Low summer 2006 bookings, TDC to increase advertising

[SHELLY]

MONEY (cost) is the predominate issue in the scenarios mentioned above--

1) Not getting value for the money paid (should a hurricane mess up the beaches)

2) Paying a chunk of money in advance (time value of money)

3) Being "required" to pay additional money in the form of travel insurance

4) The possibility of losing a sizable deposit in the event of a cancellation.

I know the rules are in place to protect the owners investment--that's understandable, but "cost" IS a MAJOR factor that explains the reason for the "slowdown" in rental reservations. Other reasons (aside from the hurricane thing) are the increase in competition due to the building boom (as pointed out in the article); the fact that many folks who used to rent have bought their own condo/house; and some SoWal old-timers may be turned off by the over development in the area. After all of that, then I'd maybe put the availability of bicycle rental as a factor.

 

[spinDrAtl]

MONEY (cost) is the predominate issue in the scenarios mentioned above--

1) Not getting value for the money paid (should a hurricane mess up the beaches)

2) Paying a chunk of money in advance (time value of money)

3) Being "required" to pay additional money in the form of travel insurance

4) The possibility of losing a sizable deposit in the event of a cancellation.

I know the rules are in place to protect the owners investment--that's understandable, but "cost" IS a MAJOR factor that explains the reason for the "slowdown" in rental reservations. Other reasons (aside from the hurricane thing) are the increase in competition due to the building boom (as pointed out in the article); the fact that many folks who used to rent have bought their own condo/house; and some SoWal old-timers may be turned off by the over development in the area. After all of that, then I'd maybe put the availability of bicycle rental as a factor.

Again, you are spinning this to fit your viewpoint. First your reply was 'cost is no object?' which was not said in the article. Now you say that 'cost is a major factor'. To many, cost is no factor.

The article mentioned many factors:

"Busier schedules, uncertainty of vacation time and the advent of the Internet are causing people to schedule their vacations later.
?In today?s society, we?re more, ?What are we going to do tomorrow??? Titus said. ?It?s a lot more difficult for some people to schedule a year out.?
In addition, Titus said increased availability of rental properties allow people to wait longer because they are not as concerned with securing a place. Cost is no longer the predominate factor. Renters have become increasingly concerned with ?added value,? like bike rentals, fitness centers, etc., Titus said.
?It?s a very competitive market,? Titus said. ?It?s a lot easier (for consumers) to make decisions.?
Reports are also indicating that visitors are concerned about the shape of the beaches and the upcoming hurricane season.

Like a true politician, you picked out one phrase, altered it a little, and used that to skew the information your way. Bike rentals are just an example of a larger class of added amenities that properties may use to sway a customer their way. It is true that the booking and cancellation policies are another factor that could sway some customers. Those who want easy cancellation can choose a hotel. None of these factors applies across the entire universe of renters as each has different priorities.

 

[DBOldford]

These are interesting observations. Our home was fully booked in the usual fashion since last summer. But we have consciously increased our rents by small amounts each year in order to keep our repeat renters from over the years, and also to offer good value for one of the larger homes. By contrast, we noticed that many homes have increased their rental rates by as much as 35 to 40 percent over last year's rates , which I assume was to help cover the increased costs associated with taxes, insurance rates, and utilities. Owners who expect rents to cover all their expenses need a reality check. For us, it is enough that rents greatly offset the home expenses (and we purchased five years ago). It's also helpful for the house to have people in it who are vigilant if something should go wrong so that the problem is detected early. These cost increases can become moot if an owner loses even one week to another more reasonably priced property during prime rental season. It's a good idea to consider the big picture, including how one's tax advantages offset "losses" in the bottom line financials.

My sense is there are as many, if not more people going to the SoWal beaches as in the past, but that there is a hugely increased inventory of properties for them to choose from now. And some vacationers are now going to Escambia and Bay Counties, where they may find lower bed tax.

For those vacationers concerned about the beaches, remember that there are beaches that were not adversely effected by the storms and which have totally renurished and do not require any dune walkovers. Look them up or inquire. And trip insurance is a good idea for a lot more reasons that hurricanes. Good idea to get some info on what is offered by these policies and work this small amount into your vacation costs regardless of where you are headed. We do this now for almost all trips. You wouldn't go "bare bones" on other types of insurance, would you?

 

[SHELLY]

These are interesting observations. Our home was fully booked in the usual fashion since last summer. But we have consciously increased our rents by small amounts each year in order to keep our repeat renters from over the years, and also to offer good value for one of the larger homes. By contrast, we noticed that many homes have increased their rental rates by as much as 35 to 40 percent over last year's rates , which I assume was to help cover the increased costs associated with taxes, insurance rates, and utilities. Owners who expect rents to cover all their expenses need a reality check. For us, it is enough that rents greatly offset the home expenses (and we purchased five years ago). It's also helpful for the house to have people in it who are vigilant if something should go wrong so that the problem is detected early. These cost increases can become moot if an owner loses even one week to another more reasonably priced property during prime rental season. It's a good idea to consider the big picture, including how one's tax advantages offset "losses" in the bottom line financials.

My sense is there are as many, if not more people going to the SoWal beaches as in the past, but that there is a hugely increased inventory of properties for them to choose from now. And some vacationers are now going to Escambia and Bay Counties, where they may find lower bed tax.

For those vacationers concerned about the beaches, remember that there are beaches that were not adversely effected by the storms and which have totally renurished and do not require any dune walkovers. Look them up or inquire. And trip insurance is a good idea for a lot more reasons that hurricanes. Good idea to get some info on what is offered by these policies and work this small amount into your vacation costs regardless of where you are headed. We do this now for almost all trips. You wouldn't go "bare bones" on other types of insurance, would you?

Donna,

You bring up excellent points.

Those owners who purchased properties before the BIG price run-ups are in and excellent position (albeit the insurance and taxes have gotta hurt). Recent buyers trying to cover their carrying costs are no match for long-time owners.

The tax advantages are a bit tricky, depending on whether it is an "investment" property vs. a second home. On an investment property (if real estate isn't your primary business) one can only write off losses up to the amount of income they receive...so if losses exceed the income generated on the property, the tax advantage can be minimal...no?

 

[DBOldford]

Here's how this was explained to us by our CPA and tax attorneys: The ability to show a break even or profit condition is the difference between whether one can take the tax advantage now, as opposed to having it delayed until sale of the property (when the basis for gain is computed). Because we are still working some, we try to make that distinction now for our tax returns and can usually do so only because of when we purchased our property. It also has a very healthy rental history and a loyal following, thank goodness.

An investment property is any property that one receives rental income on or which is rented more than 14 days out of any year, even if it is technically a second home (as ours is). Real estate doesn't have to be one's primary business. We have several rental properties that provide income, but that isn't our primary business or source of income. After the tax returns are done, those so-called "losses" (actually, differences in the bottom line accounting) are totally eclipsed by the tax advantages.

One always prefers to finance a property as a second home, if possible, because the terms are better than those associated with a commercial property. FL banks allow this, which came as something of a pleasant surprise to us. There are also advantages related to insurance if the home is considered a second home.

SoWal owners need to realize how amazingly fortunate they still are to offset their real estate investments to the degree they do with rentals. In many areas, the rental market is far more limited and even restricted for vacation rentals. And the management fees are 30 to 40 percent, on average, as compared to the more typical 20 percent at SoWal. In our CA community, it is illegal in all the cities and in the county to rent one's property for less than a 30-day period. And the bed taxes here are 12.5 percent.

SoWal properties are still a very good investment opportunity for the person with realistic expectations and a long-term outlook towards appreciation. But real estate investment has never been for the faint of heart and generally, I feel that people should not buy properties they can't pay the debt on, with or without rentals. It's kinda like an anticipated inheritance...pleasant to contemplate, but you should make it part of your financial planning!

 

[SHELLY]

One always prefers to finance a property as a second home, if possible, because the terms are better than those associated with a commercial property. FL banks allow this, which came as something of a pleasant surprise to us. There are also advantages related to insurance if the home is considered a second home.

Not surprising, since FL's Attorney General (who will be running for Gov) is pretty clueless on the housing laws.

Crist's Home Sweet Homestead

"Tax returns provided some of the information that allowed us to report Friday that Crist rents a high-rise Bayfront Tower condominium in St. Petersburg from a man who has taken the $25,000 tax break on the condo for three years, even though he doesn't live there.

That's illegal for Crist's landlord, Lawrence Compton, who is in big trouble with the Pinellas County Property Appraiser's Office.

Crist didn't know Compton has been taking the homestead exemption since 2003.

Crist also said he didn't know it was wrong to do that (it's called "rental of homestead to constitute abandonment," Florida Statute 196.061)."


More hi-jinx that puts the "duh" in Floriduh!

 

[TooFarTampa]

Nice takes Donna.

One always prefers to finance a property as a second home, if possible, because the terms are better than those associated with a commercial property. FL banks allow this, which came as something of a pleasant surprise to us. There are also advantages related to insurance if the home is considered a second home.

I think this is fairly localized. We found advantageous financing was much easier to obtain from banks and brokers in the Destin/PCB area than where we live. We found the banks and brokers here in Tampa were confounded by our purchase and consistently directed us to commercial lenders, who in turn did not want to lend to us for some reason or another. I don't think you can blame Charlie! though I suppose it would be fun to try. I would agree that he probably isn't detail oriented ... he did fail the bar exam the first try. Can't decide if I like Charlie! or not. He kind of confounds me.

SoWal owners need to realize how amazingly fortunate they still are to offset their real estate investments to the degree they do with rentals. In many areas, the rental market is far more limited and even restricted for vacation rentals.

Yes.

 

[spinDrAtl]

Having a property classified as a 2nd home vs. taking a homestead exemption is apples and oranges.

Regarding 2nd homes, as long as you meet the criteria for a 2nd home (such as being 50 miles or more from your primary residence and any other 2nd home) when you close on the property, you can later decide to classify that home as an investment property with respect to your tax returns.

As Donna said, real estate does not have to be your primary business in order to realize various tax benefits on investment property.

 

[jhelms]

Here's how this was explained to us by our CPA and tax attorneys: The ability to show a break even or profit condition is the difference between whether one can take the tax advantage now, as opposed to having it delayed until sale of the property (when the basis for gain is computed). Because we are still working some, we try to make that distinction now for our tax returns and can usually do so only because of when we purchased our property. It also has a very healthy rental history and a loyal following, thank goodness.

An investment property is any property that one receives rental income on or which is rented more than 14 days out of any year, even if it is technically a second home (as ours is). Real estate doesn't have to be one's primary business. We have several rental properties that provide income, but that isn't our primary business or source of income. After the tax returns are done, those so-called "losses" (actually, differences in the bottom line accounting) are totally eclipsed by the tax advantages.

Very good point. There is also an advantage to every trip that you make to the property. Certainly you do some sort of improvement or small fix to the property while you are there, so the trip (even if you view it as a vacation) can present a new list of deductions for you, mileage, supplies, etc.

One always prefers to finance a property as a second home, if possible, because the terms are better than those associated with a commercial property. FL banks allow this, which came as something of a pleasant surprise to us. There are also advantages related to insurance if the home is considered a second home.

Also, some people miss the fact that you can finance more than one 'second home' at a time. Two ways to do this without committing mortgage fraud: generally most loan products will allow you to finance more than one home under 'second home guidelines' provided they are than 50 miles from each other and in vacation areas. OR, if you purchased a property as a second home a few years ago, but now you are going to purchase a better / nicer second home in the same area you may decide to keep the previous place as an investment property. A loan underwriter should understand that the new place will be your actual 2nd home now (and can still be rented out and shown on your taxes as an investment property). Since the first property was purchased and used for a period of time as a second home, no mortgage fraud or deceiving was done, yet you get to take advantage of the better terms for the life of both loans.

Regarding 2nd homes, as long as you meet the criteria for a 2nd home (such as being 50 miles or more from your primary residence and any other 2nd home) when you close on the property, you can later decide to classify that home as an investment property with respect to your tax returns.

As Donna said, real estate does not have to be your primary business in order to realize various tax benefits on investment property.

Exactly!

 

[DBOldford]

I want to clarify that we do not qualify for the very advantageous homestead exemption in FL, since our primary residence is in CA. This is a big bonus relative to both property taxes and insurance rates. It is not a good thing for FL in general, however. Homestead exemption applies to any property of under $50K in value, which translates into most mobile homes (which typically rent space). Mobile homes constitute about one-half of the total residences in FL, which means that half the full-time residents are paying no or very limited property taxes. This is not a sustainable condition.

In fact, there would be a considerable advantage to having a state other than CA our primary place of residence so that we don't have to pay the 9.4% state income tax that CA imposes. This applies not only to our income from all sources, but is also factored into the capital gains tax when a property is sold. So instead of the 15% Federal capital gains tax the Floridian pays, we get to pay 24.4%. But not worth the hassle and the downside of flirting with the IRS, as it invites audits. Also, we like living in a blue state.

Yes, one can count trips as a deduction, but a maximum of two per tax year. These are not bad problems to have, obviously.