Florida Agenda

Last month, the South Florida Sun-Sentinel.com reported that median existing home prices in Broward County, Florida – including the Greater Fort Lauderdale area – rose more than 6 percent in the first quarter of 2011.

The Sun-Sentinel reported that “according to the Florida Realtors [i]n February, the median of $167,000 skyrocketed 22 percent from a year ago — the county’s largest increase in any month since December 2005.”

The story went on to note that “Broward’s prices are stronger, at least for now, because its supply of homes is smaller.”

“When inventory levels fall, buyers compete for fewer properties, which can lead to bidding wars and price increases,” it said.

The newspaper reported that an “analysis of all property types by Move Inc.

showed that Broward’s inventory level dropped by 12.45 percent in February from January, the largest decline in the nation.”

By Rick Gibson

Anyone who has attempted to buy a foreclosure or short sale property under $200,000 has likely competed with investors, whether they were aware of it or not. Investors are having a great time right now purchasing properties when prices are at record lows, and rental rates are increasing. The impact of lower purchase prices and increasing rents at the same time has dramatic impact on return on investment (ROI) that far exceeds nearly any other investment return available today.

This good news for investors is good news for all of us. As investors buy and improve properties, they may be sneaking a few good deals away from buyers with their frequently all-cash offerings, but overall the impact of investor purchases is depleting inventory and improving our real estate values. It’s great news, and overall will contribute even more to our market recovery.

Anyone who has considered investing in real estate does vnot need to be wealthy or use only cash – there a lot of ways to improve your financial position by investing in real estate. Great financing from lenders or sellers is available.

Generally speaking, there are three key ways to make money in real estate investing. The most important right now, in my opinion, is cash flow. By this, I am referring to the amount of money that is paid each month and year by tenants in either residential or commercial properties that can be considered ROI.   Second, tax benefits are incredible, and should be clarified by a tax professional, but I consider these to be second to the “income” aspect. Depreciat-ion, interest ex-pense, repairs and more are all things that your tax expert can use to increase and im-prove your financial position.   Lastly, is the “exit strategy”. I personally believe the resale of investment properties in 5-10 years will be so dramatic that anyone buying  now will become wealthy very quickly; but to be conservative I recommend my investors to buy for cash flow and look forward to resale returns as “bonuses”.

The first type of investor is perhaps the most familiar to most of you, and may actually be you. People who own property and decide to keep that property and buy another one will end up far ahead of their current position as the market continues to improve. Of course, the decisions have to be sound and facilitated by a Realtor® with experience with investing. I recommend consulting with a Certified Investment Agent (CIAS) and someone who sells a lot of income properties. Naturally, they will know more than the average Realtor® and help you create a strategy that fits your resources and objectives.

Second is the type of investor who buys perhaps 1 or 2 properties per year and is usually focused on cost per unit (duplexes being two units, triplexes being three units, etc.). Regardless of the number of units, I recommend investors determine a goal or standard for how much money per year they expect from their purchase and clarify that to their Realtor®. This may seem like a lot of properties to buy per year, but it is happening a lot more than most people realize. The returns from the stock market generally do not compare to the potential return from income properties and investors are moving money from the stock market into real estate right now.

Last are the savvy investors who are buying bulk and quickly. Some of these portfolio investors are buying several properties per month, making improvements to maximize rents, and then buying more. The details of this category – and perhaps in any category, of rent collection, repairs, tenant relations, and the occasional eviction – can become too overwhelming, so many investors favor property managers. I have sold investment properties for years and have gained so much experience in the area that it became clear in order to best serve investors I needed to provide a property management service, so I have opened a separate business entity so my investors do not have to be overwhelmed in the day-to-day details of tenant management. Instead, they can receive reports and deposits into their checking and savings accounts.

Anyone who is interested in real estate investing should consult with an expert as soon as possible. I do not recall there ever being a better opportunity to benefit from the short sales, foreclosures and rising rental rates than right now for investors.

Rick Gibson is a Realtor® with Re/Max Preferred, a Certified Investment Agent (CIAS), and Distressed Property Expert (CDPE).

The numbers over the last year and a half paint a stark picture of South Florida’s real estate market, which bottomed out in October of 2009. As is inevitably the case, however, “what comes down must go back up.” Lower-end price point properties that sold for $40,000 to $50,000 last summer are now seeing healthy increases to $70,000 and $80,000.

I have been living is South Florida for over 20 years, and have been selling real estate for a dozen of those. It’s been a truism in real estate that once the bottom of the market starts climbing with price point increases, the middle and higher end markets will follow. What had been an anemic market has begun to show signs of life. Presently we have lowered our inventory of homes and condos to half of what they were from 2009. There are many Federal and local government programs that allow assistance and incentives to motivate people to buy.

One example is the “Home Path Program” that allows a consumer to buy a home with as little as 3%  down. On top of the assistance programs, we are also seeing historically low interest rates, hovering at just over 5%. The market has finally become affordable for many consumers. (By way of comparison, I remember when I bought my first home in Portland, Maine in the early 1980s, I paid 16.50%. To quote a familiar phrase, “We’ve come a long way, baby.”)

When we review this past season of sales, I am sure we will see that the “snow birds” took advantage of lower price points and amazing interest rates. It’s safe to say that most consumers would rather pay about half of what prices were just 6 years ago. With over 60 million “Baby Boomers” retiring, who wouldn’t want their own piece of the South Florida sunshine? My motto, “Your Life Partner In Real Estate” is more than a catch-phrase: it is a watch word of my business and the professional relationships I have developed through the years. Most of my clients have become my friends and I sincerely believe that finding someone a home is more than just selling a house. Put me to the test; you will be happy you did.

A native of Boston, Massachusetts. Robert Geary MacKilligan works with Galleria International Realty, on Fort Lauderdale’s Las Olas Blvd.

A Bank Certified Specialist, he works directly with Broward Country banks to help buyers own their piece of South Florida’s foreclosure inventory, as well as with investors from all over the world. MacKilligan also serves as sales director on a number of development projects, including locations in Fort Lauderdale, Jacksonville, and New Smyrna Beach, Florida.

MacKilligan has experience working with investors, contractors and building professions on projects from start to finish. Working with an international research statistical company, he follows real estate trends throughout the world, employing strategies that are invaluable when investors are looking to sell properties they own overseas.

Robert Geary MacKilligan, “Your Life Partner In Real Estate.” Cell: 954-234-8759 rgmsell@aol.com.

By Rick Gibson

Feeling confused about real estate today?  You’re not alone … there is such negativity and so many conflicting perspectives that it’s hard to see the good news.

So, what is the “good” news? My favorite example of news that got “lost” somehow is from 2005. CNN/Money published a real estate report on U.S. zip codes. Would you believe a large area of Fort Lauderdale and Wilton Manors ranked number one in the entire country for the fastest appreciation? The importance of that news is because history repeats itself. The same areas will appreciate again for the same reasons they did in 2005.

In 2010, CNBC.com announced the City of Fort Lauderdale ranked number one in the United States for “buyer interest and demand.”  I read all the local newspapers to see if I could find this news and was intrigued to find it was nowhere to be seen. Positive news seems to get lost and gloom and doom easy to find. This contributes to confusion in one of the most exciting real estate markets I have ever seen.  Did the market drop since that report in 2005? Yes, a lot. Will it go back up? Of course it will. But, first it has to stabilize. In my opinion, it is stabilizing right now.

This month, the Sun-Sentinel reported ten zip codes in Broward County experienced price increases when compared to last year. In February, traffic to real estate websites jumped 27% and sales of single family homes and condos in Florida were up 13% from 2010.  Fort Lauderdale Beach is about to undergo a multi-million dollar facelift to transform the area west of AIA to upscale hotels, restaurants and shops. Do these numbers or information mean sellers should increase their prices? Not unless they happen to be selling in one of those 10 zip codes or in very select parts of Broward County.

What does it mean? It means we should avoid negativity, realize we are in a good place, make plans, and move forward with solid strategies.  The recovery may be slow but the good news is that we are recovering now.

Meanwhile, many people are in distressed personal situations, facing foreclosure, need to short sell their properties or considering bankruptcy. This is serious, and why the price recovery will be slow. Although not pleasant for anyone who needs or want to sell, there are many options, programs, and strategic ways to solve these challenges. I truly believe a solid plan and expert advice can turn around many of the real estate problems people are experiencing so they can still benefit from the low prices.

Stigma and misinformation about short selling properties and bankruptcy seems common and is harmful. Please consult a Realtor® with the training and experience needed to provide you accurate information, your options and opportunities to help. Real estate is more highly specialized than ever, so please make sure you are in good hands and take action to find solutions to your problems.

We hear “now is a great time to buy” over and over. It’s because it is true. Consider the people who do not own any real estate and that in many cases it costs less to buy a home than rent. They may not even be aware of their options. Loan programs such as HomePath and FHA financing are so affordable that assuming someone cannot own a home without trying may be a
mistake.

The most fortunate right now are investors and, at some level, all of us in real estate could think of ourselves as investors. The opportunities to buy, improve and rent properties out for cash flow, tax benefits and future resale are incredible.

The impact of this gentrification supports the entire market’s recovery.  Past standards for return on investment (ROI) are being exceeded dramatically due to low prices and increasing rents. If you are in a position to invest in real estate right now you are fortunate and might consider it carefully. Don’t wait for it to get better.

On the selling side of things, there are many of us who own properties worth much less than what we owe on them. It can also be a “great time to sell” if you reduce your debt and buy something else you like more and which is more affordable. For a limited time, there are tax benefits, federal assistance programs (HAFA, etc.) and cash at closing for short sellers. I recommend anyone considering short selling meet with a Certified Distressed Property Expert (CDPE) before listing their property. Sellers who are not upside down and do not have mortgages can consider renting their current property out, selling it or leveraging it to use this buying window of opportunity to upgrade, down-size or purchase investment property.

Some of you can afford to make payments but will be eighty-years-old by the time your properties break even, so may decide not to pay your mortgage and short sell or allow foreclosure. This is called “strategic default.” Some consider it unethical, but my position is to leave it to the business of the property owner and lender and not for me to decide.

In any case, there are many opportunities and

many solutions to problems. I only ask that people consider there is hope and are solutions out there. There is a lot of good news and there are a lot of people who care.

By STEVE MCALEER, SFR

In today’s real estate market, short sales and foreclosures have become widespread. Both are considered forms of “distressed” Inventory.

In November 2008, 118 short sales and 259 REOs (single family homes) were sold in Broward County. When looking at the statistics, 2009 seems to be the height of distressed inventory. There were 222 short sales and 350 REOs sold in November 2009. However, 2010 shows a substantial decrease in sales of both short sales (183) and REOs (235).

For those who aren’t familiar, a short sale is when someone is in some type of financial distress and needs to sell their home “short” of the amount of money owed on their mortgage. A foreclosure is when a lender officially sues a homeowner to take possession of the title of the home due to the homeowner being in default of their payments. Once the lender Forecloses, the lender takes title and it becomes an REO (Real Estate Owned) property.

So what does this all mean? There are many projections in the media stating how long this “distressed” inventory will be out there.

I have found that most, on average, say two to three more years. With the statistics above, it shows that current buyer’s already missed the best part of the market. There is still inventory and choices for the buyer’s of today, just a smaller pool of options and a lot more competition from other buyer’s.

With a large and growing percentage of buyer’s looking to purchase a home for under $200,000 along with a dwindling inventory in this price range, this segment of the market has turned more into a seller’s market. The higher the asking price of the home, however, the fewer buyer’s there are and so the more negotiating power the buyer has.

On the flip side of this scenario, changes in distressed inventory have affected the seller as well. This affect can be a positive one depending on the price of the home. If they are listing their home for under $200,000, there is excess demand, so selling should be a bit easier. Over $200,000, the game changes.

If you are in the market to buy real estate, you still have some great opportunity, but competition from other buyer’s looking at the same homes you are is getting fiercer. So, my best advice is to know what you want, find a Realtor that will work with you to find the best deals and inventory, and act quickly. If you are a seller and are in some type of financial distress and need to sell, talk to a certified short sale real estate specialist. You have options available to you, including a short sale or deed in lieu. If you are not in financial distress and are unsure if you should sell or what your home is worth in today’s market, call a Realtor to talk about your options.

It’s an exciting time to be in the real estate market. No matter what you are looking for, opportunity exist, just don’t let it pass you by.

Steve McAleer, from Weichert Realtors – Distinctive Homes, is a licensed Realtor. For more information, visit www.BuyInFortLauderdale.com