Probate And How It Affects Your Purchase
Property is a long term investment. And so while it may feel a little pessimistic, it makes sense to think about what may happen to your Florida condo if you, or your spouse were to die. Probate comes as a surprise to many vacation home owners, which means their family have to deal with navigating this costly process as well as coming to terms with the tragic loss of a loved one.
So what exactly is probate, then?
Probate is the legal procedure needed to formally transfer a property to the named beneficiaries of the deceased. Its a drawn out process which can take from 8 to 12 months, and cost some 3%- 4% of the value of the home in legal fees and related charges. During probate all of the assets of the estate are frozen, so the condo can not be sold on. ¹
The good news is that there are some legal ways to structure your property purchase which can help avoid probate altogether, and ensure your condo is passed to your remaining family members without the fees. Well talk through your options in a moment, to give an overview of the smart ways to buy property in Florida as a Canadian.
How To Decide Where To Move
Choosing a city to move to in Florida is easy when youve narrowed down your preferences. Ask yourself the following questions to begin your search for the perfect Florida city to call home:
- Do you want to be close to the beach?
- Do you prefer a quieter town with fewer tourists?
- Do you want to be close to the theme parks?
- Do you want to be on an island?
- Do you want to be close to big cities?
These questions are great primers to help you think about where you want to live in Florida and what matters most about the location.
Benefit #: No Individual Income Tax
Florida is one of the seven states that forgo individual income taxes in 2019. The others are Alaska, Nevada, South Dakota, Texas, Washington, and Wyoming.
This signifies that the overall income tax is lower in Florida. As real estate investors, youre able to reap benefits from this.
While the little to no income tax sounds good on paper, there are potential risks you need to be aware of. Depending on where you live, your state could authorize a tax on income thats generated out of state. The fact that your legal entity isnt taxable in Florida wont hold any importance.
Does your business operate in more than one state even though its based in Florida?
You might be subject to regulations based on nexus. In general, nexus means a connection between taxing jurisdictions, such as states. The laws regarding nexus taxes are complicated, to say the least. There many nuances depending on your particular conditions. Consult with an experienced legal professional to learn more about your situation.
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Avoiding And Resolving Last
Another critical step in the process of purchasing a Florida home is to be on the lookout for minor last-minute issues that must be addressed and resolved as soon as possible. As the closing date approaches, everyone involved in the transaction must keep track of the progress and communicate with one another daily.
Keeping track of everything makes it easier to detect when something is amiss or when there is a problem with paperwork, filings, signatures, or anything else that may cause a delay in the proceedings. As your closing date approaches, your realtor should at the very least contact you every day.
Buying A House In Florida: Step By Step Buying Guide In 2022
Our comprehensive checklist on the steps of buying a house in Florida for the first time in 2022 will walk you through the process of purchasing a house from out of state. Buying a house in Florida is one of the most stressful and difficult situations for first-time homebuyers to navigate.
However, knowing the steps of buying a house in Florida for the first time or out of state in 2022 will help boost your confidence and ensure you arent taken advantage of by any unscrupulous sellers.
Buying a house in Florida for the first time in 2022 can be broadly divided into major steps ranging from determining your finances to closing on the house.
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Which Amenities Matter Most
Once youve narrowed down location and decided on the type of property, its time to look at the amenities. Make sure you inspect the clubhouse, fitness center, pool and outdoor spaces to ensure theyre well-maintained and will appeal to vacationers.
Layout is a type of amenity that many buyers dont consider. A condo with two separate living areas is a better investment, Feuerman says. Or split bedrooms with a living area in the middle. That way people can have guests or family visit and not be on top of one another. For people who like to entertain, a summer kitchen, pool and spa are great investments in houses, she says.
Whatever you decide, its especially important to work with an agent who knows the South Florida market, so that your investment lives up to its rental potential.
Shift In Lifestyle Preferences
The pandemic has changed the meaning of home for most people. Home is no longer just a place for sleeping and storing clothes and furniture. Being forced into spending more time at home has made people seriously think of where they want to stay. This new mindset has led many to relocate to Florida, known for its warm climate, natural sceneries, theme parks, and relaxed tax laws, increasing the demand for residential properties.
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Location Is Just As Important As The Property
Its too easy to become entirely focused on the property. Whilst the property itself is, of course, the important thing to consider, you must also keep location in mind. There are many resorts and neighbourhoods in Florida, each one with its own charm and advantages. The location you go with will determine your long-term financial potential so its important to choose wisely.
For those wishing to have an investment property in Florida, think about your rental strategy. If youre looking to be close to some of the main tourist destinations such as Disney World, consider areas in Central Florida. Dont forget about personal enjoyment it still needs to be somewhere you enjoy going to.
What Foreign Nationals Need To Know About Buying Florida Real Estate
Florida real estate has always been attractive to foreign buyers, even before the housing crash that depressed prices for both residential and commercial real estate and made foreign investment in a bargain for many buyers.
According to the National Association of Realtors, Florida has the largest number of foreign real estate investors in the U.S., with 41% purchasing vacation homes, 25% making a dual use purchase and 23% investing in rental property.
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Best Way To Buy A House In Florida
To ensure you have a smooth investment property buying process, consider the following:
- Looking at properties in an area you know: If youre set on buying property in Florida to rent out or buying a vacation home, consider a city that you know. It can be your favorite vacation spot, a town you went to college in or a place youve traveled to for business a few times. When you know an area, you have a better idea of whether its a good investment area.
- Hire a trusted real estate agent: When youre buying a house in Florida from out-of-state or an investment property, you want to have an experienced real estate agent help you handle the buying process. Research and interview real estate agents to find highly-rated and recommended agents that can help you find suitable investment properties and create a hassle-free experience for you.
- Consider the surrounding area: When you buy investment property in Florida, consider the surrounding area. You want to buy investment property in an area that offers plenty of amenities and attractions so people will want to live at your property. Additionally, if youre choosing to invest in a property as a vacation home for your family, you want to ensure you select an area that offers plenty for you and your family to do, too.
Assess Your Wants And Needs
The process of buying a Florida house can be challenging because there are numerous factors to consider address, and figure out before you finally close on the deal. The process of buying a Florida house can be made much easier if you understand the real estate market in which you are buying and have a clear picture of your wants and needs. Before you begin looking for your dream home, you should make a list of what you want in your new home as well as what you dont want in your new home.
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Home Inspections And Other Tests
Home inspections must be completed and finalized in some states before offers to purchase can be made. In other states, these inspections can take place after the seller accepts an offer to purchase. It is critical to decide which inspections and tests you want to perform when buying a Florida house, regardless of when they are performed. These are the inspections and tests that may reveal flaws or problems with the house. Many of these issues could have a significant impact on the value of the home or the amount of work required to repair it.
Hire A Florida Real Estate Agent
Hiring a reputable Florida Realtor® will help you out immensely when youre buying a house in Florida from out of state. You might be surprised to learn that the real estate laws in Florida vary from those in your current state. Lean on your agents knowledge of the local regulations and their expertise in how to buy a house in Florida. A great real estate agent will look out for your best interest and guide you to properties that meet your prices range and needs.
Your real estate agent will also be the one to schedule showings, draft your sales contract, help with negotiations, and guide you through the entire home buying process. They know of the area and can send you homes for sale soon after they hit the market. Plus, brokerages like McCallion & McCallion go above and beyond to help you with virtual walk-throughs, attend inspections, and assist you on the ground, while you are in another state. Thats why it helps to have a tried-and-true real estate professional to ease the stress of the out-of-state home buying process.
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Things To Know About Investing In Florida Property
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Now the colder weather and darker days have arrived in the UK, theres no surprise that many people become interested in purchasing either a vacation home in a warmer, sunnier climate or investing in a property where they can see some return on investment. By having an investment property or vacation home readily available, seeking the sun in winter has never been easier! For many people, Florida is the most popular choice of location.
Fondly referred to as The Sunshine State, Florida boasts warm and dry weather offering a much-welcomed break from the bitter cold of a British winter. Not only this, but some Florida investment properties are situated close to Disney World, ideal for families looking for the perfect base for their dream holiday.
If youre considering buying property in Florida, we are here to help. Alistair Brown International Real Estate have years of experience in helping people find their perfect property in Florida, giving us valuable insight into the Florida real estate market. Keep on reading to discover some of the main things you should know about investing in Florida property.
Factors To Consider When Purchasing A Vacation Investment Property
For many, purchasing a second home is the first foray into investing in real estate. After all, the first home is usually purchased to suit the needs of an individual or a familys basic requirements, like proximity to work, schools, and other amenities. On the other hand, choosing a vacation home is usually much less restrictive. That said, its essential not to lose track of the financial and economic considerations of owning an investment property. Here are four factors to consider before purchasing a Florida investment property:
Rental income can potentially pay part of the mortgage and maintenance costs of your property. Before purchasing an investment property, think about how many weeks or months youll make your property available to renters. This can help you decide on your budget as you search for homes.
This is an important factor to discuss with your Signature real estate agent as you search for properties, as some areas or communities may have restrictions against short-term rentals.
Your business plan should include your income expectations, operational budget, tax planning for rental income, and return on investment calculations.
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Transparency & Ease Of Process In Real Estate Transactions
With the right advice and guidance, you will find that Florida is one of the easiest places in the world to buy investment property. Real estate transactions are highly transparent and efficient. Timelines and processes are clearly defined, and most contracts offer a time is of the essence clause- meaning parties responsible for the transaction must work in a timely manner.
Florida is also one of the few places in the world to have title insurance: which means your title is 100% guaranteed rock solid. No one can ever claim they own your property, and that is backed up by a cast-iron guarantee from the title insurance company. This is a to many European countries, where tracing the ownership of a property can be onerous and in some cases virtually impossible, which means you can never be 100 percent certain of your ownership.
Critically Evaluate Cash Flow
When purchasing the rental property, it is critical that you consider all the costs likely to affect your cash flow. These include property maintenance, renovation, repairs, and management expenses. Find out what these costs are and whether the rental income will be more than enough to meet those obligations and still leave you with a desirable amount.
If you decide to hire a property manager make sure to factor in their fees when calculating your cash flow. Interviewing your property manager ahead of time and asking detailed questions about their services and fees will help avoid surprises.
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Airbnb Occupancy Rate By City In Florida
If you are a new real estate investor, you might be thinking What is a good occupancy rate for Airbnb? While no one has a precise answer to this question, not even the top real estate experts, obviously the higher, the better. But we can generally say that anything above 50% is a good Airbnb occupancy rate, especially in a highly competitive rental market as Florida.
As you will see from the figures below, most places in Florida provide higher than typical Airbnb occupancy rate. Lets take a look at the Airbnb occupancy rate by city in the Florida real estate market at the end of 2018 as these figures are expected to continue into 2019 and beyond:
- Key West: 74.6%
- Greenacres: 31.3%
- Punta Gorda: 23.8%
As data from Mashvisors investment property calculator reveals, the highest Airbnb occupancy rate by city in Florida is in Key West, at 74.6%, while the lowest Airbnb occupancy rate by city is in Punta Gorda, at 23.8%. The rest of the top places to invest in real estate in the Florida housing market have short term rental occupancy rates in the 40s, to 50s, and even 60s. So we can conclude that the average Airbnb occupancy rate in Florida is about 50-55%.
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Planning On Buying Property In Florida Dont Pay More Than You Have To In Bank Fees
Of course, you dont want to leave your loved ones with fees to pay on your Florida property after youve gone. But dont forget that there are smart ways to cut your costs when buying a Florida condo, too.
Currency conversion and international payment costs can mount up when buying a property abroad. Banks tend to charge high fees for cross border payments, and you might also find a margin is added to the exchange rate used for currency conversion.
You could get a better deal when sending money abroad, if you use an alternative service, like Wise. Payments are made using the mid-market exchange rate with no margin added, and just a low transparent fee to pay. This can work out to be much cheaper than using your regular bank – especially when making high value transfers for real estate.
Once youre in Florida, youll also need a smart way to access your money without being hit by high fees. Check out the Wise multi-currency borderless account – a modern alternative to traditional bank accounts, which lets you hold your money in 40+ currencies, and switch between them using the mid-market exchange rate whenever you want to.
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