home owners associations | Fort Myers FL Homes

Should I Own it or Rent it?

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One of the most frequent question I hear is, “Does it make sense for me to buy right now or does it make more sense to rent?”  I have been saying for some time now that it is time to buy but other than market trends and gut instincts I did not really have hard facts to back that statement up.  Today, however that has changed.  Vanessa Wong, from Business Week has revealed a formula for quantifying this that takes much of the mystery out of this dilemma.  According to her formula, if you:

divide the purchase price by the annual rent the home will command, you can determine which is better as follows.

 

1 to 15                         Less expensive to own
16 to20                        Owning is more expensive but may make sense
Over 21                       Only makes sense to own in select instances.

 
Let’s consider a real world situation.  Let’s say a house that will sell for $159,000.00 will rent for $1,200.00 per month.  According to her formula you should divide the selling price by the annual rent ($14,400) and you will come up with the number of 11.04.  In this instance, it would be much better to own than to rent.  Of course there are always many variables that come into play.  In Southwest Florida HOA fees can be considerable and have an impact on the cost of occupancy.  On the other side is the uncertainty of market influences on rentals. When you rent you are at the mercy of the landlord every year at renewal time.  Buying must always be a careful decision and it is one that you live with for years to come.  The market we are experiencing in Southwest Florida defies logic.  When selling prices are only 50 to 60% of the cost of new construction it is hard to make the argument for renting.  One of the key incentives for ownership is the ability to build equity.  With the market prices of re-sales at historic lows compared to new construction it is very hard to envision that this gap will not close meaning an increase in value and equity for those who own.  In Southwest Florida, if you have the ability to buy, all indications are that now may be one of the best opportunities in history.

Home Owners Associations – Outrageous or Justifiable?

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When shopping Ft Myers FL homes for sale one of the first questions is single family or Condominium?  For many the answer is simple.  One is clearly right and the other is wrong.  Families with young children for instance find the condominium situation to be very difficult.  For those, however, who are considering the pros and cons, the issue often arises that condominium fees are generally much higher that subdivision HOA fees.  First let me point out that in both cases the fees directly pay for benefits and services.  Generally they are controlled by a board of trustees comprised of members of the community who seek to provide the most benefit for the least money possible.  Condominium fees out of necessity cover a number of items which are generally not covered in subdivisions.  Each association is different but I will list the most common.money

  • Exterior building maintenance
  • Insurance for the structure
  • All grounds maintenance

Items that are common to both might be:

  • Street lighting
  • Common facilities maintenance (pools, work out facilities, playgrounds, etc.)
  • Basic Cable Television

These fees vary dramatically from one development to another.  Generally they correspond directly with the amenities offered but other factors such as the size of the development have a very real impact.  When shopping Ft Myers FL Homes for sale my first advice is always to establish a budget which includes all of these items.  Next consider what level of amenities you will likely be able to afford and shop within those guidelines.  It is not uncommon to run across people that say that they want resort style amenities which commonly have a monthly price tag of $600.00 to $700.00 but who only have a total budget (including mortgage payment) of $1,000.00 per month.

Whenever buying a condominium, the sale is contingent upon review of the condominium documents.  Always review these carefully and pay particular attention to the operating statement and the roster of delinquent fees.  Current conditions have left many associations in difficult positions and you want to make sure that you are not buying into a nightmare scenario that will require assessments to be levied.  There are many developments out there that are viable and offer a carefree lifestyle.  This is an important part of the service we provide.  Our job is to present you with all the information which should help you to make informed, good decisions about the living situation that is right for you.

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