December 15, 2019

Fort Lauderdale Rental Property Owners Beware

Fort Lauderdale Real Estate is a market that has seen the worst over the last five years since its peak in approximately 2006. Notice I say “approximately 2006” as even this, the time frame at which the Fort Lauderdale Real Estate market peaked, remains not a fact and often a subject of debate. Everyone appears to claim to have a crystal ball about the Fort Lauderdale Real Estate market and as far as this Fort Lauderdale Realtor sees it, every one of the crystal ball owners would have sold their property sometime years back, been living in a rental, and purchased a home sometime about a year ago. The reality is that anyone who did was much luckier than they were skillful at timing the real estate market.

The best methods of timing the real estate market is what I refer to as, momentum plays. Simply, this means you have waited for the bottom, missed it, and are investing in the market as it goes up. Likewise, if you see a peak coming you are prepared to react and sell accordingly even though you know as we discussed prior your crystal ball will never select the absolute peak of any market. As with any market the best thing to react to is information. For the owners of Fort   Lauderdale rental properties the information is out that could be generating concern about valuations.

Concern about the value of Fort Lauderdale rental properties comes from a simple fact the true value of an investment is a product of the cash flow it generates. Once we accept this fact it is easy to see that the massive numbers of people who lost homes to foreclosures or short sale over the last few years generated a massive amount of renters, and therefore rents increased throughout Fort Lauderdale and BrowardCounty. This was good news for owners such as myself who held on to a severely upside down property.

Extremely low interest rates called for investors to seek higher returns anywhere they could. The quantity of investors clamoring for the returns that they could get on rental properties drove up the price of these properties. The higher the price, the lower percentage returns. Today rental property prices are very high and unless your rental property is totally unique for some reason, many owners may start thinking of heading for the door, as the supply equation is about to shift.

Armed with facts it is easy to see why rental prices could start falling especially for smaller individually owned properties. First, the cranes are everywhere from State Road 84 to Sunrise Blvd, there are thousands of rentals being built and more to come. Supply and demand is a long proven science. As the supply increases rentals prices will falter. Large rental owners are being very aggressive about ease of entry. No longer asking for first, last and security, tenants with responsible credit can often move in for less than $500. All these events plus the addition of the return of mortgage credit for the people who became renters just two years ago does not bode well for  Fort Lauderdale rental property owners.

If you have a great tenant today, treat them well.  Keep them happy and in place, and this may be the time to not consider rent increases on new leases.

Strong Planning, Upgrades, and now Sales are protecting property Values

Eventhough the Fort Lauderdale Real Estate market faced tough times over the last five years many condominiums and neighborhoods throughout the South Florida area approached the challenges knowing exactly what was needed to make sure as the next cycle of real estate began with property values of their homes particpating at the start of the rebound.

Neighborhoods that aggressively went after banks that were not taking care of properties whcih were in or heading to foreclosure, were protecting the value of their entire community. Cities that placed liens and refused to back down on poorly care fored properties saw banks pay attention and neglected pools were closed down properly and lawns were mowed. Condominium and homeowners associations who budgeted for unpaid maintance, foreclosed on property (when appropriate) and refused to give in on high amounts owed at closing simply because the system was slow, today are seeing the benefits of a well run property.

As these properties do proceed through the foreclosure system many well runned communitues will see nice returns back into the funds they created for “unpaid HOA dues” often in large lump sums at closing. Sometimes other, not so well runned communites, will get lucky when a realtor gets involved after many missteps by a property and gets the community a check far larger than they legally were entitled to with a large piece of it going to their own legal fees, luckily creating a surprise win for the community.

One property where Eric Miller of Keller Williams Fort Lauderdale has been very involved, as a former board member and a current property owner is the Tides at Bridgeside Square. This condominium has stayed the course throughout the real estate downtown with a great board, management company, and building staff that has risen to occasion. The building has funded reserves in a responsible fashion, worked through the process of foreclosures and short sales consistantly and is a well funded property that is watching their efforts pay off.

In 2012 the building at 10 years old completed an exterior painting of the building, there was no accessment done to complete this project. Currently the unit owners are voting on final design presenations for the new hallways, which will be upgraded beyond the level of the original construction, inlcuding marble elevator lobbies, and a new more elegant feel throughout. This huge project is also fully funded through reserves.

Just a few weeks ago numerous sales were recorded at the Tides of Bridgeside Square. In 2011 the highest recored sale was $290,000 so far in 2012 sales have been recorded at $315,000, $359,000, and with only 8 units available for sale in a building of 246 great Fort Lauderdale Beach Area Condos 2012 is certainly going be seen as the turn around year for this and many other Fort Lauderdale Beach Properties. Eric Miller and Associates were involved in everyone of the sales mention above and are always here to help you with your needs at the Tides at Bridgeside Square and every east Fort Lauderdale Property.

If you are just starting your search for real estate in the Fort Lauderdale area, and know that you like the beach area close to Oakland Park Boulvard and the Tides Fort Lauderdale, here are some other great proeprties we will be happy to show to you. That are selling to today at prices that we thing repreent very close tothe bottom of Fort Lauderale Real Estate market.  Some featured properties worth a look are below.

L’Hemitage is concerned to be one of Fort Lauderdale’s finest residential condominums, sitting on 12 acres of beachfront property. Built in 1997 the timeless architecture of the these two white tower on Fort Lauderdale Beach make it one the most desired resort style propeties in the area.  A pool side cafe and the fact that the buildings are pet freindly add to the appeal of L’ Hermitage. Today there are L’Hermitage Condos available starting at $699,000 range to just under $4,000,000.

 

At the classic Vantage View Condominium in most cases an odd numbered unit is featuring a beautiful intracostal and downtown view and an evn number is facring the ocean. At just a block form the beach this beautful building has received a new lobby and numerous upgrades over the years. One of the properties claims to fame is a roof toop swimming pool which provides from some of the most amazing views of the entire South Florida area and the beach. There are only 5 units listed for sale and they are ranging from $199,000 to $309,000 a great place to call your first Fort Lauderale home.

Curious about Fort Lauderdale Real Estate we are here to answer all your area real estate questions and may even use your question as a feature in an upcoming article.

Greenspan says, He doesn’t understand home pricing !

Alan Greenspan this morning said that when it comes to regular homes sales, that do not include Foreclosed or Short Sold properties  prices have flat lined nationwide. He went on to say that he does not understand why Foreclosed Homes and Short Sales are happening at such deep discounts to the market and actually making the average price of homes look like it is still dropping. I had to get typing here, Dear Alan, as a professional is the Fort Lauderdale Real Estate market please let me help you shed some light on your questions.

The first asnwer is simple, foreclosuers are not happening in great numbers in the best neighborhoods in town, Fort Lauderdale Real Estate Foreclosurer List, they are not on the beach (there is always an occasional exepction). These home were always in less expensive locations and continue to drive down the average price of all home sales as they move through the inventory.

Now lets discuss the more complicated issues. I hope to do so on a few fronts and maybe I will get lucky and someone of influence will read this and some light bulbs will go off. I sincerely do agree that there is no recovery to be had in this country until, the risk factor of construction is taken away, people are back to work, and the desire for housing ownership returns.

1) Banks are in processing madness. They appear to see no reason to get deals done quickly. Between insurance policies on their assets and government programs which help them along, urgency is gone. Someone has to pay for the outrageous time these hardship short sales take to process, and even though we don’t seem to understand it,  its all of us who are paying.   Part of the time factor, and failure rate, becomes priced into the asset with the “I don’t want to deal with a short sale attitude”. One example file , over a year old, has cost the bank 30% of the asset since the time they first had a chance to react, the government, you and I are picking up part of the tab. Taxes due, mortgage payments in arrears, past due maintance, dropping prices, buyers who left, bank foreclosurers of identical properties at lower prices have all hurt this asset. Solution –  place a time frame on all insurance and government programs such as HAFA  from the time a short sale offer is given to the bank, if they don’t react all programs need to disappear, if the bank does not react they should automatically waive their ability to ever seek a defiecency judgment. I will bet their ability to process would change quickly.

2) Foreclosures are selling at such a discount to the market, simply because the banks once again have gotten in the way of free markets. If the average days on market of a property in an area is 90 days and the bank tells their realtor they want it gone in 10 days ( after they have held the property for a year  and lead it into a state of ill repair) where and to whom do you think it is going to sell. It becomes a home not for an end user but for an investor, a renovator, and gets sold way under “market value”, it gets sold to a “friend of the market” for wholesale. If the property was sold on the open market with traditional neighborhood Realtors in a time frame reflective of the market, prices would certainly be higher. Prices are always higher when these homes come back on the market as normal sales 90 days later after a clean up. A very serious number to look at is the number of foreclosued  properties that are coming back on the market within 6 months as those, higher regular sales you talk about.

3) Strategic defaults – prices keep dropping – more people simply make the decision to give up as prices drop.  Its time to make sure  that foreclosure is not viewed as something easy, that will go away quickly. We spend more money in this country advertising that you shouldn’t smoke than, we spend discussing  the years of financial suffering that walking away from your home may cause. Foreclosurer is not something we should be proud of, it is just sad, and it is a hardship. I am totally sensitive to when it is the right decision, but when certain financial advisers are telling everyone to “just walk away”, as if it won’t hurt them, it simply becomes part of the problem. So where to go from here, we go to #4.

4) Encourage home ownership,  making  interest payments tax deductible, it is not enough. Use the money we are throwing at the system to Clearly Support Home Ownership in America. Take away the discussion that renting is cheaper than owning. Its time  to start thinking about what we do we encourage individual home ownership. A start, reward homeownership by making equity payments ( payment down of your mortgage) tax deductible. People who can pay additional money on their current mortgages will pump money back in to the system, and see a financial reason to keep their homes, and not walk away. Bring on depreciation deductions for primary residences, larger than the ones we give investors on the properties they rent out. Even out the playing field so Suze Orman cant  say “Walk Away“, to many callers.  Want some more ideas, ask Suze Orman ! Ask her, What would allow you to support ownership in front of your millions of viewers ?, I think she would certainly let us all know how she feels.

I dont’ have all the answers and most likely raise more questions that answers, but I do know that when people can’t see the value of building equity in their homes talking about a construction and housing recovery,  is a mis-directed conversation.