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Pablo-silver or lead?

In 5 Years I've Made $160k On My Florida Villa I'm Rich!

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25 thousand Brits have bought a place in the sun in Florida and they've made a kiling?

I recently posted this on a British Florida Property owners forum. No one disagreed with the prognosis for the Folrida market. However one respondent also pointed out that even if they could sell they had also taken a 15% hit on the exchange rate.

"Some of the most successful and respected Real Estate professionals are talking of a -25 to -30% correction in Central Florida house prices. When you set the 2005 +34% Central Florida house price increase (inflation) in the context of the 4% long term average, it looks like an aberration. During the period 2001 to 2004 the house price inflation figure grew from around 4% up to around 18% in 2004.

This is of course not real money (it’s an assumed amount of equity at a snap shot in time) unless you crystallise the gain by selling. All owners that feel a degree of comfort due to the assumed amount of equity they have in their property should factor in the following.

US interest rates are going up property prices are coming down.

The number of serious buyers out there has dropped dramatically.

The number of villas for sale, especially on sub divisions aimed at STR have increased dramatically.

Because of the lack of informed due diligence by many buyers who have entered the market, many owners are losing money on an annual operating basis (annual running costs exceeding revenue). Add to this house price inflation (which previously provided a comfort blanket) has turned into deflation and there will be an increasing amount of distressed sales chasing the market down.

It’s worth noting the amount of assumed equity being eroded as a % of the assumed value decreases quicker than it increases as a percentage of the assumed value i.e.

A 200k property increases to 300k = 50% property inflation (say over 3 years).

That 300k property only has to decreases by 33% (not 50%) to drop back to 200k.

Another example of how things can change quickly:

A 200k property bought 5 years ago increases 80% = 360k. I’m rich!

360k – 10k cost of buying = 350k. I’m rich!

350k villa drops 30% from peak prices (don’t forget that is only one year’s inflationary froth from 2005).

350k – 30% = 245k. I’m not as rich as I thought but I’m still up on the deal, I’m gone sell whilst I can still come out on top.

245k – 10% selling costs = 220k. I’ve made 20k for doing nothing. Hold on in the 5 years I’ve owned with a 160k mortgage and only rented 16 weeks yr1, 20 weeks yr2 and between 22 to 26 weeks over the last 3 yrs I’ve actually just broken even.

Blimey I’m glad I had the cushion of 80% capital growth! I should have put the 50k (40k deposit = 10k buying costs in a footsie 100 tracker fund great return and no stress.

Two things keep ringing in my ears “Property only goes up in price!” and “I’ve not bought it (my place in the sun) to make money, I just don’t want it to cost me anything!”

Pablo Silver or Lead?

Edited by Pablo-silver or lead?

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25 thousand Brits have bought a place in the sun in Florida and they've made a kiling?

I recently posted this on a British Florida Property owners forum. No one disagreed with the prognosis for the Folrida market. However one respondent also pointed out that even if they could sell they had also taken a 15% hit on the exchange rate.

"Some of the most successful and respected Real Estate professionals are talking of a -25 to -30% correction in Central Florida house prices. When you set the 2005 +34% Central Florida house price increase (inflation) in the context of the 4% long term average, it looks like an aberration. During the period 2001 to 2004 the house price inflation figure grew from around 4% up to around 18% in 2004.

This is of course not real money (it’s an assumed amount of equity at a snap shot in time) unless you crystallise the gain by selling. All owners that feel a degree of comfort due to the assumed amount of equity they have in their property should factor in the following.

US interest rates are going up property prices are coming down.

The number of serious buyers out there has dropped dramatically.

The number of villas for sale, especially on sub divisions aimed at STR have increased dramatically.

Because of the lack of informed due diligence by many buyers who have entered the market, many owners are losing money on an annual operating basis (annual running costs exceeding revenue). Add to this house price inflation (which previously provided a comfort blanket) has turned into deflation and there will be an increasing amount of distressed sales chasing the market down.

It’s worth noting the amount of assumed equity being eroded as a % of the assumed value decreases quicker than it increases as a percentage of the assumed value i.e.

A 200k property increases to 300k = 50% property inflation (say over 3 years).

That 300k property only has to decreases by 33% (not 50%) to drop back to 200k.

Another example of how things can change quickly:

A 200k property bought 5 years ago increases 80% = 360k. I’m rich!

360k – 10k cost of buying = 350k. I’m rich!

350k villa drops 30% from peak prices (don’t forget that is only one year’s inflationary froth from 2005).

350k – 30% = 245k. I’m not as rich as I thought but I’m still up on the deal, I’m gone sell whilst I can still come out on top.

245k – 10% selling costs = 220k. I’ve made 20k for doing nothing. Hold on in the 5 years I’ve owned with a 160k mortgage and only rented 16 weeks yr1, 20 weeks yr2 and between 22 to 26 weeks over the last 3 yrs I’ve actually just broken even.

Blimey I’m glad I had the cushion of 80% capital growth! I should have put the 50k (40k deposit = 10k buying costs in a footsie 100 tracker fund great return and no stress.

Two things keep ringing in my ears “Property only goes up in price!” and “I’ve not bought it (my place in the sun) to make money, I just don’t want it to cost me anything!”

Pablo Silver or Lead?

Good synopsis.

Wasn't there a massive property crash in Florida some time back - 1950s maybe?

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Good synopsis.

Wasn't there a massive property crash in Florida some time back - 1950s maybe?

I might be wrong but I think there was a massive one either just before or after the 1929 crash. I'll look it up if I get a chance later.

Edit: Oh, yes, here we go - 1925:

http://www.stock-market-crash.net/florida.htm

Edited by Magpie

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B) Yeah good point.

Anyone have any ideas of what the best country to retire in is ?

i.e good health care, cheap property, sea views, free money :rolleyes:

Not that I consider a property my pension, I just want to rent in the uk, buy a place where I would eventually like to retire to.

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B) Yeah good point.

Anyone have any ideas of what the best country to retire in is ?

i.e good health care, cheap property, sea views, free money :rolleyes:

Not that I consider a property my pension, I just want to rent in the uk, buy a place where I would eventually like to retire to.

India has all those things. Just hold your nose as you pass the slums.

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"What can you get for 150 K in Florida ?"

Whatever it is... if you wait 12 months, you'll get much more

cost you 50k for a new steel roof for a 4 bed house, homes here are NOT shifting.

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Florida is one of the biggest bubble regions in the US - more condos under construction in Miami today than in about the last 10 years put together.

It used to be a great retirement place for people from the northeast (Arizona was another favourite, also bubbleing) - they'd sell their house and buy the cheap property in Miami, and get the warm weather, and no state income tax. Unfortunately the prices have risen so much, and so have the property taxes, that it's not cheap anymore.

The other major problem for Florida is the next 10 years of Katrina like hurricanes. Expect major devastation most years, and the insurance payment on some of these houses is now heading higher than the mortgage payment.

Even without the weather problems, FL will drop precipitously when the funny money stops.

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"When a person with money meets a person with experience, the person with experience gets money and the person with money gets experience."

There are 64,000 Reale Estate Licensee's in Florida just waiting to help Brtis with money/debt gain experiance!

A place in the Sun or Money to Burn!

The Miami condo market is the biggest bubbble in the US and it's about to pop.

Pablo Silver or Lead?

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Florida is headed for some trouble (not just the Hurricanes) this year:

http://www.builderonline.com/industry-news...rticleID=283030

Despite a 29 percent decrease in new foreclosures from the first quarter to the fourth quarter,
Florida posted the nation's highest foreclosure rate and accounted for more than 14 percent of the nation's new foreclosures in 2005.
The state reported 121,843 properties in some stage of foreclosure-1.67 percent of the state's homeowners, according to RealtyTrac.

Which country sent the highest number of 2nd home buyers to Florida? Yes--you guessed it.

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B) Yeah good point.

Anyone have any ideas of what the best country to retire in is ?

i.e good health care, cheap property, sea views, free money :rolleyes:

Not that I consider a property my pension, I just want to rent in the uk, buy a place where I would eventually like to retire to.

Guatamala is said to be okay.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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