This is not a definitive guide on all aspects of buying your Florida home, it is merely a summary of what we learnt whilst going through the motions, maybe our observations will help you navigate a smooth path.

Getting Started

First things first, in Florida you do not buy a house, it is a home, I guess that the marketing professionals worked out that a home has more generic value than a house therefore as perception is everything it is worth more. Though I could just be an eternal cynic. Oh and to add to my cynicism, you do not buy houses on estates, you buy homes in communities!

Buying your home in Florida is less significant than the purchase of your residential home in the UK. For many people it will represent the second largest purchase you ever make, yet still many families are enticed to make a quick decision on the back of that 'Dream Holiday.

Appoint a buyers agent, preferably someone who understands the rental market if this is your goal. In Florida a buyers agent will not cost you anything, when you select your home the agent is paid out of the sales commission, however an agent will help guide you through the buying process, it is un likely should you end up deciding to buy that you will ever have done anything that involves signing more pieces of paper at one time before and it can help to feel confident you have someone on your side, nodding in agreement as each contract is produced. The buyers agent will guide you through all the available options, resale and new build and will help you decide what is right for you. Under Florida law your agent must disclose to you any properties on which their may be a conflict of interest and any side agreements that may be in place with any builder, you then therefore feel confident with the advice you are given. A good agent will ensure you decide on the property you require, he or she will simply point out the relevant facts to ensure you can make an informed decision.

Whether you are buying for your own personal use or as a rental venture it is important that you consider all the available options to ensure you find the right home for you. For example are you looking for somewhere that will be immediately available, are you looking to maximise revenue potential, are you looking for that secluded, idyllic, retreat.

If you are looking to rent, as we were, then you cannot go far wrong if you restrict your search to within the magic, ’15 minutes from Disney’. Properties within this area are typically able to be let for towards 40 weeks a year. This may not however be the most peaceful of areas, you may need to go further a field and sacrifice some of that rental income. If you are looking for something immediately available then you will need to look at the resale market, typically new builds currently have a 6 to 9 month lead time at the present.

As to how much will you have to spend, well at the time of writing this there has rarely been a better time to buy, the exchange rate today is 1.84 and rising in the favour of the pound. At this rate a 3 bedroom villa with a pool will set you back in the region of £120,000, a 4 bedroom with 3 bathrooms pool and hot tub around £140,000. In both cases for this price you will be able to get either a resale or a new build and it would be fully furnished and ready for rental.

New build or resale?

Why wait for a new build, this was a question that faced us recently and our decision was swayed when we started to think about the resale value. If you are planning for about 5 years then you need to consider not only what you pay for the property today, but also what it will be worth when you come to sell it. A resale will already be established and you will know exactly what is around it and what the area will look like, however how will the area develop and how attractive a proposition will the resale be in a further 5 years. You should also consider the cost of running the home, if it is new all the appliances including major fixtures such as the pool heater and air conditioning will be new and under manufacturers warranty, whereas if a resale these warranties may have already run out. If a resale it may well be worth insuring major plumbing and cooling/heating fixtures. In our case we decided it best to go for a new build, though do be careful if you are impatient, the 6 months you are quoted as an estimate in the sales office can very quickly turn into 9.

What are you looking for?

If you want the home purely for your own, and your families use then my following points will be of little interest, you know what you are looking for and will value certain aspects of your home in different ways, however if you are looking to buy for rental purposes then maybe you will find our experiences and conclusions of interest, if not feel free to ignore them.

Location, location, location… this is key in more ways than may be initially apparent. The nearer to Disney the easier to rent, within reason, and a good location can help attract repeat business, though what everyone wants from a rented home is different. On average holiday makers will spend less than 10% of their waking hours in your home, what you need to do is ensure you deliver what they want to make that 10% the best you can. Consider elements such as traffic noise, ease of access to the highway and amenities available nearby, shopping, restaurants etc. A home with a convenient take away and a seven-eleven for those essential basics can go a long way to making the holiday a more enjoyable experience.

Once you have selected your area, what type of lot do you want within the community? If buying a home for extensive use by yourselves then you may want to back on to conservation area, or better still water, though with these come their own problems. Small snakes will tend to congregate here, and whilst few visitors will ever see them, your average British tourist would not be amused. I know how I felt during our second trip to Florida when my wife had the pleasure of finding a small snake slithering across our living room floor. If you bay a house with a clear rear outlook then you will pay more, a lot premium, which can be in the region of $15,000, you must also consider the fact that due to how the resale property pricing works in Florida you are unlikely to get this back, though it could help you speed up the sale process. Corner lots may seem an attractive alternative, lower lot premiums and more space, however typically these will have a greater management fee associated with them, more grass to cut, the pool will be next to the road, and who will venture outside of the screened area to benefit from the extra space anyway. In many cases you are better off taking a standard lot and investing the extra money you have available into the interior and pool area, these are the things that are typically remembered. For us traffic noise was a real killer, many of the homes we looked at were fairly close to the highway and the last thing we wanted whilst sitting by the pool was the constant rumble of passing traffic and the all too frequent blast of an air horn. We also wanted a home in a community that had a reasonable mix of residential and holiday homes. Enough holiday lets so that the visitors did not feel out of place, though enough residents to ensure that when not in use the home had a community around it keeping an eye on it.

If security is a concern you may want to consider a gated community, though the gate will not keep the determined unwanted visitor out, they will simply tail-gate their way through, it will deter the casual passer buy. However whilst looking at properties we never had any problems getting into any gated communities to view a house, and never had one set of gate codes provided to us, so I would not tend to place this too high on my priority list.

Select the right house for you

OK, you have selected your location, community and lot, what type of home do you want to build, or if a resale what type of home are you looking for? If you can afford it go to a minimum of a 4 bedroom home, this will give you the advantage of being able to let it as either a 3 or 4 bedroom property, thus more flexibility, therefore a higher occupancy rate. If you are borrowing against the rental income to finance the home this can be key. You can buy with as little as 20% down, though I would seriously advise you to consider your break even analysis and ensure you have a model that will comfortably cover your expenses. What about a pool? This is key if renting to British visitors, more than 90% will put it at the top of their must have list, though less than 20% will use it for a significant amount of time during their stay. Also if you are looking for an extended season of rentals put in a pool heater, though compared to the UK the temperatures in Florida make for a good year round holiday, the pools can get a little chilly. For repeat business a hot tub/spa is also good, a great way for your guests to wind down after a long day of sightseeing and offers the type of facility that will help ensure they want to come back for more. There are other things you can ensure you have in your home to assist in achieving your required occupancy levels, an impressive master bedroom with a large en-suite bathroom, a games room, better quality furnishings adding that little bit of luxury, and many more. Such features are very much down to personal preference, if you have stayed in a Florida villa before, then try to remember what first impressed you, it will probably have a positive effect on your guests. If you are looking for a four bedroom property, do you want it all on one floor? Some of the more recent homes to be built offer significantly more internal space with two floors, bedroom space devoted to the first floor and interior sizes for a four bedroom property much larger than the typical 17,000 to 19,000 square feet you will find in a traditional Florida home. Though, space, whilst making a home very comfortable and roomy can bring its own problems, the larger the home the more costly it will be to keep it cool in the winter.

For us it had to be a four bedroom house, not only did we want the flexibility on how we rented it, but with three children it would mean we all had our own space. The latter being a very important factor when the children in question are in the teenage years.

We now have a location, lot and finally the home we want to put on it, now how do we pay for it. As already said you can buy a home with as little as 20% of the purchase price down and the rest on a mortgage, though with such a high mortgage gearing you would struggle to break even on the running costs on an annual basis, a factor that can be very important to the foreign investor. For us it was slightly better than break even we wanted to do, we wanted to generate enough cash form the venture to fund our annual ‘inspection trips’ to the property without having to dig into our UK funds. I will come back to inspection trips later. Our decision therefore was to carry out a detailed break even analysis on the running costs of the home and work with break even at what we believed to be a very achievable occupancy rate. So you have your down payment but where do you find the rest from? There are many different options as to how you fund your purchase, you can take a bigger loan on your UK property, if you have the equity this can be the easiest approach, however it is not the most tax efficient as you will have no interest repayments you can offset against the rental income. You are better off taking out a dedicated loan, this will mean a US based mortgage, either with a US bank or a specialised company such as British Mortgages Abroad. The latter offer a number of very popular options, typically US mortgages are not as flexible as we are used to here in the UK, however BMA off UK style products on US properties in the Florida area. With BMA you also have the advantage of being able to arrange the mortgage easily within the UK as their office is based over here.

Is it a business?

Making it pay! From the outset you need to be clear as to why you have bought the property, and should always bare in mind that it is not likely to be the most effective investment of the funds that you could have made. However if you go about the process with a bit of care you are unlikely to lose money, the property will pay for its own upkeep and house prices in Florida have been rising steadily over the past few years. Within the next five years it is also likely that new builds in the Disney vicinity will cease, so property on the resale market will attract a higher premium. As already stated you need to focus from the start of your purchase project on how you will make the property pay for itself, you should however also take care to ensure that if it over achieves you do not lose all the benefit in taxation. As with any business venture, for that is what this is, you should carefully record all your outgoings and then offset these against your income to determine you taxable gain. You should register for US tax, this can be achieved in the UK, through the US embassy, you will need to complete tax application form W7 and request an Individual Taxpayers Identification Number (ITIN), you should then complete a US tax return each year. If you do not register for US tax you may be subjected to a withholding tax of 10% of the value of your property if you sell it, and whilst you will get this back it may be tied up for a number of years, probably best avoided. As an owner of a home abroad used for rental purposes you will also need to file a UK tax return and declare any profit you make after US tax has been deducted. There are however many things you can offset against that profit, visits to see that the property remains in good order, ‘inspection visits’, up to two per year. Any costs associated with the purchase of the property. Depreciation on the fixtures and fittings, plus costs associated with the replacement of breakages. All of the day-to-day running costs. If you are at all unsure it is always best to take tax advice in the UK from someone who understands the implications of owning a property abroad at the first opportunity.

Typical monthly running costs for a 4 bedroom house

Pool Pest control & yard + lawns = $300.00
Utilities = $200.00
Cleaning twice per month = $150.00
Repairs & replacements = $25.00
Homeowners association = $36.00
Taxes & Insurance = $300.00
Total monthly cost = $1,011.00

In addition to the above you will need to allow for your mortgage repayments, this will then give you an idea of the number of weeks rental you must achieve per month in order to realise break even.

Are you doing the right thing?

It all sounds very daunting doesn’t it, and that is how it seemed to us when we set out don this road, however it needn’t be. If you know what you want and plan what you are doing you can avoid most of the pitfalls, then hopefully if you do stumble into any they will not be too deep.

An investment in a home in Florida will predominantly be an investment in your and your families happiness over the coming years, if you look at it that way, everything else becomes a bonus.

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