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

Cape Coral flipping properties

Posted: under Investments.
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It’s time again! Time to flip properties, especially here in the Cape Coral area where foreclosures have hit badly in the last couple of years. Great finds can be made these days. If you have the will to get involved in the rehab/flipping field, here are 10 tips for you to keep in mind.

1. Do not get emotional about house flipping. It is after all a business. If the numbers do not work, proceed to the next property. Some investors commit the mistake of being too attached to the flip that they sell at a high price and end up holding the flip longer thus reducing profit.

2. First impressions count. Pay attention not just to the inside of the house but the outside as well. You cannot show off all the upgrades done inside the house if potential buyers are turned off by the outside appearance of the house and its surroundings.

3. Personal tastes are a no-no in a flipped property. Your flip needs to be attractive to buyers, not you. You should define who your target buyer is and what is his/her preferences. Color is a vital part of flipping houses. Stick to neutral colors especially when it comes to painting and laying the carpet.

4. Spruce up the kitchens and the bathrooms. They will noticeably increase the price of a house. But be sure that fixtures and appliances match the target price range. If the kitchen and bathrooms look clean, sleek and updated, the house will sell faster and for a higher profit.

5. In house flipping, time is money. After making a detailed list of renovations to be done, come up with a timeline. A timeline is an important way to let contractors know when the next group of workers needs to be in a specific part of the house. One rule of thumb is to work from top to bottom and tackle the big work projects first.

6. Hire a good contractor. You cannot be at the job site all the time. This is where the contractor comes in handy. He can keep a close watch on your time line and also the part of the budget that is his responsibility. He can keep track of problems and readily find solutions. The easiest way to find a good contractor is through referrals.

7. Be ready for paperwork. There are loads of paperwork that accompany house flipping. The most important paperwork you will have to attend to are permits. It takes time to obtain permits so you need to apply for them before work begins. Not having the necessary permits can cause work stoppage and this cost money. Contracts and receipts are doubly important. Be sure to keep them. You also need to obtain insurance coverage not only on the property but the workers as well.
8. Keep track of your progress. Throughout the entire house flipping process, you have to constantly monitor your progress. That way, you will know at any given time where you stand on the project. This will help you keep focused. Time is of the essence in house flipping.

9. Start small or simply, and then work your way up. Your first house flipping project should only entail cosmetic work. You may not get a huge return on your investment but you will surely learn valuable lessons and develop experience.

10. As with any business venture, expect the unexpected. You will certainly encounter something that you simply did not expect. It may be a problem that appears hours before the transfer of ownership. You will almost always run at least a little over budget or hold the flip a little longer than expected.

Go get them or let me help you to find them :-)

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Comments (0) Dec 21 2009

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