The Money Vault

Investment property in Florida has become popular, partly due to the many television programmes extolling the merits of owning a second home abroad and in part due to Property Investment Seminars, but before taking the plunge you should find out for yourself how the mortgage system in Florida works, tax to be paid, short term rental zones etc.

In this section I will deal with owning investment property in Florida, Florida mortgages. Florida tax and management companies. I, myself owned two such investment properties in Florida, both in the Kissimmee area, up until 2005, so I know only to well the benefits and pitfalls of owning an investment property in Florida.

Most people thinking of investment property in Florida imagine themselves owning a luxury villa with pool. However, condo's are well worth considering if you can get by without the benefits of a private pool. The purchase price of a condo is minimal, with Florida mortgage brokers offering some great Florida mortgage deals. Compared to a four or five bedroomed home, management fees are less as no lawn or pool care is required, plus condo's rent out extremely well.

It is easy to get carried away on holiday and visit a showhome with an agent and, next thing, you arrive home, to slow realisation that you have bought an investment property in Florida with absolutely no knowledge of foreign proceedures.

You will need to make absolutely sure that the area where you purchase your investment property is in a STR zone ( Short Term Rental ) Not all areas in Florida are suitable for short term rental.  A decision also has to be made as to whether you want a new built home or a resale. Resale properties generally come with all furnishings included. If you buy a new built home you will also have to purchase a furnishings package. The agent will send material samples, pool tile samples etc. to your home for you to choose from.

Visitors to Florida now demand so much more. Many enquirer's now ask if the home has a games room. Choose the property on the strength of the mortgage you can afford, not on the size of home.  Besides, a home ready built with a games room installed isn't a necessity as many owners have turned their garage into a games room quite cheaply.

Being approved for a mortgage in Florida is a relatively simple business. Mortgage brokers in Florida are extremely helpful and will advise on the best mortgage to suit your needs and your pocket. On signing and returning the mortgage papers a decision is made by an underwriter and the mortgage should be approved within a very short space of time and a closing date agreed. Next, the Title Company provide a survey on the property plus a termite inspection report. Closing documents are signed and returned using a company such as Fed Ex (paid for by the Title Company) and basically, that's it. Foreign buyers do not even have to be present in Florida for closing.

Hopefully prior to closing you will have done your homework and now have an excellent management company in place, ready to look after your Florida investment. Management companies usually charge around $100 per month for management services but on top of this you will have costs for - pool care, lawn care, utilities, housekeeping (if your home is rented). On top of this you will have miscellaneous costs, e.g replacing worn items, sales/tourist tax - (again if your home is rented) yearly tangible tax payments, and of course U.S. accountancy fees. It is advisable to talk to a few management companies, don't just plump for the first company because it is easier. Management Companies vary greatly in the standards they apply to your home - your investment. Ask if they can give you details of another home they manage where the owner lives near to yourself. If they are a reputable company they certainly won't mind you contacting another owner to ask if they are happy with the level of service provided.

Many management companies offer a 'guaranteed income' scheme whereby they rent out your home for you and guarantee x amount of weeks per annum income. However, these schemes rarely live up to their promises and it is much better to do the work yourself.

All rental income you receive on your investment is subject to sales and tourist tax. Every month you must file a detailed tax return and send of your cheque for tax due. If your income for a particular month should happen to be zero, you must still send of your return stating zero earnings. British Nationals will most likely pay no income tax in the U.S on their investment, however, it must be declared to your accountant in the U.K

Now that you own a luxury home in Florida you will most surely have family, friends, some of whom are very vague friends, workmates and friends of friends either looking for a cheap or even free holiday. If you fall into the trap of taking any rental income at all that you can derive from the property, your dream of owning property in Florida will most definately be short lived. This is an investment and must be viewed as such right from the start.

You definately won't make a fortune from Florida property investment but hopefully you will offset the cost involved in owning an investment property in Florida, plus make a few thousand dollars.Remember, you and your family will be able to have many cheap holidays for years to come.