Top Five Common Mistakes to Avoid When Buying Property in Florida
Florida is the top location for foreign buyers in the United States, accounting for a fifth of all international purchases, with its year-round climate, beaches and theme parks. At its heart is Orlando, America’s most visited location, and top choice for many buyers seeking to rent out their holiday home to cover costs. Just beware of some common slip-ups, says Jerry Barker of The Jerry Barker Group.
1. Working with multiple estate agents
In Florida, all available homes are listed in the MLS (Multiple Listing Service) which is like a big warehouse that holds all property for sale. This means you only need to work with one agent and that agent can access every available property for you. As of August 2024, new laws dictate that Florida licensed agents must have every client sign a representation agreement before showing or discussing individual properties. Find one you like and trust and sign a representation agreement.
2. Not working with an agent with relevant expertise
Many agents (realtors) in Orlando do not understand how the short-term rental market works nor are they experienced with foreign national buyers. It is essential you work with an expert who ‘gets’ the unique needs of UK buyers to help them navigate the real estate system and locations. They should advise on the most suitable property, negotiate the best terms in a purchase agreement and introduce you to partners who will help you succeed in the short-term rental market such as a managing agent, a tax advisor.
3. Buying in a location not approved for short-term rental
Many owners will seek to rent out their homes to cover its costs. But be aware there is a specific area in Orlando that is county zoned for short-term rental (STR). Resorts and communities within that zone MUST ALSO approve short-term rental in their by-laws. Ensure you buy a property in the STR zone and a community that has approved STR in its covenants for homeowners. If you don’t, you won’t get a license to rent.
4. Having cash to complete in a US bank
This may at first sound a little odd but if you hold the funds you intend to use to buy a property in a US bank, there is a very strong possibility you will not be able to transfer it to the title company without physically being in the bank in the US to make the transaction. If you are closing (completing) a property remotely, transfer the amount required from a foreign exchange broker or your UK bank directly to the title company.
5. Skimping on HOA fees
Buying a home in a location with low Home Owner Association (HOA) fees can be short sighted. The mantra ‘you get what you pay for’ runs true: fees are reflected in what you – and paying guests - experience. Guests want to stay somewhere with nice amenities: a clubhouse, waterpark, lazy river, restaurants, bars, 24-hour security - and are willing to pay extra for that. If you pay higher annual HOA fees, the potential rental returns are greater. Low HOA fees may mean you charge lower rates and you get lower occupancy levels, meaning it is false economy.
