South of 49 E-Book

Philip McKernan

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 323

Veröffentlichungsjahr: 2015

Beschreibung

"South of 49 is a must-read for anyone wanting to buy real estate in the United States. This groundbreaking book is jammed full of practical information that will ensure you avoid all the potential pitfalls." --Les Hewitt, author of The Power of Focus "When buying real estate anywhere in the world, one must know all the facts and go in with eyes wide open. Before you even consider buying outside of Canada, know the realities by reading this book and learn from others' mistakes." --Don R. Campbell, best-selling author of Real Estate Investing in Canada "For any Canadian, buying real estate in the US can be the best decision you ever make, or the worst mistake you'll never forget. Philip's the real deal-an international investor who speaks from experience. This book will teach you how to make a great deal, reduce your risk and enjoy the journey along the way." --Greg Habstritt, founder of SimpleWealth From the Introduction: Whether it's a lifestyle purchase or an investment, there are many factors about buying US property that many Canadian buyers understandably find confusing, or they overlook. Add to that the complexities of the new foreclosure-driven buyers' market, and buying a US property could be a recipe for disaster if you don't do your homework. That's where South of 49 comes in. This book is about more than just tax advice and buying tips. We take you through all of the real-life considerations when buying down south, from travel time and immigration rules to making sure the home or condo you buy actually fits your investment goals. We will also help you answer one very important question when considering such a purchase: Why? Why should you buy a place and not just rent? Why should you buy in Florida instead of California, for example? The answers? It all depends. It depends on you, your individual circumstances and your goals. This book will help you think through these decisions before you make them.

Leseprobe

 

Table of Contents

Title Page

Copyright

Acknowledgments

Introduction

Chapter 1: Of Risk and Reward

Chapter 2: Of Phoenix and Foreclosures

Chapter 3: Of a Team and a Dream

Chapter 4: Of Florida and Mount Everest

Chapter 5: Of Experts and Equity

Chapter 6: Of Ownership, Death and Taxes

Chapter 7: Of a California Lifestyle and a Nevada Auction

Chapter 8: Of Phoenix and Palm Springs, and Narrowing the Search

Chapter 9: Of Offers and Counter-Offers

Chapter 10: Of Escrow Officers and Closing the Deal

Chapter 11: Victory

Epilogue

WANT MORE?

 

Copyright © 2009 by Philip McKernan, Dan Sampson and Mike Cunning

All rights reserved. No part of this work covered by the copyright herein may be reproduced or used in any form or by any means—graphic, electronic or mechanical without the prior written permission of the publisher. Any request for photocopying, recording, taping or information storage and retrieval systems of any part of this book shall be directed in writing to The Canadian Copyright Licensing Agency (Access Copyright). For an Access Copyright license, visit www.accesscopyright.ca or call toll free 1–800-893–5777.

Care has been taken to trace ownership of copyright material contained in this book. The publisher will gladly receive any information that will enable them to rectify any reference or credit line in subsequent editions.

Library and Archives Canada Cataloguing in Publication Data

McKernan, Philip      South of 49: the Canadian guide to buying residential real estate in the United States/Philip McKernan, Dan Sampson, Mike Cunning.

Includes index. ISBN: 978-0-470-67602-8

      1. Residential real estate—Purchasing—United States. 2. Residential real estate—United States. 3. Real estate investment—United States. I. Sampson, Dan II. Cunning, Mike III. Title.

HD259.M388 2009      332.63’240973       C2009–905122-2

John Wiley & Sons Canada, Ltd.6045 Freemont Blvd.

 

Acknowledgments

Writing a book was an enormous task and one that I have to say I completely underestimated. I also didn’t fully appreciate, until the project was launched, the power of having the right people around to help shape the material and share the experience. Looking back, I must say this daunting task would not have been possible without some key people.

In the middle of writing the book, my wife Pauline and I had our first child, Charlie. As is the case with any newborn, they simply (or not so simply) arrive into your life and don’t care about book deadlines, business, or if you get to the gym on any given day. While I did consider putting Charlie on eBay some nights (just kidding, Charlie!), his presence changed my life forever, and for the better.

While my wife was in labour, I was asked to do a television interview related to this book. While my son may never forgive me, Pauline insisted I keep the commitment. This is typical of Pauline, who has been a huge believer in me since we met. Her support for everything I do inspires me to take on projects outside my comfort zone. Pauline, you are my hero.

Speaking of mothers, I have to mention mine. I am a big believer in “we are who we meet,” and I can’t help but think that many of the good traits I have come from her. The mentoring my father gave me has crafted my ability to attract great people into my life, which has led to this book being possible.

Mentors have played a huge part in my life, and here are just some of the amazing people I have met along an incredible journey so far: Trevor Garret, Anthony Clare, Les Hewitt, Keith Cunningham, Michael Vaughan, Shane Cradock, Robert McKernan, David McKernan, Stephen O’Reilly, and Don Campbell. Your belief has been my oxygen, and my hope is to make you all proud.

To my numerous clients and groups that I have had the pleasure to mentor: You are my fuel and you push me every day to be better than I was the day before.

In December 2007, I met Don Loney of John Wiley & Sons Canada, who, although I did not realize it at the time, was to have a huge impact on my life. He introduced himself after hearing me deliver a keynote speech at a real estate conference in Toronto, and he later suggested I consider writing a book. Since then, he has supported and trusted me personally, as well as my South of 49 team. Thank you Don, for your belief in us.

A huge thanks also go out to my co-authors, Dan Sampson and Mike Cunning, who graciously accepted my invitation to participate in this project. They brought a fountain of knowledge to the book, some adventure, and a lot of laughs on the many trips we took to the U.S. while doing research.

Last but certainly not least, on behalf of the authors I would like to thank Brenda Bouw who helped us craft this book from an idea into what it is today. I’m not entirely sure if writing or patience is Brenda’s greatest gift, but I know for certain we tested the latter. Your genuine interest, determination, honest feedback, and military-type deadlines were not just appreciated but a critical part of the project. I could not have imagined doing this project without you.

Philip McKernan

May 2009

 

Introduction

Buying a home in the United States is a goal for many Canadians. Sitting by the pool or playing a round of golf in January while your neighbors back home are shoveling snow is, for many, the Canadian dream.

Statistics show that more and more Canadians are making that dream a reality. By mid-2008, nearly one quarter of all international homebuyers in the US were Canadians. This was not only a record, but also more than double the year before. According to the 2008 National Association of Realtors annual profile of international home buying activity in the US, the sun states of Florida and Arizona, not surprisingly, were the most popular locations for Canadian buyers, accounting for more than 60 per cent of their purchases. The survey also showed many Canadians paid cash for those homes.

House prices in the US are the cheapest they’ve been for some time, which is one of many factors inspiring Canadians to buy property there. Some are looking for a retirement home, while others are scouring the market for investment opportunities. The subprime mortgage mess has reduced prices by about 25 per cent in the US since the peak in 2006, and by more than 40 per cent in some states, in particular those sun destinations of Florida and Arizona which were overbuilt Foreclosures are so common in the US that, in true competitive American style, cities boast their top spots on the foreclosure capital standings.

While buying a sunbelt home is not new to Canadians—even before the housing market meltdown—more are inspired to buy when the Canadian dollar nears parity with the US dollar. And as home prices in Canada were reaching their peak, many homeowners took equity out of their Canadian properties to put towards buying a US place. Even after the Canadian economy and housing market began to feel their own pressures, the land rush south of the border continued, thanks to low property values and high foreclosure rates.

In fact, as long as there is winter in Canada, Canadians will continue to take the US property plunge. The purchases will also continue to be driven by demographics in the foreseeable future. As the Baby Boom generation ages, more and more are looking for retirement properties in vacation destinations for their families during the cold winter months. But instead of just renting a place, or going for long hotel stays, many are looking to buy something of their own.

The American housing crisis has also become an investment opportunity for Canadians not yet ready for retirement. The strategy: buy a home or condo to generate cash flow, and eventually sell it down the road when the market recovers.

Whether it’s a lifestyle purchase or an investment, there are many factors about buying US property that many Canadian buyers understandably find confusing, or they overlook. Add to that the complexities of the new foreclosure-driven buyers’ market, and buying a US property could be a recipe for disaster if you don’t do your homework.

That’s where South of 49 comes in. This book is about more than just tax advice and buying tips. We take you through all of the real-life considerations when buying down south, from travel time and immigration rules to making sure the home or condo you buy actually fits your investment goals. We will also help you answer one very important question when considering such a purchase: Why? Why should you buy a place and not just rent? Why should you buy in Florida instead of California, for example? The answers? It all depends. It depends on you, your individual circumstances and your goals. This book will help you think through these decisions before you make them.

While owning a home in the US may be the Canadian dream, it’s also not for everyone. We aren’t trying to discourage you from buying. Instead, we want to help you make the right choice. Buying a house in the US is a huge commitment. It’s also a lot of work. Our goal is to get you to do your research first, and then consider carefully whether the investment is right for you.

Sound daunting? Don’t worry; it will also be a lot of fun. That’s because we plan to share this information through two very entertaining characters: Ted, the Textbook Emotionally Driven buyer, and his friend Sid, the Sophisticated Investor Dude. Ted and Sid, old university buddies with different goals, will show you, as a Canadian, the pros and cons of buying and owning your own piece of property in the US.

While Ted and Sid are fictional characters, most of their experiences are based on actual events. We, the authors, have a great deal of experience in buying and selling real estate in our professional lives. For this book in particular, we traveled to several US cities from coast to coast and visited dozens of homes for sale as part of our research. We also had long discussions with various players in the American housing market, from buyers and sellers to realtors, developers, inspectors and everyone in between. We had a lot of fun, and we learned a ton. It’s our pleasure to share our insights, experiences and overall adventure with you.

Philip McKernan Dan Sampson Mike Cunning North Vancouver, May 2009

 

1

Of Risk and Reward

We meet Ted and Sid, and Ted’s real estate venture begins. Ted looked up from the Risk board game laid out on the table before him and directly into the eyes of his old friend, Sid. Ted knew what was next, as Sid flashed him that trademark winning smile that Ted has learned to recognize since they shared a university dorm room nearly 20 years earlier.

Sid threw up his arms in victory.

“Yes! The United States of America is mine!” Sid shouted after having moved his red armies into Ted’s last remaining stronghold.

Sid then jumped up and began a victory dance across Ted’s living room.

“That, Ted my friend, is what world domination looks like,” Sid said as he continued his winning gyrations.

Ted tried his best to look disconsolate. Then he laughed. “Congratulations buddy,” he said, accepting defeat in the latest round of the game that had become a tradition whenever the two got together.

“You won this time. But I, my friend, will own my own part of the US soon enough,” Ted said. “For real. And if you don’t stop that prancing around, I won’t ever invite you over.”

Sid stopped and looked at Ted, puzzled.

“All of this ocean air in Vancouver is making you talk funny,” Sid said. “Maybe you should come back to Toronto with me and start thinking straight again.”

Ted shook his head and smiled.

“Seriously, Sid. I’m about to own my own sweet little property in Phoenix, and when those Toronto winters get you down, maybe you can come visit—especially during hurricane season when you can’t see through your boarded-up windows at your Florida place.”

Sid sat down.

“Are you serious? When were you and Nancy in Phoenix? What property? Did her parents buy a place down there?”

“No,” said Ted. “We are buying a place, or maybe I should I say I am. Nancy isn’t too keen on putting any of her own money in it just yet, but I’ve got some inheritance money from years ago and maybe she’ll agree to invest in the place too once she sees it. I mean, it sounds great and…”

“Whoa!” Sid interrupted. “Hold on a minute Ted. What do you mean it sounds great? You haven’t seen it?”

“I don’t need to see it. I have the listing right here. And besides, there are tons of photos on the Internet, and a virtual tour,” Ted said as he pulled a sheet of paper out from a stack of magazines on the coffee table beside him. “I found it on the Internet and it sounds perfect. It’s so cheap; it’s practically a steal. The last owners bought it for $325,000 in 2006 and now it’s for sale for $185,000. It’s barely lived in—what could be wrong with it? Maybe I’ll have to finish the basement or something. At that price, I still win. I can’t even buy a garage in Vancouver that cheap!”

Sid grabbed the listing from Ted’s hands and started to read the description out loud: “Very nice home built in 2005. Bank owned. Priced to Sell! Barely lived in. Three thousand square feet. This home features three bedrooms, two-and-a-half bathrooms, eat-in kitchen and dining room, living room. Close to park and rec centre. Needs a little elbow grease…”

Sid read the rest quietly under his breath.

“Ted, friend. I don’t know about this. ‘Needs a little elbow grease?’ Who gave this to you?”

“A realtor in Phoenix,” Ted said. “I saw an ad from him in the local paper. He sets it all up for you from down there. He sounds like a really good guy. You tell him what you want, you know, a pool or not, a garage, how close you want to be to the center of town or the golf club. He said this one is pretty close to the US Airways Centre where the Phoenix Suns play, which is right near Chase Field, where the Diamondbacks play baseball. And the price, Sid, it’s soooo cheap. Almost half what the owners paid for it! I can’t believe how much house prices have dropped down there. It’s the perfect time for me to buy!”

“Stop right there, Ted,” Sid said.

Ted noticed his friend’s smug smile had suddenly turned to a look of concern. He’d seen this face from Sid before—the last time was when he bought a boat on impulse. Sid recommended he try renting a boat a few times first, to gauge how often he would actually use it. Ted bought the boat anyway, and after the excitement of being captain of his own ship wore off, the boat seldom left the marina while the docking and service fees ate away at his wallet. He sold the boat after two summers for less than he paid for it. Sid’s concern scared him.

“Oh no,” Ted said sheepishly. “What have I done this time?”

“Not to worry my friend,” Sid said, his tone almost reassuring. “But, you haven’t put any money down on this yet have you? Please tell me you haven’t put any money down yet, Ted?”

“I have tied it up with a deposit—a thousand bucks—and conditions are removed on Tuesday,” Ted said defensively.

Sid leaned forward and looked directly at his friend, who had since sunk into his chair.

“Listen, just do me one little favor, would you?” Sid asked.

Ted sighed, but kept listening.

“Just go down and see the place for yourself first,” Sid advised. “Go this weekend. Take a couple days off and make it a long weekend if you can. If you love it, if it’s really the place you’ve always dreamed of having as a vacation home, or investment, or whatever, then do it. But don’t—and Ted I’m begging you here, as your friend—don’t buy it without seeing it first. Please?”

Ted rubbed his eyes with the palms of his hands then shook his head, as if he had just been splashed with a bucket of cold water.

“All right Sid, if you insist. I’ll go see it. But it’s expensive to fly down there. And I have to get the time off work first, and…”

Sid interrupted again.

“Ted, it’s not a set of golf clubs you’re buying here. It’s a house. If you’re complaining about the price…By the way, what is the plan? Are you planning to rent this out or…”

“I know, I know, Sid. You’re right,” Ted cut in. “You are always right. Okay, I’ll get down there and meet this realtor myself. But I’m telling you right now that this place is the one. You’ll see. As for my plan, I don’t know exactly. Maybe I’ll rent it out to friends. It would be nice to live there someday too. All I know is that if I don’t buy now, I’ll be kicking myself later.”

Sid wasn’t so sure Ted understood what he was getting into, but felt he had pushed his old friend enough for one night. Sid took another tack.

“I hope you are right, Ted,” Sid said. “I can’t wait for you to tell me ‘I told you so.’ And if you want, call me when you’re down there, let me know how it looks or if you have any questions or anything.”

“Yes, ‘Dad,’“Ted said, laughing. “Now, can we change the subject?”

He then glared at Sid, like an eagle stalking its prey.

“How about another round of Risk then, eh pal? This time I’ll show you who owns the US. Get your little army ready for General Ted!”

The two laughed as they set up the game. “You’re always full of surprises,” Sid said. “That’s what makes you Ted, I guess. Hey, remember that boat you bought a few years ago and never used?”

“Just roll the damn dice,” Ted said.

SID’S TIPS

• Never buy a property in the US, or anywhere for that matter, without seeing it in person first. Internet photos and realtors’ brochures aren’t remotely enough information on which to base a purchasing decision. You need to see the property for yourself, including talking to the neighbors and taking a tour of the neighborhood and the region. You need to compare your list of desired services and amenities against those available where you’re looking.

• Don’t put down a deposit unless you are clear about the terms and conditions, including asking whether you can get your money back if you change your mind and don’t buy.

• Remember that listings are trying to sell you features of the home. They’re marketing tools. Any mention of “needs elbow grease” or “handyman’s special” is a red flag that the house needs a thorough inspection that may require more than just hiring a home inspector.

• Just because a house has fallen dramatically in price doesn’t make it a good reason to buy. It could be the opposite. What looks like a “good deal” should never be the primary motivating factor in a purchasing decision.

• Have a plan. What do you intend to do with the property? Will you be the only occupant or do you plan to rent it out? Think about this before you even start looking at buying a property in the US.

 

2

Of Phoenix and Foreclosures

Ted awoke to the harsh “Beep! Beep! Beep!” of his alarm clock. He felt the sharp poke of an elbow from his wife Nancy in his right rib. She then rolled over and held a pillow over her head to muffle the sound. Ted rolled in the opposite direction and silenced the alarm with the slap of his hand. He opened his eyes. In bright red numbers, the clock read 4:01 a.m. Suddenly, Ted remembered why he set it so early. He had a plane to catch. This was the day he was to fly to Phoenix to buy his dream home.

As he pushed himself upright, Ted thought to himself, “I bet Donald Trump never has to get up this early.” He shuffled to the en suite to grab a shower, walking past his already packed suitcase, his backpack with his passport zippered into a side pocket, the Lonely Planet guide to Phoenix and, of course, the listing of what would soon be his new home away from home.

The cab arrived on schedule at 5 a.m. Ted ignored the impulse to shout goodbye to Nancy as he headed out the door. As he stepped out into the pouring rain, he reflected that he wouldn’t get up if he didn’t have to, especially on a soggy Saturday in November.

The driver tucked Ted’s luggage in the trunk of the cab and hopped into the driver’s seat. The driver picked up his Starbucks coffee in a Venti cup, said good morning and asked, “Where are you flying to?”

“Phoenix,” Ted replied. “International departures, please. I’m going to Phoenix. My flight’s at seven.”

The driver nodded and started the 30-minute drive to the airport. Ted settled back and watched the rain slide across the car window. Traffic built as they approached the airport, and Ted thought how surprising it was to see so many people up at this hour. “How many might own property down south?” he mused.

At the airport, Ted checked in with his airline and made his way to the customs and immigration area, which he had to pass through before going to his departure gate. When he turned the corner, he saw about 50 people already in the lineup ahead of him. He yawned and did the step, stop and stand dance along with his fellow travelers for about 30 minutes. Finally, it was his turn. Ted flipped open his passport with his thumb and handed his ticket to the stone-faced immigration officer.

“Where to?” the woman behind the counter said in a curt voice.

“Phoenix.”

She then asked a series of questions including: What was the purpose of his visit? How long was he staying? Where was he staying? What was the address? Ted knew everything but the address. He told her it was a Holiday Inn Express.

“I’m sure I’ll be well rested, if the hotel is really as good as those ads say. I like those ads, don’t you?” Ted asked.

The officer looked up at Ted, expressionless, and handed him back his passport and ticket.

“Next!” she shouted to the person behind him.

Ted felt as though he had just run into his old high school football coach. He, too, was a tough nut with absolutely no sense of humor! Ted shrugged it off and began his search for caffeine. After a few sips of coffee, Ted spotted some empty seats outside his departure gate. Using his backpack as a pillow, he stretched out across three seats and fell asleep. It seemed as though he had just closed his eyes when a tap on his shoulder woke him.

“Are you flying to Phoenix with us today, sir?” asked a flight attendant with a brunette bob haircut, looking down at him.

Ted nodded, jumped up, grabbed his backpack, and followed her through the gate and on to the plane.

As he headed down the aisle and into the plane towards his seat near the back, Ted observed the usual pre-takeoff rituals: passengers cramming luggage into overhead bins, fidgeting with headsets, adjusting their seatbelts and complaining to the crew. People were being packed in pretty tightly, he thought. He decided to focus instead on one happy-looking couple sitting silently, dressed like twins in bright floral shirts, shorts, sandals with socks and dark tans. Ted smiled and reflected: “That will be me and Nancy someday soon.” After settling into his middle seat, Ted blew up his air-filled neck pillow and prepared for the first of two flights taking him to Phoenix today.

WELCOME TO PHOENIX

“Ladies and gentleman, we’ll be landing shortly in Phoenix. Please ensure your tray tables are put away and your seats are fully upright.”

The flight attendant’s voice was like music to Ted’s ears. After nearly six hours in the air, not including a 90-minute stopover, he had finally arrived. Ted calculated how long the trip had taken so far. He got up at 4:00 in the morning Vancouver time, and finally arrived in Phoenix at around 2:00 in the afternoon, Phoenix time. He set his watch. As the plane made its descent, he calculated how much money the trip had cost him so far: flight, about $700; cab, $50; hotel, $220. He figured he could get a cheaper flight by booking earlier, but he didn’t have time to really prepare for the trip. Sid had insisted he go right away. No matter—the money was spent. Besides, Ted was sure everything was cheaper in the US. And, the Phoenix realtor said the house was only a 20-minute drive from the airport. Soon he’d see his new place.

As the plane circled above Phoenix’s Sky Harbor International Airport, Ted got his first taste of this big city. As he surveyed the urban sprawl, Ted wondered where he would even begin looking for a place if he didn’t already have one picked out. What a coincidence it was that he found that realtor’s ad in the paper, he thought. It must be fate.

After landing and collecting his luggage, Ted walked out of the airport toward the shuttle to the car rental depot. As he stepped outside, he suddenly felt the desert heat wrap around him like a blanket. Ted smiled, pointed his face toward the sun, put on his sunglasses and exhaled loudly. “This is my kind of weather,” he said, and then stepped on the bus.

After what seemed like another long journey, Ted finally arrived at the rental car building and was given the keys to his vehicle, a beige sedan. He tossed his luggage in the back seat and headed out of the parking lot with a map of Phoenix laid open on his lap and a printout of the directions that Cliff, the realtor, had emailed him. Ted had to meet Cliff at 3 p.m. at the house. It was now 2:30. He started the drive.

At 2:55, the announcer on the radio said the temperature had hit the day’s high of 95 degrees Fahrenheit. Ted did the math quickly in his head. “Wow, 35 degrees Celsius in November!” he said out loud to himself in the car. It almost never gets that hot in Vancouver.

Ted pulled off the freeway at the appropriate exit and passed rows of strip malls and drive-in fast-food outlets. “I’ll never get hungry in this neighborhood,” he said, talking to himself again. He continued to follow the realtor’s directions, on the lookout for Jefferson Lane, a right-hand turn Ted expected to approach soon. He drove for blocks. Ten minutes passed and he still hadn’t hit Jefferson. What’s worse, every street looked the same and he couldn’t tell if he was lost, or just not there yet. What struck Ted more, though, as he drove was the number of houses with “For Sale” or “Bank Owned” signs out front. There must have been a half dozen of them on every block. Ted had heard a lot about this subprime mess in the US, but now saw it for himself. As he drove along, Ted realized he hadn’t seen a lot of people around this area, or many cars either. Maybe it was just too hot to be outside at this time of day. Maybe people were hanging out in their backyard pools. He kept driving. Finally, Ted pulled over and once again consulted the map. Many of the streets he crossed weren’t listed on it.

“Must be an old map,” Ted said to himself. He looked up and spotted a 7-Eleven sign a block ahead. He pulled up, stepped inside to a blast of air-conditioning and grabbed a Gatorade from the fridge. He then walked over to the cash register to pay, but first asked the clerk for directions to Jefferson Lane.

“Never heard of it,” said the pudgy teenage boy behind the counter. “But I’m not from around here. Not many people live in this part of town.”

Ted sighed. He decided to just pay for the drink and call Cliff the realtor for directions. As he opened his wallet, Ted realized he forgot to get American money before he left. He planned the trip in such a hurry that he forgot about the change in currency.

“I don’t suppose you take Canadian money?” Ted asked the clerk, who was sucking back a Big Gulp.

“No sir, just American money here. But there’s a bank back up on the highway there.”

“Never mind,” Ted said. He grabbed a bag of Doritos from the shelf beside him and a sealed-up turkey sandwich from the cooler and paid with his Visa card. Ted then called Cliff for directions to the house. Cliff said he was about five minutes away. It was 3:30 p.m. Ted apologized for being late and promised to be right over.

Fifteen minutes later, Ted rolled into the driveway of “his” new home, behind the realtor’s BMW, which he noticed had a couple dents on the driver’s side. Ted stepped out of the car towards Cliff, who was standing outside the front door of the house.

“Whew, it sure is hot here, eh?” Ted said.

As Cliff started to speak, there was a loud roar from above. Ted ducked, by instinct.

“Wow, what was that!?”

“Oh, that’s just a fighter jet,” said Cliff, who was wearing a beige button-down short-sleeve shirt and wrap-around shades. Beads of sweat rolled down his forehead.

“There’s a military base not too far from here. Makes you feel safe, doesn’t it?”

Ted, dressed in a Vancouver Canucks T-shirt and jeans, looked up at the sky and said: “I guess that’s pretty cool.”

Cliff nodded then gestured for Ted to follow him into the house. Ted noticed the front lawn had a number of new shrubs and trees poking out of a patch of brown grass. He then slowly scanned the outside of the house, making note of the yellow stucco exterior, the clay tile roof, bay windows and double-car garage.

“It sure is big, isn’t it?” Ted said.

“It’s a beauty,” Cliff replied. “A great neighborhood. Wait until you see inside.”

INSIDE JEFFERSON LANE

As the front door of the home swung open, Ted noticed a faded sign in red ink that read: “Foreclosure. Bank Owned.” Cliff was watching and before Ted could comment said: “It’s a shame, isn’t it? There are a lot of them around here. But it’s a steal for a guy like you. I mean, nearly half price from what the guy before you bought it for.”

“I know,” Ted said, his voice rose with excitement. “My house back home has gone up in value almost as much as this one’s gone down. It’s amazing isn’t it? And it doesn’t even rain here eight months of the year!”

As they walked through the front hall, Ted’s first thought was how big the place was—and how empty. It also smelled like new paint and new carpet.

“The carpet is brand new,” Cliff said.

Ted noticed there were no covers on the light switches and pointed it out to Cliff, who then pointed to a stack of switch plates on the kitchen counter.

“They’ll be put up today. We didn’t expect you so soon, Ted, so you might see a few unfinished things,” Cliff said.

Ted followed Cliff through the main floor of the house and listened to him talk about the square footage, the type of windows installed and on which side of the house the sun rose and set.

The next stage of tour was the second floor. As they approached the stairwell, Cliff stopped and turned to Ted. His voice got deeper.

“Now, remember I told you the place needed a bit of sweat equity. You’ll see what I mean up here. Don’t be concerned. It’s an easy fix. I know a guy who can do it for you for less than most.”

As they climbed the stairs, Ted noticed the drywall was rippled, like freshly raked sand. Ted felt a pull in his stomach. The walls looked even worse at the top of the stairs. He then looked down the hallway and saw a huge hole in the wall. It looked like someone had smashed it with a wrecking ball.

“They have a lot of parties here, the last owners?” Ted said with a nervous laugh.

“It’s a hell of a story,” Cliff replied.

He then proceeded to tell Ted about the previous owner, who was forced out of the home by the bank. But the owner didn’t want to leave. In fact, he decided one day, in a 120-degree heat wave, to barricade himself in the home. Police were called. They tried to persuade the man to leave, but he refused. After about an hour, the sheriff decided to take matters into his own hands. He went to the trunk of his car and took out what looked like a piece of silly putty. He slapped it on the outside wall of the room the man had holed himself in.

“A few seconds later, Boom! And there’s your proof,” Cliff said, pointing to the hole. “The guy didn’t stand a chance. Not sure what happened to him after that. I mean, he’s okay, but I don’t know what kind of trouble he is in. Poor bastard.”

Ted stood with his mouth wide open. He was speechless.

“Yup,” Cliff continued. “Ever heard of Composition C-4? It’s a common variety of military plastic explosive. Wouldn’t be surprised if he got it right off the base over there.”

Ted walked closer to the wall, and was about to touch the surface when Cliff stopped him.

“Oh, I wouldn’t touch that if I were you. How soon are you headed back to Canada? Tomorrow? Monday? Don’t want that on your skin when you are passing through immigration. They might think you’re a terrorist.”

Ted pulled his hand back. He decided it was a good time to call Sid. He knew what Sid would say. Ted had a bad feeling, but he tried to stay positive. Maybe he could fix that wall? How much could it cost? Plus, he had done a little dry walling in the past. How hard could it be?

Ted excused himself, went out to the front lawn and called Sid in Toronto.

“I’ve been waiting for your call,” Sid said. “How’s the house? What do you think?”

Ted described the house, how big it was, and then told him about the hole in the wall and how it happened.

“Ted, that’s not good,” Sid said in his concerned voice.

“First, you can’t fix that yourself. You would have to hire someone. As a visitor, you don’t want to be seen as working illegally in the US. They have rules about that sort of thing. Also, how do you know for sure that the former owner isn’t going to come back again and try to break in? He may not be over it yet, even after the explosion. Geez, Ted, a little elbow grease?”

As Ted tried to convince Sid it might not be as bad as it sounds, more jets flew overhead.

“What was that?” Sid asked.

“The fighter jets,” Ted said. “You could hear that?”

“Hear it? Ted, is your house on the tarmac?”

Ted paced the sidewalk in front of the house and listened to Sid trying to talk him out of the purchase.

“Maybe get him to show you something else,” Sid said.

Ted felt like a fool. He walked back into the house and heard Cliff saying goodbye to someone on his cell phone.

“I think I made a mistake,” Ted said. “I can’t do this. You didn’t tell me it was this bad. Don’t you have something else I can see? I mean, I gave you a thousand bucks and I came all the way down here?”

Cliff didn’t seem surprised by Ted’s reaction.

“Listen, I’ve got another house down the street you could see. Never lived in. It actually costs about $10,000 less. Want to see it?”

“Does it need more work than this one?” Ted asked.

The realtor explained to him that, in fact, the other house didn’t need any work. The prices in the market were sporadic, which had less to do with the condition of the homes and more to do with what the bank stuck with the property wanted to sell it for.

“Give me a minute,” Ted said, running out into the middle of the deserted street.

“Stupid! Stupid! Stupid!” Ted muttered to himself, as he banged his hand against his forehead.

Cliff was watching through the front window. He waited a few minutes then stepped out to talk to Ted.

“Let me show you this place two doors over,” he said.

Ted followed, but didn’t speak.

The house looked the same as his C4 “dream home,” and also had a “Bank Owned” sign on it.

“Ted, come inside. I think you’ll really like this one. No elbow grease. And it’s never been lived in,” Cliff said.

Ted took the tour, but didn’t hear a word Cliff said. All he could think about was how he almost bought the first house without even seeing it first, and how right Sid was in forcing him to come down and visit. Nancy was also right to be skeptical. He started to doubt whether he was capable of buying real estate in the US, and began to think about how much money he wasted on this latest whim. The impulsive boat purchase suddenly seemed small by comparison.

Ted walked over to Cliff, who was talking about the features in the kitchen. “Thanks, but I’m out,” Ted said. “And I don’t suppose I can get my deposit back.”

“Unfortunately, Ted, no.”

“Forget it,” Ted said, then walked out of the house and straight for his rental car.

As he put the car in reverse and turned to look behind him, Ted heard a knock on the passenger-side window. It was Cliff.

“You know, I was going to mention this but I think we could get the first house for $165,000 if we put in an offer today.”