This is an overview of my views, not a legal document. You need to investigate yourself, or with my help, in more depth if you wish to take this further.
If you are looking to think outside the box and looking to purchase an overseas property for a rental income you will be wary of the differing legal procedures in foreign countries, so I have put together some pointers that have been told to me regarding buying a property in Florida. The rental returns I have seen are extremely good and worth a more in depth look. I have a number of contacts in the Orlando area and they can help to set up all the necessary legal documents to make a purchase run smoothly. 66.66% deposit Mortgages are widely available even to overseas purchasers and on the specific sites I have on this website, the returns are worth further investigation. On the properties I have reviewed, on 75% occupancy and average rental prices, ($162 per night) after maintenance charges it would be common to achieve between £20 – £25k per year net. On top of this there are free holidays and the potential to increase the occupancy above the 75% norm.
I visited Reunion Resort and Champions Gate close to Orlando and had an insight into the rental potential, and free holidays of course, of purchasing one of the 5 star properties on the complexes which are just 5 minutes from Disney. The Resorts have an infrastructure which manages the rental of the available properties, along with the property management for you to keep them in top class condition. Mid 70% occupancy is the norm for these resorts.
Not only is Orlando rapidly growing in relation to tourism, it is the hub of a number of International companies like Amazon, FedEx and Walmart who are all developing huge warehouses in the area, so you might also consider a property outside the tourism area to capture the professional market.
Take a look at our investments page and review some current properties that are available to buy at Reunion Resort. A 3 bed semi house with garage at Reunion currently on offer at $210k, which is around £155k. Compare that to what you can buy in the UK and it starts to make sense.
22 million people live in Florida, the same size as the UK.
34 million visitors in 2000, 100 million visitors in 2015.
Orlando international airport is doubling in size to cater for 80 million visitors, same as Gatwick.
New Hospital expansion is going ahead in Orlando for a specialist Plastic Surgery hub where 30,000 staff will be employed.
Florida property information
Rental is virtually 12 months a year due to the relocation of Canadians, South Americans, UK and Chinese who congregate for the whole of the winter months, leaving the high demand months free to charge premium rates, up to $200 per night.
You must get a US Bank Account set up to receive the income.
The Standard Residential contract is signed and the title company does the deal, not a solicitor. They co-ordinate everything.
You need to obtain an ITIN number, Individual tax identifier number (like an NI number) by an accountant and a W8 form or else the government will withhold the income.
A Power of attorney is set up for the management company to deal with the utilities etc.
The Homeowner Association is like the Block Management Company. They look after the communal areas and there is a monthly charge.
There is a Property Tax, which is similar to a UK Council tax charge.
Owners must complete a US Tax Return called a 1040RN and the rental company you use will complete a 1099 which shows income paid in the previous year.
Tax exemptions are $6300 for an individual, $12300 per couple.
Mortgage interest has tax relief.
If you sell again before 12 months, then the income is classed as income, not capital gains. Capital gains is around 15% roughly. You can offset some costs against depreciation, rental losses etc. Depreciation is over 27.5 years.
One vital issue is that you must make sure the property you are buying is authorised for short term lets so you can do short term, holiday or long terms lets. Some are for residential use only and can’t be let out. Reunion is a short term rental contract.
If you buy with cash, you need to allow 2% for costs, if you are having a mortgage, you need to allow for 4%.
Stamp Duty is 0.7% on the mortgage amount, not on property value.