Foreign Buyers & Sellers

2008 Oct 23rd

5 Great Reasons Foreign Nationals are Buying Real Estate in Santa Barbara, California

As the world has truly become global in the last 15 years, the wealthy are looking overseas to not just vacation but to also purchase real estate in resort areas in the U.S., especially on the coastline of California. In the last several years, I personally have been in contact with at least 10 international buyers. Savvy buyers are coming from Canada, Europe and beyond to take advantage of California’s real estate investment opportunities.

Why is this the case?… There are several main reasons that foreign investors find California real estate so appealing?

Location, Location, Location - This is by far the biggest

Resort areas such as Santa Barbara CA. are very popular with foreign nationals. The gorgeous topography and climate in these resort towns seem to suit just about anyone. In the Santa Barbara area alone you can find beachfront estates, ocean view homes, wine country property, ranches and more with a wonderful year-round climate. Property in these areas also tend to hold their value over time, and are easily filled with renters if needed when the owner is not occupying the property themselves.

Secure Ownership Rights

California real estate has most likely as dependable of a property ownership system as you can find in the world. Open and transparent, any foreign investor purchasing property in California can feel comfortable and confident that he/she is purchasing property that is protected by our system of stable individual property rights.

Good Financing Options

Outside of the immediate current lending crisis, the U.S. has always offered flexible mortgage options for foreign nationals.

Relatively Affordable Inventory

As the housing market has softened and the U.S. Dollar has weakened, California real estate has become as affordable as it has been in the last 30 years. Both the British Pound and The Euro make any down payment here in the U.S. look like a discount.

Great Long-Term Investment

Over time, homes in resort areas in California have held their value, making real estate holdings a good long-term investment.

Whether you are looking for an investment, a second home, vacation property or to retire, California real estate in areas such as Santa Barbara and Montecito CA. will always be appealing.

View: Current Inventory of Santa Barbara Property $1-5 Million

View: Current Inventory of Santa Barbara Property $2-10 Million

View: Current Inventory of Santa Barbara Property $10 Million plus

Further Reading: Tips for Canadians Looking to Buy Real Estate in California, Santa Barbara Luxury Real Estate, Santa Barbara Oceanfront Areas

For information on Santa Barbara Real Estate, Montecito Real Estate and/or our surrounding areas, as well as any other aspects of life in our area, please don’t hesitate to contact Kevin Schmidtchen at Sotheby’s Int’l Realty.

Thank you for reading. I hope you find Santa Barbara Real Estate Voice informative. Please feel free to contact me or comment below with any thoughts.

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Tips for Canadians Looking to Buy Real Estate in California

Categories: Foreign Buyers & Sellers

I have had several conversations with Canadians this last year that are dreaming of heading south to California and other states to both beat the cold and to invest in real estate. The strong Canadian dollar (or should we say weak U.S. dollar) combined with a hurting housing market in the U.S. is providing Canadians with arguably as good of a time as any to buy real estate in the U.S. in the last 30 years.

If you are looking to move, invest, or purchase a second home, you should first have a basic grasp of the key differences between buying real estate in Canada versus buying real estate in the U.S.

Regarding Taxes: When it comes to taxes I will never profess to be an expert. This is too critical and the best is to contact a CPA (Certified Public Accountant) to talk about your situation and issues that you might need to look out for. Here in Santa Barbara, CA., I would be happy to recommend my father, Mike Schmidtchen at 805-963-0881. He has been a local CPA for roughly 30 years.

With that said, here for example are 2 key points that might be different than in Canada.

1) Here in the U.S. 1031 exchanges allow for capital gains taxes to be deferred from an investment property and rolled into another investment property several times over. From what I understand, this apparently is very different in Canada where this option is not allowed.

2) For a primary residence here in California, you are able to right down the interest paid on your mortgage as well as property taxes.

Regarding Lending: With the crisis that has gone on in the last 12+ months here in the U.S., lending practices are changing weekly. So if you are looking to finance a property here in California, check back home in Canada as well as with a local lender in the U.S. to see about the options you may have. The most recent that I have heard is that you would need at least 30% for a down payment and proven liquid funds for 6-12 months that would cover your payments.

Regarding Escrow: After you have talked with experts on taxes and lending (or if you are in the fortunate position to pay cash) and you have ultimately decided to look into a real estate purchase here in California, then here are some basics about the escrow process.

1) Escrow is simply the term we used to describe the time from when your purchase offer has been accepted to the time that you close sale on the property. Here in the Santa Barbara, CA. area, a “normal escrow” is around 30-45 days.

2) When writing up a purchase contract, you will need proof of funds (bank statement, letter from a lender etc.) that covers your down payment as well as earnest money (roughly 3% of the purchase price). Your Realtor will then provide you with the paperwork that is needed to write the offer.

3) Upon acceptance of your offer, your earnest money is cashed and deposited into a neutral 3rd party escrow company within 3 business days. So this is money that you will readily need available.

4) As a buyer, you have 2 major contingencies, the loan contingency and the physical inspections contingency. Generally these last 14-21 days from acceptance of your offer. During this time you will receive numerous disclosures about the property from the seller as well as other general disclosures. Also, during this time you will do a home inspection of the property and then based on the results of this and the disclosures you will hire experts to look into any negative issues/concerns about the property, go over potential requests for repairs, etc. Ultimately, this is the time to negotiate if needed and make sure you feel comfortable about the home you are buying. If you do not feel comfortable or can not reach terms with the seller under the contingency period, you can cancel escrow and your earnest money is returned to you.

5) Upon releasing contingencies, you will sign loan documents (if needed) generally within 4-6 days before the close of escrow. Money from you for the down payment or the entire purchase is generally needed within 36-48 hours before the close of escrow date.

Regarding Costs: As a buyer here in California, the costs you will incur are for escrow fees, lending fees, home inspection fees etc. There are no fees to work with a Realtor for the purchase of your property. Commissions to Realtors are 99% of the time paid for by the seller. For example, with a purchase price for a property of $1 Million, you are looking at estimated costs of $2300-$3200 at the time of close.

Regarding Property Taxes: Here in California, Proposition 13 has set property taxes as 1.02% of the purchase price of your property. So again with a purchase of $ 1 Million, you are looking at roughly $10,200 for the year which is again a tax right down. Property taxes can be paid in full once a year or in 2 installments, due December 10th and April 10th.

Further Resources: Transitional Financial, The Border Guide, Tax Considerations for Canadians Interested in US Ownership

Further Reading: Lifestyle/Things to Do Articles in Santa Barbara, California, Things to Do in Santa Barbara, California - Part 1, Market Statistics, Community Events in Santa Barbara, About Santa Barbara Real Estate Voice

Thank you for reading. I hope you find Santa Barbara Real Estate Voice informative. Please feel free to contact me or comment below with any thoughts.

Subscribe to Receive Personal Listings of Santa Barbara Area Properties

Search the Santa Barbara Area MLS

The Weakening US Dollar is Allowing More Foreigners to Buy into the California Dream

Categories: Foreign Buyers & Sellers

There is a new buying pool for the California Dream…especially in coastal resort towns such as Santa Barbara and Montecito. As the market has slowed over the last 18 months and the US Dollar has weakened dramatically, California has become second to only Florida in terms of international purchases. Many foreigners are looking for second homes and places to invest their money in less certain economic times. The property type that seems most desired is:

1) High-end estates

2) Larger homes

3) Condominiums in upscale areas

Santa Barbara and Montecito CA fit this bill for most of these buyers. Many of these buyers are also looking for homes that are turn-key, with very little to no effort needed in fixing up.

In my experience over the last 2 years here in the Santa Barbara CA area, I have seen most international buyers coming from Canada and England.

For a Realtor, a strong and user friendly Internet presence is crucial to attract foreigners who will most likely familiarize themselves with U.S. housing markets online before they search for a specific property or a real estate agent.

For information on Real Estate here in Santa Barbara, Montecito and/or our surrounding areas, as well as any other aspects of life in our area, please don’t hesitate to contact Kevin Schmidtchen at Sotheby’s Int’l Realty.Thank you for reading. I hope you find Santa Barbara Real Estate Voice informative. Please feel free to contact me or comment below with any thoughts.

Subscribe to Receive Personal Listings of Santa Barbara Area Properties

Search the Santa Barbara Area MLS