Florida Vacation Homes: Buying and Owning in the Sunshine State

By now you've heard the news. With a surplus of homes and a temporary lack of interested buyers, real estate in Florida is on sale. For those looking for a second home, or thinking about going ahead and buying a home that they may actually retire to in a couple of years, it’s a great time to be in the market.

But, should current home prices and real estate market mania be the only factors under consideration?

Of course not, so let’s ignore prices for just a moment and explore some of the other factors that need to play into your Florida real estate purchase decisions today. I’m talking about things like:

• finding the best part of Florida for you
• how to choose the right type of community
• real estate taxes and property insurance, and
• maintaining your new home in Florida while you’re away

Consider this your road map to buying a second home or your eventual retirement home in Florida today.

Finding The Best Florida Location for You
One of the most common mistakes people make when buying in Florida is finding a home, falling in love with it instantly, buying it or having it built, and then waking up after the first night in it and realizing the surrounding area has nothing to offer you in terms of your pastimes or interests.

The home is important, of course, but you should spend just as much time investigating the surrounding area as you do looking for the perfect home. You should ask yourself if the area and surrounding community offer the types of activities you enjoy and the level of shopping, dining, and other services you're used to or expect.

For Jeff and Laura Harris of New Hampshire, choosing the town of Port Orange on the east coast of Florida for their second home was an easy decision. Jeff says, “My brother Dan has owned a house 10 minutes away for a couple years prior to us moving down. We’d been to visit him several times and fell in love with the area. Plus with him nearby we’ve always got someone to hang out with.”

Also, think about family members you hope to come visit, your kids and grand kids. Is it more important to be 10 minutes from Disney World, or do they prefer to spend most of their time relaxing on the beach? The last thing you want to do is move to Florida leaving your kids and grand kids behind, and then nobody wants to come visit you because there's nothing to do.

What kind of community is right for you: Choosing the right kind of community for your retirement or second home plays a close second to choosing the right place.

There are gated communities, maintenance-free communities, active-adult communities, manufactured home communities, golf communities, condominium communities, as well as combinations of each of these types. You should seriously consider what type of community and what combination of community amenities will be right for your lifestyle, because the type of community your home is in will determine a lot of things such as your enjoyment and quality of life, not to mention your home’s future value if that’s important to you.

New Hampshire’s Jeff and Laura chose a maintenance-free, gated community for their second home. “We liked the fact that everything would be taken care of for us while we are away. We didn’t lose any sleep wondering if the yard had been cut or if the shrubs had been trimmed and it was all covered in our monthly assessments. Plus the security gates gave us an added peace of mind.”

The community Jeff and Laura chose also included a clubhouse, the fees for which account for nearly one-third of their monthly assessment. Laura says, “it’s nice knowing it’s there if we want to use it, but I can’t really say we get our money’s worth out of it.”

Another important consideration when choosing a community is the restrictions that you’ll be expected to abide by. These can either work in your favor, or against you.

For example, if your neighbor wants to paint his house school bus yellow, most communities with restrictions would require an architectural board’s approval before your neighbor could go through with his painting project, and his request would hopefully be denied.

But lets suppose for a moment that part of your Florida daydream includes a 24-foot motorboat, but after towing it home you realize it won’t fit in your garage. If you think you’ll just stick it in the backyard or park it in the driveway, you might have a problem in most communities with restrictions.

But in either case, these restrictions are an important part of maintaining order in a community and protecting the aesthetics as well as home values.

Insuring your piece of paradise
Homeowners insurance rates, especially in coastal areas of Florida, tend to be higher than what you might be used to, and coverage can be hard to find depending on the location, age of the home and the type of construction. This is ultimately a result of the 2004 hurricane season when no less than four hurricanes affected the Florida peninsula.

“The insurance issue definitely played a role in our choice of neighborhood. We knew the further inland we chose, the better off we’d be as far as rates were concerned,” said Jeff.

Another reality you'll have to contend with is that of the 200 or so private homeowners insurance companies in Florida, less than 20 percent are writing new policies. That said, insurance is available, you may just have look a little harder than you might have expected.

So, where should you start? After asking for referrals from your real estate agent or friends and family already living in Florida, you should also be sure to check the Florida Market Assistance Program at www.fmap.org. This is a referral service created by the Florida legislature to connect those who need homeowners insurance with those who are writing new policies.

If all else fails, you can always turn to Citizens Property Insurance at http://www.citizensfla.com, the state run "insurer of last resort". Rates will be higher than in the private market, and this is by design so that the government doesn't compete with private insurers. So, in the end you'll pay more but it beats going uninsured.

One last insurance recommendation is flood insurance. Most people neglect to get it, as its not required in all areas, and if you own your home free and clear, it’s not required at all. But, no matter if it’s required in the area your Florida home is in or not, you should definitely consider it. You’ll find that the rates are fairly reasonable, especially in areas where coverage is not required.

Property Taxes
In most parts of the state you should expect to pay between 1.5 and two percent of your home’s assessed value when you get your tax bill. The best way to get an idea of what your tax bite may be once you own a home in Florida is to contact the local property appraiser’s office.

Their job, besides placing a value on all property in their area, is to provide residents and prospective homeowners with the most current property tax information. You can find links to most county property appraiser’s websites at the Florida Department of Revenue website at http://dor.myflorida.com/dor/property/appraisers.html

Homeowners who qualify for the homestead exemption by making Florida their primary residence enjoy a $25,000 reduction in the assessed value of their home, which affords the average homeowner about a $500 savings each year on their tax bill. A new proposal to increase the amount of homestead exemption to $50,000 will come up for a vote in January 2008.

Another part of the proposal up for vote in January is a cap of 10 percent on increases in assessments for homes owned by people who are not full-time residents. Many politicians and real estate agents lobbied for a five percent cap on non-homesteaded property (homesteaders currently enjoy a three percent cap) but they were ultimately unsuccessful.

But unless Florida home prices spike again in the near future, this shouldn’t be a major issue for those of you who are not planning on making your Florida home a permanent residence.

Home (left) Alone
Another thing to consider when purchasing a second home in Florida, is what will become of it when you’re hundreds or thousands of miles away in another state. How can you be sure that everything is taken care of while you’re away?

Assuming you don’t have the convenience of having a friend or relative in the area like the Harrises did, you could opt for a maintenance-free community, or even a townhouse or condominium. In these types of communities you’d know that the exterior of your home was being maintained, and you won’t have any angry looks from the neighbors when you come to visit because your grass is three feet high.

Another option is to hire out the work of maintaining the exterior of your home. The only problem with this is that things happen, people get sick or don’t show up or just go out of business. How would you know if this were to happen to the person in charge of maintaining your home?

The business of “Second Home Concierges” is thriving because so many people are opting for the second home lifestyle. A concierge of this type would typically be given a key to your home, and would perform routine checks of the homes exterior and interior, making sure necessary maintenance is taken care of for you. Fees and the level of services performed vary by area, and you can start your search for businesses offering this service in the pages of this magazine, as well as online.

I hope I’ve given you some important things to think about when considering Florida for a second home or your eventual retirement home. It’s a great place to live, and it’s much more enjoyable when you have the knowledge to make the most of the experience. Follow the information I’ve outlined here and you’ll be well on your way to enjoying the Florida lifestyle you’ve dreamed of.