In this article, you will find information and tips on Buying Real Estate in Florida, how to get financing in up to 30 years at fixed annual interest rates, and much more:
- How real estate works in the USA and its particularities in Florida
- Tips and best practices for those who want to buy real estate in Florida
- Main costs to consider when buying and maintaining real estate
- Financing Real Estate for Foreign Nationals
- Financial Analysis: Return-On-Investment (ROI)
1. HOW REAL ESTATE WORKS IN THE U.S. AND ITS PARTICULARITIES IN FLORIDA
We think it is important to start by introducing who we are. Florida 360 Investments & Realty, LLC is a Real Estate and Business Consulting company located in South and Central Florida, working in the Miami, Fort Lauderdale, Palm Beach and Orlando areas.
Our specialty is to seek investment opportunities for our clients and support them in whatever they need if they are immigrating to the USA as well (also refer to our article about immigration alternatives at this link https://florida360realty.com/eng-alternatives-for-living-legally-in-the-usa/
In addition, as our name says, we cover the entire real estate cycle:
- Buying and Selling Real Estate
- We assist and guide you in finding financing for the purchase, if necessary
- We accompany the entire legal and financial process of the purchase and sale (documentation, intermediation with the parties involved, etc.)
- We do property maintenance
- We advise the buyer and recommend strategies to maximize the return on his or her investment
- We manage the rent of the property in case the buyer wishes
- We take care of the sale of the property afterwards
- And for those who want to immigrate to the USA, we offer a complete Concierge and Relocation services, from strategic immigration planning to the complete establishment of the family in Florida.
The process of buying and selling real estate in the United States is very safe, clear, and organized.
Our property search system gives access to ALL properties currently available for purchase and rent in the state of Florida, not just those that Florida 360 is selling or renting and the agents representing the buyer and seller work in collaboration and split the commission.
The commission is usually paid by the seller of the property and the buyer has no cost when using an agent to assist him/her with the purchase. Moreover, it is always recommended that both buyer and seller each have their own agent to avoid conflicts of interest.
As for the security of the purchase operation, by law, here in the United States, every real estate purchase and sale must go through a neutral intermediary company, called “Title Company”, which does background checks on the property and prepare the documentation for the closing of the transaction, guaranteeing the legitimacy of the transaction. All this, with the guarantee of a purchase and sale insurance policy.
It is also important to mention that in almost every neighborhood (or city, as we call it here) in Florida, whether the property is located in a gated community or not, there are “home owners associations (“HOA”) , which determine several rules regarding the appearance of the property, the community, the rules of living, among several other things.
These “HOAs” are extremely powerful and can even determine who can be approved to buy or rent a property. In addition, most of them control and determine how your property has to be maintained externally, what colors you can paint in the facade etc. While this sounds extreme, it does make for beautiful, clean, safe, and orderly communities.
CLICK HERE FOR AN ONLINE REAL ESTATE SEARCH:
OR SEND US AN E-MAIL WITH INSTRUCTIONS TO:
2. TIPS AND BEST PRACTICES:
One of the differentiators of Florida 360 Realty is that our agents are instructed and trained to go beyond the scope of a broker’s services, offering a broad analysis on the properties available in the market, guiding our clients to make the right choice.
Especially our international clients, not everyone knows all the peculiarities of the market. And for those who are buying real estate for investment, there are still certain precautions that need to be taken.
Below we provide examples of the care we take and the tips we give to our clients when choosing a property:
– We check if the property can be rented. There are communities that either do not allow the properties to be rented or only allow them to be rented after 1 or 2 years after the purchase. Some communities also have restrictions on the maximum number of rentals per year.
– It is very common in Florida communities that only accept residents over 55 (or at least one resident has to be over 55). Also, several either do not allow renting or the owner has to wait 1 or 2 years to be able to rent the property. It is easy to find beautiful and very cheap properties (sometimes you find $5,000 apartments in these communities!), but the restrictions end up making the purchase unviable as an investment.
– There are communities that force the owner to pay high annual membership and maintenance fees to the community’s club. This happens a lot in communities that have golf courses. If the resident is not a golfer, it is not worth paying such high mandatory fees.
– We also check if the community allows pets or if there are restrictions regarding the weight and breeds of animals. Ideally, there should be no restrictions on the properties you intend to rent, so as not to limit the rental possibilities.
– Our realtors check the “age” of the roofs of the houses and the air conditioning system, as these conditions can influence the final sale price of the property. We also recommend to all our buyer clients to pay for a “full inspection” of the property before the purchase is made. The cost varies between $300 and $500.
– We advise our clients if the property they want to buy is close to good public schools. This information is extremely important if the property will be used by families with school age children.
– We also check if the property is compliant with all new Florida codes regarding hurricane protection etc.
– It is also important to know the monthly community (“HOA”) fee of the property, as this can influence the return on investment and the monthly cost to maintain the property.
3. COSTS TO BE CONSIDERED IN THE PURCHASE AND MAINTENANCE OF THE PROPERTIES:
- At the closing of the purchase of the property:
In general, the total amount to be disbursed by the buyer who pays cash varies between 1% and 2% of the total value of the property and 5% if financing. Below are some of the items included in this cost:
– Documentation, title registration, stamps and governmental fees
– Property Insurance (if the property is being financed, it’s mandatory by the banks)
– Title Insurance (for buyer’s protection should any issues with the title come up after the purchase)
– Taxes on the property (for the remaining months of the year of the purchase)
– Other property expenses that should be pro-rated between buyer and seller.
- Monthly Costs after the purchase:
– Homeowner’s Association (HOA) fee (the amount depends on the community’s budget, amenities, assets etc)
– Lawn and Landscaping (grass cutting etc.) for houses
– Water, electricity, Internet and Cable TV (which may be paid by the tenant, if the property remains rented out to third parties)
– Fire and catastrophe insurance (paid once a year, but if the property is financed the cost is added monthly to the financing installments). In general, apartments have this expense already included in the administration (“HOA”) fee.
– Property tax (paid once a year, but added monthly to the financing installments, if applicable)
4. FINANCING FOR FOREIGN NATIONALS
As for financing real estate in the United States, specifically for foreign nationals and non-residents, the process is simple and easier than you might think.
Although US bank requirements, terms and conditions can vary throughout the year, they usually approve mortgages of up to 30 years, with 25-40% down payment and interest rates between 3-7% per year (average from recent years), subject to credit review and approval. You don’t need to have a credit history or assets in the USA to be approved!
To get an idea of the amount of financing you can get, consider that each installment of financing should not exceed 30% of your total gross income. If you already have a home loan in your country, the sum of the two loans cannot exceed 38% of your gross monthly income.
To get an idea of the value of the monthly installments, let’s consider that the total value of your loan is US$ 100,000. Your monthly installment will be approximately $550 and will include: interest + principal + property tax.
We recommend that before you decide on the total amount of the property you should purchase, that you submit an application for a line of credit, because only then will you know how much you will be able to finance. The pre-approval process is very quick and most sellers will not accept an offer without proof that the buyer is pre-approved for financing. Once you submit the required documents, you will receive a response within 1-2 days. And the financing itself comes out in about 45 days from the day the complete documents are submitted to the financial institution.
DOCUMENTS GENERALLY REQUIRED BY FINANCIAL INSTITUTIONS (most must be translated into English and those with signatures must be sent to the institution by courier service):
– Completion of a credit application form (to be provided by the institution)
– Self-employed and business owners: submit a letter from your accountant (or accounting firm) stating your income for the past 2 years, and for the current year, the accumulated amount so far.
– Salaried employees: present a declaration from the company stating the monthly salary or the last three pay stubs.
– Present a reference letter from a bank or financial institution (monthly statements can be), showing a history of at least 24 months and the current status (if the account is still open, cancelled, etc). This letter or reference can be from a bank located outside the country of residence.
– Reserves in the total amount equivalent to at least 12-24 months of expenses for the mortgage payment and condominium fees (if applicable).
– Copy of passport and any visa you have for the USA (tourist, student, green card, investor visa, etc.). The applicant must have a valid visa for entry into the USA.
The down payment required for the financing must be sent to a bank account in the USA, which must be in the applicant’s name. This account will also be used to automatically debit the monthly mortgage payment.
The assets declared must be consistent with the documents presented.
The buyer will be able to do the entire process from his/her country, including signing the purchase contract. To do so, the buyer will be oriented to take the documentation to the nearest American Consulate for signature and notarization.
SEND US AN E-MAIL IF YOU WOULD LIKE ASSISTANCE IN OBTAINING FINANCING: [email protected]
5. FINANCIAL RETURN-ON-INVESTMENT (ROI) ANALYSIS
For our clients, we also offer a free return-on-investment analysis, which includes a complete financial spreadsheet specific to the property chosen by the client.
In this other example below, we provide an estimated analysis for a financing purchase of a $100,000 property, just to illustrate how profitable it might be for the buyer, even though they have to finance. On our website, you will find a mortgage calculator, in case you want to make some inquiries.
– Property Value: US$ 100,000
– Down Payment + Closing Costs (35%) US$ 35,000
– Total financing: US$ 65,000
– Total number of installments: 360 (30 years)
– Monthly installments: Approx. US$ 350
– Monthly rent: approx. US$ 1,200
– Gross return/month: ** 850 dollars
(*) Approximate value, considering fixed interest of 5% per year (**) should subtract from this value the costs of insurance of the property, HOA, tax and maintenance. In general, they vary between 30-50% of the rent.
Any more questions? How can we help you? Contact us:
FLORIDA 360 INVESTMENTS & REALTY, LLC
Miami – Fort Lauderdale – Palm Beach – Orlando
Tel: +1 (954) 449-2529
Tel: +1 (954) 325-2625+1 (atención en Español, Português y WhatsApp)
E-mail: [email protected]