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. Our US cross-border investing hub walks through the entire process from financing to entity setup.
The Capital Gains Tax Uncertainty
Canada’s capital gains tax rules have been a rollercoaster for investors. The previous government proposed increasing the inclusion rate from 50% to 66.67% on gains above $250,000 for individuals and on all gains for corporations. That proposal created massive uncertainty and pushed many investors to accelerate sales or redirect capital to the U.S.
The increase was ultimately cancelled in March 2025 under PM Carney, keeping the inclusion rate at 50%. But the episode exposed how quickly the rules can change. Investors who had already shifted strategy southward aren’t rushing back — and the threat of future tax changes still hangs over Canadian real estate.
The policy instability alone is a reason many investors are considering Rental Property: Corporation vs Personal Name with an eye on cross-border diversification.
Even with the capital gains increase cancelled, the policy instability has pushed many investors to diversify south — book a free strategy call with LendCity to explore your U.S. financing options.
If you want to scale without hitting income qualification walls, DSCR financing is worth exploring — book a free strategy call with LendCity to see what rates and terms are available.
Canada Doesn’t Want Foreign Investment (But the U.S. Does)
Canada’s foreign buyer ban remains in effect until January 1, 2027. 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.? Eviction processes vary dramatically by state. A 2-4 week timeline is realistic in some southern and midwestern states, but New York, California, Oregon, New Jersey, Washington DC, and several other jurisdictions routinely take 3-12 months. Research the specific state’s landlord-tenant law before investing — the difference between states is enormous.
This is one of many reasons Canadian investors consider US properties. Just don’t assume “fast eviction” applies everywhere — it very much doesn’t.
If landlord-tenant rules are drawing you south, book a free strategy call with us and we’ll help you set up financing as a foreign national.
Cross-border investing adds layers of complexity to your financing — schedule a free strategy session with us and we’ll walk you through the Canadian-friendly options.
How Canadian Rent Control Affects Investment Decisions
Your mortgage payment jumps because rates went up. Can you raise the rent to cover it? In most Canadian provinces, no — not beyond the annual guideline, and you need to follow formal processes.
In much of the U.S., rent increases are left to the lease terms between landlord and tenant. That said, many US states do not have statewide rent control, but California, Oregon, New York, New Jersey, Minnesota (St. Paul), and others do — as do many individual cities, including some in otherwise uncontrolled states. Confirm the local rules before buying: rent-control status is a property-level question, not a country-level one.
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). Learn more about income-based lending for foreign nationals. 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
DSCR rates for foreign nationals typically range from approximately 6.87% on the low end up to 7.75% or higher (as of April 2026), with conventional 30-year fixed mortgages for US-domestic borrowers around 6.23%.
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 by 1-1.5%, saving you $100-150 per month.
Seller credits are often worth asking for; whether they work out better than an equivalent price reduction depends on your financing structure, loan size, and tax position, so run the numbers both ways.
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. For this strategy, see our PadSplit financing guide for room rental investors and PadSplit Investment: Room Rental for Cash Flow.
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 US mortgage financing for Canadians.
Key Takeaways:
- The Numbers Don’t Lie: Capital is Leaving Canada
- The Capital Gains Tax Uncertainty
- Canada Doesn’t Want Foreign Investment (But the U.S. Does)
- The Landlord-Tenant Tribunal Nightmare
- How Canadian Rent Control Affects Investment Decisions
Frequently Asked Questions
Can Canadians get mortgages for U.S. investment properties?
What is DSCR and why does it matter?
How much down payment do I need for U.S. investment property?
What are seller credits and how do they work?
Which U.S. markets are best for Canadian real estate investors?
How long does eviction take in the U.S. compared to Canada?
Do I need to visit the U.S. to buy investment property there?
Can I raise rent freely on U.S. investment properties?
Disclaimer: LendCity Mortgages is a licensed mortgage brokerage. Content on this page is for educational purposes only and does not constitute legal, tax, investment, securities, or financial-planning advice. Rates, premiums, program terms, and regulations referenced are as of the page's last updated date and are subject to change. Any investment returns, rental yields, tax savings, or case-study figures shown are illustrative only — they are not guaranteed, not typical, and individual results will vary. Consult a licensed lawyer, Chartered Professional Accountant, or registered dealer before acting on any information above.
Written by
LendCity
Published
December 22, 2025
· Updated April 26, 2026Reading time
9 min read
Cash Flow
The money left over after collecting rent and paying all expenses including mortgage, taxes, insurance, maintenance, and property management. Positive cash flow is the primary goal of buy-and-hold investors. See also [NOI](/glossary/noi), [Cash-on-Cash Return](/glossary/cash-on-cash-return), and [Vacancy Rate](/glossary/vacancy-rate).
DSCR
Debt Service Coverage Ratio - a metric that compares a property's [net operating income](/glossary/noi) to its mortgage payments. A DSCR of 1.25 means the property generates 25% more income than needed to cover the debt. Lenders typically require a minimum DSCR of 1.0 to 1.25 for investment property loans. See also [Cap Rate](/glossary/cap-rate) and [Cash Flow](/glossary/cash-flow).
Down Payment
The upfront cash payment when purchasing a property. For 1-4 unit investment properties, minimum 20% down is required. 5+ unit multifamily can use CMHC MLI Select with lower down payments, and house hackers can put as little as 5% down on owner-occupied 2-4 plexes. Your down payment directly affects your [LTV](/glossary/ltv) and the amount of [leverage](/glossary/leverage) you use.
Interest Rate
The cost of borrowing money, expressed as a percentage. It determines how much you pay on top of the principal borrowed. Interest rates directly affect monthly payments, [cash flow](/glossary/cash-flow), and [DSCR](/glossary/dscr). See also [Amortization](/glossary/amortization).
LLC
Limited Liability Company — a US business structure commonly used to hold US investment properties. Important caveat for Canadian residents: the CRA generally treats a US LLC as a corporation for Canadian tax purposes, which can create mismatched treatment with the IRS and double taxation; many cross-border advisors recommend a US LP (with an LLC as general partner) or direct ownership instead. Entity choice is a legal and tax decision — consult a cross-border attorney and a CPA experienced in Canada–US tax before forming one.
LTV
Loan-to-Value ratio - the mortgage amount expressed as a percentage of the property's appraised value or purchase price (whichever is lower). An 80% LTV means you're borrowing 80% and putting 20% [down](/glossary/down-payment). Lower LTV generally means better [interest rates](/glossary/interest-rate) and terms. See also [Equity](/glossary/equity) and [Leverage](/glossary/leverage).
Single Family
A detached home designed for one household, the most common property type for beginner real estate investors.
FIRPTA
Foreign Investment in Real Property Tax Act - a US tax law requiring buyers to withhold taxes when purchasing real estate from foreign sellers. Important for Canadians selling US properties.
Property Management
The operation, control, and oversight of real estate by a third party. Property managers handle tenant screening, rent collection, maintenance, and day-to-day operations.
ROI
Return on Investment - a measure of profitability calculated by dividing net profit by total investment. Used to compare the efficiency of different investments.
Mortgage Stress Test
A federal requirement to qualify at the higher of your contract rate +2% or the benchmark rate (around 5.25%). For investors, rental income can be used to offset this calculation, though lenders typically only count 50-80% of expected rent.
Coverage Ratio
A measure of a property's ability to cover its debt payments, typically referring to DSCR. Commercial lenders often require a minimum of 1.2, meaning the property's net operating income exceeds debt payments by at least 20%.
Eviction
The legal process of removing a tenant from a rental property for reasons such as non-payment of rent, lease violations, or property damage. Eviction laws vary by province and typically require landlords to follow specific notice periods and tribunal processes.
Market Rent
The rental rate that a property could reasonably command in the current market based on comparable properties, location, and condition. Understanding market rent is essential to maximize income while maintaining competitive positioning and minimizing vacancy.
Rental Income
Revenue generated from tenants paying rent on an investment property. Gross rental income is the total collected before expenses, while net rental income subtracts operating costs to show actual profitability.
Capital Gains Tax
Tax owed on the profit from selling an investment property, calculated as the difference between the sale price and the adjusted cost base. In Canada, 50% of capital gains are currently included in taxable income. A 2024 federal budget proposal to raise the inclusion rate to 66.67% on gains above $250,000 was deferred and has not been enacted; the 50% rate remains in effect. Tax outcomes depend on your specific situation — consult a Chartered Professional Accountant.
Short-Term Rental
A furnished property rented for periods shorter than 30 days through platforms like Airbnb or VRBO. Short-term rentals generate higher gross revenue but carry higher operating costs and stricter municipal regulations.
Airbnb
An online marketplace connecting property owners with short-term guests. In real estate investing, Airbnb is commonly used as shorthand for the short-term rental business model, which involves higher operational demands but potentially higher returns than long-term rentals.
Rent Control
Provincial regulations that limit how much a landlord can increase rent annually for existing tenants. Rules vary by province - Ontario caps increases at a government-set guideline, while Alberta has no rent control. Rent control directly impacts investment cash flow projections.
Below-Market Rent
Rental rates lower than comparable properties in the same area. Below-market rents represent a value-add opportunity where an investor can increase property value by raising rents to market levels.
STR
Short-Term Rental - a furnished property rented for periods of less than 30 days, typically through platforms like Airbnb or VRBO. STRs can generate 2-3x the income of long-term rentals but require more active management, higher operating costs, and compliance with local short-term rental regulations.
Hover over terms to see definitions. View the full glossary for all terms.