Save Our Homes in Florida

To homebuyers in Florida: beware of misleading annual property tax assessments when researching homes online.

An amendment to the state constitution known as Save Our Homes, around since 1995, caps annual increases to assessed property value at 3% or the change in the Consumer Price Index – whichever is lower.

When the property changes ownership, the SOH property assessment value expires at the end of that calendar year. The new owner must apply for her own Homestead Exemption, and the property will receive the SOH benefit beginning the second year. I'm paraphrasing this article.

Homebuyers who are unaware of the program may view the annual property tax assessment listed on a real estate website or government database and mistakenly think their property tax assessment will be roughly the same. But in many cases the new assessment will be significantly higher than the old one, resulting in a large jump in annual property taxes that are due.

SOH is only good for homes that are receiving the Homestead Exemption. Rental and investment properties do not qualify. In the majority of cases SOH may not be inherited. If the house is a duplex and 50% is owner-occupied principal residence, only 50% of the property assessment is shielded by SOH.

Florida homeowners enjoy a Homestead Exemption of $50,000 for if their Florida property is their permanent residence, but they must apply for it. That amount is deducted from their property's assessed value and the taxes are based on that lower number. There are a number of other exemptions available ranging from persons with disabilities to veterans to widows and surviving spouses of service members.

Closing costs in Florida

When purchasing a home in Miami or anywhere else in South Florida there are numerous fees, costs and expenses which get allocated between the buyer and the seller on the closing statement (or HUD-1 Settlement Statement).

These items are called closing costs and are typically allocated according to local custom or are, at times, negotiated between the buyer and the seller. Below is a list of the typical closing costs paid by both the buyer and the seller in a typical residential real estate transaction in Miami and South Florida.

It is advisable for a buyer or a seller to engage the services of an experienced Florida real estate attorney prior to signing the purchase and sale contract to not only review the terms of the contract, but also to make sure that these various closing costs are properly allocated between the buyer and the seller in the contract.

Buyer closing costs

Customary buyer closing costs include:

  • Down payment
  • Title insurance
  • Documentary stamps on the note
  • Intangible tax on the mortgage
  • Loan fees
  • Prepaid interest
  • Inspection fees
  • Appraisal
  • Survey fee
  • Mortgage insurance
  • Hazard insurance

Seller closing costs

Customary seller closing costs include:

  • Loan payoff
  • Broker's commission
  • Documentary stamps on the deed
  • Prorated real property taxes
  • Title search fee
  • Lien search fee

As a highly experienced Florida real estate law firm and title company, Federal Title continually guides both buyers and sellers regarding the proper allocation of closing costs and makes sure that what the parties contracted for is properly reflected on the closing statement at the time of closing so that there are no surprises on the day of closing.

5 ways to find buyers for investment properties

If you are interested in wholesale real estate investing, it’s important to know that you have to have a list of viable buyers. The wholesaling process itself requires quick action, which is virtually impossible without at least having an idea of where you will be able to sell the properties. The last thing you want to get stuck with is paying for a property because were unable to find a buyer.

Because it’s so vital to have a buyers list prior to getting started with wholesaling, the following tips will help you compile a list of buyers you can contact next time you have a property deal.

First of all, there are many areas of the country that have real estate investor clubs. Look around in your area, find such a club and become a member. This is a great way to network and meet other investors. Let them know that you are into the wholesaling business, and ask if you can call them when you have properties available.

As you drive around town, look for uninhabited houses that are in the process of being remodeled. You can talk to the workers to get the owner’s contact information. Chances are, the owner is an investor who will be more than happy to be added to your buyers list.

Another great source for property buyers is a property management firm. While they may not be able to give you a list of their clients, they may be willing to give your contact information to their clients. Ask them to have their clients contact you if they are interested in being put on an exclusive contact list; when they contact you, explain that they will be put on a list of buyers who get contacted first when you have new properties available.

Look through the classified ads; often you will find houses for sale listed as "newly renovated." Words like that are usually indicative of an investor purchase. Call the number listed in the ad to see if they would be interested in getting a heads up as new properties become available.

One last idea is to buy your own classified ad. You can list them with words such as "priced below market" or other catch phrases to catch people’s attention. This won’t necessarily put you in contact with investors, but some of the responses you receive may be from investors.

All in all, finding buyers to create a contact list is a must-have for wholesale investors. This article has only outlined a few suggestions for finding interested property investors to add to your list. Remember that in order to successfully close a sale in real estate wholesaling, a predetermined buyer is vital, so have that list ready!


About the author

Jennifer Hill and the agents at Realnet of Tampa Bay are experts at finding the best investment properties or sale. Don't fall for the trap of buying investment properties without researching a property thoroughly.

5 tax deductions for Florida landlords

The first thing most people think of when they hear the words "real estate investing" is buying cheap houses, fixing them up and reselling them at market prices. However, if the current housing market isn’t really conducive to home sales, then it is important for an investor to be able to adapt.

A lot of investors dislike the thought of being a landlord, saying that there are just too many headaches to deal with. Luckily, there are a lot of benefits of renting out properties as well, including tax deductions. The following list details five of the available tax deductions for landlords.

  1. Tax Deductible Property Repairs – If you have ever rented a home, you know that there is a lot that can go wrong. Anything that needs fixing on a rental property, such as roof repairs, tile replacements, or any other necessary repairs are tax deductible. This makes it easier to deal with costly repairs throughout the year.

  2. Insurance Premiums – Insurance is a requirement; it’s nice that for investors who are renting out the property, the premiums can be deducted from the income at the end of the year.

  3. Property Depreciation – Property values of real estate fluctuate, but generally houses appreciate rather than depreciate. This makes the fact that you deduct the depreciation of the property over time on your taxes.

  4. Tax Deductible Interest – Interest that investors pay on mortgages and other loans used for properties is tax deductible. Not only that, but if you have a credit card used solely for spending on repairs, renovations, or anything on the property, the interest is deductible on your taxes as well.

  5. Cost of Services – Perhaps one of the biggest reasons that many investors don’t want to be landlords is because they would have to deal with tenants. Hiring a project manager is the perfect way to deal with that aversion. The costs of these and other services such as lawyers and accountants are tax deductible.

These are only five of the top tax deductions available to landlords who rent out their properties. There are so many reasons to rent out properties instead of selling them: residual, steady monthly income, as well as the extra tax benefits. Many of these tax deductions are not available for the everyday home buyer. Enjoy the benefits of being a landlord, and remember not to put all of your eggs in one basket.


About the author:

Jennifer Hill and the agents at Realnet of Tampa Bay are experts at finding the best investment properties or sale. Don't fall for the trap of buying investment properties without researching a property thoroughly.

How to stay optimistic in a down market

Investments are never a sure thing, no matter what type of investments you're talking about. When it comes to the stock market, common belief dictates that the higher the risk, the higher the potential for profit. In a down economy, however, it can be a little daunting to take risks with your money.

Even in real estate investing, which is often considered safer than the stock market, investors may be nervous about tying their money up during a down market.

Real estate investors may have a little more security than stock market investors but when the economy is in a slump, no one feels secure taking risks with their hard earned cash. Sometimes it is best to keep investing even when things look grim and other times it is necessary to change with the times. Staying optimistic in hard times can be a challenge.

As previously stated, real estate investors have it a little easier as far as staying optimistic, even in a bad economy. Why? Because people will always need housing. The demand for a house to live in will never go away! Even if the prices fall for a short period, it's highly unlikely that the housing market will "crash" like the stock market.

While it won't "crash," the housing market will fluctuate; property prices rise and fall, based on how the economy is. As a result, property investors should keep a close eye on current market trends. Knowing whether to rent or flip a property is often as simple as knowing the current market.

If jobs are scarce and layoffs are rampant, home sales may drastically slow down. This doesn't mean that investors should stop their investing activities, however. It just means that their strategy needs to change. This is one reason why it’s so important to know the market; if homes aren't selling, it's not a good time to try to renovate a large amount of homes and sell them.

In a selling slump, homes should be renovated and rented out, rather than sold. This may not create a large lump sum profit, but it will generate a nice steady residual monthly income. Being optimistic in a down market is easy; just remember that in the housing industry, there is no such thing as a "down market." It's an ever changing market, for sure, but there will always be a need for housing.


About the author

Jennifer Hill and the agents at Realnet of Tampa Bay are experts at finding the best investment property for sale. Don't fall for the trap of buying cheap houses for sale without researching a property thoroughly.

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