Can't Get to the Beach? Buy a House.

I’m not with the Chamber of Commerce, but I do feel guilty when people come to Florida to get away from the cold at home and well, it’s cold here.  Not like “up north” cold, but cold nonetheless.  You can tell the folks I mean when you stop in at Publix or Wal-Mart and see them in their flip flops and shorts when it’s 42 outside. (Up home it may be 9 below…but still.)

I started thinking what would be a good use of time for a visitor who--through no fault of his own--was limited from going to the beach due to the cold.  So I was checking through the newspapers looking at all the things there are to do here in Southwest Florida even on cold days—and there are a ton, ranging from ballroom dancing, to quilting to over 65 baseball and well, everything in between. But there’s one more that is not on the newspapers list: go shopping for a new house.  This might not sound like the optimal thing to do on some of these extremely cold days that we are seeing now, but it could prove to be successful for buyers who are willing to endure the chilly weather.

Traditionally, buyers are harder to find when temperatures hit the low numbers, and even here many people aren't inclined to go outside if they don't have to. However, if you can handle a little chill and some rosy cheeks, you might find that there are some excellent house-hunting opportunities out there due to fewer house-hunters. When you're shopping for a home in the cold winter months, you'll find that you're likely competing with serious buyers. Only serious buyers would endure looking at homes in the cold weather.

And visiting homes during colder weather will give you an idea of what to expect during the winter season. Just now most of the lawns have turned a winter shade of brown thanks to the cold, and many of the plantings around a home are leafless and dormant, so the curb appeal might not be as attractive, but there are other things that you can focus on that you might not have paid as much attention to in much warmer weather.

If there’s a fireplace, there's a good chance you'll see it in action if there's an open house. You can also really experience how well the heating system functions. You'll have the opportunity to check for any cold drafts in the home or damp areas that might indicate issues with insulation or weather stripping.

Be serious about your house hunting. You probably don't want to spend any more time than necessary out looking in the cold. That's why it's even more important to have a clear picture of the financing for the home. Know how much home you can afford.

Understand what your must-have items are and what things you're willing to compromise on or do without. Working in the chilly days is taxing, but if you clearly communicate to your real estate agent the neighborhoods and house types that you're interested in, you will have a good chance to find the home you want and need.

Cold weather house hunting can even bring some bargains because sellers might be eager to get their homes sold.  Dane Hahn is affiliated with Sarasota Realty Associates in Venice. He can be reached at dane.hahn@gmail.com or by phone at 941-681-0312.  See him on the net at www.danesellsflorida.com

 

Canadian Housing Market

Think of all the Canadian Snowbirds who winter in Florida, a paradise which is to them a “foreign” country—and how many things that between the two countries seem so similar but are somehow different. Fahrenheit verses Celsius, Canadian Healthcare verses our “whatever plan”; even the language is a bit different, eh?

Look for a moment at the two housing markets. There are enough similarities that it feels normal, but when you look a little deeper you'll find that the two systems have some fundamental differences.

When the sub-prime mortgage crisis hit the United States and the housing market collapsed, I owned a real estate franchise whose headquarters was based in Toronto, and I assumed Canada's housing market would soon suffer the same fate. That didn't happen. Canada's homeownership rate passed that of the U.S. and the country's prolonged housing boom continued. Prices kept going up and stayed strong.

Back then; new types of 'exotic' mortgages were offered in the U.S. in the years leading up to the economic downtown. These mortgages often featured 'teaser rates' that kept monthly payments artificially low, only to have them increase significantly later in the mortgage. Of course everyone knew they could always refinance—and nobody thought their home value would ever drop. Major Canadian mortgage lenders never adopted features such as this.

That sub-prime market never took hold in Canada.  In the U.S.  the vast majority of mortgages were originated by third parties and then packaged and sold to investors who often did not understand the associated risk. In Canada, on the other hand, most mortgages are originated and retained by the banks and institutions whose goal it is to maintain a long-term relationship with the borrower. (Like the old days here—think 1950 to about 1970).

Banks, trust companies and credit unions in Canada have a much broader relationship with their customers than just a mortgage; they are the financial experts and they offer investments, lines of credit and more.

And even though the countries seem so similar, their individual consumers are quite different. Younger Canadians have a homeownership rate that is double that of their American counterparts. Homeownership is also a key goal for new immigrants settling in Canada and contributes to the broad homeownership rate differences across the two countries.

The U.S. offers tax breaks to homeowners with the idea that a tax break will increase homeownership, Canada, does not have a policy goal of increasing the rate of homeownership and offers no such tax breaks. In the U.S. mortgage interest is tax deductible and so the larger the mortgage, the more tax benefit (interest that can be deducted.)

But because no such option exists in Canada, there's more incentive for Canadian homeowners to pay down their mortgages quickly. That has resulted in a large gap in the amount of equity Canadians have in their homes versus U.S. homeowners. Even if the Canadian homes lose value, homeowners continue to have much more equity.

During the U.S. housing crisis, many Americans whose mortgages exceeded the value of their homes simply walked away, leaving the banks holding the mortgages. In Canada, walking away is not an option. A borrower continues to be responsible for repaying the loan even in the case of foreclosure. In Canada, a foreclosure does not relieve the homeowner of the mortgage debt. Lenders can take legal action to recoup money from the homeowner if a foreclosed home is sold for less than the amount owing on the mortgage. (Short Sales)

Canadians spend a significantly larger share of their budget on housing-related items and services than Americans, spending about US$2,500 more a year on housing expenses.

Dane Hahn is a real estate professional with Sarasota Associates in Venice, He can be reached at 941-681-0312 or by email at dane.hahn@gmail.com. See him on the web at www.danesellsflorida.com

 

 

 

Flood Insurance Continued

About ten years ago while we were still residents of NH, we had a flood in our home. In my last column I outlined the issues that led up to “our” flood, but in a nutshell, we lived on a lake, and following 30” of rain in 30 days and the snow melt up-country, our lake level went up 12 feet, and came into our lower level.

As the water began receding, a representative from FEMA knocked at our door. Our county had been declared an emergency and government aid was available. We qualified for a grant of $2,000 to begin the clean up, and we qualified for an SBA (low interest) loan to fix the damage to lower level. FEMA also gave us a plan for a concrete “flood wall” to build out front—and the one requirement to make all this generosity come to reality: we had to buy flood insurance.

I like to think of myself as a rational being, one who can evaluate issues and come up with some kind of a solution. But when the water is rising, and dozens of people are helping with sand bags, and then the water comes over the top and flows into your home; well I excused myself and went into my garage—and cried. There was just noting we could do to keep that from happening right then.

The FEMA plans for a flood wall--which could protect the home—were pretty simple. The wall was about 100 feet long and set 6 feet into the soil, with a very large footing. The wall itself was straight, with two delta wings back toward the house to give additional rigidity to this dam between me and the lake. This was the solution, they said, to avoid this happening again. And even though the flood was called a “100 year” flood, there's no telling when that might happen again. So I bought flood insurance .

As it turned out, the next 100 year flood happened again the next year, and the new wall held.

And if you think that a flood only makes all your stuff wet, you have another think coming. With the water comes mud, and fish, and frogs and snakes. And some stuff floats, and other stuff doesn't. I had tall steel shelving with paint cans and tools on them. On the bottom shelf I had placed large plastic tubs of stuff. The tubs floated and lifted the shelves up off the floor, naturally they tipped over, spilling all their contents, some of which opened and spread their contents on the water. Ugh!

The carpets were obviously under water as was the insulation in the walls. All this needed to be removed. The thermopane sliders filled with water up to the high water line. Somehow the water gets in, stains the glass, and can't get out, so there was water in there for some time. The hollow doors on that level all came unglued, they peeled and flayed out. The furnace, central air and hot water heater were all drenched, but somehow they dried out, and once “tuned up” seemed to be none the worse for wear. A month later we replaced everything except the working utilities.

You might think you could, but you can't live in a house with a flooded basement. The fire department pulled our electric meter, and told us to find a place to stay. Without electricity, all events around a house pretty well come to a halt. We engaged a cleaning company as the water finally drained out. The cleaning guys said they needed a week to dry the place out once the power was back on. They asked for permission to throw away everything, and brought in fans and a huge dumpster. (As a Yankee, I was reluctant to throw away everything, so we compromised on a few things)

But to let them have free access to the house and get me away from overseeing the mess, we came to our house in Englewood—it was Memorial Day, we went Tarpon fishing.

So this is what I know first hand about flood insurance. It's expensive, and if you read the newspapers you know it's getting more costly. When there is a flood, unless the county you live in is deemed an emergency area, you're not covered. You have to pay for it a year in advance. If you have a mortgage, it's required. Read the policy, it doesn't cover much, usually just the utilities and services on the lowest level (AC, hot water heater and the like), if water gets to the next level, they get more generous. The policy goes with the house. Meaning when you sell, the new buyer should be able to continue your policy. When we sold our house, the buyer looked into a new flood insurance policy and it was 3 times more costly than my existing policy, that's when we found he was able to assume our policy.

Also, FEMA flood maps are like the bible to a bank, even though they get redrawn all the time. God makes the floods, and they happen where the maps and even smart people least expect. There are floods in the lowlands, and along the Mississippi, but also in the mountains of Vermont and New Hampshire. So you never know. Dane Hahn is a real estate professional affiliated with Sarasota Realty Associates in Venice. You can reach him at 941-681-0312 or by email at dane.hahn@gmail.com. See him on the web at www.danesellsflorida.com

Flood Insurance (part deux)

Not too many years ago we had a flood in our home up in New Hampshire. Let me tell you a little about the event, and what a mess it made.

We lived on a lake that was about a mile long and half a mile wide, and because we were about 12 feet above the lake level--and the lake had a dam which purged water into a river--FEMA determined that flood insurance was not required. Well, to be clear, it had been required a few years earlier, but then the government cartographers redrew the flood maps and we were relived of having to carry flood insurance because all the “experts” were sure and 99.9% certain that no flood would ever bother us.

We bought that house right around the turn of the century, and got friendly with the neighbors during the first few months we were there. Neighbors are always knowledgeable of the history of the area and they were quick to tell us there had been a flood 10 years back and our house had been in the midst of the deepest waters. But the owners at that time had installed an earthen dam along the lake side of the house, and it was determined by those who knew this stuff, that the dam would most certainly keep out any future high water. The house had come with a flood insurance policy, which was required if we had a mortgage—which we did.

About three years into our owning the house, the insurance company called and said the new FEMA maps were just released, and they indicated we were no longer in a flood zone, (really?) and therefore flood insurance was no longer needed. We told them that there had been a flood once, but that didn’t matter they said. And secondly, they said, flood insurance, while cheap at that time, didn’t cover much anyway. So we cancelled the policy.

I think that was the same year we had our next 100-year flood. The earthen dam worked fine during the runoff from the snow melt and the 30 days of spring rains we had that year, until the county raised the dam to prevent more water from going into the river—as homes were being flooded by the river, downstream. That brought the water over the top of our dam. The fire department quickly responded and brought hundreds of sand bags, and we raised the top of dam maybe 8-10 inches with all the bags, but the water found a way in, and washed out our dam.

The house was an embankment ranch, meaning that it was a ranch style home on the street level, but one side of the lower level was set into the earth, the other side contained a finished playroom with glass sliders out to the lake. The lower level was carpeted, and furnished and had a Steinway piano and an antique melodeon, plus the usual collection of stereo equipment and speakers and TV and the rest, Plus there was a work-shop with a nice collection of power tools, and then a storage room with “good stuff”, family photos, yearbooks, skis and boots and things I was saving, not to mention the oil furnace, central A/C and electric panel.

The fire department came as soon as they heard the dam was breached and pulled the electric meter of the side of the house. We could no longer stay there. The water began receding about that same time and FEMA knocked at our door. Our county had been declared an emergency and government aid was there. Even though we didn’t have flood insurance, they handed us a check for a grant of $2,000 to begin the clean up, and documentation for an SBA loan to fix the whole lower level. They also gave us a plan for a concrete “flood wall” to build out front—and the one new requirement to make all this generosity come to reality: flood insurance.

For more information on floods, see: http://www.floodsmart.gov/floodsmart/pages/flooding_flood_risks/the_cost_of_flooding.jsp More on my flood and flood insurance next time. Dane Hahn is a real estate professional with Sarasota Realty Associates in Venice, he can be reached at 941-681-0312, or at dane.hahn@gmail.com. See him on the web at www.danesellsflorida.com -- Dane Hahn

Flood Insurance

Monthly flood insurance premiums for more than 1 million homeowners are set to increase this week due to a rewrite by the U.S. Congress last year of the federal flood insurance program. As a result, home prices in flood zones around the country are being affected as potential buyers balk at the cost of premiums. Flood insurance is required by lenders when they give a mortgage in a FEMA designated flood zone. So the option of not buying flood insurance is only there for cash buyers who are willing to risk a flood. Federal flood insurance covers $1.3 trillion of property in all 50 states, with Florida, Texas, Louisiana, California and New Jersey making up two-thirds of all policies, according to Federal Emergency Management Agency, FEMA which runs the program. Federal subsidies have kept rates as low as 10 percent of the actual cost, but now all that is changing. Under the law, those who bought homes after July 2012 became ineligible for subsidies after Oct. 1. The flood insurance program amassed more than $20 billion in debt after Hurricane Katrina slammed into New Orleans in 2005 and it borrowed more after superstorm Sandy hit the East Coast in 2012. Owners of vacation homes began to lose federal subsidies in January, with annual rate increases of 25 percent until reaching full price. After Oct. 1, subsidies for businesses and primary homes began being phased out. FEMA is reassessing its risk calculations, drawing new flood maps that will bring higher rates to some areas. Those who buy homes in flood zones or sign up for new policies won’t be eligible for subsidies. The new flood insurance law was designed to reduce the National Flood Insurance Program’s growing debt. The measure, called the Biggert-Waters Flood Insurance Reform Act of 2012, phases in rate increases for the 20 percent of policyholders who have been receiving federal subsidies on premiums. The new law was written by Maxine Waters, a California Democrat, and Judy Biggert, an Illinois Republican, (who lost her November re-election). Waters, said she never expected the bill she sponsored to cause large rate increases. Florida is home to 37 percent of the nation’s 5.6 million flood policies, and is now trying to attract private companies to write flood policies and are considering starting a state-based flood insurance pool, rather than the FEMA policies. Florida policyholders have paid $16 billion into the federal program over the last 35 years. Various measures have been offered to stop or delay the rate increases. Louisiana is preparing to sue. Massachusetts Attorney General Martha Coakley proposed legislation this month to cap the amount of insurance lenders can require. Bills pending in the U.S. House and Senate to delay rate increases have bipartisan support, mostly from lawmakers in coastal states. On the other side are those who advocate market-based policies, who have urged members of Congress to leave the measure in place. Would-be homebuyers up and down the barrier islands and within a few miles of the Gulf oif Mexico, are walking away from contracts when they see the insurance costs, and some Realtors are using the “fear of flood insurance” as a marketing tool for homes that don’t lie in flood zones advertising, “No flood insurance required!” Dane Hahn is a real estate professional with Venice-based Sarasota Realty Associates. He can be reached at dane.hahn@gmail.com or by phone at 941-681-0312. See him on the web at www.danesellsflorida.com

Florida Home Owner Association regs.

This year, a bill was passed and signed into law that makes several changes to homeowners’ association (HOA) governance, including the requirement for the Department to create a website where HOAs and Community Association Managers (CAMs) are now required to register. The deadline for registration was November 22nd, and as of the deadline there were 12,723 associations representing 2,563,801 parcels meet the registration requirement. It’s important to note that although the initial registration deadline has passed, HOAs will continue to have an opportunity and obligation to register. DBPR will maintain the HOA registration website and provide an annual report to the Governor and Legislature each year until 2016. Home Owner Associations that have not registered, must do so to ensure you are in compliance with the law. To register, please visit www.myfloridalicense.com/hoa. If you have any questions throughout the one-time registration process, please do not hesitate to contact the Department at 800.226.9101. To register your Homeowners’ Association, you must create an online account. Once your account has been created, you will receive an e-mail with a temporary password; you may then create your own unique, secure password. Check your Junk Mail or SPAM folder for this e-mail if you do not receive your temporary password after a short amount of time. You can creat an account on line at www.myfloridalicense.com/hoa Create Your Online Account by going to the myfloridalicense site, or use: https://www.myfloridalicense.com/datamart/loginFLDBPR.do;jsessionid=0480CD7A080BE242DF3D3903368363C9.vo_fldbprm NOTICE: THIS IS FOR HOA’S ONLY. Please do not register a Condominium Association subject to Chapter 718, FS, do not register a Cooperative association subject to Chapter 719, FS, do not register a Timeshare Association subject to Chapter 721, FS nor a Mobile Home Park subject to Chapter 723, FS. Click here to register your Homeowners’ Association If you have questions or need assistance with completing the registration form, please call the Customer Contact Center at 850.488.1122 or use this convenient contact form. Chapter 2013-218, Laws of Florida, amended Chapter 720, Florida Statutes, to require homeowners’ associations, which meet the definition of section 720.301(9), Florida Statutes, to register with the Division by November 22, 2013. Homeowners’ associations that are required to register with the Division must be a Florida corporation responsible for the operation of a community or a mobile home subdivision in which: · the voting membership is made up of parcel owners · and membership is a mandatory condition of parcel ownership, · and in which the association is authorized to impose assessments that, if unpaid, may become a lien on the parcel. The term “homeowners’ association” does not include a community development district (CDD) or other similar special taxing district created pursuant to statute. Reporting requirements: · Legal Name of homeowners’ association · Federal employer identification number · Mailing and physical addresses · Total number of parcels · Total amount of revenues and expenses from the association’s annual budget For associations in which control of the association has not been transitioned to non-developer members, the following information must also be reported: · Legal Name of developer · Mailing address · Total number of parcels owned on the date of reporting If you are a Community Association Manager filing on behalf of the association, please provide your License Number. Dane Hahn is a real estate professional affiliatgged with Sarasota Realty Associates in Venice, FL. You can reach him at 941-681-0312, or by email at dane.hahn@gmail.com See him on the web at: www.danesellsflorida.com

Want to Buy a Business, Ask Your Wife

A couple of weeks ago I received an email from a friend who is transitioning out of the Coast Guard after a 4-year career as a senior cook. He has been in charge of the Galley at Portsmouth, New Hampshire Station for the last three years and has done a remarkable job there.

The Coasties actually like the food he makes, and according to the Sr. Chief, anyone who can eliminate complaints around the station is a big help. My friend's reason for sending me the email is that he is evaluating his future, and has found a bed and breakfast for sale on the oceanfront in Maine. He is considering the purchase of the place as the next chapter in his life—which amounts to about 27 years so far. He has a wife and three small children, and presently lives off base, so he is used to paying rent and having the family around him when he’s not at the station.

At the station he has an assistant chef (FS-3), and some enlisted folks who help out in the scullery and maintenance of the Mess Deck. He is responsible for developing menus, buying the produce and ordering the food stocks. He also schedules the work week so that either he or the assistant will be there for all 21 meals a week. Generally their hours are from 6AM to 6PM, and they divide the work with some overlaps.

As a Realtor and a friend, he asked my opinion as to whether buying the bed and breakfast was a good idea—and of course I was happy to throw in my 2 cents. What follows is a part of my reply: …you have obviously done your homework on how the business plan would work. My suspicion is you would be the "breakfast" guy, and the family would all pitch in regarding the "bed" portion of the equation. If you decide to move forward with this project, your next few years will be the stuff of a novel, so take notes. But even if you have ruled it out, no doubt your entrepreneurial spirit will rise to the top like cream in skim milk and another opportunity will find you.

Oddly, when the time is right, and you are listening to hear opportunity knock, OMG, there it is! I wanted as a friend to give you the best kind of advice I got from a very high priced lawyer who I engaged to keep me out of trouble. I approached him with a business plan and asked him to look it over for any weaknesses that I might have missed. He asked me, "are you going to do this?" and I said, "I want your opinion, is this something that seems like a good idea to you?" He said his opinion was his opinion and it was based on his life, his age, his resources and his willingness to take risks.

And he said that he couldn't help me one way or the other until I had decided what I was going to do. His role was not to decide what I would be good at, but rather to limit my risk once I had made my decision. I was not happy with the answer, but over time I have come to see he was right.

So I wrote to my friend, that if you're going forward, go with 100% of your energy and brainpower. Be careful not to have one foot in the boat and one foot on the dock. If you are half-hearted about this, you will fail. I know family is important to you, as it always was to me, which means your wife needs to be equally committed. A commitment of this sort is going to mean you will have time for the family around the building and you might get out to some of the kids T-ball games or scouts but you'll have little time for vacations and travel.

If you're good with that, just know that's what to expect. And finally, I told him my wife and I may need a place to stay when we are "up north”, so let me know what happens, if he moves forward, I’ll post his address. Dane Hahn is a real estate professional with Sarasota Realty Associates in Venice, FL. You can reach him at 941-681-0312 or by email at dane.hahn@gmail.com. See him on the web at www.danesellsflorida.com