Monday, 31 March 2008

Having Your Documents Notarized

As I've mentioned before, I undertook the whole process of purchasing a property in Florida from the UK. (Although, yes, I have said that luckily my parents were able to view the flat on my behalf!)

Doing everything from the UK doesn't really present any problems. But you will have to be very organised. I've talked before about transferring funds to the U.S., and setting up foreign exchange accounts. I've also spoken about sending various documents back and forth - as long as you have a printer, fax machine and/or scanner (to email them instead), it's relatively easy to get these documents back to your lawyer or realtor.

There is, of course, an exception. The documents relating to the close of the sale - when the property finally becomes yours - need to be signed by you, then notarized (or notarised, to use the British spelling!) and witnessed. If you're in the U.S. for this step, it's easy. All you'll have to do is attend your lawyer's or the vendor's lawyer's office to sign the necessary documents. They will be able to notarize them.

If you're in the UK, you can still get closing documents notarized - at the US Embassy in London. Be aware, however, that they only schedule notarial appointments Tuesday to Friday, 9.30am to 11am. This means that appointments tend to get booked up pretty quickly; having just checked appointment availability, the earliest available day is Tuesday 15th April - two weeks away.

It is possible to book notary services appointments online. See and read through all the instructions carefully.

On the day of your appointment, make sure you're there on time and not before. Don't bring any electronic items, as these will be taken from you at the security post (and obviously given back to you when you leave!), so you might as well just leave them at home. Although your appointment may be scheduled for, say, 10am, you'll find that several other people will have an appointment at the same time!

When it's your turn, you'll approach the counter and explain what your documents are and where they need to be notarized. You'll need to pay for each notary stamp, and this can be paid in U.S. dollars or pounds, and in either cash or by credit card. As well as having the documents notarized at the Embassy, you'll also need to sign them and have your signature witnessed by two different people. For this, it's best to ask two kind strangers in the waiting room!

Another tip: I was told to sign everything in blue ink - which I understand is a very important distinction - so make sure you tell the notary this.

Thursday, 27 March 2008

Article: I Like To Be In America

Yesterday's edition of the Evening Standard, in its Homes and Property supplement, featured an article about purchasing property in North America titled "I Like To Be In America". Covering locations such as Florida, New York, Canada and the Carribean, the article didn't really mention anything particularly new about purchasing in the U.S.

A few points of note, however: author Cathy Hawker states that, although bargains are certainly to be had, buying in America isn't a way of making a fortune but more suitable for investing in long-term. With respect to Florida, she advises a certain amount of caution because of the sub-prime property disaster. Nevetheless, Hawker identifies (unsurprisingly) the areas of South Beach and Palm Beach as places where sales are strongest. She also mentions Naples, calling it a "very grown-up part of Florida". Finally, she quotes agent Nic Brennan of Knight Frank, who says the golf-resort market in Orlando above £745,000 is steady, and above £1.2 million is strong. Seems like very high prices to me!

I unfortunately can't seem to find the same article on the Web, but here's a slightly different online version: Snap up a dollar deal.

Tuesday, 25 March 2008

Consider The Costs Involved

A while back, I wrote about making an offer on your chosen property and carefully considering additional costs that are involved in the purchase and upkeep of a vacation home in Florida. To some, these costs could be a rather heavy burden, more so than anticipated. It's an interesting topic, one that I thought I would revisit in a bit more detail.

Because of the U.S. property crash and current financial uncertainty, it is true that there are some real bargains to be had in Florida. However, don't forget to factor in the following costs:

You will, of course, have to pay annual property taxes - for example, on a one-bedroom property in Broward County, taxes are approximately $3,000 per annum.

This can often be much higher than people expect as it features "hurricane clauses" - on account, of course, of Florida being at risk of hurricanes! There's no one policy that will fit for everyone, and you'll really have to speak with an insurance agent to fine one best for you, depending on what your property is and where it's specifically located. You might find some useful information on the Florida Office of Insurance Regulation website.

Condo Association Fee
If your property is part of an condominium association, you'll have to pay monthly fees that pay for the maintenance and upkeep of common parts of the development - gardens, car park, pool and so on. Again, the exact amount depends on the type of development, how large it is and so on. You will probably have to pay between $140 - $200 per month.

It's hard to budget for utilities - specifically electricity - as you're unlikely to know how much use your holiday home is going to get. Keep in mind that you may have to run some appliances even when you're not there. Summers are very humid, so you may have to program your air conditioning unit(s) to come on intermittently to prevent against mould forming on the walls.

Depending on how often you plan to visit your vacation home, you may decide to opt for an estate agent's management service. This will most likely include regular inspections of your property to make sure everything is in order, and payment of bills via your bank account. Expect to pay about a minimum of $100 per month for management; more if maintenance is required in any particular month.

Furthermore, don't depend on trying to rent out your property to raise some income. There is a great oversupply of properties for rental. According to Florida newspapers, some landlords are even giving out six months' free rent on a (for example) 2 or 3 year lease.

Even hiring out your property to holidaymakers brings up further costs: regular cleaning, maintenance, paying for utilities, rental fees (if appropriate) and so on.

You've probably already factored in mortgage and furnishing remember to budget for them too!

Photo: Hollywood Beach, January 2008

Monday, 24 March 2008

Why Did I Pick This Area?

I've received a few emails and messages asking me why I decided to buy in the area of Florida I did - and more to the point, where is this area?

So let me reveal that I bought in the Hollywood/Dania Beach area.

Why Did I Buy There?

For many reasons! Here's why:
  • It's an area very well known to me and my parents, as we've holidayed many, many times in that region over the years. As such, if we bought there, we could literally pick up the keys to the flat and "go". We'd already know where all the local supermarkets and shops where, how best to get there, how far the beach was...
  • Speaking of beaches, the closest beach - Hollywood Beach - is only a 5 minute drive away, or a 15/20-minute walk away. And it's an absolutely lovely beach: lively, but never too crowded (even on weekends); plenty of facilities (parking, picnic spots); a fair amount of shops, restaurants and cafes; the Hollywood Beach Theater, which provides shows 3 nights a week; and, best of all, the famous broadwalk - perfect for walkers, cyclists and rollerbladers. Hollywood Beach has been declared by local media the best beach in southeast Florida a number of times.
  • It's incredibly easy to reach. Miami International Airport is only a 40 minute drive away. Better yet, Fort Lauderdale/Hollywood International Airport is only a 15 minute drive away. The I-95 highway, which stretches all the way from Miami to Maine, is only a 5-minute drive away.
  • It's even possible to visit here for a long-weekend from the UK. Nine hours on one of the numerous flights from the UK to Miami, and then a quick drive on the I-95 highway...and I'm already sipping a nice, cold drink on my holiday home's balcony.
  • Local public transport is top class. The bus network is very extensive. There are buses to...everywhere. Not the case for other parts of Florida! Bus travel is cheap - a single ticket costs $1.25, or $0.60 for the over-65s. A weekly ticket, offering unlimited travel, is $11. You also have the Tri-Rail, a train service which connects Miami Airport to Palm Beach, with stop along the way. There are frequent trains at peak times. Again, tickets are inexpensive: only $3 to get to Hollywood/Dania Beach from Miami Airport.
  • There are three big cities in the area: Miami, Fort Lauderdale and Hollywood. Four, if you include Palm Beach (about 60 miles away). So there's plenty of cultural activities, entertainment, clubs, bars, restaurants and so on. South Beach, on Miami Beach, is less than 30 minutes away by car. Shopping in the region is also first class. At the last count, there were 19 malls in the area including the world-famous Sawgrass Mills, and the classy Aventura Mall.
  • Very importantly, there are also plenty of local amenities. I can easily walk to my local supermarket (Publix), pharmacy (Walgreens) and some more shops - including three or four restaurants. This isn't a part of Florida where you have to drive absolutely everywhere - even if you only want to pick up the daily newspaper or a coffee. My parents, who are retired, often don't even rent a car when visiting, preferring to rely on public transport.
  • For you Anglophiles, there's even a British pub in Dania: The King's Head. Serves fantastic fish and chips!
  • There are two nature parks very close: West Lake Park (which has sporting facilities - tennis, canoeing, paddle courts) and the beautiful Anne Kolb Nature Center, one of the largest in the area. Both are within easy walking distance.
  • Although I don't play golf, there is a public golf course nearby which I'm told is popular.
  • There's a bike path which takes you right to Hollywood Beach, from where you can continue on the broadwalk's cycle path.

Why Did I Choose This Area Over Other Parts Of Florida?

Here's my opinion on buying property in other parts of Florida:

Orlando: Good for families with young children, given all the theme parks there. But to me it feels very artificial - everything seems to have been constructed specifically for tourists. And NO beaches! What's the point of going to Florida and not experiencing its fantastic beaches?

Gulf Coast Area: A bit difficult to reach - you can either fly to Tampa or Orlando, but you'll still have a bit of a drive to your property. The beaches are also not as nice as on the Atlantic side. Furthermore - and this is something I've never experienced myself - some claim that there is a certain "smell" during part of the year that comes from the sea. Doesn't sound too pleasant! There also aren't as many amenities as on the East coast. Naples is nice, but property in prime areas or close to the sea is very expensive. The best places in this area are the islands of Sanibel and Captiva - which are absolutely stunning - but they have absolutely astronomical property prices.

Panhandle/Northern Florida: Nice, but difficult to access from the UK. Not a region I'm too familiar with.

In conclusion: when I found an 850 square foot apartment in the Hollywood/Dania Beach area, in a smallish gated community that was built only 3 years ago, and that had a bargain price, I just couldn't say no. And I'm very happy I made this decision.

Friday, 21 March 2008

Organizing Your Money

I was lucky enough not to require a mortgage for my Florida holiday home purchase. As such, I can't write about obtaining mortgages and so on.

What I can write about, however, is in setting up international money transfers quickly - and making sure they reach the U.S. in time! Remember, my closing date was only 10 days after the day I made my offer.

I decided to use a company called MoneyCorp. (There are of course many other foreign exchange companies that you could use.) I'd never used them before, but had heard many good things about them with regards to transferring large sums of money abroad. (Not in relation in purchasing property in Florida, in fact, but in Croatia. I run the Visit Croatia Forum, where property purchases in that currently are discussed in length.)

If you use MoneyCorp, you'll need to set up an account - or "trading facility" - with them. Give them a call and explain how much you need to transfer and by what date. They'll talk you through all the steps you need to undertake, and how you can open up a trading facility. Note that opening this up doesn't place you under any obligation to use them.

I spoke to MoneyCorp on a Thursday - a week and a day before the closing date of the purchase of my flat. They set up a (legally binding) contract detailing the amount of U.S. Dollars that I was to purchase, and the exchange rate that would be applicable.

This exchange rate would now be fixed for the amount of currency I would be purchasing. I had managed to get a rate of 1 GPB = 2.0042 USD - not too shabby! (N.B. This was December 2007.)

If the exchange rate changed over the next week, I would still get the one I had signed up for - even if, for whatever reason, the Pound weakened dramatically!

My contract also stated that MoneyCorp needed to receive cleared funds from me the day before the closing date of my property purchase - which is the day that my lawyer in the U.S. required them. (In order to then send funds to the vendor's lawyer.) At this stage I needed to speak with my bank, HSBC.

I called up HSBC, and spoke to them regarding my requirement to transfer funds to MoneyCorp. As MoneyCorp also used HSBC, luck was on my side. I wouldn't have to send them money 3 or 4 days in advance - only 2 would suffice. (In fact, sending MoneyCorp the money 1 day before would probably have been fine. HSBC advised me to do it 2 days in advance to be on the safe side.) HSBC would also charge me a fee of £10 for sending the money.

At this point, let's have a timetable of events, money wise:

Monday - Make Offer
Tuesday - Offer Accepted
Thursday - Set up contract with MoneyCorp (MC)

Tuesday - Transfer funds from HSBC to MC*
Wednesday - Funds received by MC**
Thursday - Deadline for funds to be received by MC; Funds transferred from MC to the U.S.
Friday - Funds received by U.S. laywer; Closing day

*Applicable because both I and MoneyCorp use HSBC. If you bank with someone else, you'll have to make this step earlier.

**You see - my money actually reached MoneyCorp the day after I sent them from my HSBC account

Phew! Easy when you know how!

Thursday, 20 March 2008

To Inspect Or Not To Inspect?

After you've made an offer on your chosen property, your agent may well recommend that you get an inspection done (undertaken by an independent inspector). This is like a very simple survey of the property; it does NOT, however, cover any structural aspects of the property. It is merely a "visual inspection of the general systems and components of the home", to quote from my inspection paperwork. Your agent should be able to book an inspection on your behalf.

The inspection on my one bedroom flat cost $120. I received back a document detailing the interior of the flat, electrical items, appliances, plumbing, and air conditioning/heating. Each section merely lists the elements that your property contains and either what they're made of (e.g. Interior Doors: Wood; Walls: Drywall & Plaster), or what make they are (Stove/Oven: GE, Electric), and, where appropriate, whether they "appear servicable" or are "not functional".

The inspection should also detail if anything appears broken or not as it should be. I only had two such things listed, both of which were minor. Having not had the experience myself, I am not 100% sure on this, but I assume that if the inspection revealed any major damage this would then need to be discussed further with the vendor and their agent.

Top Tip: You don't HAVE to get an inspection - it is not mandatory by any means. Whether or not you do get one done may obviously also depend on your circumstances and the type of property you're buying. I opted for an inspection as I figured it would be a good way of finding out everything in the flat, and also for piece of mind. (Remember, I did my whole property purchase from the U.K.!)

Wednesday, 19 March 2008

Condo Association - Background Screening

If you're buying a condo that's part of an existing development, you'll most likely be required to undergo background screening - all new residents are.

All that you'll have to do on your side is fill in a few documents with your details - from which the association can then do checks on you - and pay a fee. I had to pay $200 as I was a foreign national, which I guess makes it a little harder for them to undertake the screening.

This step isn't really anything to worry about, and is pretty straightforward. The details I had to provide were things like my address, bank details and current employer.

You may also have to have an interview - telephone, or perhaps in person when you're next there - with the condominimum association president.

Tuesday, 18 March 2008

Transferring Money & Fees

I thought that, at this stage, I should write a little addendum on my first experience of transferring funds. (See yesterday's post.)

In trying to transfer $1,000, I was told by my foreign exchange company (OnlineFX) that this would incur a fee of £15, to be paid myself. Fine, no problem.

Except that didn't really seem to be the case. Let me explain.

When the money arrived in my lawyer's account in the U.S., the total figure was $970.01 - i.e. $29.99 short. I called up OnlineFX, and they said that they definitely charged a fee on top of the amount I wanted to send, not as part of it. They explained that it was likely that the receiving bank had taken a slice of the amount as fees.

They agreed to fax me confirmation of my payment as proof. Not having a fax machine, I asked them to post it to me which they said was also possible. Four months later, I'm still waiting!

Speaking to my lawyer in the U.S., she said that there was no way her bank would have taken any fees off, as they were well aware that any funds received always need to be the full amount - any deductions could cause problems for her clients.

I tend to believe my lawyer's side much more! And a "missing" $29.99 is suspiciously close to the £15 I was supposed to be charged with.

The issue here is that this could have been a serious problem. I had agreed, and signed, to make a deposit of exactly $1,000 - not less. It meant I had not properly fulfilled my requirement to pay the deposit. I had no way of quickly "topping up" this amount, given my earlier problems of transferring funds quickly.

Luckily, the vendor agreed to accept my $970.01 as the deposit, seeing as it was an unintentional error on my part. The remaining $29.99 would be added on as part of the closing fees.

Top Tip: Be very careful when making international monetary transfers such as these. If a lesser amount is received than was agreed, it may well delay your property purchase. And always get as much confirmation as possible about your money transfers!

Monday, 17 March 2008

Offer Accepted...Pay Your Deposit

The day after I made my offer, I heard the happy news that it had been accepted. Hooray! What was then required of me was to pay a deposit of $1,000 immediately, which would be held in an escrow account (i.e. in an account held by a neutral third party - in order words, not held be either the buyer or the seller). In my case, the $1,000 would be held by my solicitor, so I need to pay this amount into her firm's account.

Top Tip: Escrow is a term that confuses me slightly - mainly because it's not one that's often used in the UK. Read up a little more about it on the Internet: Escrow from Wikipedia.

Now, this is where I came across a somewhat tricky situation. I need to transfer $1,000 from my account to a U.S. account FAST. I had no idea or experience of how to do this, so set about doing a little bit of research. Here's what I came up with - in a short space of time!

Existing Bank I thought I'd ask my own bank, HSBC, if they could help with this. I popped into my local branch and also called up my telephone banking service. They said they certainly could help...but that such transfers could take up to six days. Although sometimes funds are transferred faster, they couldn't give my any guarantee on how many days it'd take, apart from the six-day limit. I didn't have six days! My closing date was nine days away!

Conclusion: Too slow!

Large Foreign Exchange Company There's many of these companies out there, such as MoneyCorp, a company that had been recommend to me before. I had, in fact, intended to use them later to transfer the purchase price amount. Although they do transfers very quickly, quite a few of them have a minimum amount that you need to transfer. $1,000, in this case, was too low.

It may well be possible that, seeing as I was going to transfer a FAR larger amount in a week or so, they would have agreed to my $1,000 transfer. What put me off was that I would have had to set up an account with MoneyCorp to do any type of foreign exchange - and I didn't know how long this would take, or what the process would entail. I was slightly panicky given the lack of time I had, and so didn't investigate this option.

Conclusion: Won't accept "small" amounts!

Smaller Foreign Exchange Company I was getting somewhat frustrated by this point. I couldn't believe that it was seemingly so difficult to transfer $1,000 quickly to a U.S. account. So, I delved deeper to find a smaller foreign exchange company. My problem here was I'd never heard of many of them before, so had no idea who to go for. I was, after all, transferring over quite a bit of money! It seemed I'd have to take the plunge and trust one of them. However, these companies WILL transfer small amounts, and will do so FAST.

Conclusion: Fits the bill - but need to find a "trusted" one

So, as you may have guessed, I ending up going for the third option. I used a company called OnlineFx. They were able to transfer my $1,000 by a guaranteed two working days, for a fee of £15. At the time (December 2007), the total cost to me was £524.17 (including the fee).

Top Tip: Make sure you give the details of the receiving bank very carefully. U.S. bank accounts have an account number (of course) and a routing number (instead of a sort code). You'll also need the bank name, address, and account name. If any of these details are incorrectly given to your exchange company, the transfer may get delayed.

What About A Lawyer?

In the UK, if you're dealing with property, you'll most likely already have a lawyer (solicitor) who you will use for the sale or purchase.

In Florida, you're unlikely to know of any lawyers who'll be able to act for you. What to do?

My estate agent was able to recommend a lawyer to me, and yours should be able to do so too. It seemed that my agent and the lawyer often worked on property purchases and sales, so had a considerable working history - ideal for a smooth property purchase. Keep this in mind, especially if you're going for a quick purchase!

Tuesday, 4 March 2008

How To Make An Offer

In the U.S. all offers need to be made in writing. That is, once you let your agent know how much you're offering, they will prepare documentation for you to sign. This will then be presented to the other side.

You will also need to decide on the closing date of the sale, which will also be displayed on the legal documentation. "Closing" is the same thing as completion in the UK - it is the day that full funds are transferred to the vendors' solicitor and final contracts are signed, and keys can be released to the new owner.

I've been told that closing of 10, 15 or 30 days is most common. The latter is usual if you're obtaining a mortgage, and need time to obtain sufficient funds from your lender.

Be aware that you must stick to your chosen closing date. Having worked in property in the UK, I was very used to exchange and completion dates frequently being changed or pushed back, often without consequence to either party. In the US, if you cannot close on your previously chosen date, it is my understanding that the vendor may have grounds for legal action.

Also be aware that, should your offer be accepted, you will have to pay a deposit that will be held in escrow until closing. I was required to pay $1,000 - less that 1% of my offer amount.

So make your offer and declare your chosen date for closing. Let your agent prepare the documentation for you to sign and submit to the vendor's agent. Then cross your fingers!

Top Tip: You don't need to be in the U.S. for this step. My agent prepared all the documentation and emailed it to me. I printed it off, signed it, then scanned and emailed it back. (Or faxing it would be the same as the last two steps.)

So You Want To Make An Offer

So you've found a property that you like and are happy with. You can easily picture yourself making numerous trips out to it during the year, to enjoy the sun on the terrace, the laps in the pool, and glorious days at local beaches. There's only one thing for it - you've got to make an offer.

In my case, my parents viewed properties on my behalf, as during this time they were out in Florida on holiday. Having seen one flat in particular that fit the bill - in terms of location, condition and price - we decided to go ahead and make an offer.

Clearly the trickiest part at this stage is deciding on the amount you wish to offer. At the time of writing, the US property market is suffering a considerable downturn, so you may well get a low offer accepted. On the other hand, because of the downturn, your chosen property may have already been reduced in price one or more times and, as such, the vendor is unlikely to decrease the price any further.

Your agent should really be able to help you in this respect. He/she may be aware of what the vendor may accept, or if the property has received previous (unacceptable) offers in the past.

Ultimately, however, it's down to you. Use your judgement and keep to your budget. You're never going to enjoy your holiday home if you overstretch yourself!

Remember, though, to budget in the following items on top of the asking price:

Purchase Costs
You'll need to pay things like solicitor's fees and fees associated with the closing of the sale. You may get an inspection done on the property (a bit like a survey in the UK, though not as extensive). If you're buying a condo, you'll most likely have to pay prorata maintainence fees and taxes for the remainder of the year; the condo association may also ask for a background check on you, which they will charge you for. The foreign exchange company that you intend to use will also charge a fee for transferring money. Finally, don't forget that if you're not in the U.S. during the purchase of your property, you will need to pay for official documents to be shipped there.

Furniture Costs
Once you get your property, you've got to furnish it! Whether you buy the basic essentials or go all out is obviously up to you, but either way, furniture is obviously a necessity. Take a look at furniture store websites such as
Ikea, Rooms To Go, El Dorado and Macy's to get an idea of prices. Generally, furniture in the US seems cheaper to the UK.

Once you own your holiday home, you'll need to pay annual taxes. It varies depending on where you are in Florida, and the amount will also depend on the value of your property. Budget about 1.5% to 2% of your purchase price on taxes.

Maintenance Fees
If you're buying a condo, you'll have to maintenance fees for the upkeep of common parts and areas. These will obviously vary depending on the building. Ask you agent how much the fees are for specific properties that you're interested in.

Utilities - Electricity
This, again, is a little hard to budget for. It of course depends on much of the year the property will be occupied for. Keep in mind, however, that you may have to keep some things running even when you're not there - air conditioning, for one, to protect against the humidity and prevent mould from appearing on the walls.

Monday, 3 March 2008

There's Got To Be Some Information On The Web...Right?

One of the most frustrating aspects of my Florida holiday home search was the lack of any information on the Web. At least, this is my experience - please do feel free to correct me if I'm wrong.

All I really wanted was some general advice about the buying process. Things like (a rough idea) of the amount of taxes and maintenance fees I'd eventually have to pay. What would happen if I made an offer - what's the next step after that? How do I hire a solicitor to represent me? How long does the whole process take?

If you Google "buying property in Florida" or similar, one of the websites that most frequently comes up is Andrew Bartlett Florida. Although he doesn't cover the southeast Florida region, I figured it wouldn't hurt to drop him an email to see if he could advise me on the general aspects of property buying in Florida.

I have no idea he could advise me or not - I never got a response! Oh well.

Setting Up Some Viewings

By now, you will have hopefully seen details (online or via email) of some properties that are suitable for you. At this point, there's really only one thing for it: viewing them in real life.

So this is where the fun begins. Liaise with your estate agent to set up a day of viewings. Although it depends on how many properties you want to see (and, sometimes, restrictions on viewing the properties - especially if they're currently occupied) you should be able to get through them all in a day, perhaps two.

Which leaves you plenty of time to have a fun holiday! How long you stay there is clearly up to you - but I'd also recommend taking some time out of your holiday to do a little more investigation of your chosen area. Do some driving around, and check out where the local amenities are. Where are the local supermarkets and shops? How long will it take you to walk/drive to the beach? What's the transfer time to/from your nearest airport? What entertainment options will you have - what restaurants, bars, cafes will be near to you? The more information you can gather, the better position you will be in to make your final decision.

And of course, don't forget to do some all important shopping whilst you're there!