Real Estate Articles

Mortgage Loans added 1-18-2012

Mortgage loans happen to be credit facilities which make it feasible for individuals to acquire things like houses or cars that they want yet lack enough money to buy. The quantity of the loan equals the worth of the home and property to be obtained. The item is primarily registered with the title of the bank supplying the credit right up until payment has become fully made. By doing this, it acts as security to the credit, though it may be already being used by the borrower

With regards to property financing, you will find terms that are made use of that ought to be understood. The actual borrower refers back to the person or organization which uses the finance for obtaining a something such as a car or perhaps a house. The lender refers back to the financial institution or perhaps bank that provides the borrower with all the finance required to obtain the property.

Additional terms involved would be the principal. This is actually the total level of the credit. There's also the interest rate that is the expense of getting the credit. It is the profit produced by the lender for supplying funding to the borrower. Interest rates are repaid together with the principal in repayments over a duration of time. Property signifies the item or object that's bought using the loan.

Two kinds of interest rates can be found specifically fixed and variable. The actual fixed rate continues to be same through the entire period that the financial loan will last regardless of market rate modifications. The variable rate however will be flexible. It's dependant on the current market rate anytime.

The absolute maximum payback timeframe with regard to property loans is 30 years. Even so, the majority of borrowers would prefer to repay at a much earlier time period. The financial institution takes over ownership of the object when there is a default for making timely payments.

It's not possible to sell off or perhaps give away property that's been obtained with a loan in the event it is not completely paid for. Additionally, when the property under consideration is a house, the financial institution makes sure that property insurance is put in position through the owner. The financial institution can sell off the actual property to recuperate its funds when the owner is not able to complete payment.

There are several facts to consider prior to getting finance for any property acquisition venture. For instance, it is advisable to approach quite a few financial institutions rather than just one. This makes it easy to pick one that's most reasonable. The borrower is going to be much better disposed to creating a good choice if they take their time in order to browse the conditions and terms offered through the various lenders.

The particular borrowing institutions ought to be very well investigated to make sure that they've got a good lending background. They must be examined to understand if they provide their borrowers extra time or immediately take control of the house and property if there is a default in payment.

Tips To Help You Improve Your Credit-added 12-12-11

When trying to deal with everything that revolves around having poor credit, this can cause a great deal of stress. Decisions you've made in the past can have frustrating financial repercussions. It may not be the easiest thing you'll do, but it is possible to clean up your credit. Get ready to rebuild your credit with the following proven tips.

You can ask your credit card companies to reduce your credit limit. Make sure to always keep your balances at at least 50% of your credit limit. Don't lower the limit so much that it puts your current balance right against the cap, though.

Keep a savings and checking account open at all times. This will show your creditors that you can manage your finance successfully, and that you have steady income. Make sure you never overdraw your accounts and pay your bills on time to show how responsible you are.

Before you agree to settle your debt, you need to know how your credit will stand afterwards. There are ways that are less damaging than others, that is why it is important to research about it before starting an agreement with creditors. They do not care about the effects of what they do to your credit score and are just in it for the money.

For a credit score boost, an installment account will help. When opening an installment account, you need to make a monthly payment, so get something you can afford. Handling an installment account correctly will help you improve your credit score in a short period of time.

You have a long way to go to get the credit score you want from the advice you got here. Just be sure to remain consistent and follow through on your obligations. Repairing your credit is certainly something that you can do; so instead of worrying, you should take action now.

Economic and Health Advantages of Living In a Warmer Climate-added 11-21-11

Many of those living in the Northeast, Northwest and Midwest look to retiring or owning a second home in the Southeast or even Southwest. With chilly winter conditions, it is no wonder residents of cold climates long for warmer weather.

It is also little wonder universities and research organizations have conducted extensive studies into economic and health factors in cold versus warm climates. What has been gained from such empirical research only confirms what we already seem to intuitively know: warmer climates are easier on our wallet and better for our health.

But why are warmer climates more economically friendly and healthier than cold-weather climates?

Economic Advantages of Living In a Warmer Climate:

There are several advantages to living in a warmer climate, opposed to living in a cold-weather climate. Chief among them is the cost of home maintenance. To keep a home inhabitable during the winter months, home owner’s have to turn up the heat. It isn’t cheap to heat a home during a long winter.

Other maintenance costs include insulating against the cold. As winter after winter affects a home, more upkeep is needed. The cost of heating rises significantly when doors, windows, the basement and roof need to be re insulated.

The cost of to maintain personal possessions extends to vehicles. Cars in cold climates are adversely affected by winter weather. Drivers in cold weather climates are all too familiar with the cost of owning a car in such an area.

Warmer climates also mean fewer entertainment expenses. There is no cost to stroll on a beach or take a dip in the water.

Health Advantages of Living In a Warmer Climate:

In addition to economic benefits, living in a warmer climate has significant health advantages--especially for senior citizens.

Warmer climates mean the opportunity to do more for longer periods of time. Unlike cold weather climates, the days are long year-round. Moreover, the spring and summer month “feel” extended over a greater period on the calendar. In warm climates, it isn’t unusual to enjoy mid-70s highs during the fall and temperatures reaching the mid-80s in the spring.

Because people can be outdoors more means more opportunity to exercise and explore. That gives children a lot more room to explore and get out of the house. Senior citizens likewise can enjoy the revitalizing
outdoors just as much.

When you get down to it, people live more productive, fuller lives in warmer climates. And their wallets and health thank them profusely.

Simple Steps to Beautiful House Staging and getting a Higher Resale Value added 9-25-11

Home Staging is something more than cleaning and decorating a house. It is about bringing complete perfection to homes so as to make them look cleaner, brighter and more attractive for homebuyers. Potential buyers decide to buy a home within a few minutes and it is in these minutes when staging really works. Want to know how to do it? Here are some simple steps:
• Clean, de-clutter and organize all rooms of a home – First of all, remove all waste products from your drawers, cabinets and other areas in order to make the house look well balanced and clean. Put away anything you don’t really need, so it doesn’t conflict with the beauty of the home.
• Address all repairs which require attention – Small cracks, gaps or holes in house walls, drawers or in any such areas can stop home buyers from buying. Check for squeaky doors, leaks, burnt out light bulbs and anything that doesn’t give the home a clean and fresh appearance.
• Give special attention to cupboards and kitchen counters – Shelves and counter tops, especially in kitchen areas must be cleaned. This is one area which can make homebuyers quickly turned off. Remove all unnecessary appliances and dishes from the counter tops, to make the kitchen appear cleaner, wider and functional.
• Try to make the bathroom and bedrooms as bare as could be – Try removing all your personal items from the bed and bathroom areas. It is essential to pack up all collectible items, children’s artwork, trophies, holiday souvenirs and family photos.
• Take professional photographs of your house. Provide professionally taken photographs for the house for potential homebuyers. This will provide them good images of your house and help close the deal.
• Make the home as bright and as good smelling to as possible – Open all drapes and blinds so as to allow natural light to come in. Add some fragrance to your house by putting up fresh flowers and candles in the dining and/or bedroom area.
• Hide any items, which you don’t wish to sell – If there are any antique or special items which you don’t want to sell then, keep it away from potential home buyers.
These steps can really help you in staging your home to sell.

Florida Keys Real Estate – Buying water front property added 8-30-11

The Florida Keys is a place where residents can enjoy leisure living with the soothing sounds of ocean and sea.
It is very beneficial to invest in water-front properties in the Florida Keys.

Why? The reasons are mentioned below:
• Assists in generating additional income – For the people who have their own home for living, investing in Florida Keys real estate would provide additional income. They can make that property a vacation rental place and earn rent from the tourists that visit the place throughout the year. Tourists always prefer to rent waterfront properties.

• Special Appreciation – Water front real estate has always been preferred by everybody, be it permanent residents or tourists. People like to live in water front domiciles because they provide a relaxed lifestyle.
Factors to consider when buying water front Florida Keys real estate

• Flood zones – Some people are not aware of the flood zones. They do not understand that flood insurance in AE zone is lesser than VE zone. It is crucial to find out flood zone of the property and then ask an insurance agent or agency regarding insurance costs for that particular property.

• Find out what kind of boats are permitted – Sometimes, commercial fishing boats and jet skis are not allowed at some places. If one has to use certain boats, check out for any restrictions.

• Make use of area lenders – Consider going to lenders who deal in the area where one wants to buy property. One is committing a big mistake when hiring lender from an outside area. He may not be familiar with the prevailing state laws and may put certain restrictions on the property.

• Determine rental laws of Florida Keys – when buying a water front Florida Keys real estate, an individual should have complete knowledge of rental laws that prevail in that area. It is necessary because one may wish to make that property as a vacation home. Check out whether one can rent on weekly basis, monthly or what. These laws will make a huge difference in earning income and ease of renting.

Looking at the benefits of buying water front properties at Florida Keys, the investors might be excited about investing in it.
However, it is worth considering all points given above before making actual investment. These are only a few points. Hiring a specialized Florida Keys realtor will assist an individual in considering all facts and figures.

 

The best way to help improve Real Estate Demand from customers. added 7-21-11

Your federal government should be more and more focused around the demand from customers aspect about real estate property, as opposed to the supply side, however it will get much more distinct than that. We should instead begin supporting people that will be in a situation to really gain benefit from the help they may be offered, instead of individuals who are merely planning to grab the funds they're offered, plus extend the unavoidable. In many cases most of us jeer at the idea of, "helping people who find themselves in a very beneficial situation to assist them selves." Who's more prone to gain in cases like this: the person that has been recently in foreclosure process in the last 12 months having a 30 1000 mortgage loan, or perhaps the person that merely requires outside assistance finding cash for settlement costs having a 5000 $ mortgage loan? It may look like this is negative, however the individual who is actually near to finishing will manage to benefit through the minimum help for a considerably longer time period compared to individual who was already in foreclosure process.

The final point here is that all of us have to start obtaining the greatest number of individuals in to the marketplace as is possible, simply because we require this interest on real estate to begin growing. You will find thousands of people that tend to be prepared and able to plunge directly into owning a home, however are not able to due to restricted underwriting standards, or because they're a few 1000 us dollars lacking staying away from mortgage loan insurance coverage, or even paying out settlement costs. I suggest that people shift the support towards this particular population group, for the reason that more and more people who are able to purchase, the greater demand from customers we are going to get inside the housing market, that will increase price ranges, increasing the collateral to all of the properties. The greater collateral, the greater amount of we are able to acquire, make investments, expend, and so on.

In closing, I believe as if it really is reckless for policy designers to concentrate quite as much of their own attention and time regarding those who are in no situation to become helped through the help that they're receiving. To ensure that the marketplace corrects itself, we have to help people who are usually inches away from home possession. As for all those who're beyond the stage associated with fast help, their particular only option is to hang about until they are able to re-enter the marketplace, and then make utilization of the time period they can not.

 

Marketing Your Property - The necessity of Pricing Effectively added 6-20-11

Allow me to get started with the phrase "Current market Worth".

"The actual estimated value a professional, prepared, plus unpressured purchaser would pay out to some well-informed, prepared, and also unpressured owner."

Essentially, what this means is your property is merely really worth just what a purchaser would like to spend for the property. Therefore, how can we determine a suitable value, which a purchaser could well be ready to spend? A good number of owners will probably look at the regional MLS® listings, and find out precisely how their residence compares to presently listed properties. Although this is a great place to start, and definitely will provide you with a good grasp of the competitors, it may also be a little unreliable. The reason why it could be inaccurate, is really because a home owner can easily "request" just as much as they really want with regards to their property. This does not imply anybody will pay that amount!

The most crucial element while marketing your property is definitely not precisely what properties will be listed for, but instead precisely what comparable properties recently were bought for. Right here is the statistic, which will correctly inform you precisely what purchasers are prepared to spend on an identical property, inside a comparable neighborhood. To determine precisely what comparable properties have sold for inside your area, make contact with a local Realtor® in the area.

And so, exactly why is pricing your home properly, extremely important? The most frequent assertion we take note of whenever listing a property, will be "why don't we list it somewhat higher...in that way we've got space to barter."

Although this might appear to be a wise idea theoretically, there are several issues with this tactic. Based on your current price tag, requesting that additional $5,000-$10,000 may place you outside of quite a few prospective purchaser's price structure, therefore removing all of them from your picture in its entirety. Additionally, an overvalued property may help promote the property across the street, which is valued appropriately. Additionally, in my opinion, whenever a purchaser finds out a property is now over valued, they have a tendency to wish to offer you a lot less than they typically could to make up (maybe in certain cases due to vengeance) for your higher price tag.

Another point to consider is the fact that overvalued properties usually sit on the marketplace for a longer time. When a listing gets to be "stagnant", it always really encourages "cheap" offers. The thought being that this owner has to be getting anxious for an offer.

Whenever you take these kinds of elements into account, it is easy to understand why correctly priced properties sell faster, and frequently for additional funds as compared with their overvalued competition. For additional info on marketing your property, get hold of your local Real Estate Agent

4 Steps To Real Estate Investing Success! added 5-25-11

Real estate investing is always good and sometimes it's red hot. When it's hot dozens of real estate seminars begin rolling across the country and thousands of people spend thousands of dollars for investing education.

It's startling to learn that of all those thousands of eager folks who attend these seminars only about 5% buy even one investment house. Why? The real estate gurus sell the "sizzle" and make profiting from real estate sound easy. The truth is that it's simple, but not easy.

Here's a quick plan that will enable anyone to begin building financial independence.
There are basically four steps to investing in single family homes:

1. Buy homes below full market value. Yes, people really do sell homes for less than the home's full value. The key is to understand that most home owners will only consider a purchase offer that is all cash and within 5% to 10% of their asking price.

The successful investor learns to find financially distressed home owners who have no choice but to sell for less than market value. They have lost their job or been suddenly transferred; they are divorcing; they been living beyond their income; the family has been overwhelmed with medical bills and, not uncommonly these days, their money has gone to support a drug habit.

Those are examples of motivated sellers. They have to sell and they will accept something other than a conventional, all cash offer.

2. How do you find motivated sellers? You work at it! Like any business it is important to develop a little marketing plan. One that is simple, yet very effective, is the one that was proven 75 years ago by the Fuller Brush company; door to door sales.

You are selling your skill as a home buyer to people who must sell. Your are there when they need you and you have the skill to help them solve at least part of their problem. With door to door prospecting you will learn more and buy more homes quicker than any other method. However, most people just won't walk door to door for three or four hours per week. OK, there are other ways.

You can watch public notices for the announcement of foreclosure sales. Meeting with a home owner right after they've received a notice that they are about to lose their home allows you to deal with a very motivated seller. Other public notices that provide buying opportunities include probate, divorce and bankruptcy. You can follow the Homes For Sale listings in your local newspaper or Internet site.

You can telephone the names found in these notices or, and this is the least time consuming, send a postcard expressing your interest in buying their property. It will produce buying opportunities, just not as many as personal contact.

3. After you've found a motivated seller you must understand how to frame offers that provide benefits for both you and for the home owner. A good real estate investor quickly learns that this is not a business of stealing property, but of solving problems in a way that benefits the seller.

The home owner is in a tight spot of some kind and you can save them from public embarrassment and, in most cases, give them at least a little cash to get a new start.

No investor can afford to leave cash in every deal. No one but Bill Gates has that much available money. You must use creative techniques like, leases, option and taking over mortgage payments. Little or no cash is needed for those deals. You can find plenty of reasonable priced educational material on those subjects in book stores or on EBay. The same education that seminars sell for thousands of dollars.

4. You make your profit when you buy! Never make a purchase until you've carefully determined exactly how you will get to your profit. If you hold it as a long term investment will the monthly rental income more than cover the monthly mortgage payment? Will you sell the deal to another investor for fast cash? Will you do some fix-up and sell the property for full value? Will you quickly trade it for a more desirable property? Have a plan before you buy.

There you have four steps that even a part-time investor can execute in three to four hours per week. What's the missing ingredient? Your determination and perseverance. If you will unfailingly follow the plan for a few months you will be well on your way to financial independence.

First-time Customers Mortgage Application Guidelines added 4-28-11

When you have an aspiration about proudly owning your own house and applying for home financing then you might be a bit nervous at the present moment. While having your own property will be the American dream the high prices involved can be mind-boggling. Furthermore, most financiers may well be more occupied with generating a return than with helping you locate a house that will fit your income. Below are steps you can take to properly make an application for your first mortgage loan.

Obtaining a mortgage used to be straightforward. People would compare the costs and interest rates on houses they wanted, and when they found a financial institution they were comfortable with, they'd make a hefty down payment after which move in. Today important things have changed, and going over the quantity of possibilities can be extremely traumatic. One thing you might want to do before shopping for a residence is to educate yourself.

First Mortgage loan Application form Actions

The first thing you really need to do is take a look at current income. Simply how much do you make each year? How secure is your own job? Don't forget, if you attempt finding a mortgage the standard way, it could take 15 to three decades to pay it off, and if you get in back of on your obligations, you could lose your home and have your credit ruined. If you can't find the money for a home, it's best not to move into one unless you can. This will prevent you from agreeing to debt you can't manage to pay for.

How Much Could You Give?

If you think that you can afford a mortgage the next matter you should choose is how much could suit your budget. Lenders have a tendency to give you mortgages which are more than you can afford, and this is essential to don't forget. In addition to the cost of the home loan itself, you will have to pay taxes, insurance and other expenses in addition. These costs has to be included in your monthly expenses.

Submit an application Directly Or By Way Of A Brokerage service?

Once you start hunting for a mortgage loan you may confront two types of loan merchants; mortgage brokers and direct loan providers. The direct lenders are the those who have got the income to lend you. It seems in the long run the individual's who decide if you will be approved for a home. The mortgage loan officer acts as a intermediary, venturing out and finding direct lenders who can provde the lowest price.

Get The Paperwork In Order

Once you've found mortgage finance by way of a direct loan service or real estate agent the next step is to submit an application. There are numerous of items you have to have to submit the application form and it'll help when you've got some supporting paperwork. You will need to provide details about your wages, amount of work, as well as your assets. They will want to know what other loans or store cards you might have.

Once these facts has been provided, the financial institution will look for your credit reports. In addition, they're going to need to see your bank statements and check slips from a job. You might also must demonstrate to them tax information and data about your insurance. Should your credit is good, an appraiser will be hired to make certain the home is evaluated at the loan amount that will be presented to you.

About Islamorada-added 3-28-11

Made up of a chain of five islands which include Lower Matecumbe Key, Upper Matecumbe Key, Plantation Key, Tea Table Key and Windley Key, the Islamorada chain are among the most lovely places to live or vacation within the Keys. As an investor, Islamorada real estate offers the opportunities to own a piece of paradise that can produce revenue on a weekly or monthly basis. As a place to live and/or retire to why not do it in a friendly, quaint and beautiful setting.

This 18 mile stretch of islands connected by Overseas Highway has beautiful bay and ocean front properties available for sale or rent. It’s also a water sports center for diving, fishing, parasailing and lounging on a deck in front the beautiful waters. One of the interesting things about Islamorada is that in and around the shore, on the bay side, the bottom is quite sandy giving a beautiful hue to the water with enough draft, for the most part, allowing boats to easily negotiate the waters without fear of running aground.

At night for dinner (or even during lunch) there are excellent restaurants (many of which are accessible by boat) from which to choose featuring the freshest catch of the day, conch and succulent lobster. If you’re up for a casual island ambiance, there’s always Holiday Isle Beach Resort and Marina which offers not only casual dining and all manner of drinks, but the ability to lounge around and just watch the people on jet skis or sailing through the air on parasails.

The beauty of Islamorada real estate is that it’s an investment that can be revenue friendly for just about 12 months a year. Certainly, the summer and winter season produce the most rentals, but because of the weather and the never ending sunshine, Islamorada beckons visitors the year round. Islamorada can be more than an investment. It can be a state of mind.

How to Set Up a Vacation Home as a Rental-added 1-19-2011

One of the best real estate deals nowadays is to own rental property. Is that really possible? Yes, however, it must be a certain type of property. The property should be a vacation property able to support short term

rentals throughout the year. In order to be effective at turning a second home into a vacation home, there are a series of considerations and steps that you will need to be aware of and undertake. These will be described in more detail below.

Legal Considerations
Most of what is stated below will deal with Florida and local laws. However, most vacation homes in other states will have similar rules that are applicable. The author’s previous experience has been with short term rentals, for the most part.

Florida basically permits an individual or corporation to rent a dwelling, whether a condominium or home. In some cases, the local county where the property is located, will insist on an inspection of the property, however for the most part, this isn’t the case. In the case of condominiums, often the condo association will handle some of those issues.

The major interest the state and county has is whether or not the owner of the property is collecting and paying sales tax on the rentals and remitting it on a regular basis. One other consideration: before trying to rent your property out, make sure that the local ordinances support short term rentals. One further consideration is that it might be advisable to set the property up as a corporation for both tax and legal protections. Consult an accountant or attorney for advice in this regard.

Sales Tax
Sales tax on short term rentals are applicable to hotel rooms, rental homes and condominiums for stays of less than 180 days. With declining local tax revenues throughout the country, states like Florida, are now more vigilant in their efforts to collect sales occupancy taxes. In Florida, sales taxes on short term stays are especially important because the “occupancy” sales tax is typically double the regular sales tax rate.

For instance, if a county has a sales tax rate of 6% or so, one expects that the occupancy sales tax would be approximately 12%. Obviously on a week long stay with rentals of $900 or so, the sales tax collected for the state would be approximately $90. This will add up over the course of a year and is an extremely attractive source of revenue for the state. Therefore, a prospective owner must collect and pay the taxes or face strong legal action by the state.

Licensing – Any type of business activity must be licensed in the county where the business activity occurs. This is an occupational license. The fee for one may be anywhere from $75 and up. Sometimes in the case of a condominium, the condo association’s license is all that is required. Second, you may have to apply for a state license for your rental property. This will of course, entail another fee. This is renewable every year. In certain case, the state may insist upon an inspection of the property before granting a license.

Rental contracts – In line with the above, it’s important to have a well written, short term rental contract that protects you as the property owner. It is worth one’s time, expense and avoidance of future problems to have an attorney craft such a document

Safety Considerations - Most of the safety precaution are common sense, but it’s important that the property conform to the letter of the law. Additionally, there are some safety considerations that will be applicable. A short term rental home must have a fire extinguisher and a working dead bolt lock for all entry doors. Typically, the home must also have a fire alarm and an emergency light that automatically illuminates, if power is lost. The home must be easily accessible or easy to exit in cases of an emergency. If the home is a condominium on an upper floor and there is a balcony attached to the property, there must also be a restraining fence to prevent someone from accidentally falling.

Billing/Payment – Renting out a vacation property is a bit different from most other types of rental arrangements and business activities.
• It is such a short term transaction that it is important for the owner to obtain all payments well in advance of the rental period. If someone decides to rent your property and fails to pay in a timely manner and then cancels right before they were due to arrive, you’ll not usually be able to replace the rental.

• If they pay by check and the check doesn’t clear and the renter has already left, you might have a difficult time forcing him to make good on the rental and is certainly not worth the hassle. Therefore, insist on payment either by check (long in advance of the rental) or Paypal. Even funds transfer is open to abuse. Although in some cases, if the renter is arriving from another country, you may not have a choice.

Insurance – It is always vital to carry good insurance to protect against damage, weather disasters and liability in the case of accident.

Rental Season Profitability - In most case, if a vacation rental can accommodate virtually all seasons, such as the Keys, Tampa Bay area or South Florida, the total yearly rentals generated will be significantly greater on average, than properties that may only be rentable within a single season, such as a ski area or more northern lake properties. Typically, properties that have a year round rental attraction can usually show a profit within the first few years of ownership. This may be a major consideration when you are planning to purchase such a property.

Rentals Policy – When you are setting up a rental property, you will need to decide if you are interested in longer term seasonal versus shorter term vacation rentals. Most that wish to rent their property should avoid the spring break situation, for obvious reasons. Longer term rentals, one to three months, tend to be less profitable because rents will always be lower than a short term weekly rental. Also, short term renters usually spend minimal time at a property, while longer term renters will normally consider your second home to be their second home when they rent. The advantage is that because weekly renters are spending more time outside there will almost always be less wear and tear on the inside of your property.

Furniture, Equipment & Flooring – In order to make a vacation property attractive, the furniture should be of a reasonably high quality to accommodate years of rental abuse. In the case of sofas, the material should be treated with a stain resistance compound. Further, the appliances should be relatively new and modern and not prone to break down or malfunction. In most cases, avoid whenever possible, carpeting. It is a magnet for dirt and stains. Instead, install a good ceramic or porcelain tile which is worth the expense to avoid future headaches. Wood floors are attractive, but expensive and will require more maintenance.

Maintenance and Repairs – Typically, the short term renter pays for the exit cleaning. Therefore, it will be of paramount importance to locate cleaning people to come in and change the linens and perform the basic cleaning after guests have departed. In line with the above, a potential vacation home owner will need to have a working relationship with local maintenance people that can unblock a sink, repair damage or fix any appliances, when necessary.

 

Evaluating Real Estate Investments Like a Pro: Present Valueadded 12-10-2011
When you consider that there are many real estate opportunities where you think you could make a killing, how can you really be sure that one investment is better than another? Many would-be investors jump into real estate without a good way of determining whether a particular piece of property, a single family home, resort condo or a multi family dwelling is really and truly a good investment. The end result is often disappointing. Maybe you should have bought investment B instead of investment A. And so it goes…What is the best way of evaluating real estate? The following approach is the way large companies utilize a very important, yet relatively simple evaluation tool for comparing competing investments.
A Couple Fundamentals, First
Obviously, if you are a real estate investor, you probably have decided on a minimum rate of return or minimum amount of money that you would expect yearly on a real estate investment. Of course, there are some investments that you can immediately jump into without doing very much evaluation. Suppose you can snap up a home that is selling for 60% less than its current value and you’re very sure that without upfront repair/refurbishment expenditures, you can immediately sell it, realizing an attractive profit. The answer is obvious upfront. Most times, these opportunities are hard to find and often the listing real estate agent is in the best position to takes advantage of these situations. Also, we’ll need to assume that there are no legal barriers, potential zoning regulations or other problems that would immediately preclude one investment over the other. Moreover, you as an investor will need to assume that all of your information is imperfect and the future is almost always unclear about investment choices you make. Thus, the following approach to evaluating competing real estate investments is based purely on financial returns. Let the numbers do the talking!
Present Value Overview
The basic approach to present value boils down to an obvious fact: a dollar today is worth more than a dollar that will be received at some time in the future. For instance, what would you rather have: a $100 return now or $100 return in 2 years? Obviously now, but when you start making that future $100 grow, there will be some point at which you will decide in favor of the latter. Assuming the worst is always a safer strategy. In present value, it is more reasonable for you to assume that any rents, receivables, rates of return, rate of appreciation and occupancy rates will typically be less than you want and expect. As you assemble the facts for your analysis or business plan, be very conservative and this is especially the case if you’re seeking funding from a bank, venture capital source or investment group.
Present Value Internal Rate of Return MethodologyAs mentioned above, money has a time value. Albert Einstein was quoted as saying, “The most powerful force in the universe is compound interest”. The so called internal rate of return analysis is all about that. The Microsoft product, Excel allows a relative financial neophyte to analyze side-by-side alternative investment cash flows in terms of its compound interest time valueA Basic ExampleLet us say that you have two properties that you’re might considering. The first is a home that you can purchase for $100,000 with $25,000 down. The second is a condominium that has a price of $75,000, but can be purchased directly from the builder with only $7,500 as the down payment. Let’s assume that both will appreciate at 5% per year and by the end of three years, you would be able to sell either for a 15% profit over your initial cost. Let is assume that you can rent these properties resulting in the following:

1. You receive a net $100 per month profit after your mortgage payment on the single-family home.2. You can realize $50 per month net profit on the condo.

The image on left shows what the Excel format would look like.
In the basic financial terms, without even considering individual any federal or state income tax rates that apply, the best investment would obviously be the condo’s rate of return which is more than double the rate of the investment on the home.Now extending the investment horizon to 6 years, with the same sales price and the same rents, the condo is still the best investment, but the rates of return falls drastically. The home has a rate of return of 12.2% and the condo has a return of 22.3%.

How to Use the Excel function
Using Excel to set the example up is simple:The Excel formula is IRR(Cash Flow1, Cash Flow2. Cash Flow3,Guess at Rate). On the Excel spread sheet it will be expressed as follows: =IRR(-C2:C5,19) where C2 is the initial investment (down payment with a bracket surrounding it, designating that it’s a negative flow) and C3, C4, C5, etc. which are the yearly (or monthly cash flows). The last number, 19 is a ‘guessimate’ of the what the rate might be. I could used 5, 10, etc. Excel uses this as a function, but it really doesn’t matter whether you’re accurate or not. You can obtain additional information about IRR directly from Microsoft.Obviously you can make this as complex as needed. For instance, you might want to use a factor for federal income taxes, a factor for expected repairs and even increases in rent and real estate taxes. You may also assume occupancy rates. It really doesn’t matter as long as the formula is set up in the correct Excel format. You can make it as precise as you need. But keep in mind that too much precision into the future is largely wasted effort. This approach to analysis only requires you to be reasonable in all your assumptions.
There are numerous ways of performing real estate investment analysis. While you can’t ever know the future, you can assume typical terms, conditions and the types of rates that most banks or investor groups will demand of the real estate investor.

Want an Investment Property? How About a Florida Vacation Home?

With the mortgage melt down, the last thing on most people’s minds is buying real estate as an investment strategy. Right? Well, no, not right! At least, when it comes to buying the right kind of home or investment home. Right…translates into buying a Florida vacation home.

The Ideal Florida Vacation Home Investment Certain areas in the Sunshine State are ideal for investment now in the current real estate market. Those areas are located mostly on the shorelines of Florida: the south east coast, the Florida Keys and the west coast from Tampa Bay and points south. There are three good reasons why investing in a vacation home now makes good economic sense: 1. All Florida home prices are depressed. 2. Short-term rental prices for the most part, have not declined. 3. A Florida vacation home can generate rentals all year round.

One must keep in mind that not all Florida vacation properties are good economic bets. First, the Disney area is not particularly a good investment. It’s a bit over built. Second, areas north of Tampa Bay on the west coast and north of Daytona Beach on the east coast have winters that are a little too cool to attract vacationers the year round. Therefore, the best places for investment in vacation rental homes will usually be further to the south. Also, the vacation real estate investor should only purchase in communities permitting short-term (weekly) rentals. Many of the advantages enumerated below will not materialize, if short-term rentals are prohibited.

The Mortgage Meltdown and Recession Has Created Gold for the Savvy Investor While home purchase prices have declined in Florida, the allure of the weather, beaches and waters continue to attract vacationers. During the summer almost everywhere in coastal Florida is a good vacation choice. During the winter, the ‘snow bird’ crowd flies in for several weeks or months of temperate weather in the more southerly areas of the Sunshine State. During the rest of the year, short-term rentals are fewer, but still exist.

In line with the above, a weak economy means that many, who might normally opt for a vacation in Europe, have decided to spend their vacations in Florida. Also nowadays, people employed in corporate America are less apt to take long vacations fearing that they might not have a job after returning from a two-week junket. Further, because of excellent airline service throughout Florida, now almost anyone can easily squeeze in a few days of sun from almost anywhere in the continental U.S.

This translates to opportunity for those looking to purchase vacation properties in Florida for investment. There are some excellent advantages to owning vacation real estate, as well:

• A Florida vacation property doubles as an investment as well as a vacation escape • With a fall in prices and rentals remaining at or near their previous levels, a property on a weekly rental basis can quickly show a net positive cash flow • With basic depreciation and other out of pocket expenditures as deductible expenses, it is likely that an investor can show a “taxable” loss, thereby reducing federal income tax liabilities. • Regardless of the future, a typical vacation home with its rentals can carry itself handily on into the future. This of course, assumes that the investor purchased the property at a reasonable level.

Assuming that a property can generate short tern rentals and also assuming that mortgage payments are not excessive, a property as stated previously will be a net positive investment. As home prices start to regain their footing, vacation properties in Florida, obviously will also enjoy the same price increases. If an investor decides to sell his vacation property at a later date, history has proven that the net rate of return on his investment, including rentals should be equal to or greater than other investment alternatives that could have been undertaken and available at the same time. When taken in total, vacation properties in Florida in the right areas at the right price is an investment worthy of serious consideration.

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.

 

Destination Resort Spectacular: The Florida Keys

Real estate is now a shaky investment with plummeting prices, high unemployment and enough uncertainty regarding the future to scare off even the most stalwart real estate investor. This situation is precarious almost everywhere except with respect to the ownership of vacation rentals, particularly at destination resort locations.

Destination Resort Areas
Some shining example of real destination resorts are The Florida Keys, particularly Islamorada, Nassau and ski vacation locales such as Telluride and Aspen. What makes the Florida Keys a premier resort location is the fact that it offers vacationers a year round destination. While it’s true that Nassau, like Key West are cruise destinations, Key West and to a lesser extent, the rest of the Keys have incredible vacation attractions year round.

This is the key advantage that Florida Keys resort properties enjoy over ski resort properties in Colorado, California or Utah. The winter vacation season in Florida starts in late January and ends sometime in April. Beginning in June, the summer season kicks in until Labor Day. However, if you walked on the streets of Key West during the “off seasons” you couldn’t fail to notice tourists taking snapshots, fishing off the pier or enjoying the sights and sounds of old Key West. Cruise ships typically make port year round in Key West, probably to a greater extent than even in Nassau.

Other Keys Resort Areas
One shouldn’t overlook other Keys destinations such as Islamorada located about 78 miles from Key West and 53 miles from Miami. That’s a one hour drive to the airport. (Key West has its own airport, albeit somewhat small with limited service). The major advantage that Islamorada offers is its beauty, easy going life style and ready access to excellent restaurants and even some funky night spots.

There are other locations worth mentioning in the Keys, especially Key Largo, with its proximity to Miami, great diving and fishing. Certainly, Marathon and some of the lesser known Keys are certainly worth considering as investment opportunities which also offers an owner a great place to stay while not rented. However, Key West will still be the major draw in the Keys as an income producing vacation area.

Investment Points to Consider
It’s a fact that more than 50% of the vacation properties owned (condos and private homes) are owned by Florida residents. Another interesting fact about the Keys, is that more than 55% of the properties that are sold in the Keys are sold to people that visited there loved and loved what they saw. Therefore, the key point (no pun intended) is that the Florida Keys are an important vacation choice for people wishing to own their piece of paradise.

At the same time, the rentals on most of the properties can be used to defray most, if not all of the costs of owning a vacation property. In fact, after a few a years, the typical owner will have a net positive income based on vacation rentals. Of course, there is a trade off: how much does one wish to use their property versus how much income they do wish to generate with their property?

A Contrast: Owning an Investment in a Non Vacation Area
One of the primary reasons people elect to rent properties in non vacation locales versus vacation properties is the belief that those renting an apartment or home are less likely to damage the property where they reside. This is a specious argument, notwithstanding the problems that might result from renting to college spring breakers. Typically, if you judiciously rent your home or condo, carefully screening to whom you rent, there is little chance of major damage occurring.

This raises the question: why? Those visiting vacation properties in the Keys are spending most of their time outdoors sightseeing, fishing, diving, swimming, etc. While those in non vacation areas in their homes, spend the vast majority of their time (24/7, as it were) within that property. Breakage and damage is statistically more likely to occur, as a result of family problems and/or the wear and tear on a dwelling occurring with daily use. Another factor is partially socioeconomic. When a vacationer throws down $1,000 or more per week for a vacation rental in addition to a sizable security deposit, they are less likely to damage a well maintained vacation rental and may typically be more advanced in their career or job.

It’s Better in the Keys
In almost all ways, Florida Keys destination properties are certainly on a par with Telluride or Nassau. However, the Keys offer the added benefit of having an extended vacation season. Moreover, whether you’re interested in the Upper Keys (Islamorada) or Key West (the Lower Keys), property values have not depreciated nearly as much as they have within the rest of Florida or the rest of the country. There are two good reasons: 1. There is an overabundance of vacant properties throughout the U.S. as homes go into foreclosure. 2. Key West or Islamorada are vacation destinations and will perpetually produce income.

With an ongoing recession, vacations within Florida will be an even more attractive alternative to vacations outside of the country. Thus, a property purchased in the Keys will be an income producing property (zoning permitting) in the foreseeable future. As an investment vehicle and as a place to enjoy some ‘fun in the sun’, few vacation destinations top Florida Keys real estate.

A World Away – Vacationing in the Florida Keys

The Florida Keys offer many of the same laid back characteristics as the Caribbean, without ever leaving the United States. Amazing sunsets and a free spirited attitude all contribute to the laid back atmosphere of the Keys.

There are many activities to do, like sport fishing, scuba diving and snorkeling, boating, sailing, kayaking and eco-tours. Each island destination has its own special features. These islands are also rich in culture and history with many galleries, restaurants, festivals, music and theater to visit and check out. Of course, just relaxing is always an option throughout the Keys as well.

The Keys span about 120 miles and are connected by bridges and causeways, running south west from Miami. This area has the only living-coral barrier reef in the United Stares and is approximately 5 miles off shore and runs the entire length of the Keys.

The first island in the Florida Keys is Key Largo. Being close to the Everglades National park, there is much wildlife to be seen here. It is a popular destination for kayakers and bird watchers. There are many amazing scuba diving or snorkeling sites in Key Largo as well, with many sunken wrecks in the area. The John Pennekamp Coral Reef State Park is located here and offers scuba and snorkeling tours, glass bottom boat tours and swimming in the Florida Keys National Marine Sanctuary. In 2002, the navy ship, the USS Spiegel Grove was sunk to provide a reef here and a sunken wreck for divers to explore.

The next island in the chain is Islamorada. It is comprised of six islands including Plantation Key, Windley Key, Upper Matecumbe Key, Lower Matecumbe Key and the offshore islands of Indian Key and Lignumvitae Key. This area is well known for its world class sport fishing. There are many fishing tournaments held here each season.

Marathon Key is in the middle of the Florida keys. It is famous for the Seven Mile Bridge, which links it to the Lower Florida Keys. You will find great shopping and many fine restaurants offering fresh seafood. At Crane Point Museum, there is one of the last untouched tropical hardwood hammocks in the Florida Keys.

Big Pine Key is known for its boating tours and for bird watching and fishing. The diving and snorkeling is great here too. It is a quiet region of small resorts, home-style restaurants, vacation homes and untouched natural areas.

The last of the Florida Keys is Key West. There are many festivals, shopping and restaurants. Boat tours provide a great way to view Key West from the water. The snorkeling and diving are renowned here to see a diverse array of marine life. Wrecks and reefs, both artificial and natural coral, are home to hundreds of species of tropical and game fish. Many visitors rent a bicycle or go on walking tours to explore the history and architecture of Old Town Key West.

So if you are into eco-tourism, scuba diving or snorkeling, shopping and dining, or just want to relax in a tropical paradise, the Florida Keys may be the destination for you.

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