Important considerations for Canadians buying real estate in Florida

Each year, thousands of Canadians head to Florida for the winter. With the recent drop in real estate prices in the United States, many Canadian snowbirds are taking the opportunity to invest in a winter home instead of renting, as they have traditionally done in the past. However, now that the housing market is stabilizing, and with more snowbird destinations available around the world than ever before, it’s important to think twice about investing in real estate in Florida.

The stats

• According to Florida’s official tourism marketing agency, approximately 3.8 million Canadians visited in 2014
• Real estate prices fell by 50% during the credit crunch of 2008–2009
• About 500,000 Canadians own property in Florida

Even with real estate prices recovering recently, it’s still tempting to look into the buying options, especially for snowbirds who plan to head south for a large part of the winter.

Gordon Pape, publisher of the Internet Wealth Builder newsletter, outlines in the Toronto Star some important reasons why you should give investing in real estate in Florida a second thought:

• Mortgages are more difficult to get in the US, often taking four to six weeks
• The Canadian dollar is down, which raises the cost of real estate and lowers the potential profit from your investment
• Foreign investors are required to pay 30% of the house price before they are even considered for a mortgage
• Home insurance is expensive – it’s about double the cost that homeowners pay for insurance in Canada
• Length of stay restrictions limit the number of days you can stay in the US before you are responsible for paying taxes there

Other important considerations

Buying sights unseen

While the Internet is a great place to start your search, help you narrow your options and understand your financial and tax commitments, seeing a home in person is a must before closing a deal. Once you choose a community and have a short list of homes, plan a trip to see the homes in person and explore each community. This is the only way to know for sure if you are investing in a sound property.

Committing to the same location

If you buy property in Florida, you are also making a commitment to go to the same location year after year. Be sure this something you are willing to do.

Impact on retirement and finances

Will adding a mortgage to your expenses have an impact on your retirement income? Will it limit your expendable income or financial flexibility? Talk with your financial adviser and explore your financing options to ensure it is a viable choice.

Ownership and property maintenance

Owning property away from home comes with the added responsibility of maintaining the property while you are there and managing it when you are at home in Canada. Do you plan to rent your property when you are not there? Do you plan on hiring a company to handle property maintenance? How much can you invest in property management and maintenance?

Medical travel insurance and health care

Travel insurance is essential for snowbirds. If you plan on spending a large part of the year in Florida, it’s crucial that you have access to travel health insurance. Investing in travel insurance for trips to the USA, even if they are short trips, will give you the peace of mind in knowing you have access to high-quality health care while you are away.

“Travel insurance is crucial,” says Evan Rachkovsky, the research and communications officer for the Canadian Snowbird Association, in the Globe and Mail. “Our provincial insurance does not follow us, we get a limited, scaled-down version so purchasing supplementary insurance is essential.”