British buyers are coming to Florida in greater numbers to buy holiday homes and investment properties. British buyers look for advice on how best to approach buying Florida real estate. They should avoid thinking that the American system is the same as in UK. US system is generally more efficient and affords more Protection for the buyer.
Buying a property in Florida is a big step. Here are six things you can do to ensure your Florida property investment is a success.
Understand Your Motivation
Why do you want to buy a home in Florida? How will you use it – winter/retirement home, family holidays, holiday rental, purely an investment property, or a combination of these things? How you intend to use the property will influence your choice of location and the property style and size. Some homes are not zoned for holiday rentals. While Orlando has many homes specifically aimed at holiday lettings, coastal areas have a limited supply of such homes, and you will need the help of an experienced local agent to identify them.
Establish a Budget
Decide how much you can afford to spend, and whether you will purchase with cash, or obtain a mortgage. If you wish to finance the purchase, mortgages for foreign nationals are available in Florida. Typically they will require 30-35% deposit and proof of U.K. based assets and income. Alternatively, you may wish to release capital from a U.K. property, or work with a U.K. based lender for the Florida purchase.
Location, Location, Location
Florida is a huge state – about 30% larger than England – so you really need to have a feel for where you would like to purchase. Orlando/Kissimmee is the number one destination for U.K. buyers, followed by Sarasota/Bradenton on the west coast. Orlando is perfect if you plan to spend shorter periods of time in Florida and make regular visits to the many theme parks in the area. A coastal area may be more suitable if you plan on extended stays and would appreciate the opportunity for broader-based activities. Longer stays will allow you to explore the beaches and coastal waterways, indulge in golf and water sports, or spend time enjoying Florida’s cultural offerings: theatre, music, art, museums and much more.
Understand the True Costs
It’s not enough to know the cost of the property. You need to consider “closing costs” and cost of ownership. Closing costs are associated with the process of a buying a home. They may include inspections, stamp duty, title insurance, property taxes and building insurance for instance. If you pay cash for the property, budget 2.5% of the purchase price to cover closing costs. If you have a mortgage, the closing costs may be significantly higher. You should also consider the ongoing cost of ownership. Florida’s gated communities with resort style amenities come at a cost. Be sure you understand the Home Owners Association (HOA) fees and property taxes, and factor these into the annual running costs of the property.
Plan Early for Your Currency Needs
Even a slight movement in the exchange rate between Sterling and the U.S. Dollar can mean a big difference in the actual cost of the home. Early in the process, establish a relationship with a specialist foreign exchange company who will help you change funds at the best possible time.
Choose an Agent, not a House
The property market in Florida is structured in such a way that a single real estate agent has access to all resale properties that are being offered for sale. A good agent will also know local builders and new construction options in their market. Your chosen agent works for you, not for the seller. Typically your agent will share in the seller’s agent’s commission, so their services are free to you as a buyer. All agents in Florida must be licensed by the state, and there are more than 127,000 of them! Try to locate an agent who is a Certified International Property Specialist (CIPS) – this indicates they have gone through additional education to make them more effective at serving overseas buyers like you.
About the Author
Patricia Tan moved from England to Florida in 1997 and for the past 10 years has helped many British buyers invest in Florida homes. She is a Certified International Property Specialist (CIPS), and Graduate Realtor Institute (GRI). Her real estate team www.YourGlobalAgents.com operates from Coldwell Banker in Sarasota, and they can provide buying advice through Coldwell Banker’s extensive network of offices around Florida.
Foreign real estate investment in the United States was at an all-time high in 2014. As European and Asian cities implement mansion taxes, more overseas buyers will be looking to purchase homes in places like Florida. Florida has no wealth tax and for US residents, is a great place to create your homestead in order to avoid taxes such as estate/inheritance, and state income taxes.
Places like New York, London, Singapore, Hong Kong, San Francisco, and Paris will always have those who want to live there and won’t mind paying the tax for that privilege. But for those just looking to invest or simply have a holiday or vacation home, these taxes will make them consider other cities or countries.
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The US housing market has finally stabilized in most areas. Southwest Florida (Sarasota, Bradenton, Venice, Siesta Key, Naples) is still one of the housing markets that is more affordable than its historical average.
So what does this mean for buyers looking to purchase a home in the sun? There's still room for price appreciation which means it is still a good time to buy. With financing more readily available and interest rates still low, both domestic and overseas buyers are still coming to Florida to invest in vacation/holiday, retirement, or year-round residences.
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I remember when Lakewood Ranch was getting started in the late '90s. It seemed so far away and the comment from many locals was that no one would ever live "that far away."
Fast forward to today and Lakewood Ranch, Florida is a thriving residential community that spans over Sarasota and Manatee Counties. Home to numerous residents (including some celebrities and sports professionals), it has become a thriving area of growth for both new homes and businesses.
Lakewood Ranch is also home to over 35 private ranches with over 600 horses for its 9 fields of rugulation sized polo fields that can be played on year round. It is also home to the Sarasota International Cricket Club, founded over 25 years ago, whos fields are laser-leveled!
With its close proximity to I-75 and the new University Town Center (UTC) mall, Lakewood Ranch has remained to be a hotspot for both locals on the move and newcomers to the area. Gated communities and luxury homes make this neighborhood a great place to live for those relocating here year-round or just wishing a vacation/investment property in the Sarasota/Bradenton areas.
To read more about Lakewood Ranch's evolution, click here.
It’s official! Most press reports now indicate that the U.S. housing market is in recovery. Across the country, the numbers of transactions are growing, inventory levels are shrinking and prices are rising. Of course the United States is a huge country and it is difficult to generalize, especially when location is such a key element in a property purchase. However, Dr. Lawrence Yun, chief economist for the National Association of Realtors® (NAR) has stated that the recovery is strengthening and to expect limited housing supplies for the balance of the year in much of the country.
In a statement dated June 20, 2013 Dr. Yun went on to say that” housing numbers are overwhelmingly positive. However, the number of available homes is unlikely to grow, unless new home construction ramps up quickly. Only additional supply from new homebuilding can moderate future price growth”. The speed at which homebuilders can ramp up production remains to be seen. Many scaled back their activities during the market’s slowest years, and a shortage of skilled labour is being experienced in many areas.
Latest research by NAR offers this perspective on the market:
So what does this mean to foreign investors who have not yet invested in the U.S.A. market? Have they “missed the boat?” Not necessarily. Homes in many areas are still being offered for sale at prices up to 40% below where they were at the height of the property boom in 2005 – indicating a good opportunity for capital gains. Rents have continued to rise as rental demand has increased, giving landlords a good return on $$$s invested.
As I travel around the world educating would-be investors, the question I hear most often is “How do I get started?” The good news is that it is not hard to buy real estate in U.S.A. Foreign investors have the same ownership rights as Americans, and the market is highly regulated which affords the consumer some level of protection.
One of the keys to investing successfully is to accept that one size does not fit all. You should establish your own investment criteria and then find properties that meet those criteria. Your budget, availability of financing, timing, attitude to risk, and exit strategy is something unique to you. Having established what these criteria are, you should then strive to identify a market(s) and properties that meet your needs. This can be difficult to do from another country, so your next task should be to identify an agent to work with. The agent may be in your home country, or someone who resides in U.S.A. who is experienced in working with overseas investors. Much can be learned from the right professionals.
I offer this guidance on selecting an agent. Interview several agents, either by email, phone or face-to-face. You should not be embarrassed or feel awkward about telling the prospective agent about your selection process, and the need to ask a few questions. The agent will respect you for being open about it.
Six questions you should ask a prospective agent. One or two of these pertain specifically to American agents, but can be modified for your local market.
Only members of the National Association of Realtors® may use the term Realtor®. NAR do offer membership to real estate agents outside of U.S.A. This is an important differentiation, as Realtors® are bound by a Code of Ethics over and above the minimum requirements of their local real estate licensing law. Generally the Code of Ethics requires a Realtor® to:
This is a good indication of the agent’s experience and dedication to their profession. Generally, agents who have made real estate their full time career are more likely to be knowledgeable about the latest laws, standards of practice, trends in the market and how they may affect you as a buyer.
The answer to this question is an indication of how seriously the agent takes their personal education and responsibility to be aware of the best ways to serve their clients. Designations indicate that the agent has undergone structured training courses, run by the National Association of Realtors® aimed at providing tools, knowledge and skills needed to work successfully with clients. The most important designation for an overseas buyer to look for is the CIPS – Certified International Property Specialist, a designation is held by a relatively small number of agents, but one that is entirely focused on working a global environment. You will find a directory of CIPS at NAR’s website www.realtor.org
An agent operating alone may do an excellent job, but if you need assistance at a particularly busy time you may get frustrated by their lack of availability or responsiveness – especially as you will be working across different time zones. Try to work with an agent who is part of an immediate “team” that includes other Realtors® and administration staff. Beyond that, they should also have an extensive support team provided by the company they work for – effectively giving you multiple levels of assistance should you need it.
Don’t be afraid to ask for customer testimonials or references, and the ability to speak to previous clients if that is what you need to feel comfortable in making a decision about the agent.
The agent should be able to articulate a number of areas where they will exercise particular care in working with you as a foreign buyer. Some of these may include: taking title, qualifying for a mortgage, home inspection, insurance considerations, currency exchange, money transfer and money laundering regulations, taxes, immigration, logistical problems associated with document signatures and notarization, and so on. Where these areas require the service of another professional, such as a real estate lawyer or accountant, the agent should be able to make the appropriate introduction.
Here are two examples of properties which may meet your investment criteria.
Atlantic Ocean Views Close to Miami
High quality construction and finishes in these high rise condomoniums that sit on the intracoastal waterway with views across to the Atlantic Ocean. 805 sq ft 1 bedroom units from US$195,000
Florida Gulf Coast - Waterfront with Boat Dock
Hard-to-find brand new construction directly on the water. Each town home has its very own boat dock. Waterfront locations will always have limited supply and command a premium. These homes represent excellent value from just US$250,000 and 50% financing available. Valu
Florida had 23% of all US residential home sales to non-resident foreigners from June 2013-June 2014. Of the $7.97 billion purchased by these non-residents, 32% of sales were from Canadians. That’s the highest percentage of Canadians purchasing in the state since 2011. The UK which held the #1 spot for years had only 7% of all Florida buyers.
Canadians are mainly still purchasing properties for vacation homes but the number of Canadians purchasing for pure investment has increased exponentially. Overall, the price point for half of the Canadians tends to be under $200,000. The median price is $260,800 and 89% paid cash. Lending has become easier for buyers with more being able to obtain US mortgages.
According to the National Association of Realtors, the median national home price of all sales in March was $199,575. From March 2013-2014, Canadians accounted for 15% of all international sales totaling $13.8 billion – the highest in international transactions. International sales across the US were up 35% since last year totaling $92.2 billion.
Inventory continues to be a problem for Florida agents. Buyers are still flooding the market but finding a very narrow selection. In many cases, if they do find something they like, they sometimes end up competing in a multiple offer situation with other buyers. For this reason, many purchasers are now back to purchasing new builds/pre-construction and spending a little more to get exactly what they want.
According to Florida Realtors, Canadians are purchasing all across the state but tend to favor Tampa/St. Petersburg, Naples/Marco Island, Fort Lauderdale, Cape Coral/Fort Myers, and Sarasota/Bradenton. While condos tend to be preferred, the percentage of single family home buyers has increased. The resort areas are seeing the most buyers but suburban areas are becoming more popular as buyers spread out to different areas in search of deals.
Outside of Florida, Canadians have been investing in Las Vegas, Detroit, and Los Angeles. Buyers should work closely with a Certified International Property Specialist whenever investing to ensure they are being properly represented and advised on protecting their assets. Have you seen the story about the man trading his house in Detroit for an iPhone for he cannot sell or rent his “cheap” investment property even at $3000? It pays to work with a professional who knows the market well and has a team of experts to guide you through the transaction.
Despite low inventory, foreign buyers are still looking at the USA as a secure investment. Most buyers purchase for relocation, education, diversifying/protecting their assets, or simply for vacation and lifestyle.
International buyers have continued to concentrate on four states: Florida, California, Texas, and Arizona. These four states account for more than half of all international purchases. According to the National Association of Realtors, Canada, China, India, Mexico and the United Kingdom remain as the major sources of purchasers. Purchasers from Central and South Americas tend to favor Miami due to the ease of direct flights and its Latin flair. Canadians tend to focus on Florida and Arizona particularly due to the weather. Mexican purchasers tend to focus on Arizona and Texas, most likely because of its close proximity. Asian purchasers tend to migrate to California due to the ease of flights and culture.
So what about the Brazilians? In 2013, Brazilians accounted for 2% of all foreign sales in the United States. This is a small decrease in sales from 2011-2012 where purchases were 3%. The depreciation of the Real and economic conditions are potential reasons for the slight decline.
In general, Brazilians favor Florida and accounted for 6.5% of all international sales across the state in 2013 (down from 9.8% in 2012). While this may seems like a small number, it ranks them #3 in the state for foreign investment. The most popular area was Orlando followed by Miami (the top 2 destinations of all foreign buyers). Other areas of interest include Sarasota/Bradenton and Tampa/St. Petersburg, both on the Gulf Coast or west coast of the state.
Brazilians are typically spending more on real estate than other foreign countries (with Venezuela being the exception). While almost 50 percent of foreign purchasers bought property priced at $199,000 or less, Brazilians were spending between $ 300,000 -$450,000 according to Florida Realtors.
Financing has become easier to obtain over the past few years, and more Brazilians are leaning towards having a mortgage (18%) versus paying cash (82%)
While condominiums/apartments used to be the biggest preference, there is a growing this year for single family homes and even commercial properties.
Unlike many foreign buyers, Brazilians still prefer to be in cities versus suburban/rural areas or even resorts – but this is slowly changing as the appeal of communities that offer amenities (such as golf) become more popular. Unlike many foreign buyers, Brazilians are mostly using their homes solely for vacation and family with only about 11% purchasing just for pure investment or rental potential. One of the main reasons for this is that Brazilians tend to stay in the USA longer (anywhere from 3-6months) compared to other foreign owners.
There are many opportunities available for investment today – both in residential and commercial. With many cities having little inventory, developers of new construction are seeing an influx of Brazilian buyers. In fact, Brazilians are responsible for purchasing most of the excess condominium inventory in Miami over the past 5 years. Prices of residential properties have been seeing steady increases over the past year. Commercial investment is beginning to show a sign of improvement as the economy continues to get stronger and new businesses are opening.
When considering an investment, it is best to work with an agent who not only understands your objectives but knows there are other factors – currency exchange, potential immigration, tax consequences, and financing – that are critical to the process. Searching for a Certified International Property Specialist in the United States is your best option to help you achieve your goals and guide you comfortably and securely through the process of buying outside your home country.
The Sarasota County real estate market remained on record pace in October 2014, with 1,011 property transactions recorded for the month – the fifth time the 1,000 level has been reached in the past eight months. The total was 23.3 percent higher than October 2013’s sales of 820, and also 8.2 percent higher than the September 2014 sales of 934. Sales for the first 10 months of the year now stand at 9,795, or 417 sales over last year’s total. Sales in 2013 wound up as the second highest level in the county’s history. If sales continue at this pace, 2014 could surpass the historic year of 2004, when 11,482 sales were recorded in the county.
The breakdown for closed sales in October 2014 was 723 single family homes and 288 condos sold, according to figures released by Florida Realtors®.
The median sale price for single family homes stood at $195,000, up slightly from the September figure of $189,000, and also up from last October’s level of $186,388. The condo median was $175,000, a drop of 11.4 percent from the September figure of $195,000, and identical to last October’s median price. The fluctuations in condominium prices have not been unusual in recent years, compared to the steadier nature of the single family home market, and tend to reflect the buying tendencies of investors in the market.
The median sale price for the 12-month period ending in October, which moderates monthly swings, was $196,000 for single family homes, 10 percent higher than last October’s 12-month period of $178,000. For condos, it was $180,000, up about 12 percent over last October’s 12- month period of $162,900.
“The season is only just beginning, and no one is reporting a holiday slowdown in market activity at this point,” said Sarasota Association of Realtors® President Peter Crowley. “In the past few years, we haven’t observed a major drop off in sales in November and December. With the national economy picking up steam, and unemployment still dropping, I’m optimistic we’ll continue to see these strong numbers.”
The current inventory of available properties stands at 3,791, up about 3.4 percent from the September figure of 3,666, but down about 6 percent from last October’s level of 4,032. The
inventory tends to rise as many local residents begin testing the water for a home sale as the seasonal residents return. The month’s supply of inventory stood at 4.0 for single family, identical to the September figure but down from last October’s figure of 4.4. For condos, the October figure was 3.9, slightly higher than September’s figure of 3.8, but lower than the October 2013 figure of 4.3.
In October, 24 percent of total sales were short sales or foreclosure sales, the same as in September. Last October, the figure was 25.8 percent, just above the current figure. Distressed listings in October 2014 represented 10.1 percent of all available properties. This percentage has ranged from 10 to 12 percent throughout the year.
Pending sales remained strong in October 2014, hitting 773, which was 17.5 percent lower than September’s figure of 938, but close to last October’s figure of 820. This should translate to sales in November 2014 coming in close to the 818 closings in November 2013.
“The year 2014 is shaping up to be one for the history books in Sarasota County,” said Crowley. “With the approved merger of the Sarasota Association of Realtors® and Manatee Association of Realtors®, we will soon be reporting on sales and other statistics in both counties. It would be remarkable if we achieved the record for Sarasota County sales in such an historic year for our two associations.”
// Zillow Blog
An Austrian man’s desperate attempt to unload his Detroit investment property found a happy ending this week with a sale — and an iPhone 6.
Andreas Gindelhuber bought a $41,000 foreclosure on Detroit’s east side in 2010, hoping to make some money on it as a rental property. But the Detroit market continued to plummet, and home values on his street only worsened as neighbors walked away from their houses, leaving them vacant. When Gindelhuber’s tenants left seven months ago, he owed $6,000 in county property taxes. He hired a local agent, Larry Else, to sell the house.
Their rock bottom price of $3,000 found no takers after four months, so they had a brainstorm.
“I’d be willing to trade it for an iPhone 6 or an iPad 32 GB,” Else remembers Gindelhuber telling him.
“If you’re serious about that, I think that’s a really good idea that would make this listing stand out,” Else said.
Else had only peeked at the home, but he knew it would be hard to give away. The 3-bedroom, 1.5-bath colonial is smoke-damaged, missing all its doors and windows, and carries the $6,000 tax bill. There’s a chair on the roof of the porch. Else added the iPhone swap to his listing.
What happened next was one of those Internet miracles: The local Fox affiliate spotted the listing on Zillow and did a story. The listing went viral, and the house sold. Else wouldn’t share the sale price, but said it was less than $1,000, to a buyer who lives a block down on the same street.
“He loves the home and thinks it’s going to be a beauty,” Else said.
But Gindelhuber still didn’t have his iPhone 6. Wednesday morning, Else got an email from a German man who saw the story in a German magazine and wants to donate his iPhone 6.
“I’m not interested in this villa, but I wanted to donate my iPhone 6 to the seller of this house,” the man wrote in an email. “It’s brand new. … The advertisement touched me somehow.”
Photos courtesy of Larry Else.
The Sarasota County real estate market remained on pace for near record sales numbers in September 2014, ending the month with 934 closed transactions - 14 percent higher than last September when 817 properties changed hands. Sales for the first three-quarters of the year now stand at 8,784, about 200 sales over last year's pace which wound up as the second highest sales year in the county's history. A strong closing quarter (sales of 900 per month or higher) could push the final figure near the historic year of 2004, when 11,482 sales were recorded in the county.
The breakdown for closed sales in September 2014 was 688 single family homes and 246 condos sold, according to figures released by Florida Realtors®. Closings were down slightly from the August 2014 figures of 698 single family homes and 277 condos sold (975 total).
The median sale price for single family homes stood at $189,000 for single family homes, off slightly from the $195,750 in August 2014 and almost identical to last September's figure of $189,902. The condo median was $195,000, up about 10 percent from last month and up 18 percent from last September's figure of $165,000. The fluctuations in condominium prices have not been unusual in recent years, compared to the steadier nature of the single family home market, and tend to reflect the buying tendencies of investors in the market.
The median sale price for the 12-month period ending in August, which moderates monthly swings, was $196,000 for single family homes, 10 percent higher than last September's 12-month period of $178,000. For condos, it was $180,000, up about 12.5 percent over last September's 12-month period of $160,000.
"We are seeing steady, strong numbers for the Sarasota County real estate market," said Sarasota Association of Realtors® President Peter Crowley. "The first three quarters of 2014 remain on an historic, positive pace, and our members are helping to make the dream of home ownership come true for thousands of buyers. Sarasota is a unique, incredible place to live, work and play, and the world has obviously discovered that fact!"
The current inventory of available properties stands at 3,666, down about 2 percent from the August figure of 3,745 and down about 8 percent from last September. The inventory has dropped very close to the low point of recent years - the July 2012 figure of 3,644. The month's supply of inventory stood at 4.0 for single family, down from August's figure of 4.1 and lower than last September's figure of 4.4. For condos, the September figure was 3.8, the same as August 2014 and lower than last September's figure of 4.0.
In September 2014, 24 percent of total sales were short sales or foreclosure sales. This was up slightly from the 22 percent figure in August 2014. Last September, the figure was 22 percent, just below the current figure. Distressed listings in September 2014 represented 10.3 percent of all available properties. This percentage has ranged from 10 to 12 percent throughout the year.
Pending sales remained strong in September 2014, hitting 840, about the same as August's figure of 832, but well ahead of last September's figure of 750. This should translate to sales in October 2014 coming in ahead of 2013's figure of 818 closings.
"I remain confident and encouraged with the numbers we are witnessing," said Crowley. "If we do wind up at or near record sales levels, it is a reflection on the dynamic professionals that serve our market, and of course the incredible community that we live in."
Click HERE for the complete press release in PDF format, plus two pages of statistical charts.
Sarasota Association of REALTORS®