.

HOW MUCH RENT CAN I EXPECT TO GET?

At 100% occupancy, a single family home will generally earn between $10,000-$13,000 USD per year in rent and a duplex can generate anywhere between $18,000-$21,000 USD. In addition to cash tenants, our property management team is also very experienced in working with government subsidized programs. If you choose to go this route, rent is paid directly by the US government via direct deposit. This ensures both timely and stable rent payments throughout the tenancy.

WHAT HAPPENS IF A TENANT DOESN’T PAY?

When a tenant is late or defaults on their rent, steps can be taken to remove the tenant. Unlike in Ontario, the eviction process in Michigan is considered to be landlord friendly. In Detroit, eviction proceedings are dealt with on an expedited basis and do not require repeated violations before finding in a landlord’s favour. As long as the landlord has a valid reason for filing for eviction, including for non-payment of rent, and the landlord has complied with all of the steps in the eviction process, the court will generally find in the landlord’s favour. The typical timeline to evict a tenant for non-payment of rent 60-75 days.

WHAT IF I WANT TO SELL?

At USProperties.ca, we work with a large pool of investors who are regularly purchasing properties for their portfolios and we can work with you to find a suitable buyer for your property from our existing network of investors. In addition, we work with realtors who can help you list your rental property on MLS (in Detroit, the current average list to offer time for properties on MLS is around 45 days).

CAN I REFINANCE MY PROPERTY?

At USProperties.ca, we have resources to help you establish personal and corporate credit in the US for refinancing purposes down the road.

WHAT ARE THE TURNOVER COSTS AND TIMELINES?

Turnover costs can vary depending on the length of the tenancy. At USProperties.ca, we work with cost effective and experienced contractors who strive to turnover a property for $1,000-$1,500 USD. Generally, the turnover includes painting and some minor repairs, and is usually completed within 1 week.

HOW MUCH ARE PROPERTY TAXES?

Property taxes in Detroit tend to be significantly lower than in the Greater Toronto Area. On average, for single family homes, property taxes will range from $1,000-$1,500 per year and approximately $1,500-$2,000 for one of our typical duplexes.

HOW MUCH IS IT TO INSURE MY PROPERTY?

As a non-resident, insurance can be obtained for a relatively low cost and will usually run around $1,000 USD for a single family home and approximately $1,300 USD for a duplex.

If you have any questions, please call 1.886.964.6088 or contact us.