Income over Expenditure

We have been asked on numerous occasions if we are prepared to guarantee a rental income for your vacation home should you purchase one thorugh us. The real question is: Are we as a company prepared to guarantee international exchange rates, the continuing growth of tourism in Florida and a dozen other imponderables that would give the Florida Tourist Board sleepless nights. The sensible answer is of course no, we have been in business for seventeen years and want to continue that way.

What we can do however is give a realistic scenario as a guideline. These figures apply to three and four bedroom rental vacation homes with a pool and we have assumed a $125,000 and $140,000 repayment mortgage and homes in the price range $180,000 and $200,000 with a further $17,000 / $22,000 allowed for furnishings. Whilst we do not guarantee these figures we believe they are sustainable with current trends.

EXPENDITURE: (Average monthly outgoings 3 and 4 bedroom Florida rental homes)

Electricity $125.00 Utilities $60.00 Telephone Line Rental $25.00 Cable TV $43.00

Management Fee $265.00 (Includes Pool and Lawn Service) Planned Maintenance $32.00

Florida property taxes approx. $2,200 per annum / 12 = $184.50 (Allowance of $500.00 extra for 4 bed homes.) Building and Contents Insurance $700.00 per annum $58.50

Total Monthly Expenditure $787.00 or $9444.00 per annum.

Mortgage repayments over 30 years at a rate of 6.75%.
A $125,000 mortgage would give a Monthly repayment of $810.75.
(Annual repayment of $9,729)

A $140,000 mortgage would give a Monthly repayment of $908.04.
(Annual repayment of $10896)

(Assuming that rental income covers operating costs the profit on this investment is in a current annual property appreciation of 16% to 18% with income used to pay outstanding mortgage).

Like the majority of investments real estate is not immune to downturns in the market nor, as previously mentioned is tourism in Florida absolutley guaranteed. Ultimately it is the clients decision to purchase a second/vacation/investment home in Florida.

© Universal Vacations Realty,Inc. 2006. Florida, USA.