FLORIDA KEYS AND KEY LARGO REAL ESTATE ARTICLES

Distressed, Depressed Florida Vacation Properties with Potential

Buying a home, whether for investment or actually planning to live there is challenging in today’s real estate market. And with current economic conditions, you may be hesitant to take the plunge, always thinking in the back of your mind, “Maybe the price will drop further!” Well, sometimes it does and sometimes it doesn’t. One general way to guard against the unthinkable price drop is by purchasing a home that has already taken a deep plunge due to its condition. Maybe the prospective investment home could be described as “shabby” and maybe there area few “rocks” under the surface, yet to be discovered by a hapless investor. At the same time, such properties may also present a real estate investor with tangible opportunities and many of these can be found down in Florida.

The Florida Market is Depressed...but Depression Sometime Spells Opportunity
While depressed values in Florida may be true, there are still attractive opportunities to be found. Among the most promising are homes and condos located in desirable vacation areas, especially in parts of Florida, like Vero Beach and the Florida Keys. We’re considering homes and condominiums that might be defined as ‘distressed properties’. Many of these could be near the beaches or waterfront areas and normally could be rented out on the weekly or monthly basis during most of the year, if they were in presentable condition.

Florida vacation properties will always be in demand by tourist regardless of the economy:

• In a weak real estate or economy, people will still take vacations, but rather than drop thousands for lavish destinations in Europe or elsewhere, Florida is still a great vacation destination.
• In a strong economy, many will still opt for Florida as a fill in or second vacation. It’s easy to get to Florida from anywhere in the U.S. and airfares to and from are typically reasonable

The Florida Vacation Connection
The areas we’re considering are located mostly on the east coast of Florida, such as Vero Beach and the Keys. Although parts of the west coast are also desirable and quite obviously this approach will certainly work there, as well. Single family homes or condos near the beach or the shore front areas will command high prices, but in today’s real estate markets, what is high anymore? This investment strategy is intriguing, but there are a few factors that must be considered.

Averting a Home Purchase Disaster
Obviously, there are dangers inherent in purchasing distressed properties. Sometimes the previous home owners never maintained the properties very well and sometimes they’ve moved out because of foreclosure and actually vandalized their own homes, rendering them unlivable. Other times, a home is just so old that modernization is absolutely mandatory. There are many reasons why a home is in substandard condition. Should this deter you from making a purchase? No, not if appropriate precautions are taken prior to finalizing on the purchase. And the price can be adjusted downward, if possible.

Also, keep in mind that real estate in Florida vacation areas will always be in relatively high demand because of its income generating potential. Unlike typical residential locales, the land in vacation areas will always have a high value relative to other areas in the sunshine state Even if a home must be practically rebuilt, this renovation will further enhance the value of the investment. Caution is the name of the game and making sure that the price is consistent with your minimum income generation expectation is your ultimate goal.

However, there are fundamental issues that must be explored and answered to your satisfaction in order to avoid a catastrophic mistake, prior to finalizing on this type of real estate transaction.

1. Question the neighbors as to what type of person the previous home owner was. If your sense after speaking with the neighbors was that the previous occupant was erratic and possibly negligent about maintaining his home, you might avoid the purchase or at least you’ll be on guard.

2. Always, always, always check out the zoning. If short term rentals are prohibited, don’t expect to obtain a zoning variance. The property, under these circumstances, can not typically generate enough revenue to justify the purchase.

3. Always use an expert home inspector that has been recommended. He should be able to sort out and identify major problems from minor problems. Once problems are identified, then they must be quantified and whether you perform the renovation yourself or use outside contractors, the cost of repair and renovation must be realistic. You should factor in a 10%-20% cost over run in determining your cost basis, to account for unforeseen circumstances.

4. If the home you’re considering purchasing is a VA repossession, attractive price and mortgage opportunities are available, including obtaining financing directly through the VA. The VA however doesn’t guarantee home condition and therefore inspection is still mandatory.

5. An alternative approach might be to use the FHA HUD program section 203(k) which will assist you in rehabbing a property. The only limitations are with condos for investment which is prohibited under HUD regulations.

6. Whenever possible, consider an investment vacation home in an area where the property you’re considering is one of the lesser expensive properties in a more expensive area. This will offer some upward potential, as opposed to buying a more expensive property in a lower priced area.

7. Now, once you have established realistic and conservative costs, you will need to run a rate of return analysis to see if your potential weekly/monthly rentals can afford you the ability to purchase the home and enjoy a positive or at least break even cash flow after all relevant costs, realistic expenses and revenues are taken into consideration.

Assuming that the number work, you can begin the price negotiation process. Also keep in mind that if the property is now salable and economic conditions have substantially improved, you can always sell and cash out your investment for a profit. Of course, having a vacation property in a sought after location gives you a place to go and relax from the stresses of life.

FIVE TOP MISTAKES IN BUYING KEYS WATERFRONT PROPERTY

1. Not Understanding the importance of controlling Depth.
When buying waterfront property, both the actual value of the property and it’s usefulness as to boating are governed by controlling depth.

What is controlling depth?
It is the depth at which your boat can safely get to open water at average low tide. Another way to look at it is boating draft.

For example, most sailboats have at minimum a 4 foot draft—meaning they need at least 4ft of water to safely navigate without running aground.

So-If you own a sailboat or are ever considering the purchase of one, the waterfront property you buy has to have at least 4 feet of controlling depth.

How does this affect value?
People that own 50 ft boats and larger sailboats, that require 4 to 5 foot draft, will find that neighborhoods have controlling depths of 4-5 feet or more are typically more expensive as to real estate prices.

To Consider.
Even if you don’t own a boat, you may want to buy one in the future or will possibly have friends coming to visit that do have a larger boat. So first and foremost take Controlling depth into consideration.

2. Not knowing what types of Boats are allowed.
Generally there is no problem with pleasure craft, however jet skis and commercial fishing boats can be a problem based on neighborhood (subdivision) restrictions (if any)

For example: Many boating communities frown upon Jet Skis due to the noise. If you plan on using jet skis or having friends that use them, look into any restrictions.
The same thing goes for commercial boats.

3. Not paying attention to Flood Zones.
What type of Flood zone is the home you are buying?
For example flood insurance for a home in a VE will be triple that of a home in an AE zone. So one of the first things to find out is the Flood zone and then check with a local insurance company as to costs.

4. Using outside of the area lenders.
If you are buying waterfront property in Florida and are considering a lender in Colorado, you can have a problem. Why?
Because lenders outside of the state can place prohibitive restrictions on a property.

For example, some lenders will feel that any waterfront home bought in Florida needs to be constructed of Concrete block as opposed to wood frame, due to potential hurricane damage.
Be sure to talk to Local (at least State) lenders, as they will be familiar with the area.

5. Not determining area (county or subdivision) rental Laws.
If you are considering using your waterfront home as a rental, look into the area or subdivision zoning laws as to rental periods allowed.
For example-can you only rent monthly-every 6 months or are weekly rentals allowed. Whatever the law, it will make a big difference in both ease of renting and your potential income.

These are just some of the most important issues to seriously look into. As your Agent, I will help guide you through all of this.

Florida Beach Towns Beat Big City Stresses

Living in a big city doesn't always mean instant advantages. Traffic noise and pollution, deadlines set for yesterday, rising crime and insurance rates, and the cost of living index, to name a few: Stresses in today's cities can overwhelm the senses and well-being of even the strongest. The negative effects of city life can impact all facets of life.

Health
Extended exposure to constant stress reduces one's ability to withstand disease and permanently damage one's physical health:
1. High Blood Pressure
2. Heart Attacks
3. Strokes
4. Ulcers
5. Natural Immunity
6. Sleep
7. Teeth and Gums
8. And many more.

But the negative effects don't stop with just the body. One's mental health often suffers, as well:
1. Depression
2. Desperation
3. Night Sweats
4. Nightmares
5. Road Rage
6. And so much more.

Friends, family, co-workers, bosses, customers, and even strangers can both affect and be affected by common stresses found in the city. Unless one completely sequesters him- or herself from exposure, there's really no way to avoid city life stress. But that presents its own stress factor list.

What might be done to reduce those stresses? Move to a quiet, beautiful beach town in Florida!

Calmer Living
Reduction or elimination of major stress factors plays a huge part in improving both physical well-being and mental and emotional outlook. Changing living locations to a slower, calmer, more pleasant environment, such as smaller beach towns on the Florida coastline can vastly improve physical and mental health.

Commutes of minutes instead of hours, breathtaking scenery, and affordable living costs all present themselves in Florida beach towns. Sandy beaches, friendly neighbors and shop keepers embrace peaceful living and incorporate serenity into the way of life along Florida's coastlines.

From Jupiter to Marlboro to Fort Meyers to Seaside and many more, Florida coastal beach towns offer the potential of reductions in virtually every category--except, of course, increases in peace of mind, relaxation, and overall satisfaction.

Solution
Close to major metropolitan areas or more isolated locations, Florida beach towns gift visitors and residents, old and new, with revised outlooks and reduced stress with peaceful ways of life!

Wouldn’t it be nice to vacation here and not have to leave?

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FLORIDA KEYS AND KEY LARGO REAL ESTATE ARTICLES