Snowbird FAQs is a forum where we provide answers to some of the most common and interesting questions we receive from Snowbird Advisor members that we feel will be of interest to other members.
We had trouble finding a suitable winter rental this past Fall. When is the best time to start looking for a winter rental property for next season?
With so many people retiring each year, there’s a lot of pressure on the winter rental market across the southern U.S. and some parts of Mexico.
In addition, many owners of rental units give preference to their existing renters for the following year, so you may not even have access to these units if the current renters commit for next season.
With that in mind, its never to early to start seeking out a rental property, but the ideal time to look and book for the following year is in March and April, near the end of the snowbird season.
It’s also important to be aware that landlords usually prefer someone looking for a minimum 3-month rental, so if you’re thinking of just renting for one month, you may have a tough time finding something during peak season.
We have been renting a property in Florida every winter for the past 5 years and plan on coming to the same spot for many years to come. Is it cheaper to keep renting or would be better off buying a property in the long run?
When it comes to renting vs. buying a vacation property for snowbirds, the rule of thumb is if you spend 4 months or more in the same destination year after year, you’re usually better off financially if you buy, because the carrying costs of owning will be less than renting for 4 to 6 months.
Of course, if you’re looking to buy you’ll either have to have the necessary capital or the means to finance a purchase. Some snowbirds use a line of credit or mortgage on their Canadian home to finance a winter home - or you can finance through a Canadian bank that operates in the U.S.
Ultimately, whether it makes financial sense for you to rent or buy comes down to several factors, including:
- Do you plan on spending your winters in the same place for several years?
- How much time do you plan on spending in your winter destination each year?
- Do you have the means to purchase a property outright or finance the purchase?
We are considering buying a vacation property in Arizona. Can (or should) we get a U.S. mortgage? What are our other financing options?
Canadians snowbirds have a number of financing options available when buying U.S. property.
U.S. mortgages can be a good option for snowbirds, but be aware that many U.S. lenders won’t offer mortgages to “foreign nationals” (including Canadians) and those who do may charge you a hefty premium.
If you’re looking for a U.S. mortgage, you should check first with Canadian banks that have operations in the U.S., as some of them offer U.S. mortgages for Canadians that use your Canadian credit history to evaluate your mortgage application and won’t charge you a premium for being a foreign national.
If you own property in Canada, you should also explore getting a mortgage in Canada or Home Equity Line of Credit (HELOC) on your Canadian property and using the proceeds to purchase your U.S. property.
There are pros and cons to each option, and the right option for you will depend on you your personal situation and the general economic environment.
Your best bet is to explore all options so you can compare each of them.
For more information on this topic, you may want to check out our top mortgage tips for Canadians buying U.S. property and snowbird vacation home financing options.
My husband and I are considering buying a winter home in Arizona and a friend told us that we should set up an LLC in the U.S. to own the property. Is this the best option for owning U.S. property?
While LLCs (Limited Liability Companies) may be a good structure for Americans to own real estate, they are often NOT the best structure for Canadians to own U.S. real estate. Unfortunately, a number of Canadians have been incorrectly advised that LLCs are their best option by individuals who don’t understand the tax and estate planning issues on both sides of the border.
The best ownership structure for Canadians to own U.S. property really depends on your personal situation. Before you choose an ownership structure, we always suggest you consult with a legal advisor who specializes in cross border real estate transactions so they can help you decide on the right structure to meet your needs.
You can learn more about U.S. real estate ownership structures for Canadians here