Buying holiday property for sale in Florida
If you are new to buying property for sale in Florida, look no further. Our buyer’s guide below is everything you need to know. This buyer’s guide comes from 20 years of experience in assisting International buyers and sellers of Florida property. From just browsing properties online to carefully assisting you in selecting the perfect holiday home for your family. Paying cash or need a US mortgage? No problem we can help you get pre-qualified for a US mortgage in just minutes. In no time and with our help you can finally own that property in the sun you have always dreamed of, so let’s get started…
Paying cash or using a US Mortgage?
- Whether cash or mortgage you will need to provide a bank statement that is dated within 30 days, includes your name and account balance (Please do not include account numbers). The balance should be enough to cover all of a cash purchase or the total deposits needed for a mortgage.
- If you intend on purchasing with a US mortgage you should get pre-qualified for a mortgage before booking flights to purchase a property. Without a pre-qualification letter you cannot make an offer on a property. Currently qualified foreign buyers should expect to put down a minimum of 30% on holiday homes and 40% on investment properties.
- The mortgage provider will be able to provide you with specifics on interest rates, down payments required and maximum purchase amount.
We have relationships with local tax professionals that specialize in assisting foreign nationals who are interested in buying US property. We recommend all our clients speak with a tax professional prior to purchasing a property, whether in person or a scheduled phone interview.
Selecting a property
New build or Resale? New build properties will typically cost 10%-15% more than resale however they are built with the newest energy saving technologies and tend to have more attractive floor plans.
The question to ask is, “Are we buying this mainly for our family’s use or is rental income most important.”
- If you are considering rental income to cover some costs and want to also use the property for holidays then you must buy a property that is zoned for short term rental. These short term rental properties are located mostly around the Orlando attractions and/or beaches.
- If you are buying a property solely for the use as second home and are not interested in renting the property you can purchase a property in any location.
Unlike the UK, all agents in Florida (Realtors) are able to show and sell other agents’ properties, if listed. Fortunately our listing association, reaches from the east coast beaches through the greater Orlando/Kissimmee areas to the Gulf Coast beaches and south giving our buyers tens of thousands of choices in property.
Making an offer
The most important factors in making a successful offer in today’s property market are to be educated on the property’s current value and to understand what type of sale it is. To determine a property’s current value we will prepare a market summary and analysis for your review which details the most recent comparable sales and comparable active listings for the property you are interested in. Today you will find that all property listings fall into one of four categories; (1)New build, (2)Traditional resale, short sale or bank owned.
- New build-New build properties can be completed waiting for a buyer, partially completed or off plan. Most builders will require a minimum of $5,000 deposit within days of signing a contract, then anywhere from $30,000-30% within 30 days.
- Traditional resales– These types of sales are that most buyers are used to. You the buyer make an offer through your agent to the sellers’ agent and then you negotiate to a final accepted contact for sale.
- Short sales- A short sale occurs when the anticipated sales price will not be enough to pay off the existing mortgage(s) on the property. Because of the decrease in property values over the last few years many homeowners are underwater and need to sell. As a buyer of a short sale you would make an offer to the seller of the property but all terms of the contract would have to be approved by the sellers’ mortgage company(s). This process of short sale approval usually takes 30-90 days and can be very frustrating to all involved. After months of waiting the sellers’ mortgage company may come back and approve the short sale at the agreed upon terms, they may ask for an increase in the sales price or they may deny the short sale all together.
- Bank owned sales- These types of sales include properties that have been taken back by the bank through foreclosure or repossession. The offer process on bank owned properties is very similar to traditional sales in that you are making an offer directly to the bank or one of their authorized representatives. Banks don’t want to own properties and sitting on them can cost the bank real money therefore they usually instruct the listing agent to list the property at a price that will bring multiple offers within one to two weeks of the property being on the market. In many cases bank owned properties will sell for more than the list price. With many distressed property buyers not wanting to wait around for short sale approvals bank owned properties are the preferred option for many buyers, creating an auction type atmosphere.
Completing the purchase (Closing)
Once your offer has been accepted by the seller, or in the case of a short sale when the sellers’ lender has approved the short sale, you then move into the inspections and closing phase of the sales transaction.
- If your property is under construction and you are using a mortgage to purchase the property, there will be a period of 4-6 months were you will need to update financial documents with your lender. Within around 30-45 days of completion these documents will need to be updated again.
- Once your property is within 30 days of completion the lender will order an independent appraisal which will cost you around $500 at this time you will also have a closing date scheduled.
- Within 10 days of closing, we as your agent, will perform a walk through of the property to make sure any last minute items are addressed.
- Your deposit must be immediately (1-3 days) wired to the sellers’ chosen “Closing” agent when your offer has been accepted.
- At this time we would assist you with scheduling your home inspection of the property which must usually be completed within 5-10 days. These inspections usually cost $400-$500 US dollars. Once you have reviewed the home inspection you can choose to continue with the purchase, address concerns or walk away and receive a refund of your good faith deposit. Since all short sale and bank owned properties are sold “As Is” the sellers will not make repairs and your original offer amount should reflect this. If you choose to continue with the purchase you are then expected to complete the purchase by the timelines set forth in the contract.
- During this time, the sellers’ chosen title (closing) agent will be preparing all transfer of ownership documents and gathering all relative information to calculate the buyers’ and sellers’ closing costs. These closing costs for a cash purchase usually run below 1% of the sales price of the property but can sometimes be higher. On purchases where a mortgage is involved, closing costs can run up to 6%. Closing agents are typically backed by property attorneys (Solicitors) and provide title insurance to show that the property is transferred free and clear.
- Most sellers and banks will require you to close within 30 days of the acceptance of your offer.
On mortgage purchases, once the closing date is scheduled you will need book your flights for the signing of closing documents. You will also get an estimate of the final amount needed to complete the purchase, this will include all closing costs plus the purchase price minus any deposits received on your behalf and any concessions or incentives due to you. This “cash to close” will need to wired to the closing agent before you leave to Florida. Any overages from the estimate will be refunded back to you after all documents are signed. Closing costs on mortgage transactions average 4-5% of the sales price.
With cash purchases, closing or transfer of ownership documents can be emailed or faxed to you for signatures and originals can be express mailed back, a notary may be needed. Closing costs on cash transactions average 1% of the sales price.
*Closing costs include HOA dues, transfer taxes and closing fees. If a mortgage is involved then mortgage fees and property insurance will apply.
Select a property management company
Some properties will require using an onsite management company. These resort style properties typically handle upkeep and rental of all villas/apartments in the development. Other properties, typically villas, need independent management companies for upkeep and rental. Either way, management companies will take a percentage of the rental income for their efforts. This can range anywhere from 10%-50%, depending on the extent of their services. They may also charge a monthly management fee of $119-$300 even if the property is not in the rental program.
The wow factor! Renters rent with the eyes. If your intent is to rent the property as a holiday home, furnishings can be just as important as location!
New build – Most new build properties are sold unfurnished which allows the owner a “blank canvas”.
Resale – Some resale properties include furnishings however most of those need some updating. If your property does not come with furnishings then you will need to purchase a furniture package.
Because the internet has become such an important part of advertising rental property, competition has become very intense. When purchasing furniture it is very important to pay attention to quality and the appeal to potential renters. Your management company should have guidelines to follow regarding furnishing a property for successful rental outcomes.
We will suggest 2-3 design companies that can assist with furnishing your property. Furnishing packages can range from $20,000-$60,000 or more depending on the number of bedrooms and quality.
As an owner of Florida property, you will be responsible for annual property taxes which will be billed to you in November for the current year. In most cases these property taxes are 2% or less of the property’s assessed value. The local county property appraiser will assess every property based of recent comparable sales of simila property. If you are renting the property as a short term rental you will also be responsible for sales taxes, your property management company can track and assist you with these details. You will also need to carry a home owners insurance property suited for your specific property.
Most communities have a homeowners’ association (HOA). An HOA can be responsible for keeping the community to a specific standard as set forth by the property owners. In holiday property communities they can do much more. For example if the community has a pool, clubhouse or recreation center, the HOA is responsible for maintaining these amenities and collecting dues from property owners. Typically the more amenities the higher the HOA. Some HOA’s even cover lawn maintenance and certain utilities like cable television.
Selling your property
At some point in the future you may consider selling your property and it is important to work with an agent that understands your buyers and what effect selling will have on you. As a foreign owner of property in the United States you will be responsible for paying income tax on any income earned from the sale of a property. In order to insure its payment the IRS requires the buyer to withhold 15% of the sale amount until the taxed owed is determined.
Whether this is your first time buying property abroad or you are an experienced investor, rest assured with over 20 years of experience in the Central Florida holiday property market we can comfortably guide you from your selection of property through your purchase and eventual sale, all the while assisting you with every step in between to insure a smooth transaction.
*This is only a guide and many times there are special exceptions in the buying process. If you have any questions feel free to contact us by phone or email.