Florida – Page 2 – John W. Tanner, J.D., M.S.

Should I Pursue a Career in Real Estate?

Posted on November 29, 2020 by John W. Tanner, J.D.|M.S.

Have you been thinking about making a career in real estate?

There are many reasons to love a career in real estate, but there are many negatives too. There’s no such thing as a “perfect” career, but if you can get to 85% (and you’re having fun), you’re doing well!

Here’s a Bird’s Eye View of 5 Benefits of a Career in Real Estate:

Easy Entry.
No Boss.
Good Income.
Flexible Schedule.
Job Satisfaction.
Access to Investments.

Here Are A Few Negatives of a Career in Real Estate:

Working Beyond 40 Hours a Week.
No Regular Paycheck.
You Need to Spend Money to Get Started.
Not a Lot of Repeat Customers.
Requires a Real Estate License and CE Credits Every Two Years.

In summary, you have to weigh your options before jumping into the pool of real estate. I’ve been a student and/or practitioner of real estate for 27 years and I still find it fun and fascinating to observe the changes happening every year. If you want to know more about this career, reach out to me. John@colemantanner.com

Now Hiring: hr@colemantanner.com

new construction, Uncategorized

What Roofing Materials Should I Buy?

Posted on November 15, 2020November 15, 2020 by John W. Tanner, J.D.|M.S.

1. Clay tile. AKA “Spanish tile” (my favorite) this material is considered the most attractive, but also more expensive. This roof will have a 50 to 100 year life expectancy, but is costly to repair.

Benefit: good wind resistance.

2. Steel Panels. This roofing material is less expensive than clay tile, but not as attractive.

Benefit: lower cost & good wind resistance.

3. Composition Shingle. There are many grades of shingle quality to choose from, they are the most affordable material, and they have a 20 to 50 year life expectancy. However, they are the least wind resistant.

Benefit: low-cost.

Roofing Options: Solar Panels. When you are thinking about your roofing installation, you may want to consider adding solar panels. They may cut your electric bill, but you should consider the installation costs, as well as future repair and replacement costs. Also, they may be difficult to remove when repairing your roof and they are not attractive.

Perhaps when the technology expands to the point where the panels are embedded into the roofing materials, it will become a “must have.” For now, you may need to crunch the numbers closely before placing an order.

In closing, when designing your new home, you may be restricted by the developer’s rules on what roofing material you can use. Also, take into consideration your environment and how well your preference will blend in. Lastly, remember the old adage that you get what you pay for.

Happy Homebuilding!

Uncategorized

Florida Camping Guide

Posted on November 14, 2020November 14, 2020 by John W. Tanner, J.D.|M.S.

Ever wonder what it would be like to pitch a tent in Florida? Click on the link to learn more…

www.floridastateparks.org/sites/default/files/media/file/2018_CampingCabinsGuide.pdf

Real Estate: Buy, Sell, Lease

New Book Release:

Posted on November 10, 2020March 2, 2021 by John W. Tanner, J.D.|M.S.

Download Your FREE Home Shopping Workbook — Now Available on Amazon (or download here for FREE)

Uncategorized

New Construction: What Is Standard vs. Upgrades?

Posted on October 10, 2020 by John W. Tanner, J.D.|M.S.

Model homes commonly showcase almost every upgrade offered by the builder.

New home buyers often fall in love with the model homes they visit because the builders hire interior designers to showcase almost every premiere feature they offer. As such, it is important to clarify what IS and what IS NOT included in the model that you buy.

Here is a list of typical upgrades offered by most new home builders:

Coffered, Vaulted, or Raised Ceilings,
Built-in Shelving, Alcoves, Art Niches, or TV Cut-outs,
Bonus Room, Mud Room, Laundry Room, In-Law Quarters, or Sun Rooms,
Covered Patio or Lanai, Wood Deck, Brick Paver or Concrete Slab Patio,
Swimming Pool (with Option to Screen Patio),
Landscaping (Front/Rear/Sides),
Fireplaces and Mantles,
Covered Porch,
1 to 3 Car Garage and/or “Porto Cochere” (carport),
Dormers (real or faux), Shutters (real or faux), or Decorative Windows (such as “Bay” Windows),
Skylights or Recessed Lighting, and
Optional Siding (Brick, Stone, Stucco, or Log Siding). Note: I recommend you avoid buying a home with synthetic stucco, vinyl, aluminum, Hardy board (aka T-111 siding), or Masonite lap siding. These low cost options have aged poorly in the past and may cost you money for replacement when you want to sell, as well as lose its luster and reduce your home’s curb appeal.

Also, keep in mind what others are doing in your neighborhood. An appraisal rule of thumb to keep in mind is that if your home is the only one in the neighborhood that has a fancy “thing-a-ma-gig” that nobody else has, it will be deemed an “over improvement” and not be given weight to the bottom line market value of your home.

In closing, when negotiating the features of your new home, be sure to get the cost of each upgrade upfront and in writing and stick to your budget. Compare the builder’s costs versus doing it yourself, or consider the cost of outsourcing some of these optional items, such as the pool, on your own, post-purchase. But do keep in mind that any items included now will also be financed into your home loan at highly remarkable, low interest rates – in today’s market October, 2020 – that’s under 4% for a fixed 30-year loan.

Best of luck in your new home construction purchase!

Real Estate Sales Tips

To Build (New Construction) or Not to Build, That is the Question!

Posted on October 3, 2020 by John W. Tanner, J.D.|M.S.

Buying “new construction” is an exciting undertaking. Unlike buying an existing home, you’ll get to make it your own before turning the key for the first time. Here are ten tips to keep in mind as you begin your home building journey.

Establish a Set Budget. When it comes to establishing a budget for your new home, being a prudent homeowner is highly recommended. Therefore, you should plan on paying a 20% down payment on your new home and your monthly housing expense (principal, interest, tax, insurance, and association fee) at 25% of your income.
Get Everything in Writing. Having a lawyer review your initial contract and any subsequent amendments is highly recommended. Here are a few items to look for in the contract: (i) a “cooling off” period; (ii) payment schedule; (iii) timeframe for completion; (iv) included plans and specifications, warranties and insurance protection; and no blank spaces. Be clear about what changes are allowed once you “sign off” on the final plans. Two addendums you should include are (a) “all changes must be clearly documented & mutually agreed upon” and “time is of the essence.”
Stay Informed. Ask the builder for regular updates. Have somebody take pictures of the progress so you have evidence of any issues that may arise.
Be Patient. Delays will happen. This is a marathon, not a sprint.
Prepare for Hidden Costs. Does the developer’s estimate include “Finishing Costs”? How about zoning or CDD fees? Does your estimate include utility hookups, such a electric and gas meters? What about internet service wiring and installation? Are there estimates for your exterior, such as landscaping, concrete decks or brick pavers, fences and entries, or a mailbox? Try to think of every expense associated with your new home so that your estimate is as close to perfect as possible and that you have adequate financing in place to cover every expense. Ask about closing costs and developer contributions, if any.
Choose the Right Builder. It’s always a good idea to read online reviews, talk to residents in the new community about their experience, and see if any complaints are filed against them on USA.gov – consumer complaints, the Federal Trade Commission, and the Better Business Bureau. Also check to see if they are registered with the National Association of Home Builders. Lastly, are they good at communication? The last thing you want is to feel in the dark whilst waiting on your new home to be built.
Hire a Private Home Inspector (HI). Look for a home inspector with a current or prior Residential Contractor or General Contractor license. This type of person will know all the building materials and methods used in the construction industry. Their job is to ensure the structure is built up to code and complies with the municipal and HOA regulations and CC&Rs. Having the new home inspected by a 3rd party will help you rest easy at night while you wait. There are four stages of construction which warrant an updated inspection: (i) Foundations & Footings: the HI will check the slabs, foundations, drains and form work; (ii) Framing: the HI will check that the walls are straight & level, verify room dimensions, and ceiling height and roof lines all conforming to the plans & specs; (iii) Lock Up: This is the stage where the windows and doors have been installed. The HI will check the frames, seals, window flashing, brick and mortar work, and electric and plumbing; (iv) Final Inspection (Pre-Handover): At this point your home should be ready for a Certificate of Occupancy. Your HI will check for final interior/exterior finishings, paint, tile, carpet, wood flooring, cabinetry, windows & doors, and hardware, as well as inspect the site to ensure it is clear of any remaining materials or debris.
Create an Image File. You will be looking at plenty of options for creating your new home just the way you want it, and trying to convey a mental image of the vision for what you want each room to look like is quite tricky. So, why not save images that demonstrate what you want? This will help you communicate your requests to the builder and other 3rd parties more succinctly.
Think About the Little Things. Having electrical, telephone and internet outlets installed after drywall & insulation are installed is practically impossible to have done, so be sure to think about where you want your TVs mounted and cable boxes set prior to the electrical installation date. Do you plan on enjoying afternoon on the patio in the shade? The direction of your new home and where the sun sets will impact whether or not this happens. Keep shady sunsets in mind when you are looking at available lots. Location is important! By the way, corner lots are usually bigger and offer more privacy (one neighbor instead of two), so you’ll likely be charged a premium for it.
Lastly, Begin With the End in Mind. Will this be your “forever” home or your “retirement retreat”? Whether you plan to grow a family in a home that you’ll spend the rest of your life in, or one you will approach your golden years in, take time to envision the lifestyle you want for yourself (and your growing family, perhaps) before you select a new home development.

In closing, buying a new home is fun when you think of the construction details with a business-like approach, and the community lifestyle & interior design with your heart. We wish you a successful journey in pursuit of your “forever” home!

Coleman Tanner Realty – Your Home for Real Estate Solutions!

To schedule a Home Buyer Consultation, we can be reached at (786) 258-8877 or by e-mail at sales@colemantanner.com.

http://www.colemantanner.com

Coleman Tanner Realty is an Equal Opportunity Housing provider.

Real Estate Investing

How To Calculate True ROI for a SFR Rental Investment

Posted on August 24, 2020August 24, 2020 by John W. Tanner, J.D.|M.S.

Are you thinking about getting into the real life game of Monopoly? If so, you probably have a few questions you want answered before committing yourself to your first investment purchase, such as:

What is the property worth?
How do you calculate return on investment? (ROI)?
How much equity will I earn through appreciation?
What are my tax burdens going to be?

The answers to these questions vary with every property as no two transactions are ever identical. That notwithstanding, let’s take a look at the basics and figure out how to analyze a property to determine whether or not it is a good deal for you.

Q1. What is the Property Worth?

The answer to this question depends on whether the property is a single-family residence, a 2 to 4 unit property, or a 5+ unit multi-family property. Generally speaking, the market dictates the value of 1 to 4 unit residences using a valuation model called the sales comparison approach. The sales price/rent price of comparable properties that recently closed within the immediate area of the subject property are analyzed to determine an opinion of value.

For commercial real estate, 2 to 4 unit properties, or 5+ multi-family properties, the income approach to valuation is widely used by real estate agents, appraisers and lenders. This approach requires determining an annual market capitalization rate (based on the income of comparable sales) and a property-specific cap rate, based on projected annual income of the subject property (a pro forma statement of rents), using a gross rent multiplier, divided by the current value of the property.

Example: If a 1 unit condo costs $120,000 to purchase and the expected rental income is $1,200 per month, then the expected annual income is: $14,400 divided by $120,000 (cost to purchase), equals a cap rate of 12%.

The cap rate Is helpful for comparison purposes, but for a closer look at your potential investment, you’ll need to consider inflation and deduct for it using a discounted cash flow model. You’ll also need to factor in the costs of a mortgage, known as annual debt service, property taxes, property insurance, and other miscellaneous expenses such as water, electricity, landscaping, security, reserves for replacement, preventative maintenance, etc.

Q2. How Do You Calculate ROI?

When comparing investment options, properties with a higher ROI will help you make the best choice with regard to the greatest return on investment. To calculate your ROI, divide your profits by your investment cost. For ROI to be meaningful, you must input the most realistic expenses that can be expected for the subject property. Otherwise, any costs that are manipulated or omitted, which would reduce the ROI, will paint a picture that is unrealistic, increasing your opportunity cost (that is, The cost of not investing in other investment options), and may burden you with additional operating costs every month during the holding period.

You should also consider the option of using a mortgage to acquire the property, versus paying cash, and consider the annual debt service, which are the mortgage payments, and how they impact your monthly and annual cash flows. Additionally, the upside of leverage (buying an asset using other peoples money, or OPM), may significantly increase your ROI.

Note: Don’t forget to factor in your closing costs, real estate commissions, etc. into your purchase price and sale price of the subject property; these are acquisition and disposition costs.

Before we examine ROI on a financed property let’s look at the ROI for a subject property purchased as a cash transaction.

As you can see in the case study the overall rate and a five year period for rental ROI is 8.8%. The overall rate (OAR) on value appreciation is 29.6% for the five-year period or 5.92% per year. Added with the rental income the total annual ROI per year is 14.72%!

Now, let’s take a look at the same investment property but, in this case, let’s use a mortgage to purchase a property.

As you can see in the second example the ROI on rental income is an overall rate of 16.9%! Wow! the ROI on the appreciation is 134%! Combined together, this property produces an annual ROI of 43.7% per year!

Q3. How Much Equity Will I Earn Through Appreciation?

It depends. The market dictates the sales price, and, as we all know, that fluctuates based on a variety of variables, such as political, social, cultural, “acts of God,” (such as hurricanes and tornadoes), and economical and business changes in the immediate environment (such as the installation of an Amazon distribution center or an Apple research park coming to Your Town, USA. That said, on average, real estate doubles in value every 10 years. Put another way, a property owner can estimate a 10% per year appreciation in a healthy market in the growth stage of its economic life.

The Four Stages of the Economic Life of a New Home Development: Growth, Stability, Decline, and Revitalization.

Given the science behind the economic life of a property and its community, the best time to purchase a home is when it is first built. Thus, the best time to sell would be at the end of the first 15 years of its growth or shortly into the stability phase. As a rule of thumb, a rental investment is less risky when the property was built within the last 10 years and the holding period should be no more than 10 years. Buying an investment property within these parameters will give you the best opportunity, external factors aside, to realize a 10% per year gain of appreciation in value.

Q4. What Are My Tax Burdens Going To Be?

That’s a tough question to answer because no two investors are examining their tax situation from the same position. If you lived in the home to out of the past five years prior to the sale, then you could be exempt from capital gains tax on the sale of the property buy up to $250,000 for a single person or up to $500,000 for a married couple. However, assuming the property was rented for all five years of the holding period, then you would report your profit as capital gains, which that amount would depend on adjustments such as depreciation and other taxable income which would shift your tax bracket up or down.

Note, however, that a 1031 exchange Allows the seller to roll over the profit into another investment property of equal or higher value without incurring any capital gains taxes. Another note worth mentioning is that if the owner sells the property due to divorce or death and unmarried widow or divorce may count any time that their former spouse lived in the subject property under the exceptions to the “time and use” test. If that sounds like your situation, you should consult a real estate attorney in your market with expertise in real estate law.

Disclaimer: The author of this article is a non-licensed attorney. The information provided herein is for educational purposes only and is not intended to be used as legal advice.

Key Takeaways:

Return on investment (ROI) Can be used to calculate the value of an investment based on its monthly cash flow’s, as well as during the entire holding period.
To see the true ROI, consider the return with appreciation over an extended holding period, such as five years.
ROI tends to be much higher when buying an investment using other peoples money, or OPM, with a five year holding.

Are You Ready to Take the Next Step to Invest?

Schedule a FREE Consultation

Real Estate Sales Tips

Now Hiring @ Coleman Tanner Realty

Posted on March 8, 2020March 2, 2021 by John W. Tanner, J.D.|M.S.

Life is an adventure story, ready to begin a new chapter?

We’re seeking a **few** select agents in the following FLORIDA cities: Miami, Fort Lauderdale, West Palm Beach, Tampa, Orlando, Naples, Daytona Beach, Pensacola, Jacksonville, St. Augustine, and Fernandina Beach. Are you interested? You know what to do. HR@colemantanner.com

Real Estate Investing, Uncategorized

Renters for a Weekend or a While: What’s the Best Use of Your Investment Property?

Posted on August 8, 2018 by John W. Tanner, J.D.|M.S.

The residential rental market is now the fastest-growing segment of the housing market. In the United States, the demand for single-family rentals, defined as either detached homes or townhouses, has risen 30 percent in the past three years.¹And in Canada, rental units now account for nearly one-third of the country’s homes, with particular demand for multi-family units, including apartments and condominiums.²

At the same time, the short-term, or vacation, rental market is also booming. The popularity of online marketplaces like Airbnb, HomeAway, and VRBO has helped the short-term rental market become one of the fastest-growing segments in the travel industry.³

Now, more than ever, there is an abundance of opportunity for real estate investors. But which path is best: leasing your property to a long-term tenant, or renting your property to travelers on a short-term basis?

In this post, we examine the differences between the two investment strategies and the benefits and limitations of each category.

WHY INVEST IN A RENTAL PROPERTY? The Top 5 Reasons

Before we delve into the differences between long-term and short-term rentals, let’s answer the question: “Why invest in a rental property at all?”

There are five key reasons investors choose to buy real estate over other investment vehicles:

I. Appreciation

Appreciation is the increase in your property’s value over time. And history has proven that over an extended period, the cost of real estate continues to rise. Recessions may still occur, but in the vast majority of markets, the value of real estate does grow over the long term.

II. Cash Flow

One of the key benefits of investing in real estate is the ability to generate steady cash flow. Rental income can be used to pay the mortgage and taxes on your investment property, as well as regular maintenance and repairs. If appropriately priced in a solid rental market, there may even be a little extra cash each month to help with your living expenses or to grow your savings.

Even if you only take in enough rent to cover your expenses, a rental property purchase will pay for itself over time. As you pay down the mortgage every month with your rental income, your equity will continue to increase until you own the property free and clear … leaving you with residual cash flow for years to come.

III. Hedge Against Inflation

Inflation is the rate at which the general cost of goods and services rises. That means as inflation rises, the money you have sitting in a savings account will buy less tomorrow than it will today. On the other hand, the price of real estate typically matches (or often exceeds) the rate of inflation. To hedge or guard yourself against inflation, real estate can be a smart investment choice.

IV. Leverage

Leverage is the use of borrowed capital to increase the potential return of an investment. You can put a relatively small amount down on a property, finance the rest of the investment with a mortgage, and then profit on the entire combined value.

V. Tax Benefits

Don’t overlook the tax benefits that can come with a real estate investment, as well. From deductions to depreciation to exemptions, there are many ways a real estate investment can save you money on taxes. Consult a tax professional to discuss your particular circumstances.

These are just a few of the many perks of investing in real estate. But what’s the best strategy to maximize returns on your investment property? In the next section, we explore the differences between long-term and short-term rentals.

LONG-TERM (TRADITIONAL) RENTAL MARKET

When most people think of owning a rental property, they imagine buying a home and renting it out to tenants to use as their primary residence. Traditionally, investors would use their rental property to generate an additional stream of income while benefiting from the property’s long-term appreciation in value.

In fact, that steady and predictable monthly cash flow is one of the key advantages of owning a long-term rental. And as an owner, you don’t usually have to worry about paying the utility bills or furnishing the property—both of which are typically covered by the tenant. Add to this the fact that traditional tenants translate into less time and effort spent on day-to-day property management, and long-term rentals are an attractive option for many investors.

However, there are also limitations to long-term rentals, which often come down to your ability to control the property. Perhaps the most obvious one is that you do not get to use the home or closely monitor its upkeep (this is different from a short-term rental, which we’ll share in the next section).

In addition, while you can usually generate a steady, predictable income stream with a long-term rental, you are limited in your ability to adjust rent prices based on increasing or seasonal demand. Therefore, you may end up with a lower overall return on your investment. In fact, according to data from Mashvisor, in the 10 hottest real estate markets, short-term rentals produced “significantly higher rental income” than long-term rentals.⁴

SHORT-TERM (VACATION) RENTAL MARKET

Short-term rentals are often referred to as vacation rentals, as more and more travelers enjoy the benefits of staying in a home while on vacation. In fact, according to Wells Fargo, vacation rentals are steadily growing and predicted to account for 21% of the worldwide accommodations market by 2020.⁵

Investing in a short-term rental or funding your second-home purchase by renting it out can offer many benefits. If you purchase an investment property in a top travel destination or vacation spot, you can expect steady demand from travelers while taking advantage of any non-rented periods to enjoy the home yourself. In addition to greater control over how your property is used, you can also adjust your rental price around peak travel demand to maximize your returns.

But short-term rentals also have risks and drawbacks that may dissuade some investors. They require greater day-to-day property management, and owners are typically responsible for furnishing the property, upkeep, and utilities.

And while rental revenue can be higher, it can also be less predictable based on seasonal or consumer travel trends. For example, a lack of snowfall during ski season could mean fewer bookings and lower rental revenue that year.

In addition, laws and limitations on short-term rentals can vary by region. And in some areas, the regulations are in flux as residents and government officials adapt to a new surge in short-term rentals. So, make sure you understand any existing or proposed restrictions on rentals in the area where you want to invest. Urban centers or suburban communities may be more resistant to short-term renters, thus more likely to pass future limitations on use. To lower your risk, you may want to consider properties in resort communities that are accustomed to travelers. We can help you assess the current regulations on short-term rentals in our area. Or if you’re interested in investing in another market, we can refer you to a local agent who can help.

WHICH INVESTMENT STRATEGY IS RIGHT FOR YOU?

Now that you understand these two real estate investment options, how do you pick the right one for you? It’s helpful to start by clarifying your investment goals.

If your goal is to generate steady, predictable income with less time and effort spent on property management, then a long-term rental may be your best option. Also, if you prefer a less-risky investment with more reliable (but possibly lower) returns, then you may be more comfortable with a long-term rental.

On the other hand, if your goal is to purchase a vacation or second home that you’ll use, and you want to defray some (or all) of the expense, then a short-term rental may be a good option for you. Similarly, if you’re open to taking on more risk and revenue volatility for the possibility of greater investment returns, then a short-term rental may better suit your spirit as an investor.

But sometimes the decision isn’t always so clear-cut. If your goal is to purchase a future retirement home now to hedge against inflation, rising real estate prices, and interest rates, then both long- and short-term rentals could be suitable options. In this case, you’ll want to consider other factors like location, market demand, property type, and your risk tolerance.

HERE OR ELSEWHERE … WE CAN HELP

If you’re looking to make a real estate investment—whether it’s a primary residence, investment property, vacation home, or future retirement home—give us a call. We’ll help you determine the best course of action and share insights and resources to help you make an informed decision. And if your plans include buying outside of our area, we can refer you to a local agent who can help. Contact us to schedule a free consultation! (904) 373-8453.

The above references an opinion and is for informational purposes only. It is not intended to be financial advice. Consult the appropriate professionals for advice regarding your individual needs.

Sources:

Real Estate Sales Tips, Uncategorized

Self-Promotion: Real Estate Media Creation

Posted on April 19, 2016 by John W. Tanner, J.D.|M.S.

Okay, so I have been experimenting with Canva and I love the capabilities for digital & print media. So far I have only used the graphics online, but you could easily print the pdf’s for, let’s say, open house brochures. Here’s a sample piece I created to market the neighborhood I live in:

sjtc Realtor

As you can see, I introduce three properties within the Town Center development: Esplanade (Condos), 5 Thousand Town (Luxury Apartments), and The Uptown (also Luxury Apartments). The 4th main image is part of the shopping center.

You may note that I also added two pop-out images of the rooftop fire pit and the pool deck touching the 5 Thousand Town image. These are especially useful for highlighting some of your listing’s “special” features that draw in your prospect’s attention.

Well friends, that’s it for today’s lesson. I hope you enjoyed this post and I look forward to seeing you again inside the blog.

Cheers!

John