Everything about Florida Real Estate

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The first thing you should all know is that the Florida Real Estate market is in a transition. The market today is different from even six months ago. The prices at the bottom and moving up as demand increases; and the inventory is depleted. We are not seeing as much flipping by investors as we are seeing “buy, fix up , and rent” investors. Upper level homes are still going wanting for buyers as retirees and second home buyers look for smaller homes in prime locations. There are still deals, but they sell quickly and often with multiple offers.

Technology has made confident buyers come to the market thinking they know what’s going on. They don’t. Zillow does not know neighborhood trends. Trulia does not know the difference between active and active contingent, and Realtor.com can’t give you the pulse of the market; what’s hot and what’s not. A good amount of the initial time spent with buyers is educating them on local conditions. Use a local expert to help guide you. And to get the full picture of the market, instead of using Trulia or Zilow, you can ask me a password to access our MLS.

The rental market is hot. But be careful of rental prices given to you in a proforma. Move in incentives and free rent are skewing yield rates. Yes you can buy rental property here and get a good return (6 to 10%), but it is rarely as good as presented. This is due to differed maintenance; move in incentives, and underestimated lease out fees and management costs.

New Homes are hot. The last time any volume of homes were built was in 2005. Some of these have never been lived in, been air-conditioned, nor had the mechanical put to the test (if they are even there). They have no warranties. Because of this buyers are looking to new homes. They will be better built, perhaps Green, and will be smaller and smarter. And financing is cheap (3.88% today). And you can get what you want in a house.

Buy and Rent is the New Flip. To build a new home cost around $120 per square foot. You can buy an existing home today for half that. The rent less expenses will return you more than you can get in a traditional liquid investment. The gradual return towards a par with replacement costs is the bonus round. I have regularly leads from cash buy and hold investors, especially from Europe. What do they want? They want homes in areas that will rent to people that will be buyers in three to five years or that they can enjoy themselves for retirement.

Cost of Owning.

What does it cost to own a rental house in Florida? In the absence of accurate numbers for a specific house I use these rules of thumb:

Initial improvement and get ready costs $8,000

Annual Vacancy loss 5%

Annual Cleaning and Repairs .08% of Purchase Price

Annual Insurance 1.2% of Purchase Price including liability

Monthly Property Management 8% at Rossman Realty

Leasing cost is 50% of the first month’s rent

Annual Taxes 1.5% of Purchase price

Selling Costs 7%-8% of selling price

Insurance Costs. It costs more to insure a home near the water or in low lying areas. You can’t get insurance on an older home without a roof inspection. If you are comparing homes, get an insurance cost estimate before you buy. If you want to rent it, make sure to have a liability insurance as well.

Hurricanes. More important to outsiders than the locals. Newer homes built since 1992 are better equipped to deal with them. Look for good drainage (we get a lot of rain), solid windows, and roof quality.

Air-conditioning costs and water costs are high. Check on insulation, age and efficiency of the air units, and make sure there is a deep well for irrigation.

Water and Sewer. Not all homes are hooked up to city water and sewer, and if they are, not all the assessments are paid.

Termites. Like the hot weather and the rain, bugs are a way of life here. Get a WDO (Wood Destroying Organism) inspection. All houses will have bugs, they can be dealt with. It’s when the bugs have been ignored for a long time you have trouble.

A good house inspection with WDO (Wood Destroying Organism) will cost you between $250 and $300. This is your best investment.

Let’s talk about the commercial market. It’s coming back. Empty retail and office space is getting filled. There are great deals on empty industrial buildings now. I do not expect that to last more than a year or two. In fact the rate of our recovery is increasing. Like a snowball, we are picking up momentum. The locations that are hot have the traffic and infrastructure. Look for a return of the industries that cater to the home building market. Medical has been soft while the doctors fret about Obama care, but I see this loosening up as well. It’s a great time for owner occupied purchases because there is money to lend to them. It’s still very tough to get investor money for commercial property.

I expect a very busy summer for both home and commercial sales. Condos are disappearing as well. (Prices are well below replacement costs)

If I can help you in your real estate needs, just drop me an email or call me at 239-240-3283

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Comments (0) Apr 01 2013

Facebook Vs Real Estate

Posted: under Investments.
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Like a lots of people, I had an eye on Facebook regarding the IPO. Even if I’m not into investing on Wall Street, having no knowledge, I was just curious what could be the outcome of it. It was definitely the talk of the town, if not the talk of the planet in this case :-) .

I put these 2 widgets side by side, so I can compare how is reacting the Facebook share and the Cape Coral Real Estate. The future will tell if it was better to invest in Real Estate or in facebook :-)
Maybe this can be useful for other investors as it is for me.


Those values are updated live, so you get the real picture here.

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Comments (0) May 23 2012

Do you really need a Real Estate agent to purchase a property?

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Do you think you can write an offer on a Cape Coral foreclosure for sale without the help of an agent? The answer is a big YES!

If you think about it, my guess is you want to save the typical 6% commission that we make. If it’s the case, you are completely mistaken. First, our commissions are not set to be 6%. It’s negotiable. And in the foreclosure and REO world, it’s the bank that decides how much they really want to pay. Most agents doing foreclosure make about 1 to 2% of the closed price as the seller representative. So the buyer’s agent is really doing something like 2 to 4%. In that case, if you represent yourself for that foreclosure home purchase, you’re really saving about those 2 to 4% commission.

Now, prepare yourself to get an accepted offer on that Cape Coral foreclosure house for sale. You will need a few things checked with the listing agent, and I have been in contact with most of them, they use to be very difficult if they are not in front of another agent because they think they’ll have to do all the work believing that you won’t be able to do your part:

  • What kind of paperwork do they want?  Typical is proof of funds, pre-approval letter from your bank, etc…
  • How many offers are on the property? Maybe it is a multiple offers situation already.
  • Is there a mandatory minimum MLS marketing time?
  • How do they want to receive your offer?  Fax, website or email.

So, once you have all that done, you’ll be able to put a good offer but you will need to know something important: the price. Don’t google that. You will not be able to rely on sites like Zillow or Trulia for pricing. They are not accurate. Hire an appraiser instead, especially if you do not have access to your local MLS. The point here is that you don’t want to pay too much or too little. Too much and you may overpay for the property and too little,you may lose the home to higher bidder.

You can also read this buying a foreclosure in Cape Coral post for more tips.

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Comments (0) Sep 26 2011

Must do for first-time homebuyers

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As you may know, the first-time homebuyers’ $8,000 credit has been extended. I think it’s time to let you know what you should do before purchasing your first home.

1. Check the selling prices‘ of comparable homes in your area. Web sites like Zillow, Trulia or Homegain are not giving you an acccurate idea of what you should expect to pay. You can also do a quick search of actual multiple listing service, or MLS, listings in your area on a number of Web sites. The best will be to ask a Realtor® of course. Choose one that work in the area you are looking to buy.

2. Use a mortgage calculator to get an idea of what your monthly mortgage payments would be if you bought today. They are plenty of them online, just google it.

3. Find out what your total monthly housing cost would be, including taxes and homeowners insurance. In some areas, what you’ll pay for your taxes and insurance escrow can almost double your mortgage payment. Make sure you can afford that

To get an idea of what you’ll pay in insurance, pick a property in the area where you want to live and make a call to a local insurance agent for an estimate. You won’t be obligated to get the insurance, but you’ll have a good idea of what you’ll pay if you do buy. Just remember that exemptions and the intricacies of local tax law (like Florida’s Save Our Homes value cap) can create differences between what a homeowner is currently paying and what you can expect to pay as a new homeowner.

4. Find out how much you’ll likely pay in closing costs. The upfront cost of settling on your home shouldn’t be overlooked. Closing costs include origination fees charged by the lender, title and settlement fees, taxes and prepaid items like homeowners insurance or homeowners’ association fees. You can see what closing costs average here.

5. Look at your budget and determine how a house fits into it. Fannie Mae recommends that buyers spend no more than 28 percent of their income on housing costs. Go much past 30 percent and you risk becoming house poor.

6. Talk to a reputable Realtor® in your area about the real estate climate. Do they believe prices will continue falling or do they think your area has hit bottom or will rise soon?

7. Remember to look at the big picture. While a buying a house is a great way to build wealth, maintaining your investment can be labor-intensive and expensive. When unexpected costs for new appliances, roof repairs and plumbing problems crop up, there’s no landlord to turn to, and these costs and can quickly drain your bank account.

So consider whether you’re ready for the expense and effort of homeownership before pulling the trigger.

Then, prepare yourself for the hunting!

If the numbers make sense for you, taking a few steps at the beginning of the homebuying process can save you time, money and aggravation.1. Examine your credit. Right now, blemished credit or the inability to make substantial down payment can put the kibosh on your homeownership plans. That’s why it pays to look at your creditworthiness early in the home-buying process. Get a credit report and comb through it for errors and unresolved issues. If you find mistakes, contact the credit reporting bureau to make sure they are corrected. It’s also a good idea to get your FICO score, which will cost you a small fee.

2. Get your docs in a row. Collect pay stubs, bank account statements, W-2s, tax returns for the last two years, statements from current loans and credit lines, and names and addresses of your landlords for the past two years. Have them ready to show to the lender. This may seem like a lot, but in this age of tight credit, don’t be surprised if your lender needs a lot in the way of documentation.

3. Find lenders and get preapproved. Getting preapproved for a mortgage helps you bargain from a position of strength when you are house hunting. The institution where you bank and a local credit union are good places to start your search. Applying to multiple lenders in the same month helps increase your chances of getting a loan approved at the best rate possible without dinging your credit score too much.

4. If at first you don’t succeed, try, try … the government? If you can’t find a bank willing to lend to you — and in the current tight credit market, it’s possible you won’t — consider getting an FHA loan. The Federal Housing Administration has a program that insures the mortgages of many first-time homebuyers. As a result of this guarantee, lenders who might otherwise feel queasy about your qualifications will be more inclined to lend to you. As a bonus, the FHA only requires a 3 percent to 3.5 percent down payment from first-time homebuyers.

5. Finally, don’t forget about the first-time homebuyer’s credit. Get your hands on Form 5405 ahead of time and send it in with your tax return immediately after your home purchase to ensure you receive the $8,000 credit as soon as possible, especially since the credit is set to expire April 30, 2010 and you must close by July 31.

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Comments (0) Dec 07 2009

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