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Your Questions Answered On Villa Ownership

As an ex villa owner I know only too well the pitfalls and benefits of villa ownership as I was at one time the proud owner of two villas in Indian Point, Kissimmee. Villa owners in general are reluctant to discuss the cost of running a second home for their own reasons, but I feel that if someone is thinking of buying they want all the help they can get and running costs are a huge part of the equasion - please scroll down for a breakdown of cost.

Owning a second property abroad has become popular, partly due to the many television programmes extolling the merits of owning a second home abroad and in part due to Property Investment Seminars, but before taking the plunge you should find out for yourself how the mortgage system in Florida works, cost of running the home, tax to be paid, short term rental zones etc. I spent four years investigating villa ownership before I took the plunge. The four years was spent contacting management companies as a prospective client to find out what level of service they offered, checking thousands of websites to compare rental prices and facilities offered, reading up on cost involved etc.

Will I Make Money Owning A Villa
You will never make any real money to speak of by investing in Florida Real Estate if you have a mortgage to pay!!!!! Until regular bookings start coming in your villa WILL drain your bank balance every month. It will be hard work and cost you a lot of sleepless nights but it will also give you a lot of pleasure. If you are determined to follow your dream and are sure you have the dedication, know how and, most importantly, back up finances to run it as a business then keep reading.

What Size Of Villa Is Best For Rental
My first home was a 4 bedroom/2 bathroom and the second was a 3 bedroom/2 bathroom. I was told by my management company that the 3 bedroom would rent out best but I found the 4 bedroom rented out marginally better.  Most people thinking of property investment in Florida imagine themselves owning a luxury villa with pool. However, condo's are well worth considering. The purchase price is minimal, with Florida mortgage brokers offering some great Florida mortgage deals. Compared to a four or five bedroomed home management fees for a condo are less as no lawn or pool care is required, plus condo's rent out extremely well.

Advertising Your Villa
Having your own website with decent photos and a good description of your villa is essential. I can discuss your requirments and build a website for the minimal cost of £100  ( Click here to contact me ) Advertising should start before you have even closed on the villa as you will be paying bills from the first month of ownership. Magazine and newspaper adverts are expensive and in my experience brought very little return on investment. The only success through that media was with Rail News. Most of my advertising was done by searching for the term 'florida villa free advertising' The companies that offer free advertising usually give 1 - 3 months trial which is enough to know if it's worthwhile continuing with them. Anyone who recommended me to a friend who booked received a discount off their next holiday. One lady went all out with this and advertised at her daughter's school, dancing class etc. She asked me to keep all the commissions she was earning until she had saved enough for a free stay in my villa - she stayed 2 years running at no cost to herself!!!!

Short Term Rental Zones
You will need to make absolutely sure that the area where you purchase your investment property is in a STR zone ( Short Term Rental ) Not all areas in Florida are suitable for short term rental although at this time most of Kissimmee allows short term rental.

New or Resale Home
A decision also has to be made as to whether you want a new build home or a resale. Resale properties in Florida generally come with all furnishings included which can save money but on the other hand they may be a little older which means wear and tear and replacing items right from the start, many of them major. If you buy a new built home you will also have to purchase a furnishings package and possibly fund the building of a pool. If it isn't possible to be in Florida during the build to choose furnishings etc. your agent will post material samples, pool tile samples etc. to your home for you to choose from.

What Do You Need To Supply In A Florida Villa
Visitors to Florida now demand so much more of their vacation villa. Many enquirer's now demand a games room, ensuite bathroom for each bedroom plus at least a Queen sized bed in each room. Choose the property on the strength of the mortgage you can afford, not on the size of home or the extras included.  Besides, a home ready built with a games room installed isn't a necessity as many owners have turned their garage into a games room quite cheaply by painting the walls, buying a cheap pool table, dart board etc. from Wallmart and adding air con.

Florida Mortgage
Being approved for a mortgage in Florida is a relatively simple business. Mortgage brokers in Florida are extremely helpful and will advise on the best mortgage to suit your needs and your pocket. On signing and returning the mortgage papers a decision is made by an underwriter and the mortgage should be approved within a very short space of time and a closing date agreed. Next, the Title Company provide a survey on the property plus a termite inspection report. Closing documents are signed and returned using a company such as Fed Ex (paid for by the Title Company) and basically, that's it. Foreign buyers do not even have to be present in Florida for closing.

How Many Weeks Would Need To Be Rented To Break Even
A villa with a mortgage would have to be rented out for approx. 40 weeks. To achieve this booking level takes hard work and dedication on your part. When I was renting my villas I achieved more than that amount but only because I was fortunate enough to be able to stay at home every day and be constantly connected to the internet. Prospective rentors send emails to as many villa owners as they can find so if you aren't one of the first to reply you have probably lost the booking. It is a temptation to reduce rates to attract a guest but if you want to hold on to your villa you should never consider this option. You need to stick to good rental rates if you don't want to lose your home -FULL STOP...

Management Companies
Hopefully prior to closing you will have done your homework and now have an excellent management company in place, ready to look after your Florida investment. The management company you choose has a direct affect on the success of your rental investment. There are far too many bad management companies in Florida who are happy to take your money while doing very little towards the maintenance of your home. Management companies all charge roughly the same (see below for list of charges) so it makes sense to look around for a good one who will provide value for money

How Much Can I Expect To Pay To A Management Company
Costs are assuming the villa is 3 bed/2 bath and all costs are only a guideline as charges vary between companies

Approx. Monthly Cost Of Owning A Villa (US $)

On top of the above approximate figures you will have your mortgage repayments (if applicable), departure clean (for the weeks your home is rented) with approx. cost of $80 per clean, lawn treatment quarterly (lawn treatment is separate to lawn care) sporadic miscellaneous costs, e.g replacing worn items including pool furniture, painting the inside and outside of your villa, power washing your villa etc. A rental villa needs to be in tip top condition at all times and a good villa owner wishing to rent will not skip on things like power washing as Florida has a humid atmosphere and mould will collect on pool screens, pool furniture etc.

Guaranteed Income Schemes
Many management companies offer a 'guaranteed income' scheme whereby they rent out your home for you and guarantee x amount of weeks per annum income. However, these schemes rarely live up to their promises and it is much better to do the work yourself.

Sales and Tourist Tax
All rental income you receive on your investment is subject to sales and tourist tax. Every month you must file a detailed tax return and send of your cheque for tax due. If your income for a particular month should happen to be zero, you must still send of your return stating zero earnings. British Nationals will most likely pay no income tax in the U.S on their investment, however, it must be declared to your accountant in the U.K

Summary
Now that you own a luxury home in Florida you will most surely have family, friends, some of whom are very vague friends, workmates and friends of friends either looking for a cheap or even free holiday. If you fall into the trap of lowering your rates your dream of owning property in Florida will most definately be short lived. This is an investment and must be viewed as such right from the start. I have seen so many people lose their villa through lowering prices. It is better to have 30 weeks of the year rented at a higher rate than 40 weeks rented at a low rate. The income will be around the same with a lot less wear and tear on your beloved home.

You definately won't make a fortune from Florida property investment but hopefully you will offset the cost involved in owning an investment property in Florida, plus make a few thousand dollars.Remember, you and your family will be able to have many cheap holidays for years to come.