Law Office of Ryan S. Shipp, PLLC

Palm Beach County Real Estate Blog

Variables to consider when buying real estate

Renting out a single-family home may seem like an easy way for Florida residents to make money investing in real estate. However, there are many problems that an investor may encounter. First, the owner of the property has to decide whether to manage it on his or her own or pay someone up to 10 percent of the property's income to look after it.

Next, most people make their money based on how much the home appreciates. In the meantime, rental income alone may not be enough to produce meaningful and consistent cash flow. Compared to multifamily homes, single-family homes have higher vacancy rates on average. A multifamily home is occupied on average 95 percent of the time while a single-family home is occupied only 91.75 percent during a year if there is a month's vacancy.

Summer commercial real estate business is strong

While the summer months are usually the slowest for Florida commercial real estate transactions, this season has been different. In the past few months, sales and leases were strong across the country, according to a survey of brokers.

Biznow surveyed brokers across the country about the commercial real estate business in their markets. Almost unanimously, the respondents reported that business was up in August over previous years as well as over this winter and spring. For example, brokers in the San Francisco Bay Area reported that 2.4 million square feet were leased by businesses during the last 90 days while just 700,000 square feet were leased in the first yearly quarter.

As a landlord, you need to know how the eviction process works

Owning rental property in Florida is a great way to make extra income or earn a living. While the concept of being a landlord is simple enough, there are many issues that can arise and make it complex, costly and stressful. As a landlord, you should be aware of how to protect your rights, including your right to evict tenants if necessary.

Essentially forcing someone to leave his or her residence is not an easy process. If it becomes necessary to evict a tenant, there are only certain grounds by which you can do so, and there are certain steps you have to take. This can be a battle, but you do not have to walk through it alone.

Avoiding mistakes when purchasing commercial real estate

Prospective buyers of Florida commercial real estate may run into some common problems with getting their transactions approved by prospective lenders. People should be aware of these issues and take the time to fix them in advance.

Some prospective buyers do not understand that banks do not see them in the same way that they see themselves. Banks care less about what people do for a career as much as what they look like on paper. If the prospective buyers have some credit problems such as several late payments, charge-offs, bankruptcies or tax liens, they are unlikely to be approved regardless of what types of positions they hold. This makes it important for people to check their credit and to take steps to correct any problems that they have.

Home sales sluggish because of low inventory

Florida residents who are looking for a new home may not be surprised to hear that there are relatively few available properties on the market. Although homes were selling at a near record pace, existing home sales around the country dropped by 1.8 percent overall in June because of the low supply. Only the Midwest region was able to buck the trend and see an increase in sales during that month.

Despite the sales dip from May to June, sales were actually up about .7 percent since this time in 2016. The seasonally adjusted 5.52 million sales in June was the second-lowest of the year ahead of only February's results. According to one economist, demand is still strong, but low supply is causing prices to increase, which is pricing some people out of the market. There were 1.96 million homes available for sale nationally in June 2017, which was 7.1 percent lower than June 2016.

Foreign buyers and U.S. homes

According to the National Association of Realtors, investors from other countries are purchasing residential real estate in the United States in record numbers, with half of the foreign sales being made in California, Florida and Texas. Foreigners purchased residential properties totaling $153 billion from April 2016 to March 2017. That is a 49 percent increase from the same period one year earlier and exceeds the previous record that was set in 2015.

The increase in purchases was unexpected considering that housing in the United States has become more expensive with the strength of the dollar compared to a majority of currencies abroad. Investors seem to believe the rising costs of residential properties are worth the financial security the properties provide.

Options for Florida homeowners facing foreclosure

After a homeowner misses a few months of mortgage payments, the lender will likely issue a foreclosure notice. Although the problem might seem overwhelming, options for preventing foreclosure and the subsequent drop in credit rating exist. A distressed homeowner should contact the lender as soon as possible and ask for more time to catch up on payments. In some cases, lenders restructure loans to allow people a chance to keep paying and halt the foreclosure. Selling the home also presents a viable solution in many cases.

If the proceeds of a sale could pay off the mortgage balance and late fees, then the owner should inform the lender that the home will be listed. The lender might agree to delay foreclosure in the hopes of getting money. A real estate agent could perform a market analysis and inform the owner of the expected value of the property. An agent might also aid the owner in finding a buyer within the necessary timeline.

Review long-term goals before buying residential property

New home buyers in Palm Beach County often second-guess their choice to buy and the reasoning behind it. Some are looking for a way to get into the market and start saving equity that will later be used to purchase a larger family home. Other buyers think they are ready now to get into a home that they will keep for decades to come. There are some justifications for each approach, and they can help new buyers determine their strategy in the residential real estate market.

The first home is often seen as a stepping stone. For that reason, buyers will want to determine if the subdivision or surrounding area will support selling in a few years. Researching an area may uncover trends in price and occupancy rate to help in the decision. Besides the possibility of selling, homeowners will also want to look at the potential for renting out their home when moving to another.

Florida reforms condominium association laws

As long as you have been a member of the board of the condo association in your community, you have probably dealt with your share of accusations and conflicts. Certainly, there have been condo owners who have complained about the Covenants, Conditions and Restrictions and some who have clearly not even read that document. Perhaps you have even dealt with board members who had personal agendas at heart instead of the good of the community.

While homeowners associations seem to get more negative press than positive, you believe in the good an HOA can do in strengthening the community and maintaining the values of the condos within it. Perhaps you welcome the new condo law reforms recently signed by Gov. Rick Scott, or maybe you see these reforms as another way to make villains out of HOAs.

Tips for success when buying a home in Florida

Shopping, financing and negotiating represent the major aspects of buying a home. A prospective homebuyer should consider every element in terms of meeting current needs and preventing future challenges. Setting a budget marks the first step, and a buyer should pick a figure that does not impose financial hardship. Since a future job loss or pay cut might make high payments impossible, buyers should be somewhat conservative about what they can afford.

Because a trustworthy and knowledgeable real estate agent could make the difference between happiness and financial disaster, buyers should interview several agents until they find someone who meets their criteria. When making an offer on a property, a down payment of at least 20 percent of the value is ideal. A down payment of that size will allow a person to avoid paying costly mortgage insurance, also known as PMI.

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