Sunday, March 1, 2020
Coming to Florida
For good or otherwise, we have seen a greater than usual influx of people coming from the frozen north. Not only are they lured here by the year round summer, but they have been driven out of many northern and western states by the propensity of the governing bodies to take more and more than their fair share of their citizens hard earned dollars to expand services to citizens and non-citizens alike. While this could turn into a rant about the right and wrong of these decisions, the real purpose is to look at the choices people have when the come to the Sunshine State and the possible implications for investors.
For many, selling a home in the God forsaken lands of New York and New Jersey, maybe even Pennsylvania lets the newcomers can plunk down cash for their purchase and still bank a nice chuck of money. I have known some who put a major addition onto their new home to keep from giving an undeserved windfall to the tax man. Now the price differential may not be quite so great if there is a hankering to live by the beach. Before the reader believes I unfairly look down on the northern states I must add that I grew up in Pennsylvania, lived in New Jersey eight years before I escaped and spent part of my summers on a family farm in New York. I come by my opinions honestly.
So for those flush with cash, the choice of where is live is pretty much open. Although there may be some wisdom in not putting all the cash into bricks and mortar. Those with the resources can purchase a wide range of properties and join the many home owners using the copius supply of lawn service providers, along with pool and cleaning services. It can be kind of like living in a condo, but you have control of the whole property. And there are many service providers making a pretty good living doing this kind of work for those capable of writing the checks.
For those with not quite so much cash or those who don't feel the desire to invest it all into bricks and mortar, condos are a good choice. The come in all age and 55 plus flavors and in apartment, townhouse and villa configurations as well as single family home configurations.
They each have their own definite characteristics, just like larger towns and cities. This is probably more important to the buyers comfort level than the facility itself. You can change the carpet easier than you can change your neighbors. Talk to some of the residents and not just the property manager, although sometimes they represent several communities and can direct you to just the place you are looking for.
There are several things to be aware of if you are looking to finance a condominium. Lower price units may be best handled as cash purchases unless you look for a personal loan. Often times mortgage companies are not interested in small loans as there is just as much work to create a $40,000 loan as a $400,000 loan, Another consideration is that many condos are built on leased land. Most are hundred year leases issued several decades ago. The bankstes definitely won't go for a unit where than land lease expires before the term of the loan. I have had one with 52 years remaining on a 30 year loan give the underwriter too much ajita to issue the loan.
HOA fees are another factor to keep in mind when looking at the overall costs. You will often pay less for older units, but because these usually require more maintenance, HOA fees are higher and in an emergency are more likely to require special assessments from the property owners. You will pay more for newer units, but they generally require less and less costly repairs. The point here is that no class of condos is generally bad or good, but some are more suited to the budget and needs of various people, Due diligence is critical as I came across a lady who thought she bought an ideal unit. She had a number of friends that rode motor cycles, It was only after she moved in that she found that these bikes were not permitted in the complex.
If you don't necessarily care to live above or below someone, a nice mobile home may be just the thing. Of course you can find the type of trailer park James Carville visits, but most are pretty nice places to live... and since 1978 they are actually manufactured homes. Many are framed in 2x6s rather than the 2x4s in most single family homes. Like condos they come in all age and over 55 flavors,
They can be had for a few thousand dollars up to $100K or more for the nicer, newer units. As with condos, talking to the residents as well as park managers is a good way to be sure the community is the type of place you want to live in. Lot rent is another consideration and can run over $700 a month. This is not necessarily bad if you check out what is included for the money. Another way of manufactured home living is selecting a resident owned park where you buy a share along with your home. The monthly fees are considerably less but the price of admission is higher. The added benefit is that you have input into park management.
In either case, it's good if you like pan cakes since many have Saturday morning pan cake breakfasts in the clubhouse for the residents. Many have pools and club houses, bingo and shuffle board,
So what does this mean for the investor? Among other things, there is a steady flow buyers for all sorts of housing, not mention long term and seasonal rentals. Then there is the an increasing supply of potential financial partners as the folks coming into the Sunshine State after selling their home up north may well be looking for a better return than their banksters are willing to give. Whatever the guy or girl behind the fancy desk will tell them, or you, .9 % is NOT a high interest account. It may be the best they can do but it still is NOT high interest. We may cover this in another article, but you can pay them a whole lot more so everybody wins... except the bankster.
Treat people fairly and honestly and you may well find yourself a new funding source as well as a friend.