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Question for current property owners in the US

We sold our house in NY when we originally moved to Europe.  We were going to buy a flat in Prague but pulled out at the last possible second when we realized that we were again moving.  Since then, we have been casually in the market for an investment/vacation property.  The nature of our lives is that we will probably always be renting our primary residence, as we have no idea how long we might be here or where we might be headed to next.  With that in mind we've been thinking about buying a place, using it for vacations here and there, and sitting on it until we retire, at which point we would either sell it or live in it part of the year.

We had been looking at Spain and Croatia, but with the property market in the US we are thinking that Florida might be our best option.  My parents have a place on the Gulf Coast that my entire family has vacationed to since I was a kid.  Property prices around my parent's place have dropped dramatically in the past few years, to the point where we can afford a beach unit very close to my parent's place.  I am thinking that this makes perfect sense, especially when we have kids.  We could basically just take them to one place and all relatives that we would have some sort of obligation to see would come to us (since they all go every year anyway).  Also, the proximity to my parent's place would mean that my dad could check up on it from time to time.  I know that a lot of the condos there have in house management and rental options, so if we wanted we could probably rent it out for a few months a year when we're not there.

We're not in any rush, but what am I completely overlooking here?  Like I said, we sold our house before we moved, so we've never dealt with owning a property while on another continent before.  Please give me all of the PITA bits that my mind is completely glossing over right now.

Re: Question for current property owners in the US

  • I'm not sure if they ever fixed this, but I know that a lot of places in Florida with a homeowners fee had their fees grow substantially when people started foreclosing on their homes. So, one concern I would have is how that fee (or condo association fee) fluctuates and such. 

    Also, I have no idea how this works, but you may want to check into the differences as a homeowner who lives there and one who is renting it out.  If you aren't living there full time there are more obstacles/costs and some places only want people who will have that as their primary home. I don't think it's an issue because you'd obviously then just go with the place that fits your lifestyle, but it always good to know. 

  • Good point about the COA fees.  I'm also pretty sure that FL's property tax system is structured in such a way as that people pay more for a house that isn't their primary residence.  We definitely need to look into that too.

    Did anything come up that you weren't really expecting from living on another continent than your property?  Other than the neighbors breaking in, I mean. 

  • If you buy a house that's part of a homeowner's association, you'll want to designate a proxy to vote for you during meetings--and go to meetings for that matter.  DH owns a house (from before we met) and another tenant is his proxy for HOA things.  

    He also made sure to get a reliable maintenance man set up who can check up on things when the tenants need him and can refer us to specialists if necessary.

    You're going to want to do direct bill pay with tenants and have that set up in the lease as a material condition.  Otherwise you will have to have tenants mail checks internationally or have family deposit them into your account--super annoying to do.  Some of our tenants were okay with this, some fought it because monthly fees for this can be $25 a transaction.

    Things like property taxes should also be direct pay (on your end) to the county.  We recently had a tenant email telling us we had a property tax bill, agreeing to forward it to my parents and then it got lost in the mail.  Thankfully DH had it set up to be deposited to the county so we weren't delinquent, but it could have been a major issue.

    There may also tax implications because it will not be your primary residence, so you will want to look into that.

    ETA: Also a reputable realtor you can trust to find good tenants helps.   

  • image The Little One:
    There may also tax implications because it will not be your primary residence, so you will want to look into that.  

    Yeah, curses for the conversion loophole for capital gains changing.  I feel cheated that my grandparents could convert a second home into a primary residence for tax purposes by living in it for two years and I can't.  Stupid government.

  • Our situation was different since we were not planning on keeping the place in the US at all. The one issue, which LO mentioned, is to find some reliable people. My H's grandfather lives in a condo on the gulf coast and several people there live in other places part of the year. Since he's retired, he helps them with things they need for the condo. 

    We needed a reliable lawn service person for our home. We had used someone the whole time we lived there and as soon as we moved, he flaked. It's been difficult setting something up since then. Eventually our realtor did it.  

  • Home insurance.  We just got whammied with this.  If you don't live in the home, then you get stuck with "vacant" home insurance, which is really expensive.  We've been able to swing the vacation home bit for a couple of years because we return, but because there's no longer any furniture in there, we can't.  So, keep it fully furnished and that won't be a problem.

    If you're buying a condo, you won't be dealing with the same crap we have (outside maintenance, blah blah blah)

    Sure you don't want a nice little place in Michigan 1 mile from the beach?? ;)

  • And mortgages. How would you be funding this? Property "overseas" in certain areas is harder to fund.
  • image xnickerx:
    And mortgages. How would you be funding this? Property "overseas" in certain areas is harder to fund.

    This is actually one of the reasons we are thinking of buying in the US as opposed to the Eurozone or Croatia.  We wouldn't have to worry about converting funds. 

  • image AmoroAgain:

    Home insurance.  We just got whammied with this.  If you don't live in the home, then you get stuck with "vacant" home insurance, which is really expensive.  We've been able to swing the vacation home bit for a couple of years because we return, but because there's no longer any furniture in there, we can't.  So, keep it fully furnished and that won't be a problem.

    If you're buying a condo, you won't be dealing with the same crap we have (outside maintenance, blah blah blah)

    Sure you don't want a nice little place in Michigan 1 mile from the beach?? ;)

    See, I hadn't even thought of this.  Thanks!

    As for the place in Michigan...we're from Ohio.  I couldn't talk my parents into visiting us there if I tried. Wink

  • My parents also have a place on the Gulf Coast in Florida and don't pay vacant homeowners tax, but do pay an arm and a leg because of hurricane insurance. Their first 2 companies dropped everyone in that area after the last few years of hurricanes, and what they pay now is a ridiculous premium. They don't rent their house out, so I don't know how that works. I do know they would like to sell it in the next couple of years but the market there sucks!
    DS 02.10.2008 * DD 04.05.2011

    [IMG]http://i53.tinypic.com/jhzsar.jpg[/IMG]
  • image Publius:
    image AmoroAgain:

    Home insurance.  We just got whammied with this.  If you don't live in the home, then you get stuck with "vacant" home insurance, which is really expensive.  We've been able to swing the vacation home bit for a couple of years because we return, but because there's no longer any furniture in there, we can't.  So, keep it fully furnished and that won't be a problem.

    If you're buying a condo, you won't be dealing with the same crap we have (outside maintenance, blah blah blah)

    Sure you don't want a nice little place in Michigan 1 mile from the beach?? ;)

    See, I hadn't even thought of this.  Thanks!

    As for the place in Michigan...we're from Ohio.  I couldn't talk my parents into visiting us there if I tried. Wink

    HAHAHA!!!  But you know, that sometimes could be a GOOD thing! :D

  • We own a home that we eventually plan on living in again as a primary residence.  We rent it out and have a property manager.  Twice we have had to evict tenants and it is a HUGE pain in the ass.  HUGE.  It really irks me that we had tenants twice living in our house rent free and there is pretty much nothing we can do to get the money back.  We can garnish wages in the future but the process to get the money back is just as costly as just eating the money.

    We were told by our property manager to have 6 months worth of mortgage sitting in the bank for just in case.  We've blown through that by having two sets of tenants that don't pay rent.

    For insurance, we went through USAA.  They had us take out a primary policy on our apartment in Amsterdam and then they let us take out secondary insurance on the house in Virginia.  The insurance on the house in Virginia only covers the house and major appliances (we don't have furniture in it) and costs about $500 a year for both sets of insurances.

    Things to think about:

    1.  Get a propety manager.  You need one.  Ours costs per month 1/10 of the amount of rent we get for the property.  He is responsible for the upkeep of the house and making sure the tenants pay plus any emergency situations.  i couldn't imagine getting a call at 1AM my time saying that I needed to fix a blown up toliet or something.  Plus he has connections and can get someone in there right away to fix stuff.  I would just have to go through the phone book and worry whether or not the guy was going to show.

    2.  Put aside money for when things go bad (our washer/dryer fried and so we had to replace immediately which cost about $800).

    3.  If you can swing the mortgage without renting it out, I would skip renting it out and just pay a property manager to go by twice a month to check things out (or after a big storm to make sure everything is OK).

    4.  If it is a house, not a condo, you'll need to pay for upkeep (ie HVAC maintenance, gutter cleaning, yard work, etc.)  Another reason to get a PM - he can take care of this.

    If I think of anything else, I'll let you know.

  • image twopeasinapod:

    We own a home that we eventually plan on living in again as a primary residence.  We rent it out and have a property manager.  Twice we have had to evict tenants and it is a HUGE pain in the ass.  HUGE.  It really irks me that we had tenants twice living in our house rent free and there is pretty much nothing we can do to get the money back.  We can garnish wages in the future but the process to get the money back is just as costly as just eating the money.

    We were told by our property manager to have 6 months worth of mortgage sitting in the bank for just in case.  We've blown through that by having two sets of tenants that don't pay rent.

    3.  If you can swing the mortgage without renting it out, I would skip renting it out and just pay a property manager to go by twice a month to check things out (or after a big storm to make sure everything is OK).

    Admittedly, we've only rented to some friends parents for the summer because we are THAT afraid of having to go through a similar situation, and not knowing what they are going to do to the house.  

  • My other suggestions is get a property manager that comes recommended.  We've been through two.  The first was one my husband found through the phone book.  He was a waste of space.  The second was one that came recommende to me through a client in my old job (the client did PM for commercial real estate and knew a ton of people).  The second property manager is gold.
  • DH and I have two investment properties in the US.  DH purchased them with a partner prior to us getting together.

    Overall, they are great investments.  We are in a solid area where we know the market.  DH does all the tax related issues and our partner handles the details with the tentants, HOA, etc.  He use to live in that town and has moved and is now three hours north.

    For a while my DH blogged about it, but goes into a lot of detail about becoming a landlord, etc.  It might give you an idea of the level of commitment you will have and unforeseen costs.  http://lordingtheland.blogspot.com/2006/07/lord-of-land-or-why-blog.html

    Good luck in your decision, but I would make sure that I have at least 30% to put down (or as a non primary residence you will have to pay PMI), a seperate emergency fund for the property (i.e. new roof, vacant period, unanticipated raise in taxes), people involved that you trust that will act as a third party in your absence.  This could be friend, family member, etc.  I would also be prepared to pay them for their time. 

    If you have any questions, let me know.  We've only ever had one issue with tentants, but overall are really pleased.

    International Nesties June Siggy Challenge: Place I would like to visit.... Dead Sea, Jordan! Only a few more months!
    image
  • Depending on how long you'd stay at this property would you need a car? Or is there adequate public transportation to get around for things like groceries etc?
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