Listed below are some very helpful and extremely important tips if you are considering purchasing a Florida private rental villa or Disney rental house.
Before my wife and I became Florida villa owners, we spent many months investigating if and where we should buy an investment property. Should the villa have a pool and / or spa, should it be close to Disney World, how many bedrooms and bathrooms should it have ? How will I obtain a mortgage and what type of mortgage is best? These are just a small sample of the many questions that you will need answered before taking that final step of buying your dream Florida villa.
Florida is extremely well known for its large and beautifully designed properties, year round sunshine, many attractions, exquisite beaches and inexpensive lifestyle. We wanted a holiday home that we could enjoy with our family and also rent out to help cover the cost of the mortgage.
After many months of trawling the internet, speaking to various property companies and existing Florida villa owners we were ready to purchase our very own Disney World rental home. We needed to select a good development area, choose our own plot and decide on the style of the property to be built. We eventually decided on a single storey home in Kissimmee. Once it was completed, it was everything we dreamed it would be.
You have already taken the first step toward purchasing your home by reading this article. Though buying a property in Florida is relatively uncomplicated we still hear many stories of people who have had problems in one way or another.
Please don’t forget that the experience of buying your Florida villa should be pleasurable and exciting. From visiting the various developments, choosing the plot and house that is right for you to finally making the purchase.
Location, location, location
The next step to buying your home requires some ground work to be done by yourself prior to arriving in Florida. Firstly decide where you want to buy. Do you want the villa to be close to Orlando’s many theme and water park attractions or do you prefer to be near the beaches? If you prefer the beaches, do you prefer the Gulf Coast or the Atlantic Coast. Whichever you decide, as with all investment properties location is very important. Once you have decided on your location, you must decide the type of property, the number of bedrooms, bathrooms, pool, etc. Do you want to be on a small development or larger resort development, do you want a gated or non gated community.
And last but not least what is your budget.
Do You Need To Rent Your Property ?
This is a very important question as it will determine where you can buy. Only certain communities in Orlando are zoned for STR (Short Term Rental). Please do not accept any verbal guarantees from salespeople regarding STR without checking in the covenants and restrictions of the developer.
One of the most important decisions you will make is choosing the development which suits your needs best. Remember not all developments allow short term rental and if you intend to rent your property this is the single most important item you must consider.
Remember the developers’ agent is acting on behalf of the builder, and is bound by law to obtain the best possible deal for the builder, not for you. Some builders and management companies offer guaranteed rental programs. These include a minimum income for an agreed period (usually 12 months) or alternatively, a minimum number of weeks booked for the year. What you are not told however is what the income will be for those weeks or what the agent will rent your property out for (for example, you may receive £350 per week but the agent is renting it out for £450 per week).
We strongly advise that if you decide not to secure rentals for the property yourself, then you thoroughly investigate any proposals presented to you from Management Companies / Letting Agents.
Our advice is that if you have the time, you market the villa yourself. This allows you to maximise your income and makes it easier to reach that magical break even point of income versus expenditure. If we are being honest this can be quite time consuming but well worth the effort when the bookings start to come in. If you go down this route you will have to consider the costs involved in marketing your villa. Costs could include newspaper / magazine advertising, creating your own website, listing your villa on other websites and other incidentals like business cards, flyers etc.
We would highly recommend you look at the possibility of an inspection trip. This can be purely for the purpose of choosing your dream home or can be combined with a holiday / vacation.
While there are benefits to both scenarios if you have limited time available and are there, purely with the inspection of properties in mind, then you are more focussed on the job in hand. However, we would recommend an absolute minimum of 4 days for an inspection visit. You will need to meet up with the Realtor to view several villas and communities, spend a few sleepless nights deciding on which property to purchase, sign contracts with the builders, pay the deposit, choose the colour of the house etc. Decide on the shape and size of the pool and type of pool tiles, open a bank account and look at some of the furniture packages that are available. A very hectic but rewarding few days.
Alternatively If you can spare more time, it will give you extra opportunities to view a few more developments over a longer period, then take a few days to contemplate and narrow your choice down to a couple of villas before finally viewing your favourites again.
You will also have more time to investigate the local area and amenities such as shops, restaurants, banks and supermarkets to satisfy yourself the area has what you and your guests will be happy with.
Its now time to make your final decision. Should you buy a new home or a resale.
Should you decide to have your dream home newly built, you will then sign a contract with your chosen builder, leave your deposit and if you haven’t already done so open a bank account and arrange a mortgage quotation.
If you decide to purchase a resale home, then under Florida law, all that is required for a legally binding sales contract is a signed written agreement plus good faith deposit. It is therefore possible to ‘Exchange Contracts’ straight away with a Seller and virtually eliminate any possibility of your chosen property being sold elsewhere. Most written Sales contracts are conditional and you will have ample time to arrange financing, survey the property and approve legal work. If your loan is denied or the house does not pass inspection, you may withdraw without penalty. There can be any number of conditions in the contract but essentially all elements of the sale should be in writing to avoid dispute.
We would highly recommend that you use the services of a state registered realtor whether you are buying new or resale. In the U.K. we use estate agents who are normally employed by the house owner to find a buyer for their property. They then work with both the buyer and seller to agree a deal that is suitable to both. The downfall of this system is that the estate agent may withhold information about the buyer or seller which may be beneficial to the other despite the seller paying their fee. In Florida the realtor you choose can only work on your behalf and is legally bound to act in your best interest disclosing information such as – is the property worth the asking price – are there similar properties available at a better price – are there any known future developments that may affect the value of the property.
Many British citizens who buy a holiday home in Florida, are unsure whether to arrange a US or UK mortgage.
Most US mortgages enable you to lock into a fixed rate mortgage for up to 30 years. In our opinion, this is the best way forward as you will always know what your monthly mortgage outgoings will be – there will not be any interest rate increases. The only drawback is that exchange rate fluctuations will affect how many dollars you get to the £ when you transfer money over to your US bank account. However, if you keep an eye on the rates and transfer money at the correct time, these fluctuations will not have a significant effect on your expenditure.
A UK mortgage can be arranged through several companies dealing with homes in Florida and usually offer variable rate mortgages closely linked to our own bank base rate – usually around 1.5% above base rate. They do offer a fixed rate but usually for a maximum of 3 years. The issue with this type of mortgage is that your repayments are always subject to interest rate increases. Remember that if your mortgage payments increase, you cannot increase your weekly rental prices. The upside is that your repayments are not subject to exchange rate fluctuations.
Once you have purchased your Florida vacation villa, whether you intend to use it for your own personal use, or for short term rental purposes, you will most definitely need to employ the services of a reputable management company to look after your investment. In this section our aim is to advise you on the do’s and don’ts of management in Florida.
Which Type Of Management Company Should I Choose ?
The simple answer to the question above is really down to individual circumstances. In Orlando there are literally hundreds of management companies offering their services to villa owners. They vary from the very large companies with hundreds of homes on their books to the small husband and wife teams with just a few homes. Our advice, is that you look into which type of Management Company suits your personal needs and aspirations for your villa, speak to at least 3 companies and make you final decision from there. If possible obtain recommendations from current villa owners who deal with the proposed Management Company.
What Should I Expect From My Management Company ?
Lawn maintenance, villa cleaning and inspection, pool maintenance, villa maintenance, pest control and perhaps bill payment facility.
Dealing With Licencing Issues
All Florida vacation villa owners who intend to rent their villa for short term rental purposes must be properly licensed with Department of Regulation, divisions of hotels and restaurants and a Florida state agency. Before the licence is issued the property will be inspected by a Florida state agency, this will cost in the region of $150 for a single family home.
In addition to the property taxes that every homeowner has to pay, an additional tax based on the gross rents received must be collected for any rentals of 180 days or less. This is made up of 5 or 6% Tourist Development or Resort Tax plus 6 to 7% State of Florida Sales Tax.
Therefore, a total of around 11% to 13% of gross rentals received is to be paid in State and County Taxes. Normally these taxes are charged on top of the rents and paid by the tenants – much the same as would take place with a hotel or motel. However, for our homes, we include the taxes within the price we quote so that the potential guest does not receive any nasty surprises when the final rental cost is calculated.
Taxes that are collected from rental income must be submitted to the appropriate agencies on a monthly basis by the 20th of the following month, in compliance with the law. In other words, rental income received in August must be paid by the 20th of September. By paying these taxes, you are assured that you are properly registered for State and County Tax. It is the responsibility of the owner to declare the rental income achieved on Owner Bookings and to pay the relevant tourist tax. If your Management Company has made bookings on your behalf and taken the rental income, then it is their responsibility to ensure all taxes are paid to the relevant authorities. However, you need to check this happens as any default on payment is YOUR responsibility. For this reason, my wife and I pay all taxes for our properties – once again enabling us to keep strict control of our finances.
Alright, so you woke up one day, checked your Swiss Bank Account, called your family office planner, had breakfast with your private client service wealth manager, got your tax accountant on the phone, and between three of you, you decided to invest your proceeds from your latest company’s Merger or Acquisition not into some dubious hedge fund or start-up biotech venture, but into financing Hollywood films because you figure you need the State tax Credits, the Federal tax write-offs, as well as a nice hedge of revenues from a few movies.
Now, this may not ring too well initially with your hedge fund manager neighbors in Connecticut or your oil and gas investor friends in Bahrain or Dubai, but aren’t these the same guys who are financing Hollywood blockbusters? And the only question for you, how do you get in the game without feeling like the Uncle of the film school student who wrote his nephew a $1,000,000 check for a film that starred his theater department classmates and ended up as a free download on youtube.com?
So after doing your share of homework, here’s what you discover may be the opportunity to spice up your wealthy but boring life:
*Sergey Brin And Larry Page Of Google, Fred Smith, the CEO of Federal Express, Norman Waitt, the Co-Founder of Gateway Computers, Jeff Skoll Of Ebay, Todd Wagner and Marc Cuban (formerly of broadcast.com), Max Levchin and David Grodnick Of PAYPAL, Marc Turtletaub of The Money Store, Roger Marino Of EMC Corp, former Chicago bulls co-owner Jim Stern, Sidney Kimmel Of Jones Apparel Group, Minnesota Twins owner Bill Pohlad; Real Estate Developers Tom Rosenberg, Bob Yari; and, financiers Robert Sturm, Sheikh Waleed Al Ibrahim, Zeid Masri of SilverHaze Partners, Michael Singer, Mark Esses, David Larcher, Michael Goguen, Richard Landry, Michael Reilly, Rafael Fogel, and Philip Anschutz are just a handful of high net worth entrepreneurs who entered the motion picture finance and production business with successful results.
*There are various tradable state, federal, and international tax credit incentives that would offer a premium based on an equity position. Assuming there is a 10 million dollar budget film, where 50% of it is in equity, and 50% is through international distribution guarantees prior to release. Now assume there is a 20-25% tax credit on the entire amount of $10 million dollars, which will immediately translate into $2-2.5 million tax credit to an investor.
*Numerous hedge funds such as Reed, Conner & Birdwell (DISNEY), Legendary Fund (Warner Brothers), Melrose Fund (Paramount Pictures), Ingenious Media’s 700 Million dollar Float on London’s AIM, Benjamin Waisbren Investments, and a host of other funds and fund managers are entering the film finance arena.
*The explosion of international DVD, pay-per-view, home video, cable, megaplex theaters, the future of multi-lingual Internet video on demand downloads, and cross-market digital distribution including low-cost theatrical digital projection, the movie industry is accelerating at an unprecedented growth rate.
*The American Jobs Creation Act of 2004, which amends the Internal Revenue Code of 1986, was signed into law . The Act creates three tax incentives expressly applicable to motion pictures, one of which – § 181 of the Internal Revenue Code – is especially significant to independent film producers and their passive investors on qualifying films with budgets under $20 million dollars.
*The filmed and other entertainment sectors are constantly outperforming and beating analyst expectations with regards to growth, and are the only industries resistant to untimely global events and adverse economic conditions.
*Movie Investor returns may be more favorable and more liquid than holding direct equity positions in most public entertainment and other public companies, real estate investments, and other alternative investments.
*There is a huge demand, audience, and growing distribution structure for specialty independent, ,crime, horror, and other low budget films as exemplified by the success of such films as “Brokeback Mountain”, “Sideways”, “Capote”, “Garden State”, “Napolean Dynamite”, “Y Tu Mama Tambien”, “My Big Fat Greek Wedding”, “Memento”, “Crash” , “Saw 1 &2″, Friday The 13th”, “Halloween”, “Texas Chain Saw Massacre”, “Hostel” and “WOLF CREEK”, which was made for $800,000, bought for nearly 4 million dollars prior to its release by Dimension, as well as “Hustle and Flow” which was made for $2 million dollars and bought for $16 million by Paramount Pictures.
*Apart from large blockbusters such as “King Kong”, “Harry Potter”, and other large scale studio films, the majority of studio-produced films have been under performing at the box office. The films that have been successful for studios were all externally financed and or co-financed with studios, sold for 2-3 x their costs, and a majority of them retained foreign sales rights to maximize revenues.
So after looking at all the great benefits, how do you actually go about finding a deal or movie project where you are certain that half your money isn’t going to be used by a Hollywood producer as a down payment on a new mansion in Pacific Palisades?
The key that separates the successful film financiers vs. the newbie Oil magnates who come to Los Angeles with a pocketful of money and end up leaving with half a pocketful of money is called several things: structured finance, leverage, risk minimization, multiple exit strategies, tax credits, and the ethical consciousness of the filmmaker/producer.
What does that translate to you in a real world scenario. Lets say you want to finance 100% of a $1.5 million dollar low budget genre film whose worst case scenario is a DVD release and profits from international sales and perhaps some other equity sweeteners in the conversion of the securities that you subscribe for as part of the deal. Well, if you write a check for $1.5 million, and the film is shot in a state that has 30% in tax credits, you get back $450,000 in tax credits + under Section 181, you are able to write off that amount under Federal. So you are already making a nice return before the profits kick in. Then you figure you sell the film to 50 countries, and if you are really lucky, you sell the film for 3-4 times it cost to a studio at a swanky festival like Sundance, Toronto, Cannes, etc. Do this over 5-10 films and you can make a very profitable name for yourself among the Hollywood elite.
But lets really take this a step further and see how the bigger boys leverage film investing because they can get a bigger star which can translate in larger overseas sales. Lets say a filmmaker/producer has a $10 million film and you want in on the action. You would park $5 million in equity, receive an 20-30% tax credit on $10 million which will be $2-$3 million, the producer will get the biggest star he can, get a studio to kick in the other $5 million dollars, you wont worry about ever seeing a penny from the theatrical release because you know your DVD profits and international sales will cover your equity position. Make sense?
Now leverage this with different budgets, genres, stars, distribution, places where you can get high tax credits (Ie Puerto Rico is 40%), other exit strategies where you can find your shares on the London AIM, and you are on your new career path as a sophisticated and educated film financier. Off course, if you want to go even further and guarantee 100% of your capital, there are tricks to that as well.
The world of banking and investment banking was rocked in the past few years with the downturn of the economy as well as mass fraud and bad investing throughout the finance world from giant Ponzi schemes to exotic mortgages.
The outlook on this industry is overall strong as the salaries as I will note later are strong but also the amount of jobs stays fairly large considering the massive layoffs just around two years ago. The amount of jobs may be slightly less but seems to be coming back at a pace about the same as most other strong industries. The type of jobs are also shifting more away from who can pick good stocks and investments to more programming and algorithm based jobs. This is because of the massive amounts of high frequency trading and less large-scale investments, mergers, and acquisitions.
The salaries for those in investment banking are still doing well with many starting jobs or entry-level jobs at large firms being slightly less than normal but the regular and associate level jobs are actually being higher paid than before the economic downturn according to most analysts estimates. This is good news for those going into the field that is known for big salaries because if this economic downturn and regulation after couldn’t hurt the salaries than nothing seems to be able to.
The changing opportunities is something that should be talked about for those who are wanting to be in investment banking. In recent years major companies have started venture capital and investment units just to invest in emerging technology and good entrepreneurs. Google is one of those companies along with other companies like Disney who invest in companies that fit their profile and they can either acquire for a cheaper price later or simply make a return on that investment. Also if you are wanting a career in investment banking a knowledge of how algorithms and computer coding works is a major plus since large departments of investment banks and stock trading firms need someone who can merge the two worlds when needed.
So overall the investment banking industry has a strong outlook with jobs in the industry recovering and the salaries higher than ever. Being qualified for these jobs and finding the connections to be able to get the highest paying jobs at the top firms is no easy task. Investment bankers and others in finance have a strong outlook as banking and finance is something as old as any other industry.
Unless you’re a Seasonal or Retail based business, it’s no secret that business will slow down around the holiday season. Right around October is where you can see a big drop in sales. These Holiday months can be rough on small businesses, so How do you continue your company’s growth into the holidays? If you agree that there might not be any customers to sell to during this time, what do you do with the extra time?
It’s crucial to not become idle and complacent during this Holiday season. As a business owner, there’s always things to be improved on and not hustling through the Holiday season can allow competitors to close in on your market. No matter what industry you’re in, there’s always challenges that need to be addressed. The harsh reality is – businesses fall victim to the Holiday slow season and end up closing doors.
Stay ahead of competition and prepare for the Holidays. While others slow down and sit around, get the edge with these 4 tips.
Follow up on overdue Invoices
If you’re a small business, there’s a high chance that there’s outstanding invoices that haven’t been paid. With the additional downtime, make an effort to cash in on these invoices. Sometimes it’s as easy as invoices that you forgot about. Other times, it’s more difficult cases that need to be sent to collections – either way, you shouldn’t leave money on the table. Any money coming in is helpful to your books.
Make sure to keep note of why invoices are outstanding. Later, you can improve your billing process this way to ensure no more leaks.
Trim fat by cutting expenses
It’s easy to allow monthly expenses to get out of control. When business is doing well, you don’t notice the small thing. But You don’t have to wait until urgent times to do a review of your business expenses. There’s always ways to cut back. Where to start? Try Asking your employees. For Example: You can reduce your marketing expenses if your employees know that the ROI won’t be good or You can ask for email subscription/marketing services to be suspended a month. Finding ways to trim your expenses will give you extra cash flow into the new year.
Another expense you can look into reducing is your payroll. You can increase your employee morale and satisfaction by offering an option to have 1-2+ weeks of unpaid vacation. Some Employees will appreciate this option as they cherish time with their family and loved ones. In exchange, you get to reduce payroll for the month, and It’s a great way to keep everyone happy.
Build up a cash reserve
It’s always good to have a 2-month operating cash reserve, regardless if it’s the Holidays or not. In the months leading up to the last quarter, stash away some money for your cash reserves. If times get rough, you’ll be glad that you have it. You never know if you might need it for some unexpected tax liabilities or other operating expenses.
Reflect and Plan your attack
During the slow season, you should reflect on the past year of business. Meet with your accounting department to see what month was the busiest, then plan accordingly. Plan to apply strategies that were the most successful and make a note of what services or expenses offered the best ROI. Then Challenge yourself with a realistic goal that you want to beat. This will encourage growth and serve as a benchmark for you to work toward.
It’s not easy running a business. But between balancing your books, keeping your employees happy and solving problems daily – sometimes you forget about relaxing. Our final piece of advice is about stepping away. Taking a Vacation won’t destroy your business. The best time to take some personal time off is during the Holiday slow down. Going away for a vacation can do wonders for your thought process. According to (Forbes), 3/5 people reported having better clarity with their thoughts after an extended vacation. Use our tips to ensure productive use of your downtime.