The Florida Bar Association has a proposal to require Homeowners’ Associations to hire a lawyer for such tasks as sending demand letters for unpaid dues, violations of CCRs, collecting debts, and drafting liens. It is under review by the Florida Supreme Court. The Florida Legislature passed a law last session that would allow the HOA’s managers to continue those administrative duties. It’s unclear whether the Florida Supreme Court’s opinion (requested by the Florida Bar Association) will be affected or how their opinion might be influenced by this new law. There is no set time by which we can expect an opinion from the Florida Supreme Court. Just another budget item to delve into on your HOA financials. Might there be legal risk lurking in how your HOA’s management handles its legal risks? Also verify what is covered for Board members and HOA members within your association’s insurance policies.
Golf Clubs
Do you golf? Somebody always asks that question. My response is that I have clubs. Still do not have enough time to actually use them, but I have a set. We have been members of two other golf clubs, prior to the one we belong to now. My husband is the only person in this family who actually has the time to golf. Why we needed to belong to more than one club at a time is a point of debate. If you are completely honest with yourself, you may have to admit that you too do not have enough time to play golf regularly & join a club because golf takes too much time. I would have to say that’s my guess about why participation in the sport has dropped off. Golf takes about twice as much time as tennis. Maybe a difference of 3-4 hours per week. Multiplied over a year that amounts to 150-200 hours. You need to be retired or POTUS to be able to do that unless you devote every weekend to it, which won’t make your spouse happy if they are not playing with you. Younger people in their prime working hours look at that time commitment and think of what else they could be doing – working their way up at their company or building a business. And when will you find time for your family commitments? Real estate can be an ideal business and investment!
GRM (Gross Rent Multiplier) and Cash on Cash Return
Investors like to use the GRM as a fast method for identifying a potential cash-flowing investment property.
To figure your GRM, use your purchase price divided by the potential gross rents on an annual basis.
Many investors like to see a net of 8-20% cash on cash return on their investment. If you consider your initial investment (downpayment) then divide by your net cash flow (not gross – you want to use your cash flow after all your expenses.) This allows you to decide if your investment will meet your cash on cash return requirement. It’s also where you decide if the risk is worthwhile for the return based on other factors.
Right now investors are not being compensated for the risks they are taking by keeping funds in banks or in the stock market. Historically, the real rate of return has been a lot higher on real terms. Don’t hold your breath waiting for the rates they pay you to rise. This is why you need to consider real estate that offers cash flow to build your portfolio and wealth.
Water
There is a misguided perception that we have a world water shortage. However, as a long-time Sonoran Desert dweller, I can tell you that you don’t conserve water in the Northeast to relieve drought conditions in the Southwest. There are however, regional and local water shortages and droughts. It is imperative that we do not needlessly pollute the local and regional water supplies where we live. There is a big movement to “eat local” so that fresh food is available in your region without being trucked in at further expense. It stands to reason that you would not want your local food being polluted by your own water supply. Be aware of what’s upstream in your watershed. I used to love poring over U.S. Geological Survey maps as a hiker. Always good to know the lay of the land where you live. Is common sense being utilized to make sure that you even have a water supply to produce food? This is the top basic function of local governments. What happens in the future if people upstream cut off your water supply? What happens if you live in an area with an inadequate water supply? Are current assumptions about water still valid? El Nino may be expected this year, creating or exacerbating new areas of drought conditions. If you are buying investment property in Arizona, make sure you have access to an assured water supply.
A great summer project for kids would be making rain barrels and growing fresh veggies. In the future, this may be even more important to your health and the well-being of your family’s environment, including all your local flora and fauna.
Florida Ranked #5 for 2014 Business Tax Climate
The Tax Foundation says Florida is #5 after Wyoming (1), South Dakota (2), Nevada (3), and Alaska (4).
