Buyer local info
Pre-qualification. Be ahead of the game. Get preapproval.
I have several lenders I can recommend or you can
talk with someone of your choice. I do recommend
you consider using a proven lender that does business
in the Keys, it helps that the lender has an understanding
of the tradition & local market, underestimated
expenses associated with a purchase can create and
end result of disappointment.
Loan process- loans are a process that is invasive,
repetitive & frustrating. Just be prepared to
deal with the inconvenience. I suggest you shop a
bit, 2-3 lenders and negotiate your terms based on
your credit scores & strength in buying. Also
gather all of your financial documents and expect
that the lender will check & recheck again prior
to closing to make sure nothing has changed. Please
don’t go buy that new boat or other big ticket
items during the process. Also, do not change jobs
during the process.
Title company/closing- I have two closing companies
I like to work with. They both have good communication
and history with me. That is sometimes the person
I have to lean on the hardest to pull everything
together to get to the closing table.
Insurance- if you require a mortgage, you will need
to obtain windstorm, homeowners & most likely
flood insurance. Rates are based on age, construction
type, preventative measures taken (wind mitigation
report at the time of home inspection, also may need
to have a 4 point inspection if the home is more
than 35 years old) and elevation. Elevation is a
big part of what you must consider. Flood insurance
in VE & some AE zones can be expensive.
Condos – 95% of our condos include in the ‘maintenance’ fees
the exterior Windstorm, Flood & Homeowners insurance.
If you have a mortgage on a condo, be aware you will
also need to insure the interior. The HO-6 policy
typically runs about 100.00 to 125.00 a month.
Mobile homes –whether on the water or non water
there are guidelines for financing on mobiles. Please
be aware, Mobiles built pre-1976 are unlikely candidates
for any type of finance other than private funding
at a high interest rate. Previous to 1976, there
were no wiring codes in place for Mobiles. Fannie
Mae nor Freddie Mac will back a loan on these older
mobiles. To finance a mobile home, you should only
consider a Doublewide built 1976 or newer. There
are some opportunities to finance a single wide (1976
+) but, be prepared to make this your primary residence.
The other finance option is if you plan to tear the
mobile down & build a house onsite. This construction
loan will close the property & then fund on draws
as needed but be prepared, you must start the construction
process immediately and this loan is a more in-depth,
Investment property-if you are obtaining a mortgage
for an investment property, be prepared for a larger
down payment requirement along with a slightly higher
than rates you may see advertised as standard rates.
Are you selling another investment property? Let’s
talk about a 1031 Tax Deferred Exchange. If you are
approaching as a rental investment, the lender may
require the appraiser to document the going rate
for rental. Also the insurance may need to cover
rental loss in the event property is not able to
rent due to natural disaster, fire etc.
Rental & use yourself properties-Please keep
in mind, Monroe County & the Village of Islamorada
have rental ordinances in place. Rentals in a non
gated community (i.e. any single family, mobile
homes type property) are limited to a term of NOT
LESS than 28 days. Gated communities (i.e. Condos)
are allowed to set their own rental terms & limits
but they do not all necessarily level out with
local ordinances. There are only a handful of ‘short
term’ rentals in the Upper Keys that are “legal” and
those are Moon Bay, Ocean Pointe, Kawama Tower,
Mariners Club & Lake Surprise 2 on Mangrove
Vacant Land purchase-ROGO is a term you may see
often regarding vacant land. That stands for Rate
of Growth Ordinance. We don’t want to turn
into Miami South. Tier 3 is the highest rated vacant
lot, less than 3 is unlikely to be able to obtain
a building permit. The ordinance in place has officials
anticipating that we could be built out by 2020.
That would mean now is the time to be very diligent
in a vacant land purchase to confirm that the lot
is in fact buildable. There are many factors in
the county or incorporated cities in the Keys to
determine whether a piece of land is buildable.
Not limited to but certainly considerations is
endangered species including snails, mice, rats,
trees & overall habitat. Elevation & amount
of hard wood hammock along with intended house
size & impact on environment also adds to the
determine of build-ability. The other quick alternative
to building is to purchase an existing structure
such as a mobile home (the municipalities are always
happy to issue a permit to replace a mobile for
the sake of safety & longevity). This direction
is referred to as ROGO Exempt as long as the structure
was initially permitted & acknowledged by the
governing municipality, that should result in a
short wait to obtain a building permit.
Taxes -Monroe County enjoys a lower tax base than
most of S. Florida. You can expect an annual property
tax bill in the vicinity of 1.% to 1.25% of your
purchase price. Don’t rely on what the current
owner pays. They could have purchased 25 years
ago, and exercised their right to the Homestead
Exemption (limits the increase in property taxes
by 3% per year if you qualify).
Title insurance & closing costs-traditionally
here in the Upper Keys, buyer chooses the title
company to close with. Buyer pays for a new title
insurance policy (a cost based on purchase price).
Seller pays to update the current policy from the
time they purchased. Other out of pocket expenses
(but not limited to) are; Inspections, Appraisal,
Survey, Elevation Certificate, recording fees,
taxes on notes, property insurance, HOA applications
if applicable, and courier fees if necessary.
Last minute pushes-pulling together a closing
is not as simple as one would expect. Often this
is the most stressful time for all involved, and
you can expect the lender to ask for verifications
of employment and resubmission of anything & everything
you have submitted, surveys, insurance & title
insurance all must be reviewed & approved by
your lenders underwriter one to three days prior
Central Sewers - We have a state mandate that
we have centralized sewers in place by 2012, with
an extension. Key Largo is 98% completed, Plantation
Key is mostly completed. Upper & Lower Matecumbe
is in process, some remote properties still could
be some time away for completion. The cost is two-fold.
One to disconnect the old septic, dig the trench & put
the new connection in place-that goes to the plumber.
The second is the wastewater treatment district,
which is typically charged as a non ad valorem
tax and typically the remaining balance is transferred
from owner to owner. You can pay this off in full
at any time; most homeowners chose to pay over
the course of 20+ years.
Permits & code violations - Four to five years
ago, this was a not an issue that was checked or
dealt with. Today, I check every property that
I write offers on for open, expired permits & code
issues. Closing companies also check this & will
not close a transaction without the seller closing
these out; this expectation is also in the standard
language of our purchase contracts.
Comparable sales- when you find a property you
have true interest in, I will help guide your offer
by providing you some closed sales to base your
starting offer on. These comps are most likely
the same that an appraiser would use. We don’t
have apples to apples lots of the time, but, I
find the best comparables we have & go from
Please ask any questions I have not covered here,
this is intended to get you off to a good start.
Now, let’s find that piece of paradise for