This is part of a series of stories on retirement and second home destinations in North America.
Have you been dreaming of a home in the sun while shovelling your walk for the umpteenth time?
Before you become a Canadian snowbird with a stake in U.S. real estate, here are five essential issues you should think about first:
1. Finding your southern nest
Make your first stop the Internet.
From local real estate websites to Canadian companies that find the homes for you, Internet research can give you a handle on properties and prices. (Canada’s most popular snowbird states are Florida, Arizona, California, Hawaii and Texas, but you can find retirement communities just about everywhere.) When looking for a real estate agent, it’s a good idea to go with someone who has been referred to you personally, if possible.
Once you have narrowed it down to three or four communities, use some vacation time to check out the properties in person, says Bill Ness, founder of 55places.com, a review site for 55+ and active adult communities across the United States.
“The Internet is great for doing research and narrowing down your options, but it doesn’t tell the whole story,” Mr. Ness says. “There are things when you drive around, things you might not necessarily see in photos.”
Consider these questions: Do I want to be in the same place every year or would I prefer to vacation in several different places? How close is this location to an airport? Will family be coming to stay, and if so, will this home be big enough?
“With our Canadians buyers, one thing they look for is low-maintenance homes because they do spend half the year up in Canada and they want to make sure the house is taken care of, mowing the lawn, trimming the bushes,” Mr. Ness says.
Once you’ve found a property, make sure the title on it is clear. Unless you are purchasing the property through a company that will do that work for you (such as Florida Home Finders, for example), you will need to enlist a cross-border lawyer or an escrow agent in the United States to do a title search.
2. Paying for it
A trip to your financial adviser is essential to find out how purchasing a property down south will affect your finances and your income during retirement, says Tannis Dawson, senior tax and estate planning specialist at Investors Group in Winnipeg.
“You need that plan to look at, ‘Where am I now? What are my in-flows of cash, what are my out-flows?’” Ms. Dawson says. “How will this affect my long-term goals? If I’m putting more money into a U.S. property, I will have less money for investments. So will I still be on track to save the magic number that I need for retirement?’ ”
Take a look at financing options. If you have the cash, you can purchase property outright. Other options include getting a home equity line of credit (HELOC), refinancing your home or getting a line of credit from a Canadian bank. Although it can be difficult to get a mortgage with a U.S. bank, you do have the option of getting a mortgage through an American bank with a Canadian counterpart, such as Toronto-Dominion Bank or Bank of Montreal (which is affiliated with Harris Bank), which will take your Canadian credit history into account.
“We communicate with our U.S. partners and we assist our clients making the best decision whether to finance their home in the U.S. or do their financing here in Canada,” says Laura Parsons, national media representative for BMO. (Harris Bank has branches in Illinois, Indiana, Arizona, Florida and Wisconsin.)
When considering options, ensure that purchasing the property won’t make you so “house-poor” back in Canada that you can’t enjoy it, Ms. Dawson says. Don’t forget to factor in the cost of travelling back and forth to your property, plus insurance costs, utilities and property taxes.
“For example, the property taxes in Florida for non-residents can go up higher than residents in Florida, so it’s something you need to inquire about and look into,” Mr. Dawson says.