Distressed Property In Phoenix, AZ
As a Canadian who is currently buying rental properties in Phoenix, AZ there are a few things that Canadians should keep in mind when investing there.
First, for those who own Phoenix, AZ real estate already, make sure you visit the Maricopa County Assessor's web site at:
Default
Use the 3rd line "By Name & Street". Enter your "Last Name" and the "Street" that your property is located. Make sure your property tax bill is being sent to the correct address and that your payments are up to date. Americans are sometimes confused with our "weird" postal codes and don't understand that they're alpha-numeric and may change the letters into numbers to match their idea of a zip code. This would cause your property tax bill to fall into a black hole - not something that you want!
Second, Canadians also need to fill out a Form W-7 to get their Individual Taxpayer Identification Number (ITIN) to pay their share of U.S. taxes. An accountant familiar with the Canadian-U.S. Tax Treaty should be able to help you out. For more information, go here:
Individual Taxpayer Identification Number (ITIN)
Keep in mind that the identification that you submit along with your Form W-7 needs to be Notarized. I used my passport.
Third, if you're renting your property out make sure you have the proper Residential Property Classification. As a property owner that will be using a property for investment it is your responsibility to notify the tax assessor's office that the property is a class 4 residential property (rental) as opposed to class 3 (residential). If your property is not properly classified you will be subject to fines and penalties. Your property manager should be able to help you out with this.
Fourth, if you own 6 or more lots or homes within a subdivision you need to file a disclosure document when you plan to sell, with material information about the development and surrounding area. As an investor, if you purchase 6 or more lots, homes, condos, town homes (etc.) within a single subdivision, when you go to sell even 1 of these properties, you will be subject to the rules governing public reporting. In other words, you have to provide the buyer a copy of a current and valid public report. Failure to do so may allow the buyer to recind their purchase contract for up to 3 years after the sale and get their money back. Read that last sentence again...slowly.
To bypass the issues around the last point, just buy 5 units or less within the subdivision and move on.
Last, but not as important as the above, keep in mind that returns of 20% on gross rent are not uncommon in Phoenix, AZ right now. Don't get excited when you see prices that are only 5x gross annual rent. There are a lot of these kinds of properties so take your time and find the one that suits you the best!
I hope this helps!
Best regards.
As a Canadian who is currently buying rental properties in Phoenix, AZ there are a few things that Canadians should keep in mind when investing there.
First, for those who own Phoenix, AZ real estate already, make sure you visit the Maricopa County Assessor's web site at:
Default
Use the 3rd line "By Name & Street". Enter your "Last Name" and the "Street" that your property is located. Make sure your property tax bill is being sent to the correct address and that your payments are up to date. Americans are sometimes confused with our "weird" postal codes and don't understand that they're alpha-numeric and may change the letters into numbers to match their idea of a zip code. This would cause your property tax bill to fall into a black hole - not something that you want!
Second, Canadians also need to fill out a Form W-7 to get their Individual Taxpayer Identification Number (ITIN) to pay their share of U.S. taxes. An accountant familiar with the Canadian-U.S. Tax Treaty should be able to help you out. For more information, go here:
Individual Taxpayer Identification Number (ITIN)
Keep in mind that the identification that you submit along with your Form W-7 needs to be Notarized. I used my passport.
Third, if you're renting your property out make sure you have the proper Residential Property Classification. As a property owner that will be using a property for investment it is your responsibility to notify the tax assessor's office that the property is a class 4 residential property (rental) as opposed to class 3 (residential). If your property is not properly classified you will be subject to fines and penalties. Your property manager should be able to help you out with this.
Fourth, if you own 6 or more lots or homes within a subdivision you need to file a disclosure document when you plan to sell, with material information about the development and surrounding area. As an investor, if you purchase 6 or more lots, homes, condos, town homes (etc.) within a single subdivision, when you go to sell even 1 of these properties, you will be subject to the rules governing public reporting. In other words, you have to provide the buyer a copy of a current and valid public report. Failure to do so may allow the buyer to recind their purchase contract for up to 3 years after the sale and get their money back. Read that last sentence again...slowly.
To bypass the issues around the last point, just buy 5 units or less within the subdivision and move on.
Last, but not as important as the above, keep in mind that returns of 20% on gross rent are not uncommon in Phoenix, AZ right now. Don't get excited when you see prices that are only 5x gross annual rent. There are a lot of these kinds of properties so take your time and find the one that suits you the best!
I hope this helps!
Best regards.
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