How to Buy a US Rental Property From Canada, Step by Step

Buying a US rental from Canada takes about two to four months from the first call with an accountant to the day you get keys, and most of that time goes to lining people up before you make an offer. The order below saves the most rework. The tax and exchange-rate details are in the main guide for Canadian investors, so this post sticks to the sequence.

1. Set a budget with the extra costs in it

Start with what you can put down, then add the costs a US buyer doesn't have. A first cross-border year often includes an accountant (a few thousand dollars is common), currency conversion fees, and an ITIN application. Lenders for non-residents often ask for 25% to 40% down and several months of payments held in reserve, so a US$150,000 house can need US$45,000 or more in cash before repairs. The calculator takes a custom down payment and rate, and how much cash you need lists the rest.

2. Find a cross-border accountant

Do this before you pick a house. Ask who files US non-resident returns (Form 1040-NR) and Canadian returns for the same clients, how they'd handle the ITIN, and whether they'd hold the property personally or recommend something else. The ownership question affects the lender and the title, so it can't wait until closing. Our guide to personal, LLC and corporate ownership shows what to ask.

3. Choose a market

Pick the state first, since tax filing, landlord law and insurance differ more by state than by city. The state guide for Canadian investors compares the usual choices, and the markets page shows median prices, rents and an estimated cap rate for ten cash flow cities. If you want to see a city's numbers on your own terms, the market picker lets you weight cash flow against growth.

4. Build your US team

You'll want four people before you make an offer:

• An investor-friendly agent who has sold rentals, not only homes people live in.
• A property manager who covers the specific neighborhood. See how to find one.
• A lender who places loans for Canadians. See whether a Canadian can get a US mortgage or DSCR loan.
• A closing attorney or title company. Some states run closings through attorneys and others through title companies, and your agent will know which applies.

5. Get pre-approved and set up a US dollar account

A pre-approval tells you the actual down payment, and sellers take your offer more seriously with one. At the same time, open a USD account at a Canadian bank or a bank with cross-border services, and compare what each charges to convert and send money. The funding side, including borrowing against a Canadian home, is covered in funding a US rental property from Canada.

6. Run the numbers on real listings

Use rent comparables, not the listing's estimate, and put in the actual property tax for that county and an insurance quote. A deal that clears your cash-on-cash target with those figures is a candidate. A free market report shows which listings in a city currently clear a standard bar. Our nightly screening does the same for your own numbers.

7. Make an offer and wire earnest money carefully

Offers are usually accompanied by earnest money, commonly one to three percent of the price, held by the title company or attorney. Confirm the wire instructions by phone using a number you found yourself. Wire fraud targets real estate closings, and a remote buyer sending a large international wire is a likely target.

8. Inspect, appraise and finish the loan

Hire an inspector who works for you, and ask for a video walkthrough or send a trusted local to watch. The out-of-state checklist lists what to check. The lender orders an appraisal. If it comes in under the price, you can renegotiate, pay the gap or walk, depending on your contract.

9. Close from Canada

Closing usually takes 30 to 45 days from the accepted offer, and a non-resident loan can take longer. Many states allow remote online notarization, but not all, and your lender and title company have to accept it. If they won't, a power of attorney can let someone local sign for you, with their approval. Ask on day one so it doesn't hold up closing. The Canadian checklist has a line for this.

10. After closing

The first months decide whether the tax side runs smoothly:

1. Start the ITIN if you haven't. You need it to file the US return and to give your property manager a W-8ECI so they stop withholding 30% of the rent, and it can take nine to eleven weeks from Canada.
2. Set up landlord insurance with enough liability coverage, and think about an umbrella policy.
3. Set up the USD account for rent and expenses.
4. Calendar the US return, the Canadian return and the T1135, which is due with your Canadian return if your foreign property cost passes C$100,000.

US rental income tax for Canadians walks through the first year, and selling a US rental as a Canadian covers the exit so you can plan for it from the start.

The Canadians Investing in US Property Checklist has the full list in one place.