Florida's Bottom Fishers

After many years of spectacular growth, Florida property, like the rest of America, has seen a recent decline. High interest rates have taken their toll but less well recognised, 2005’s above average hurricane season has been a major factor in the Florida story. Obtaining property insurance in Florida is difficult. Most insurance companies won’t take the risk, and so home owners have to obtain cover from the insurer of last resort –government subsidised "Citizens Insurance". This has caused premiums to soar (by Florida standards) to approximately 1%. A $500,000 house, insured for $350,000 to exclude the plot value, would be about $3500 annually, with a 2% excess for hurricane damage claims. There is much political activity to resolve the issue and Congressman Jim Davis has promised to slash these rates by at least 40%. However, for many homeowners it is already too late and they have been forced to put their homes on the market or are having their homes foreclosed on. This increased inventory, in a market that is already full and has few buyers, is resulting in falling prices.

There is opportunity in crisis and UK and other international buyers are moving in. They realise the greenhouse effect or the risk of terrorism or disaster of one sort or another applies virtually everywhere. Weathermen are predicting 30 years of instability worldwide, and even in Britain the Environment Agency is issuing flood warnings all across the UK so the risk in Florida has to be put into perspective. In reality the 2006 Hurricane Season, which was billed to be even busier than 2005, was uneventful.

Unlike Louisiana, Florida is above sea level which reduces the damage caused by a hurricane. Added to that, a hurricane is one of the few natural disasters that can be both anticipated and action taken to avert much of the effect. Floridians are used to shuttering their homes and either sitting it out or moving away from a direct storm. Even if the hoped for insurance premium reductions do not take effect, at 1% insurance is still a viable protection and more than compensated for by the huge savings in the price of Florida real-estate. The sunshine State has a lot to offer, 75 million visitors each year flock to its 1500 miles of beaches, its 1200 golf courses, its theme parks and myriad of other attractions. 350,000 people each year move to make Florida their home, many of them British, keen to live in a better climate and a vibrant English speaking community.

Daniel and Judith did exactly that. They moved their family from London to Tampa and for $500,000 (approx £266,000) their home has four large bedrooms and an office, three and a half bathrooms, room for a pool table, and a garden with a private swimming pool. They live on a tree-lined boulevard with community spirited neighbours, fine schools for their two children and plenty of leisure activities, parks and other amenities. Both hold real estate licences and a mortgage license and are in a unique position to monitor the market and see the tremendous values that now abound.
They have bought several properties themselves and have helped many clients find the right property to suit them. As Daniel says "where else could you find the value of property we now have in Florida, in a country that has historically proven to be politically and financially stable with tremendous growth potential?"

For those British trying to get to the US permanently there is currently a 2 year backlog for visa applications. Many are choosing to apply for E2 business visas. By buying a business they can usually get a visa much more quickly. A buyer of any business over 150,000 pounds is almost certain to get one. Many business brokers have a wide choice of suitable business opportunities from motels to tea rooms.

So, why Florida? According to Daniel the housing market has bottomed and cannot fall much further. Developers across the State are offering all sorts of attractive inducements to shift their stocks of new homes. "As is so often the case feast has turned to famine but these things are usually overdone. In my experience now is the time for the bottom fishers to cast their lines. For about $300,000 we can find many very nice homes that can be rented to provide a break-even or small positive cash flow based on a 75% mortgage at current US rates. And if that wasn’t appealing enough, British buyers stand to enjoy the added buying power of Sterling’s strength as it appreciates against the dollar".