Condos can be great options, not just for personal enjoyment when vacation time rolls around, but as an investment. Of course, as an investor, you want to make savvy decisions with your money. No doubt, you’ve realized that the US condo market offers a much wider range of investment opportunities than what’s available in Canada, plus you get a better yield on rental rates in the US than here at home.
So far, it seems like a no-brainer. However, there are a few things that you’ll need to consider before you make the leap to being an international real estate investor. We’ll take a closer look at those below.
Wear and Tear
If you’re renting out your condo, you’re going to need to consider the wear and tear on things like your stove, your washer and dryer, the oven, the HVAC system, and more. These appliances can see a lot of wear and tear during normal use, but if you’re renting out the condo, there’s a chance that you’ll see accelerated wear and premature failure.
Where does that leave you if you don’t have any manufacturer’s warranty remaining? A home warranty could be just the ticket.
What’s a Home Warranty?
A home warranty is really nothing more than what it sounds like – a warranty you purchase from a third party that covers items within your home. When the manufacturer’s warranty ends, your home warranty kicks in. So, suppose your oven failed. Instead of searching online or flipping through a phonebook for a repair company, you’d report it to the warranty company, and they would handle everything else.
What Warranty Companies Exist?
You’ll find a host of home warranty companies operating in the US. You could choose to purchase an Amazon home warranty. You could also consider warranty coverage from any of the following companies:
- Select Home Warranty
- First American Home Warranty
- 2-10 Home Buyers Warranty
- Choice Home Warranty
- Total Home Protection
- Advanced Home Warranty
You get the idea. There are lots of options. When you compare your choices, make sure you match covered items and systems so that you’re making an informed decision.
What Are the Benefits of a Home Warranty?
A home warranty offers some pretty obvious benefits for all homeowners. However, they are even more pronounced for rental owners living internationally. Suppose an appliance fails while a renter is in the property, but you’re in Canada and they’re in Los Angeles or Miami. How would you even go about finding a repair company? With a home warranty, there’s no stress or hassle involved. It’s all about peace of mind and getting the best return on your investment.
The Exchange Rate
Historically, US currency has been stronger than Canadian, and that works to your advantage in this instance. Because you’re able to rent your condo in the US, you can see higher returns on your investment. However, make sure that you account for everything that’s involved in exchanging the funds.
You’ll certainly need insurance on the condo. You will need condo insurance to cover the dwelling itself. Renters’ insurance will only cover the contents (and should really be purchased by the person renting your condo).
With a condo, you own everything within the structure, from the walls inward. While the condo association or property owner will deal with damage to the grounds and the exterior, as well as stairways, corridors, and other public-use spaces, you’re responsible for covering the dwelling portion of your space.
To really understand what you need to cover with insurance is to read through the association documentation, which should spell out what is considered “contents” and what is considered “betterments” or “improvements” and who is responsible for what.
If you’re on the fence about insurance or unsure what US insurers to consider, the Allstate website offers a lot of explanation about condo coverage in the States.
In the end, buying a condo and using it as a rental property can be an excellent investment decision. You simply need to ensure that you’ve thought through the things discussed above and have a plan in place for how you’ll handle them.