Property Appreciation or Lack of it !!!

As you are probably aware Florida property prices appreciate through a number of factors including rising labor costs, the availability and price of building land, infrastructure expenses, etc. But most importantly it is the purchasers perceived valve of the property that sells a home and this is where it gets tricky when purchasing your first home abroad.

A popular misconception amongst would be homeowners is that Florida properties do not appreciate, or even worse lose their valve over time. To the contrary 2001 / 2002 statistics show that property appreciation along the West Coast is currently running at 16-18% per annum.

However some overseas purchasers have lost money on Florida properties not through lack of appreciation but because they unwittingly paid to much for the property in the first place. The perceived value of a builders model home including a pool, furnishings and other upgrades may look cheap against the cost of a European home but contain a 10% to 12.5% commission for the real estate agents involved.

Imagine knowingly paying a Realtor $21,875 in commission on the day that you receive the keys to your new home. You may well be doing exactly that when you calculate the commission on a $175,000 home at 12.5%. On top of this the furnishings may well have been built into the price and they will also devalue rapidly. Add compound mortgage interest to this extra amount and it will easily eat up four to five years normal appreciation before you open your new front door. That's negative appreciation.

What can I do to ensure that I do not pay excessive real estate commissions!!! Simple, ask the builder to put in writing all real estate fees and commissions he is paying to agents. This is normal on a contract for sale of existing property and your request should not offend anyone. If you have the slightest doubts check around to see what prices the builder is offering through local advertising and also look at a few local competitors if possible. Even ask to see the standard price list. Quite often there is an all-inclusive price list for "overseas investors" and a standard "local" price list. In most instances it will work out a lot cheaper to take the standard local price list and build up your own specification.
Other factors which govern appreciation in Florida are the same logical ones which affect property values the world over except that you will probably be selling to an American family one day and they tend to prefer homes in really good condition. Therefore it is extremely important that your management company stays on top of maintenance and this includes the exterior and landscaping.
Location goes without saying. Stay away from the large tract housing developments with more acreage than a Mid-Western Ranch. They will still be introducing new phases long after you are collecting your pension and Disney World stretches the length of Interstate 4. out into the Gulf of Mexico.
These developments have little character, no after-market appeal and the builders will always find new ways of drawing prospective purchasers past your existing property towards their even newer and greater model centers. Caveat emptor.

Guaranteed Rental Income

I have been promised a guaranteed income if I purchase a home in Kissimmee.

Fine but ask how long the guarantee is for. Your mortgages will probably be for 20-30 years and a I -2 year guarantee of potential income, together with a vague promise of renewal will not continue to make the bank payments after the contract expires. The fact is that new homes continue to be so.

© Universal Vacations Realty,Inc. 2006