Per the National Association of Realtors, Canada emerged as the top country of origin among foreign buyers from April 2020-March 2021, accounting for 8% of foreign buyer purchases in terms of the number of units of existing home purchases. According to statista.com, with a total of 5.5 billion U.S. dollars, Canada was one of the top foreign buyers of residential real estate in the U.S. in 2022. However, as the statistic goes, 99% of Canadian investors are missing out on U.S. real estate.
One of the touted advantages of Canadians investing in our neighbour south of the border is improved cash flow. Another oft-mentioned benefit is the many tax advantages to owning a home in the U.S., including the ability to deduct mortgage interest and property taxes from your federal taxes.
We reached out to Madeleine Gergen and Patrick Gergen, President, and Chief Executive Officer, respectively of AmeriCan Multifamily Alliance Group to leverage their wealth of experience in investing in America. Patrick is U.S.-born and Madeleine is a fellow Canadian, born in Calgary, Alberta. Together this dynamic duo, who also have over 50 years in real estate collectively, have been purchasing large multifamily properties (158-272 units) in Dallas, Texas since 2011.
We asked the two seasoned investors what property type yields Canadian investors the biggest bang for their loonie. Here is the wisdom that they were kind enough to share with Canadian Real Estate Wealth readers on the topic:
“We solely invest in B & C class multifamily buildings with a strong forced value-add business model,” stated Patrick. Followed by Madeleine, “Yes, and we have a mission for social impact within those communities which also helps to lower our costs and increase investor returns while doing good.”
Since Texas holds two of the top three spots to invest in real estate in 2023, and we have the ear of Madeleine and Patrick, respectively (and full disclosure: the thought of daydreaming about somewhere bright and warm has a very big draw right now), we decided to zone in on the lone star state, Texas; particularly Dallas, but we’ll get to that.
Real Estate market trends are closely tied to the general economy. It's for this reason that choosing the right place to invest one’s hard-earned dollars is of paramount importance. The economic conditions in Texas are close to ideal for the Canadian investor-client.
Texas boasts the #1 market in the U.S. for job creation. Consequently, its unemployment rate is far below the national average. It’s home to more Fortune 500 headquarters than anywhere in America, except for New York. Also, massive international trade through Texas gives exponentially more employment opportunities to this rapidly growing region.
Dallas, Texas has many features that make it an appealing city to live in. This is important as it impacts the appeal of the location to the renters' pool, which is ultimately the client of those investors purchasing multifamily residential.
Here are some fantastic aspects of Dallas:
The city's civil engineering may be one of the best of many great aspects that this city has to offer. The public transit system, Dallas Area Rapid Transit (DART) has 62 rail stations and over 130 bus routes. The Trinity Railway Express, otherwise known as TRE, is a dedicated train line connecting Fort Worth and Dallas with stops at the cities in between; Perfect for commuters. Dallas has seen an inbound surge for employability as people flock to be part of its many Fortune-500 companies.
Some of the most prestigious universities are found in Dallas; the University of Texas at Dallas, the University of Dallas, and the Southern Methodist University all call Dallas home.
Dallas is world-renowned for having one of the biggest arts districts in the United States – the Dallas Arts District with noteworthy art museums and galleries, such as the Dallas Museum of Art.
While the Southern US may have its barbecue, Dallas-Fort Worth stands out in its religious dedication to cooking the best of true barbecue meats — brisket. You may still find your slow-smoked pork around the area, but the beef and brisket reign as #1 in DFW’s barbecue restaurants. With incredible eats, Dallas creates a curated artisan community experience.
All of that is great from the renters’ perspective, but what about the Dallas investor? Well, the number one reason to invest in a multifamily property in Dallas is that properties are significantly lower pricing than in other major US cities like New York, Los Angeles, and Seattle.
We turned once again to Madeleine and Patrick for their perspective on what the benefits or drawbacks of investing in multifamily residential properties in Dallas, Texas are for Canadians. Here is their insight:
“There is so much room for upward movement yet in Dallas real estate prices, as compared with other markets,” said Patrick, “Dallas is an incredibly strong market and extremely landlord friendly.” Madeleine states, “We specialize in multifamily for many reasons, one being that it is much easier to manage when all units are in one location rather than scattered throughout a city and your team members are all under one roof.” “Combined… Dallas and multifamily investing, we have been able to achieve high investor returns in a solid, stable, growing city.”
As we as Canadians look down the barrel of a long, cold, and snowy winter, it may be the perfect time to explore investment opportunities in the Lone Star state. If you’re not sure where to start, check out the AmeriCan website (https://www.multifamilyalliance.com/), then schedule an exploration call. The last thing on the investor list is to travel to Texas this winter-- not only to become an informed investor on the geographic location and the properties themselves but also to perfect saying “Welcome home, y’all!”
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