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do not have time to read this entire document. Buying a property in the sun of Florida can be many the culmination of
their lifetime dream - living in an idyllic paradise surrounded by tropical beaches, azure
seas and gently swaying palm trees, sipping exotic cocktails in the evening as gorgeous
sunsets illuminate and paint the sky in breathtaking colours, and indeed for large number
of lucky Brits enjoying the Gulf Coast lifestyle this is reality along with year round
sun, great golf, fishing, dining and theatre not always in that order!
Depending on your motive a Florida property can provide a form of investment in $ bricks
and mortar as opposed to shares or indeed certain pension funds when sterling is at an all
time recent high, as well as a sound method of cheaply financing your holidays for years
to come when you rent out the property or simply be realizing your ambition to secure a
place to retire in the sun and enjoy a more relaxed and comparatively inexpensive
lifestyle.
Unfortunately it is that very desire when not tempered by prudence that can open up a
proverbial obstacle course of traps for the biggest cynic. It would be all too easy for
the most avid pessimist such as Victor Meldrew to be seduced by the alluring glossy
brochures. An information pack popping through the post containing destination and
property videos which viewed in the depths of a cold British winter or spring can
encourage you to book your flights there and then.
Perhaps the big question is following the plethora of newspaper articles highlighting high
pressure inspection flights where the sales people all but confiscate your passport and
recent television coverage of European property disasters manifested by government
departments confiscating property in Spain, long lost relatives claiming land in France
and buildings demolished for being built in the wrong area in Italy is Florida as safe as
houses and if so to give the childhood metaphor a straw - wood or brick house!
Certainly there are rules in Florida concerning compulsory purchase, which are well laid
out and less well known ones relating to unpaid taxes, mortgages etc in Florida when a
lien can be put on your house. There have even been instances of speculative purchase of
what turns out to be swampland but on the whole these are rare occurrences and dangers lie
far more in aspects of the everyday property transaction. A well laid out legal system and
contracts laid out by The Florida Real estate commission have to date avoided the reported
European scenarios.
In reality the biggest danger to some Brits
looking for a house in Florida comes down to a case of frazzled brain syndrome under the
Florida sun. All to often the most cautious of individuals will forget they are
making an investment in a foreign land and with a breathtaking lack of caution,
preparation and common sense be swayed by the magic charm of Florida and a silver-tongued
salesman into making an inappropriate buying decision.
Whilst undertaking research for this article and with a sense of curiosity I returned to
the UK to try and relive the start of the Florida journey I made several years ago and
made by many Brits planning to buy property over here. I discovered with the benefit of
several years real estate experience in America a ride that on occasions proved every bit
as thrilling as sometimes terrifying as anything thunder mountain can offer.
First stop in my itinerary was to visit, accompanied by family in tow, several of the
Florida stands at the many property exhibitions held all over Britain and whilst much of
the information and advice available was fine there were certainly some interesting
points. I was obviously expecting a sales orientated approach but one tempered by good
factual knowledge - after all visitors to these exhibitions were looking for exhibitors to
be the experts.
My request was for information on the Sarasota, Naples areas of the Gulf Coast - the brief
for a property within a thirty minute drive of the beaches, shops and golf courses. The
property had to be in an area suitable for short term rental in case that option was ever
required, have good investment potential and be under 250,000 Pounds.
There are certainly very few developments in Sarasota / Bradenton or Naples suitably zoned
for rental and it's often difficult to find such properties but it’s this scarcity
that makes them an excellent investment - in certain areas 35 weeks annual rental and
property price rises exceeding 30% over the past year are excellent.
At a major exhibition we were told during a polished seminar conducted by one of the
Florida exhibitors that due to zoning restrictions it was not possible to purchase this
type of property on the Gulf Coast - maybe they worked closely with a selected group of
Orlando developers, whatever the motivation the information was completely wrong.
At another exhibition - the exhibitor
covered a number of countries and areas including Florida. We were incorrectly told that
we could purchase a short term rental property on a specific development which in reality
has one of the most onerous restrictions possible and is only viable as an unfurnished
long term rental proposition. This could explain the ads that I had seen in a
number of British rental magazines, advertising holiday rents in areas I knew to be
illegal and leaving the owners vulnerable to a citation as soon as the authorities
discover the use the property is being put to. To compound the error of this advice the
same inappropriate development is detailed in a very impressive glossy brochure and
website.
At another stand which actually specialised in the area we were investigating we were
directed towards a single specific development. In fairness the development in question is
excellent - however it was more than thirty minutes away from the beaches and does not
allow short term rentals. It became evident
that the salesman did not subscribe or have access to the areas multiple listing system
(MLS) which in Florida details all properties on the local market - an absolute must if
you are to be given the widest range of properties.
At a number of exhibitions particularly on some of the Orlando stands which also
advertised the Gulf Coast, there seemed to be more than a little confusion over the
potential of the holiday rental market outside Orlando. Without doubt Orlando / Kissimmee is by far the
largest area of holiday rental properties (phenomenal competition if you are a rental
property owner). Some exhibitors clearly had limited knowledge of areas outside
Orlando. We were advised by a number of exhibitors that year round rentals were only
available in Orlando. In fact both The Gulf and The Atlantic Coasts have the advantage of
a year round season with Brits taking holidays throughout Easter to the autumn and
Americans from the inclement northern states (referred to locally as snowbirds) descending
en masse from November through to Easter. Given that there are far fewer rental properties
available on certain areas of the Gulf and Atlantic coasts it is also interesting to
compare rental rates.
The concept of guaranteed rentals as described in various brochures was also interesting,
one wonders how guarantees work in the event of adverse publicity in a particular location
or a fall off in visitor numbers - another reason by the way one should never depend on a
single rental market ie Brits but require a diverse range of markets. Assuming that the
guarantee has been built into the property price (thus increasing the price you are paying
for the house) what happens if for whatever reason the guarantee fails - will you go to
law in Florida, how will you meet the costs? if you win who recovers your settlement.
After one exhibition I received a most interesting email newsletter concerning the recent
hurricanes that had hit Florida during the summer. The articles basic premise was that
hurricanes were a Gulf Coast problem; Orlando was safe and was an evacuation zone. I found
this fascinating as I was in Sarasota during the hurricane season and would have certainly
noticed the storm! I certainly remember the great storm of 1987 when Sevenoaks became
Oneoak and Michael Fish became a household name. Although it is true that Orlando is an
accepted evacuation area the storms actually passed through Central Florida causing
localised damage, but did not hit Sarasota or Tampa on the Gulf Coast.
Finally, one critical point to remember,
before starting your property search in Florida.. When leafing through glossy brochures -
web sites - video tours etc remember you need to compare properties in Florida with like
for like, not those you are familiar with in Britain - generally Florida properties cost
less far less.
If you are considering a new house what you see may not be
what you get. The American equivalent of Laurence Lleweyln Bowen may have been
commissioned to create Hollywood style showcased perfection in the show house but to
achieve the same in some cases can add up to 30% on the cost of the base model. Some new
developments need looking at in their entirety: certain developments for example back onto
Interstate highways (motorways).
One of the first considerations that need to be taken into account when buying are to
determine your specific requirements, do you need to rent the property?, is it primarily an investment, is it mainly for your
own use, do you intend playing golf, what are the association costs, do you wish to be in
an area with some cultural orientation. All to often Brits are bowled over by a property
without considering that all important factor, location, location, location and believe me
I have seen some locations where the only local eatery is the 7 to 11 - however good their
hot dogs!
Some British buyers overlook factors which they do not recognise as relevant to their
requirements, for example schools if they do not have school age children. However one
needs to consider that if one wishes to resell the property in the future the majority of
potential buyers will be American who will be interested in the school district. Another
point often overlooked is buying on a development that is overwhelmingly rental properties
may also restrict resale interest, Americans are not keen to move onto a development where
their neighbours change every two weeks.
Turning to the American Real Estate market,
if you decide to begin your search in Florida - it is imperative to find an appropriate
Real Estate Agent (Realtor) who is willing to guide you through locations as well as
property. This seemingly simple task in the Florida context can be make or break in terms
of ease of passage to the perfect Florida lifestyle. One critical thing, don’t
attempt to act as your own agent - you do not pay for an agents services and its all to
easy to fall foul of the system when you undertake a house search without professional
help - I repeat Florida is not Britain.
An in depth knowledge of a British buyers
specific needs and requirements is paramount. You probably have limited knowledge of the
US house purchase system, the majority of American sales agents have no experience of the
British house buying system, and here lies loads of opportunity for misunderstanding and
mistakes. Another point to be wary of is the knowledge base of individual sales
agents, some specialise in a very limited area or even just a few developments, some
specialise in listing (selling) properties as opposed to Buyers.
Another common but incorrect assumption made by the unwary Brit is that if they walk into
a Real Estate Office in Florida they are there and then going to find the ideal agent to
suit their specific needs. Apart from the requirements mentioned above it needs to be
recognized that in the many Real estate sales offices the prospective buyers are going to
meet the agent undertaking 'floor time'. This term can be viewed as a lottery process, as
it is probable you will find a newly qualified agent without in-depth knowledge of the
needs of British clients. You may be their first overseas client; do they know the rental
implications of various areas?-to many Americans buyers this is not a relevant point, do
they know the most appropriate developments?
Don't be deceived by the fact there is no
charge when you buy property in Florida for using an agent's services. The system
works on the basis that the commission paid by the sellers' agent or new development is
split with your (the buyer's) agent at no cost to you. However commissions vary
significantly between areas i.e. on certain Orlando developments it can be 10% in Sarasota
and Naples 6%.
Another key difference between Britain and Florida is that a house
survey in the UK is not the same as a house inspection
in Florida. House inspectors in Florida are not qualified in the same way as Members of
the Royal Society of Chartered Surveyors are in Britain. There can be limitations to the
costs you claim back, if for example they find out your air conditioning unit in the attic
is rotten with rust and needs replacement. There are also unfortunately rare instances
where sales people have recommended an inspector who gives a fairly superficial inspection
thereby ensuring the sales goes through.
In Florida the contingencies (clauses) entered into a contract
can be all important. As a British buyer a particular area of concern can be contingencies
dealing with mortgages (the right type can be essential). If you are using the property for rental you
will require an investment mortgage, if this
is not specified in the contract you may well end up having to buy the property and will
not be able to rent it. American lenders have been known to be unaware of this
distinction and I am aware of clients being asked to perjure themselves to obtain a
mortgage. Zoning restrictions is another important area to be aware of as the restrictions
applicable to installing a pool.
Yes Florida is a comparatively safe
destination in which to buy property - probably in terms of safety more on parr with
Britain than some of the traditional European favorites presently suffering some adverse
publicity. Florida is also a lovely place to work, enjoy a second home in or to
retire too in the winter months but it is absolutely essential not to be seduced by those
lavish brochures, claims, videos etc prior to buying property in the sunshine state. The
most important rule is to obtain the right advice at the very offset and benefit from it.
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