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Homes for Rent in

Sarasota County

Is it now a perfect time to buy in Florida?

The answer is a clear ….it depends. Oh my gosh, and you were expecting a clear yes or no! But it really "depends" on what you have in mind. If you want to buy now and flip for profit in a few months – maybe it will work, but most likely it is not going to happen so fast.

Now, you want to buy a house, use it as a vacation home, and sell it maybe in a few years with a profit?  That seems to be a better idea. Will your gain be in the two digits per annum? Honestly, we don't know - but we don't think so. It will probably be back to "normal" (3-5% per year).

Can you set off your expenses by renting the place out while you are "slaving" in Canada? We think so – Yes! However, here comes an important advise: The "Location, Location, Location thing" is back on the market. If you buy a home in a wrong location you may have to keep it forever. A nice steel in a problem community will most likely stick to you for years to come.

Therefore, it's got to be in a reasonable community (beachfront, canal front, lakefront, golf course, etc.) in order to increase in value. You can dream - but it's better to have a vision. Some communities may not improve in your lifetime. 

Here are the 10 questions buyers should ask when deciding to purchase a condominium unit:

What is the monthly condominium fee and what does it pay for? 
 

The monthly condominium fee can range quite dramatically from condominium to condominium. The fee is a by-product of the number of units, the annual expenses to maintain the common area, whether the condo is professionally managed or self-managed, the age and condition of the project, and other variables such as litigation. For budgeting and financing you need to know the monthly fee and exactly what you are getting for it.

What are the condominium rules & regulations?

Condominium rules can prohibit pets, your ability to rent out the unit, and perform renovations. Make sure you carefully review the rules and regulations before buying. Needless to say, the buyer's attorney should review and approval all condominium documents, including the master deed, declaration of trust/by-laws, covenants, unit deed and floor plans to ensure compliance with state condominium laws as well as Fannie Mae and FHA guidelines, as necessary.

How much money is in the capital reserve account and how much is funded annually?

The capital reserve fund is like an insurance policy for the inevitable capital repairs every building requires. As a general rule, the fund should contain at least 10% of the annual revenue budget, and in the case of older projects, even more.

If the capital reserve account is poorly funded, there is a higher risk of a special assessment. Get a copy of the last 2 years budget, the current reserve account funding level and any capital reserve study.

Are there any contemplated or pending special assessments?

Special assessments are one time fees for capital improvements payable by every unit owner. Some special assessments can run in the thousands or even in the millions for high end condos. You need to be aware if you are buying a special assessment along with your unit. It's a good idea to ask for the last 2 years of condominium meeting minutes to check what's been going on with the condomininium.

Is there a professional management company or is the association self-managed?

A professional management company, while an added cost, can add great value to a condominium with well run governance and management of common areas. 

Is the condominium involved in any pending legal actions? 

 
Legal disputes between owners, with developers or with the association can signal trouble and a poorly run organization. Legal action equals attorneys’ fees which are payable out of the condominium budget and could result in a special assessment. In Florida you can run a search of the condominium association in the court database to check if they've been involved in recent lawsuits.

How many units are owner occupied?

A large percentage of renters can create unwanted noise and neighbor issues. It can also raise re-sale and financing issues with the new Fannie Mae and FHA condominium regulations which limit owner-occupancy rates. If you are using conventional financing, check if it is a Fannie Mae approved condo. If FHA financing, check if it's an FHA approved condo.

What is the condominium fee delinquency rate?

This is a very important question because it is a signal of financial trouble, and Fannie Mae and FHA want to see the rate at 15% or less.

Do unit owners have exclusive easements or right to use certain common areas such as porches, decks, storage spaces and parking spaces?

Condominiums differ as to how they structure the “ownership” of certain amenities such as roof decks, porches, storage spaces and parking spaces. Sometimes, they are truly “deeded” with the unit, so the unit owner has sole responsibility for maintenance and repairs.

Sometimes, there are common areas in which the unit owner has the exclusive right to use, but the maintenance and repair is left with the association. Review the Master Deed and Unit Deed on this one.

What Does The Master Insurance Policy Cover?

The condominium should have up to $1M or more in coverage under their master condominium policy. For buyer's own protection, they should always buy an individual HO-6 policy covering the interior and contents of the unit, because the master policy and condo by-laws may not cover all damage to their personal possessions and interior damage in case of a roof leak, water pipe burst or other problem arising from a common area element.

Ask for a copy of the master insurance policy and don't forget to check the fine print of the by-laws. Sometimes, there's language that would hurt a unit owner in case of a common area casualty. Condominiums over 20 units should also have fidelity insurance to protect against embezzlement.

Florida is a nice spot to be when the cold arctic wind drives snow flurries down the streets up north and you are down in the dumps. Wouldn’t it be nice to sit on your own lanai watching the sun set? Real estate is very affordable in Florida at the moment; therefore the temptation to buy is there. But before you are getting too excited about the red carpet treatment cash buyers usually get in Florida, you need to get a handle on certain issues:

• Will this be an investment or a lifestyle property? The answer to this will make a big difference. You want to make sure you get tax planning advice because you could be subject to taxation in 2 countries if you haven’t set everything up right for an investment property.
• How and where do you want to hold the property? Be sure to consider the ease of access from your Canadian home as well as the other things you’re looking for.
• Financing options (most people get financing in Canada to pay cash for their property in the US. This would be the easiest route to go).
• How much time do you plan to spend in the US? You know that you may be in trouble if you stay for 6 months and more? You may lose your national health benefits if you stay outside of your country for an extended time.
• Know your financing and closing costs. Begin the loan pre-approval process before you begin searching for a home or condo in Florida. In this way, when you find the dream home you’ve been searching for, you will be negotiating price with the seller from a position of strength. The seller will know upfront that you are fully prepared and "qualified" to buy. How beautiful is that? Be prepared to wait 5 – 6 months before you can move in. During that period, all of the third-parties involved (inspectors, appraisers, insurance companies, title companies, etc.) will be conducting their portions of the transaction.
• Minimizing Your Taxes. Even though you are a citizen of Canada or another nation, you may be treated as a U.S. citizen for tax purposes. Be aware that non-residents of Florida do not get all of the property tax advantages granted to permanent residents of Florida. All people are treated equal – do you really believe that? Anyhow, the ink on the purchase contract is still wet – and the IRS and the county tax collector love you already. It is always nice to have real friends in a strange world like this.

If you rent your Florida property for the portion of the year that you spend in your own country, you will need to file a federal U.S. income tax return. You will have to declare your rental income, but you may be able to deduct expenses such as maintenance, utilities or mortgage interest. Since Florida doesn’t have a state income tax, income from the property will only be taxed by the federal government. What an incentive!

Property Insurance. Property insurance in Florida can be expensive. Newer homes are less expensive because the structure is able to withstand higher winds. Insurance companies charge less to insure properties that meet the latest code requirements. Homes and condos that are not located directly on or adjacent to the waterfront or in designated "flood zones," cost less to insure as well.

More...

Avoiding Estate and Probate Taxes.

The probate process of transferring property to beneficiaries can be lengthy and costly. Putting the deed to your Florida home in the name of a Cross Border Revocable Living Trust (CBRLT) rather than in an individual's name may offer advantages. Properties held by a CBRLT are exempt from Florida probate and thus have no filing requirements for U.S. or Canadian tax authorities, for example.

Check with an attorney or tax advisor to find out what benefits may be available to you.

Understanding Capital Gains in Real Estate

When you sell a stock, you owe taxes on your gain — the difference between what you paid for the stock and what you sold it for. The same holds true when selling a home (or a second home), but there are some special considerations.

• Cost of the purchase — including transfer fees, attorney fees, and inspections, but not points you paid on your mortgage.
• Cost of sale — including inspections, attorney fees, real estate commission, and money you spent to fix up your home just prior to sale.
• Cost of improvements — including room additions, deck, etc. Note here that improvements do not include repairing or replacing something already there, such as putting on a new roof or buying a new furnace.

A common misconception is that Florida charges Canadians and other foreign nationals more in property tax than U.S. Citizens. This is absolutely not true. Snowbirds from the U.S. are treated the same way. The name “snowbird” is the important key word, implicating that this person is not a full-time resident. The difference in the property tax structure in Florida is about those who can claim homestead exemption (only full-time residents can do it) and those who cannot (part-timers can't). Homestead exemption consists of two elements: a $50,000 deductable from the assessed value and a 3% cap. "Cap" means, that the tax cannot go higher than 3% in any given year. The law was meant to protect the "poor" Florida residents but stirred up a lot of emotions in the "snowbird community".

If you want to determine how much the property tax may be for a certain property, don't rely on the MLS data. The figure  might be far too low because the seller had claimed homestead exemption for years, and he may have had other deductions (veteran, handicapped person etc.) as well. In contrast the tax could also appear to be extremely high. This can happen if he had owned the home for several years without any deductions. Furthermore, the tax is based on the assessed value of the property, and how the county appraiser figures that out is his secret. The assessed value has nothing to do with the market value or the price of the last sale. The "millage rate" is a percentage of the assessed value and determines the amount of the tax. It  may vary widely from county to county, which makes it even harder to determine the correct tax. Give us a call; we have access to all the tax data and may be able to give you an approximation.

Another question: Is there a Sales Tax due when buying property? The answer is "no". There is a state tax and intangible tax (.35 and .02 of the mortgage amount due) if you take out a mortgage, but there is no "Sales Tax" or VAT. However, be aware, that when you are selling your property many years down the road you may have to pay capital gains tax. This is a tough one, and it is not easy to avoid.

Who pays for real estate service? The seller always pays the sales commission because he is hiring the services of a real estate professional to find a willing and able buyer for his property. The buyer does not pay any commission.

Is it beneficial to hire a buyer's agent? If you are not familiar with the neighborhood and the bidding/sales process an experienced realtor can save you a lot of time and frustration. He can find you the desired property and he can find out for you the construction details, pending assessments, association fees, also he can give you detailed information about the location. Furthermore, he will warn you if there are legal issues with the contract. However, he cannot give you any legal advice. If you want us to assist you, give us a call.

Should I get a condo versus single family home? It really depends on your preferences.Condos appear to be low maintenance, but this is not necessarily the whole truth. Some condo associations charge insane amounts of fees for maintenance and services. With a single family home, the owner can better control what he wants to pay, which may be a lot more reasonable.

Is property insurance hard to get? For most foreign national buyers obtaining homeowners insurance is straight forward and not a problem at all. Older homes and homes in certain areas (close to the water) are more expensive; homes with hurricane protection (shutters) and hip roof will cost less in premium. If you want to rent your home out while not using it you need to be a little more cautious: not every insurance wants to insure "renters risk" and you need the okay from the community as well. Quite a few  communities don't permit short term rentals.

Can a foreign national get financing for his vacation home? This is a tough question. Paying cash would still be the best route to go. If you can use your equity line of credit  the purchasing process would be a lot smoother. Second choice would be to get a loan from a Canadian Bank operating in Florida. RBC would probably be the choice. If you are looking for trouble -  try a U.S. bank. There is absolutely not a single American bank we would recommend at this point. If you insist on going that route you might want to try Liberty Savings or Sun Trust, but be prepared: long gone are the days of the “no money down” – “no documentation” loan. Be prepared to bring at least 30-40% of own money, and bring all your income statements, bank account and asset verifications. You might still be out of luck if, for some reason, the bank doesn't like the property you fell in love with. The appraisal is always an important key element of the purchasing process. Our advice: only when all your Canadian resources are exhausted try a U.S bank. 

The Canadian Dollar – US Dollar Exchange Rate - Beautiful!

With a desire to escape bone chilling winter weather, Canadians from Cities like Toronto, Vancouver, Ontario, Winnipeg, Saskatoon or Calgary represent an ever growing demographic here in Sarasota County. Canada is and remains Florida's number one international economic partner, number one source of inbound tourism and number one partner in terms of origin trade.

A recent study, produced by Kroll Inc., a global research and business intelligence firm, found Canada to be Florida's top international economic partner, with the main components of the Florida – Canada economic relationship are being trade, investment and tourism.

Canadians are buying up Florida's real estate at a faster pace now than they were during the boom years of 2004 – 2007; however, real estate is definitely more affordable than it used to be, but homes are still not for free.

Even if the prices of waterfront properties are down a million or so from a couple of years ago – it is still more than pocket money for the average buyer. Besides, it will most likely be a second home and only be occupied for a few months annually.

In fact, with the recent decrease in the relative volume of the Canadian dollar, Florida houses actually just went up in price. However, it's difficult for cold Canadians not to think their chance for perpetual warmth is tantalizingly close.

What is the price situation like in Sarasota/Sarasota County in the year 2011 A.D.?

First of all, let this get straightened out: if you want a new home right in the middle of nowhere – you have many to choose from and they are dirt cheap. There are thousands of foreclosures in those areas and more foreclosures are popping up every minute. Most of the homes have little or no vacation potential, and they are only suitable for retirement or part time retirement, or if you consider alligator hunting your favorite hobby.

You are absolutely right when you object; of course, there are also some nice foreclosures in more favorable communities as well. However, you need to make sure those homes have always been well maintained since the departure of their owners. This is very often not the case because the new owner, the bank, did not really want to own the property in the first place, nor did she really intend to become responsible for the property.

The bank has already lost a lot of money due to the unpaid mortgage and proper maintenance is expensive, especially when the sale takes forever. You may think that Florida per se has a mild climate and homes do not need a lot of maintenance, but unfortunately that is not the truth. Summer in paradise is as tough as the winter in Canada. High humidity, a baking sun and salt in the air can destroy a building very fast.

The least expensive homes are often not well built, because the builder used a lot of cheap (second grade) material, and problems will arise quickly. Well built homes can survive a lot longer, but they also require regular maintenance. In a climate like this mold appears quickly when air-conditioning systems are shut down. That is something you don't want to have happen.  

Furthermore, the exterior of the building is deteriorating fast as it's being reclaimed by the jungle. It is sometimes sad to look at bank owned properties. Especially the big out of State banks do not care about their properties at all. Why should they? The prospect buyer gets his deal only “as is” anyway. No bank is paying for repairs; once the documents are signed all problems are considered the buyer's problems. What a nice deal!

Let's have a look at some market data:

Waterfront property is still holding its value. There is one underlying reason for this: there is no endless supply of shoreline.

Of course, the values have dropped since the boom years (2004 - 2007), but only a meager 10 – 15 % overall. People want to live by the water, and they will pay for it any justified price. Waterfront is prime location and it will always be. 

Golf Course properties are different.

Well established and pricier communities are comparable to waterfront – newer golf course communities tend to be more in trouble at this point. Why is that? Too many nice amenities drive up the maintenance fees. If people want to cut down on expenses, they can only avoid high membership fees and high maintenance fees.

In most exclusive Golf communities the membership is mandatory and the fee is a little on the high end, but if you have the money to purchase a million dollar home with golf course view, you probably have the money to pay for the mandatory membership as well.

Some newer and cheaper golf communities have opened Pandora 's Box: they wanted to keep the monthly bills low by pooling the costs and divided the land into far too many lots. To make it even worse, they created an unforeseeable problem by letting too many unqualified people buy homes in the community.

Now the inflation of the sheer number of homes drives already the prices down and the foreclosure of the people, who should not have bought in the first place, adds to the problem. In such a communities  you can actually find nice homes for bargain prices, but having too many distressed homes in your neighborhood can be an eyesore. 

Gated Communities are probably a good choice

 for second home buyers.

If you are gone for six months of the year you want at least to make sure that your property is protected against unwelcome visitors. America is not Canada or Europe and single homes outside of communities may not be as safe as they may be in your country, especially when the owner is gone for a longer period of time.

In general, asking prices for nice homes in favorable communities are down 15-30% compared to what they were at the peak. Actual sales prices are an additional 5-10% below asking prices. About three years ago asking prices and sales prices were almost identical. That was seller's paradise.

The Condo Market is slowly coming back. This real estate segment is still not so easy to handle. It is sometimes hard to determine if the asking price is real or if it is still way too high. A thorough investigation is usually necessary in order to prevent paying too much.

However, there are good condo deals out there - just look around.