Why Canadian Investors Are Looking South to U.S. Real Estate

Something big is happening in Canadian real estate investing. Money is leaving Canada at record speeds, and it’s heading south to the United States.

Let’s talk about why this is happening and what it means for you as an investor.

The Numbers Don’t Lie: Capital is Leaving Canada

Recent data from Statistics Canada shows a clear trend. Investment dollars that used to flow into Canada are now flowing out. This started around 2015, peaked during COVID, and it’s speeding up again.

The U.S. is the main destination for this money. Even major Canadian pension funds are now investing billions in American single-family homes instead of Canadian properties.

When the big institutional investors move their money, you should probably pay attention.

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The Capital Gains Tax Problem

Here’s what changed. Canada introduced new capital gains taxes that hit real estate investors hard.

For personal investments, the first $250,000 gets taxed at the old rate. Anything above that gets hit with the new, higher rate.

But for corporations? There’s no buffer at all. Every dollar of capital gains gets taxed at the new higher rate right from the start.

This makes holding investment property in a corporation way less attractive than it used to be.

Canada Doesn’t Want Foreign Investment (But the U.S. Does)

As of 2025, Canada has renewed its foreign buyer ban for another two years. The message is pretty clear: we don’t want your foreign money here.

The U.S. takes the opposite approach. They actively welcome foreign investment. Their policies encourage it. Their lending systems make it easy.

One country is rolling out the welcome mat. The other is putting up barriers.

The Landlord-Tenant Tribunal Nightmare

Here’s a real example. An investor accepted $400 below market rent for tenants who promised to maintain the property like their own home. Years later, the rent is $1,460 per month. The mortgage payment is $3,000.

The investor decides to sell and redeploy the capital somewhere better. The tenants refuse to leave.

The tribunal process takes 6-8 months. If the buyer backs out because they can’t get possession, you start over from scratch with a new buyer. No buyer will wait 9 months.

The tenants found a loophole to stay indefinitely while the property bleeds money every month.

In the U.S.? The eviction process takes 2-4 weeks. Maximum two months. Problem solved, move on.

This alone is one of the biggest reasons to consider American properties. The risk is so much lower when you have fair landlord-tenant laws.

Rent Control is Killing Canadian Investors

Your mortgage payment jumps because rates went up. Can you raise the rent to cover it? Not really. You’re limited to small annual increases, and you need to follow formal processes.

In the U.S., you can approach your tenant and explain that rates went up. You need to raise the rent to market rate. If they don’t want to pay it, they can move out. You bring in a new tenant at current rates.

Rising interest rates hurt Canadian investors way more than American investors. The flexibility to adjust rent makes a huge difference.

Property Prices: You Get More for Less

Yes, the exchange rate stings. But even with that, U.S. properties cost less.

You can find full houses at price points that don’t exist in Canada anymore. Properties under $100,000 are available. Even at $150,000, you can find homes in pretty nice neighborhoods.

You can’t do that in Canada. The entry point is just too high in most markets.

The Lending Difference: Common Sense vs. Red Tape

This is huge. Canadian lending for investment properties is incredibly restrictive.

Canadian A lenders only count about 50% of your rental income. They stress test your mortgage payment at artificially high rates. They limit your total debt to 44% of your income. And they’re not even using all your income in the calculation.

U.S. lenders look at the property. Does it cash flow? Yes? Let’s move forward.

They calculate a Debt Service Coverage Ratio (DSCR). As long as the property income covers the expenses and mortgage payment, you’re good. They don’t check your Canadian credit. You don’t need to prove employment. You don’t even need a job.

The property qualifies itself based on the numbers. That’s it.

U.S. Loan Programs

Here’s what’s available:

Standard program: 70% loan-to-value (30% down). No income verification needed. Based purely on property Cash Flow.
Confirmed income program: 75% loan-to-value (25% down). They verify your Canadian income but accept much higher debt ratios than Canadian lenders.
Minimum loan amount: $75,000 for both programs

Interest Rates and How to Lower Them

Current rates run from 6% on the low end up to 8.5% without any special strategies.

But here’s a trick: ask for seller credits.

You can request up to 5% of the purchase price as a seller credit. Use that money to buy down your interest rate.

Example: You’re buying a $100,000 property. You can either negotiate the price down to $95,000, or buy it at $100,000 with a $5,000 seller credit.

The lower price saves you maybe $10-15 per month on your mortgage. The seller credit can buy your rate down from 7.5% to 6%, saving you $100-150 per month.

Always ask for the seller credit. It’s way more valuable.

Best Markets for Canadian Investors

Different markets work for different strategies:

Ohio (Cleveland, Columbus)

Great for cash flow investors. Low purchase prices. Strong rental returns. Avoid Toledo though – population is declining.

Florida

Perfect for Airbnb and lifestyle investing. Beautiful weather. Strong tourism. You can use the property yourself when it’s vacant between bookings.

Texas

Excellent for corporate housing and pad split strategies. Major companies are opening operations there. You can rent individual rooms to executives on midterm stays at short-term rental rates. Often their employers pay the rent directly.

Detroit

The city has revitalized significantly. Downtown looks stunning now. Real estate is still very cheap – $150,000 gets you a nice neighborhood. Population is growing again.

The big caveat: area selection matters a lot in Detroit. There’s huge variation between neighborhoods. Do your homework on specific areas.

Should You Abandon Canadian Real Estate?

No. That’s not the message here.

Canadian real estate still has value. But diversification makes sense. Adding U.S. properties to your portfolio reduces your risk and opens up opportunities that don’t exist in Canada anymore.

The tax situation isn’t getting better. The tribunal system isn’t getting faster. Rent control isn’t going away. The foreign buyer ban just got extended.

Meanwhile, the U.S. welcomes your investment with open arms and lending programs designed to make it easy.

You don’t have to choose one or the other. You can invest in both countries. But ignoring what’s happening with capital flight from Canada would be a mistake.

The smart money is already moving. Major institutions with armies of analysts are redirecting billions to American properties. Individual investors are setting up U.S. entities and bank accounts.

The question isn’t whether U.S. real estate makes sense for Canadian investors anymore. The question is whether you’re ready to explore it for yourself.

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Frequently Asked Questions

Can Canadians get mortgages for U.S. investment properties?

Yes. U.S. lenders offer programs specifically for foreign investors. You can get 70% financing with no income verification if the property cash flows, or 75% financing if you verify your Canadian income. You don't need U.S. credit history or even a job – approval is based on the property's numbers.

What is DSCR and why does it matter?

DSCR stands for Debt Service Coverage Ratio. It compares the property's rental income to its expenses and mortgage payment. A DSCR of 1.0 or higher means the property fully covers itself. U.S. lenders use this instead of looking at your personal income, making it much easier to qualify for investment property loans.

How much down payment do I need for U.S. investment property?

You need either 30% down (70% loan-to-value) for the standard program, or 25% down (75% loan-to-value) if you verify your Canadian income. The minimum loan amount is $75,000, so the property needs to be worth at least around $107,000 for the standard program.

What are seller credits and how do they work?

You can request up to 5% of the purchase price as a seller credit at closing. This money is used to buy down your interest rate by prepaying some of the lender's profit. A $5,000 credit on a $100,000 property can drop your rate from 7.5% to 6%, saving you $100-150 monthly – much more valuable than negotiating the price down by the same amount.

Which U.S. markets are best for Canadian real estate investors?

It depends on your strategy. Ohio (Cleveland, Columbus) offers strong cash flow with low prices. Florida is great for Airbnb and lifestyle investing. Texas works well for corporate housing and pad split strategies. Detroit has cheap properties and is revitalizing, but requires careful neighborhood selection.

How long does eviction take in the U.S. compared to Canada?

U.S. evictions typically take 2-4 weeks, with a maximum of about 2 months. In Canada, the tribunal process takes 6-8 months, and tenants can use legal tactics to delay even longer. This makes U.S. properties significantly less risky for landlords who need to remove problem tenants or sell their property.

Do I need to visit the U.S. to buy investment property there?

No, you can complete the entire purchase remotely. You'll need to set up a U.S. entity (like an LLC) and open a U.S. bank account, but both can be done without traveling. Many Canadian investors buy U.S. properties sight unseen, though visiting the area first is always recommended if possible.

Can I raise rent freely on U.S. investment properties?

Yes. Unlike Canada's strict rent control, U.S. landlords have much more flexibility to adjust rents to market rates. If your mortgage payment increases or market rents go up, you can approach tenants about raising the rent. If they don't agree, they can move out and you can rent to new tenants at current market rates.

Disclaimer: LendCity Mortgages is a licensed mortgage brokerage, and our team includes experienced real estate investors. While we are qualified to provide mortgage-related guidance, the broader financial, tax, and legal information in this article is provided for educational purposes only and does not constitute financial planning, tax, or legal advice. For matters outside mortgage financing, we recommend consulting a Chartered Professional Accountant (CPA), licensed financial planner, or qualified legal advisor.

Written by

LendCity

Published

December 22, 2025