Florida's RE Conundrum

[housingcrashsurvivor]

Re: Florida's RE Conundrum

Okay, maybe not. Needs too much work. I now figure best about 8-9% return on 10 months' rent and after taxes & insurance. At some other time I might have thought that a safe bet but I'm too skittish for this. Pretty sure someone will buy at that price though, and that'll make a nice comp for the other one I'm stalking if it ever comes to market. Patience my pet.

PS Zillowed house currently for sale. Zestimate $80k. (~$60/sq ft) though houses selling here currently average $99/sq ft and apts (much of that student housing) going for $43/sq ft.

Previous sales 2006 $165k, 2004 $143k, 2002 $120k

[flintlock]

Re: Florida's RE Conundrum

The condos we're tracking are listed in the $130 - 150 range, with HOA fees of $400. The rentals among them are listed at $1300. All built in the late 80s - early 90s. Well maintained complex.

Any reason you wouldn't just rent Don? Sounds like you might save a few hundred bucks a month by buying now, but is that worth it? Of course, I like buying because it gives more stability on where you live. Not having to move again, that to me is good enough reason.

[flintlock]

Re: Florida's RE Conundrum

Yeah, at some point its just easier to buy stocks or mutual funds and see how things go. Click, click, your'e done. More liquid too. I still think it may be a bit early for RE as an investor. As a place to live, different story.

[don]

Re: Florida's RE Conundrum

Any reason you wouldn't just rent Don? Sounds like you might save a few hundred bucks a month by buying now, but is that worth it? Of course, I like buying because it gives more stability on where you live. Not having to move again, that to me is good enough reason.

We've given this a lot of thought (and a lot of good input from the 'tulip) and yes, there can be pitfalls but where we are looking - smaller developments, mostly NE migrants, predominantly Jewish (my wife's Jewish), fiscally conservative, quiet, good HOA fee record, well maintained, priced right - putting that all in a cash blender we end up with an impressively low housing overhead. Never paying a bank a dime, in today's FIRE climate, is rewarding in a number of ways in itself. Would I do this when I was younger? No, probably not.

As things stand today, which could change, the HOA fees cover structural insurance, grounds maintenance, water, basic cable, garbage and exterior maintenance and repair of the unit. The $400 is well spent. Plus clubhouse, pool, gated, etc. If possible my wife plans on running for the board as a bit of insider insurance. We plan on rebuilding part of our capital outlay immediately. Our monthly payments will be half that of renting. A possible added bonus is finding a place furnished, not that rare in this area (estate sales), which makes moving from coast to coast an easier, if not easy, task.

[BiscayneSunrise]

Re: Florida's RE Conundrum

From my view here In south Florida, Don is on the right track. At the mid to lower price ranges, a home, well bought, would be a better investment now than renting.
At the higher end, rents are far cheaper than owning.
Which leads me to the conclusion that for investment purposes, prices are still too high. Current asking prices for investment properties would result in low single digit, even negative, cap rates.
As for HOA fees, look at them as a way to afford a nicer lifestyle than you might be able to afford otherwise. Having said that, it is really important to buy into an association that is both functional and filled with like minded people.

[housingcrashsurvivor]

Re: Florida's RE Conundrum

Okay, maybe not. Needs too much work. I now figure best about 8-9% return on 10 months' rent and after taxes & insurance. At some other time I might have thought that a safe bet but I'm too skittish for this. Pretty sure someone will buy at that price though, and that'll make a nice comp for the other one I'm stalking if it ever comes to market. Patience my pet.

PS Zillowed house currently for sale. Zestimate $80k. (~$60/sq ft) though houses selling here currently average $99/sq ft and apts (much of that student housing) going for $43/sq ft.

Previous sales 2006 $165k, 2004 $143k, 2002 $120k

UPDATE. Home just sold for $62,000, near asking (52% below its 2002 price) or $46/sq ft. (z-estimate bumped up $5k to $85k).

[don]

Re: Florida's RE Conundrum

UPDATE. Home just sold for $62,000, near asking (52% below its 2002 price) or $46/sq ft. (z-estimate bumped up $5k to $85k).

Was that a bank-owned foreclosure? I'm finding that's the sweet spot for buyers. Owners are stuck with their mortgages, leaving little room to negotiate. Banks have "public assistance" for their liquidation shortfalls.

[housingcrashsurvivor]

Re: Florida's RE Conundrum

Yup. The bank took it a while back and had it rented. Property well maintained visually. Sold quickly when they decided to unload. I considered it but too much work and I'm working on two others now. Is on an entry street into this area so I didn't like that. Otherwise nice property. Though was already subdivided (mine here divides into 3 as do some others still). Structure looked solid but just a shell. Needs new roof, windows, doors, had no central a/c and I didn't bother to look but I'm guessing needs new kitchen and baths. Still would be a good deal even after improvements but I would need a better deal as this is all still too scary for me.

I checked on the cpi calculator and went back from the 2002 selling price. Today's price on that? Circa 1981-1982. This is insane.

[lektrode]

Re: Florida's RE Conundrum

Was that a bank-owned foreclosure? I'm finding that's the sweet spot for buyers. Owners are stuck with their mortgages, leaving little room to negotiate. Banks have "public assistance" for their liquidation shortfalls.

if can close the deal, thats what we'll be paying in slc for a 2000sqft, on 1/4ac, down from 155 last sold in 2006, after substantial upgrades (still a dump tho, but loc is what i'm buying)

[cjppjc]

Re: Florida's RE Conundrum

Yup. The bank took it a while back and had it rented. Property well maintained visually. Sold quickly when they decided to unload. I considered it but too much work and I'm working on two others now. Is on an entry street into this area so I didn't like that. Otherwise nice property. Though was already subdivided (mine here divides into 3 as do some others still). Structure looked solid but just a shell. Needs new roof, windows, doors, had no central a/c and I didn't bother to look but I'm guessing needs new kitchen and baths. Still would be a good deal even after improvements but I would need a better deal as this is all still too scary for me.

I checked on the cpi calculator and went back from the 2002 selling price. Today's price on that? Circa 1981-1982. This is insane.

Comparing prices like this is tricky. Did it need a new roof, windows, kitchen, and bathrooms in 2002? Was it vacant then?

[housingcrashsurvivor]

Re: Florida's RE Conundrum

Comparing prices like this is tricky. Did it need a new roof, windows, kitchen, and bathrooms in 2002? Was it vacant then?

Yeah, I know, I just try to get a feel for things. I assume no work was done on this house since it was built, as it doesn't even have central air, a requirement of modern day Florida. So I would guess that it did need those things in 2002. (Realize that I'm guessing on the inside based only on what I saw of the outside.) I think a huge problem with the market now is that nobody knows what anything is worth anymore. How do we move from this uncertainty?

In the case of this one, even tacking on $20-25k now to make it perfectly liveable is still 27% below the 2002 selling price. CPI calculator indicates that to be a 1990 price with those improvements. Two decades lost. That gives me no comfort either.

[don]

Re: Florida's RE Conundrum

More than 400,000 South Florida homeowners owe more on their mortgages than their properties are worth, a new quarterly report by research firm CoreLogic shows.

In Miami-Dade, 236,103 homeowners were underwater during first quarter of this year, a rate of 46.6 percent. That’s down slightly from the fourth quarter of 2010, when 245,530 properties had negative equity, a rate of 48.2 percent.

In Broward, the underwater rate is 49.4 percent, for at total of 212,606 properties.

In Florida, there are more than 2 million underwater homes, equal to 46.1 percent of all mortgages. After Nevada and Arizona, Florida has the highest proportion of underwater homeowners in the nation.

http://www.miamiherald.com/2011/06/0...#ixzz1On9aQ2HJ


In Nevada, buyers must pay any HOA liens, which have a first position priority. Same in Florida?

[housingcrashsurvivor]

Re: Florida's RE Conundrum

In Nevada, buyers must pay any HOA liens, which have a first position priority. Same in Florida?
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Don't think I'd ever live in an association-type unit so I don't know that. I understand that the HOAs here have the power to foreclose on a property for unpaid dues. I would think it smarter to forgo collecting past dues that might interfere with a sale, especially of a vacant unit, but I suppose that would be up to the collective wisdom of committee.

[don]

Re: Florida's RE Conundrum

Don't think I'd ever live in an association-type unit so I don't know that. I understand that the HOAs here have the power to foreclose on a property for unpaid dues. I would think it smarter to forgo collecting past dues that might interfere with a sale, especially of a vacant unit, but I suppose that would be up to the collective wisdom of committee.

My understanding, albeit sketchy, is many HOAs turn over non-payers to collection agencies (read FIRE in the house) to which the most egregious attach outrageous fees (hundreds of dollars for mailing a notice, etc), piling on to the point of no return. I assume the business plan is either the new buyer clears the 'debt' or the former 'owner' is hounded forever. My guess? Both.

[housingcrashsurvivor]

Re: Florida's RE Conundrum

My understanding, albeit sketchy, is many HOAs turn over non-payers to collection agencies (read FIRE in the house) to which the most egregious attach outrageous fees (hundreds of dollars for mailing a notice, etc), piling on to the point of no return. I assume the business plan is either the new buyer clears the 'debt' or the former 'owner' is hounded forever. My guess? Both.

Seems self-defeating to me though I haven't looked at the numbers. Less money towards the sale. Less money for upgrades. Lower Zillow comps for the next guy (only half kidding). When I was on a code enforcement board and a house with one of our liens went to market, if the contract purchaser came before us and promised improvements, we forewent fines. Why interfere with a sale that could improve the property & neighborhood? Granted, those were just fines, not arrears. I guess the condos are looking at the greater good, or not, and that's how they play it.