Most buyers have many questions about Florida houses for sale and so we’ve shown a more replies to typical questions below (see this Florida Homes For Sale page for the first part):
2. Florida Houses For Sale – Financing a Purchase
Q.The price of Florida properties varies enormously, so how much do I really need to pay?
If you’re looking for a detached home (“single-family home” in US-speak), Central Florida houses for sale that are suitable for short-term rental purposes currently start somewhere in the $150,000 to $200,000 range. That would be re-sale (second-hand), likely 4 bedrooms and with a pool and furniture. New homes start around the mid-$200,000’s (i.e. $250,000 or more), furniture extra.
If you wanted a new condo or townhouse, we could find you one today from a base level of around $195,000 (furniture extra), although prices are rising. Re-sale would be from the mid-$100,000’s (including furniture). Bear in mind that the newer the home, the easier to rent. Prices in other Florida areas will obviously vary.
For a long-term rental home, which is unlikely to be something for you to use when in town because you would probably buy one without a pool and you would not furnish it (that’s what most of the market wants), you can still just about buy a new home below $200,000 and a re-sale one for between $150,000 and $200,000.
The median price of Central Florida houses for sale has increased by double-digit percentages for the last few years, and other parts of Florida have seen significant increases too. If that continues, these numbers will soon be out of date.
Q. Can I make money by buying a rental home
Yes, depending on what you’re trying to do and the sort of home you buy. If you want to spend the minimum on a short-term rental home for your own significant use, you’re should budget between 150 and 200 thousand US dollars at current prices and could (emphasize “could”) cover the running costs but you may have surpluses in some months of the year and deficits in others. The more rentals that you obtain yourself, the closer to achieving a positive cash flow you will achieve. You’re unlikely to cover all of the running costs plus the mortgage costs (assuming you take out a loan to buy the house). You should be able to fund either running costs or the mortgage cost.
Current demand from renters means that you can get the biggest gross rental income, and therefore the best net income, by going for one of the larger, new homes – there are homes of 6, 7, 8 and even 10 bedrooms on offer right now and even larger, and these attract premium rental rates and more weeks of occupancy. One client of ours expects to gross more than $70,000 this year from her 6 bedroom home, for example. That obviously demands a much larger investment up-front and it requires the right choice of location, home, furnishings and property management. We can advise you on all of those.
Q. Can I cover all of the expenses of owning a home by renting it out?
Possibly. For a modest re-sale home, excluding loan costs, be prepared for costs of $1200 per month or more. You may be able to cover all of this and perhaps a little more. You may not cover all of this. Business is seasonal, so income will vary month to month, although many expenses do not, so save your surpluses to pay for the leaner months. For a larger and newer home, monthly expenses can be double the figure above, sometimes even three times as much. Income can be even greater, sometimes as much as $5000 or more. It all depends on getting the right home/community/furnishings/management company and so on. Ask us to help you do that!
Q. How do I get the maximum rental income? Can I / should I do my own bookings?
- To repeat or paraphrase what it says elsewhere “It all depends on getting the right home/community/furnishings/management company and so on. Ask us to help you do that!”
- Avoid using tour companies, focus on US renters
- Do at least some of your own bookings. Work with a management company that allows that, not all do
Q. How many weeks am I going to rent it? How much will it rent for?
Back to the same old mantra – it depends. On the type, size and quality of home that you buy, how you rent it and how good a condition you keep it in. Some renters get 10 weeks a year or less and they achieve $50 to $100 a night. At the other end of the scale, one of our clients is asking and achieving more than $500 a night for his 8 bedroom home and he’s booked up for most of 2015. Think seriously about doing your own bookings if you want to maximize income and ask us for advice on how to do that.
Q. Why are Homeowners Association (“HOA”) fees so different from one property to the next?
There are several reasons. One major difference is that some communities are “resort” type communities, with a clubhouse containing a large community pool, a gym a theater and so on, so the Florida houses for sale at this type of development come with higher HOA fees to fund those facilities. The costs of those facilities are paid for by the community and divided among each homeowner. Another reason is that some communities provide additional services e.g. lawn cutting, internet service, paying for water bills. To compare each community, you need to understand what’s in each HOA’s services. We can help you to do that.
3. Raising The Money
Q. Can I get a US loan to buy one of the Florida houses for sale?
Yes you can, but it’s a specialist area and you need to talk to the right people (we can connect you with loan companies that deal with this type of mortgage). Loan conditions vary regularly but right now you can get a loan of around 70 percent of the value if you are not a US resident (i.e. if you are a “foreign national”). Advance warning: they will ask you to provide lots of information, for example here is one set of information required from loan applicants as recently issued by one lender:
- Copy of passport(s) and driver’s license
- Complete last three months bank statements.
- Must have a U.S. bank account.
- Purchase agreement. (When available)
- Reference letters.
- Clear copy of one utility bill to evidence primary home address.
- Employment letter for employed applicants and an accountant letter with last 3 years tax returns and year to date financial statement for self-employed.
Each loan company has different requirements but this gives you some idea of what is required.
Q. Is it better to get a loan in Florida or in the UK?
It can be better to raise the money in the UK, depending on your circumstances. Interest rates on loans on Florida houses for sale may be slightly higher if you go for a US loan on a vacation home; things like stamp duty and other legal costs and admin fees (collectively called “Closing Costs”) will almost certainly be higher.
4. Managing Your Home
Q. Can I manage it myself?
Not really. For almost everyone, that option is crazy. You’re 4000 miles away. How will you deal with maintenance problems or renter questions, for example?
Q. Can I buy a home and then just let the management company deal with everything?
That’s a high risk strategy that we discourage. Don’t think of Florida houses for sale as a passive investment, because you could be in for some disappointments if you don’t keep an eye on things. Treat it like a business – if you’re going to invest a serious sum of money, take an interest, review things regularly, pay your own utility bills as a way to measure what’s happening and pay regular visits to check on how your money is being taken care of. That’s the only way we know.
Q. What does a property management company do?
There are different types of company. Virtually all companies handle “caretaking” tasks such as routine maintenance (pool and lawn for example) and post-rental cleaning of the property to get it ready for the next renter. They schedule/monitor bigger issues like painting and AC repairs. They can also act as a point of contact for guests/renters, including checking in the renters and handling questions or concerns during the course of the rental.
Some also handle admin tasks like licensing the home with the State, collecting and paying over sales tax and supplying monthly statements to the owners about income and expenses. The bigger ones also generate rentals to put into the house, taking a share of the income as a commission.
Check out two or three before you settle on the one that you want, to make sure they represent the best mix of services and style of operation to meet your requirements.
Q. How do I know that my home will be looked after properly?
Choose the right property management company: at the same time as you’re reviewing Florida houses for sale, interview prospective management companies too so that you find the right one. Review costs and income monthly one you own a home and you’re paying bills. Visit regularly to see how things are going.
5.Setting Up Your Home
Q. How much do I need to budget for furniture for my new short term rental home? If I buy one of the brand new Florida houses for sale, how do I furnish it?
Expect to spend a minimum of $20,000 to $25,000 to furnish your new 3 or 4 bed short-term property. If you go for one of the bigger homes, 7 or 8 or 9 bedrooms, budget a minimum of $40,000 and as much as $50,000 or $60,000 or sometimes even more – it’s up to you. You can save some money by doing it all yourself, but most buyers use the services of a specialist furniture company and we can put you in touch with several of them so you can compare costs and quality. These businesses provide everything including pots, pans, pictures and bedding as a complete package. If you buy a re-sale house, these usually come with the furniture so you can just replace things as required.
6. Expert help at no cost
Q. Who do you work for – the builder? The seller?
We actually work for you, we’re on your side.
The way that the Florida system works is that even though our fees are paid by the Seller (new builder or second-hand home seller), we advise you solely and our loyalty is to you as a Buyer.
The new home builder pays a commission to us when you buy; the second-hand home seller divides the commission he pays between his “Listing Agent” (Estate Agent in the UK) and the Buyer’s Agent (us, if we help you). So if you’re a buyer, you get the benefit of having local expertise to find the best bargains and to avoid the pitfalls, at no cost to you. There are both bargains and pitfalls and you definitely need to know about both of those!
In addition, please understand that we have no interest in pressurising you to buy and we get our satisfaction from finding you the right home. Sure, we make money only when you buy a home, but we are motivated just as much by getting you what is in your best interests as we are by the money, because job satisfaction and doing things right is very important to us. We know that we discourage some clients because where applicable, we are prepared to tell them that buying a vacation home is not in their best interests.
Finally, since we have knowledge of and access to all of the professionally-listed Florida houses for sale, whether re-sale or new (again, that’s the Florida system, every Realtor can sell everyone else’s homes), whichever type you want doesn’t matter to us. We’ll tell you the pros and cons of each approach and let you make up your own mind.
Q. Why don’t I just talk to the Listing Agent direct?
The person that is associated with most of what you see on the Internet is the Listing Agent for that home, the equivalent of a UK Estate Agent. He/she is likely to play up the merits of property or properties in question that he lists and to play down the merits of alternatives because that approach brings him/her the most money. And most real estate people over in Florida are even more money-hungry than you experience with UK property sellers!
We are more than happy to explore the range of options that you have to make sure you find the right home. We make money when you buy a home, but we want it to be the right property and we’d rather you didn’t buy than force-fit you into something less than ideal, just to make us a short-term gain. We’re funny that way!
Q. How much are your fees?
See above – our fees are zero, as far as you are concerned.
Q. What is the scope of your help?
Think of us as a “Concierge” service when you’re planning to buy one of the Florida houses for sale – we help you from the outset to locate the right place, hold your hand through the buying or building process, work with you to get your place set up and to attract the best rental income, and then we’re there when you’re up and running if you need support. Ask us for client referrals if you need to know more.
We hope that the above points help you to understand how things work when you’re contemplating buying one of the many Florida houses for sale, but please contact us via the form on this page with any other questions that you have.