October, 2017 | Sarasota FL House Values | 941-321-3916 Beverly Bowen

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Why Real Estate Investing Makes (Dollars and) Sense


Turn on the television or scroll through Facebook, and chances are you’ll see at least one advertisement for a group or “guru” who promises to teach you how to “get rich quick” through real estate investing. The truth is, much of what they’re selling are high-risk tactics that aren’t a good fit for the average investor. However, there is a way to make steady, predictable, low-risk income through real estate investing. In this blog post, we’ll examine the tried-and-true tactics that can be used to increase your income, pay off debt … even fund your retirement!

WHY INVEST IN REAL ESTATE?

One of the basic principles of real estate investment lies in this fact: everyone needs a place to live. And according to the Bureau of Labor Statistics’ most recent Consumer Expenditures Survey, housing is typically an American’s largest expense.1

But there are other reasons why real estate is a great investment choice, and we’ve outlined the top five below:

1. Appreciation

Appreciation is the increase in your property’s value over time. History has proven that over an extended period of time, the value of real estate continues to rise. That doesn’t mean recessions won’t occur. The real estate market is cyclical, and market ups and downs are natural. In fact, the U.S. housing market took a sharp downturn in 2008, and many properties took several years to recover their value. However, in the vast majority of markets, the value of real estate does grow over the long term.

The S&P CoreLogic Case-Shiller National Home Price Index, which tracks U.S. residential real estate prices, released its latest results on August 29 with the headline “National Home Price Index Rises Again to All Time High.”2

Source: ZeroHedge3

While no investment is without risk, real estate has proven again and again to be a solid choice to invest your money over the long term.

2. Hedge Against Inflation

Inflation is the rate at which the general cost of goods and services rises. As inflation rises, prices go up. This means the money you have in your bank account is essentially worth less because your purchasing power has decreased.

Luckily, real estate prices also rise when inflation increases. That means any money you have invested in real estate will rise with (or often exceed) the rate of inflation. Therefore, real estate is a smart place to put your money to guard against inflation.

3. Cash Flow

One of the big benefits of investing in real estate over the stock market is its ability to provide a fairly steady and predictable monthly cash flow. That is, if you choose to rent out your investment property to a tenant, you can expect to receive a rent payment each month.

If you’ve invested wisely, the rent payment should cover the debt obligation you may have on the property (i.e. mortgage), as well as any repairs and maintenance that are needed. Ideally, the monthly rental income would be great enough to leave you a little extra cash each month, as well. You could use that extra money to pay off the mortgage faster, cover your own household expenses, or save for another investment property.

Even if you only take in enough rent to cover your expenses, a rental property purchase will pay for itself over time. As you pay down the mortgage every month with your rental income, your equity will continue to increase, until you own the property free and clear … leaving you with residual cash flow for years to come.

As the owner, you will also benefit from the property’s appreciation when it comes time to sell. This can be a great way to save for retirement or even fund a child’s or grandchild’s college education. Purchase a property when the child is young, and with a little discipline, it can be paid off by the time they are ready to go to college. You can sell it for a lump sum, or use the monthly income to pay their tuition and expenses.

4. Leverage

One of the unique features that sets real estate apart from other asset classes is the ability to leverage your investment. Leverage is the use of borrowed capital to increase the potential return of an investment.

For example, if you purchase an investment property for $100,000, you might put 10% down ($10,000) and borrow the remaining $90,000 in the form of a mortgage.

Even though you’ve only invested $10,000 at this point, you have the ability to earn a profit on the entire $100,000 investment. So, if the property appreciates to $120,000 – a 20% increase over the purchase price – you still only have to pay the bank back the original $90,000 (plus interest) … and you get to keep the $20,000 profit.

That means you made $20,000 off of a $10,000 investment, essentially doubling your money, even though the market only went up by 20%! That’s the power of leverage.

5. Tax Advantages

One of the top reasons to invest in real estate is the tax benefit. There are numerous ways a real estate investment can save you money each year on taxes:

Depreciation

When you record your income from a rental property on your annual tax return, you get to deduct any expenses associated with the investment. This includes interest paid on the mortgage, maintenance, repairs and improvements, but it also includes something called depreciation.

Depreciation is the theoretical loss your property suffers each year due to aging. While it’s true that as a home ages it will structurally need repairs and systems will eventually need to be replaced, we’ve also learned in this post that the value of real estate appreciates over time. So getting to claim a “loss” on your investment that is actually gaining in value makes real estate an appealing investment choice.

Serial Home Selling

Even if you’re not interested in owning a rental property, other types of real estate investments offer tax advantages, as well. Generally, when you own an investment property you pay a capital gains tax on any profits you make when you sell the property.

However, when you sell your principal residence, you are exempt from paying taxes on capital gains (up to $250,000 for singles and $500,000 for couples). The Internal Revenue Service (IRS) only requires that you live in the house for two of the previous five years. That means you can purchase an investment property, live in it while you remodel it, and then sell it for a tax-free profit two years later. This can be a great way to get started in real estate investing.

Section 1031 Exchanges

In addition to profiting off of your personal residence tax free, it is possible to sell an investment property tax free if you do it through a 1031 Exchange. If structured properly, the IRS Tax Code enables an investor to sell a property and reinvest the proceeds in a new property while deferring all capital gains taxes.

Tax-Deferred Retirement Account

It’s a common misconception that you can only purchase financial instruments (i.e. stocks, bonds, mutual funds, etc.) through an Individual Retirement Account (IRA) or 401(k). In actuality, the IRS allows individuals to invest retirement funds in real estate and other alternative types of investments, as well. By purchasing your investment property through an IRA, you can take advantage of all of the tax savings these accounts offer.

Be sure to consult a tax professional regarding all tax matters related to your real estate investments. If structured correctly, the profits you earn on your real estate investments can be largely shielded from tax liability. Just another reason to choose real estate as your preferred investment vehicle.

TYPES OF REAL ESTATE INVESTMENTS

While there are numerous ways to invest in real estate, we’re going to focus on three primary ways average investors earn money through real estate. We touched on several of these already in the previous section.

1. Remodel and Resell

HGTV has countless “reality” shows featuring property flippers who make this investment strategy look easy. Commonly referred to as a “Fix and Flip,” investors purchase a property with the intention of remodeling it in a short period of time, with the hope of selling it quickly for a profit.

This is a higher-risk tactic, and one for which many of the real estate “gurus” we talked about earlier claim to have the magic formula. They promise huge profits in a short amount of time. But investors need to understand the risks involved, and be prepared financially to cover additional expenses that may arise.

Luckily, an experienced real estate agent can help you identify properties that may be good candidates for this type of investment strategy… and help you avoid some of the pitfalls that could derail your plans.

2. Traditional Rental

One of the more conservative choices for investing in real estate is to purchase a rental property. The appeal of a rental property is that you can generate cash flow to cover the expenses, while taking advantage of the property’s long-term appreciation in value, and the tax benefits of investing in real estate. It’s a win-win, and a great way for first-time investors to get started.

And according to the U.S. Bureau of Labor Statistics, rents for primary residences have increased 21.9 percent between 2007 and 2015 as demand for rental units continues to grow.1

3. Short-term Rental

With the huge movement toward a “sharing economy,” platforms that facilitate short-term rentals, like Airbnb and HomeAway, are booming. Their popularity has spurred a growing trend toward dual-purpose vacation homes, which owners use themselves part of the year, and rent out the remainder of the time. There are also a growing number of investors purchasing single-family homes for the sole purpose of leasing them on these sites.

Short-term rentals offer several benefits over traditional rentals, which many investors find attractive, including flexibility and higher profit margins. However, the most profitable properties are strategically located near popular tourist destinations. You’ll need an experienced real estate professional to help you identify the right property if you want to be successful in this highly-competitive market.

DOES REAL ESTATE INVESTING SOUND TOO GOOD TO BE TRUE?

We’ve all heard stories, or maybe even know someone, who struck it rich with a well-timed real estate purchase. However, just like any investment strategy, a high potential for earnings often goes hand-in-hand with an increase in risk. Still, there’s substantial evidence that a well-executed real estate investment can be one of the best choices for your money.

Purchasing a home to remodel and resell can be highly profitable, as long as you have a trusted team in place to complete the remodel quickly and within budget … and the financial means to carry the property for a few extra months if delays occur.

Or, if you buy a house for appreciation and cash flow, you can ride through the market ups and downs without stress because you know your property value is bound to increase over time, and your expenses are covered by your rental income.

In either scenario, make sure you’re working with a real estate agent who has knowledge of the investment market and can guide you through the process. While no investment is without risk, a conservative and well-planned investment in real estate can supplement your income and set you up for future financial security.

If you are considering an investment in real estate, please contact us to set up a free consultation. We have experience working with all types of investors and can help you determine the best strategy to meet your investment goals.

Our areas of specialization include Sarasota real estate, Osprey real estate, Nokomis real estate and Venice real estate. 

Give Beverly and John a call at 941-321-3916.

Sources:

Bureau of Labor Statistics Consumer Expenditure Survey Annual Report  – https://www.bls.gov/opub/reports/consumer-expenditures/2015/home.htm

S&P Dow Jones Indices Press Release –
https://www.spice-indices.com/idpfiles/spice-assets/resources/public/documents/574349_cshomeprice-release-0829.pdf?force_download=true

Durden, T. (2016 November 29). US Home Prices Rise Above July 2006 Levels, Hit New Record High [blog post] ZeroHedge  –
http://www.zerohedge.com/news/2016-11-29/us-home-prices-rise-above-july-2006-levels-hit-new-record-hig
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October 5, 2017

The Top 12 Things to Do on a Rainy Day in Sarasota and Venice

Ca'D'Zan Sarasota Florida


We have family coming into town this weekend and the weather report is looking dismal. Okay – more than dismal – rainy is the term.

So we started thinking about what activities there are for rainy days in our area. So many of the things we love to do revolve around being outside and generally we have wonderful weather for that.

It is not that it never rains here – it is just tricky when they are just coming for the weekend and the whole weekend forecast predicts rain.

So here are some things we came up with to do in Sarasota, Venice and surrounding areas.

  1. John Ringling Museum of Art – 5401 Bay Shore Road, Sarasota, FL, 34243
    Set on 66 acres right on the Bayfront in Sarasota. Includes Museum of Art, Circus Museum, and the Ca’D’Zan – John Ringling’s 56 room mansion. There are ever changing exhibits and events.

  2. Mote Marine – 1600 Ken Thompson Parkway, Sarasota, FL, 34236
    (941)388-4441. Research facility and Mote Aquarium. The working aquarium hosts more than 100 species of marine life including manatees and sharks. There are two touch tanks and a 135,000 gallon shark habitat.

  3. The Sarasota Classic Car Museum – 5500 N. Tamiami Trail Sarasota, FL 34243 (941) 355-6228.  Travel back in time and view over 75 immaculately restored automobiles including classic and muscle cars, including Bentleys, DeLoreans, Edsels and Ferraris. There are cars that were owned by the Ringlings, John Lennon and Paul McCartney.

  4. Burns Court Cinema – 506 Burns Ct, Sarasota, FL 34236. (941) 955-3456. Small theater that offers first-run foreign, independent and art films along with beer, wine and popcorn.

  5. The Mall at University Town Center – 140 University Town Center Drive, Sarasota, FL 34243. (941) 552-7000. This mall is located at I-75 and University Parkway and is considered a world-class fashion and dining destination with more than 150 stores and restaurants many of which are not found anywhere else in the local area.

  6. Venice Little Theatre – 140 W. Tampa Ave., Venice, FL 34285. (941) 488-1115. Since 1950 The Venice Theatre has been providing entertainment, education and outreach to the community. It is one of the largest and most active community theaters in our country.

  7. Clyde Butcher Gallery – 237 Warfield Ave., Venice, FL 34285 (941) 486-0811. Clyde Butcher is a legendary nature photographer, often called a modern-day Ansel Adams. We are so fortunate to have one of his studios here in Venice where his photographs and books are on display and for purchase. Clyde Butcher’s 2000 square foot darkroom is also located here.

  8. Historic Venice Train Depot - 303 E. Venice Ave., Venice FL 34285. The train depot was built in 1927 and renovated in 2002-2003. You can learn interesting key events in Venice history and the history of the train depot.

  9. Military Heritage Museum – Fishermen’s Village. 1200 West Retta Esplanade, Punta Gorda, FL 33950. (941) 575-9002. This is located further south in Punta Gorda and is another very worthwhile experience. “The mission of the Military Heritage Museum is to promote an understanding and respect for the rich military heritage of the United States and the sacrifices made by our country’s veterans, living and dead, emphasizing that freedom is not free”

  10. South Florida Museum – 201 10th St. W. Bradenton, FL 34205. (941) 746-4131. This museum is located just north of Sarasota and it both the Bishop Planetarium and the Parker Manatee Aquarium. It is the largest natural and cultural history museum on Florida’s Gulf Coast and has ever changing exhibits in addition to the permanent exhibits.

  11. Chihuly Collection – 720 Central Avenue, St. Petersburg, FL 33701. Located even further north is this outstanding collection of world-renowned glass artist Dale Chihuly. Nearby is the Morean Arts Center Glass Studio & Hot Shop where you can watch glassblowers create one-of-a-kind pieces, have your own personal glass blowing experience and shop for unique glass art created by local and regional artists.

  12. Salvador Dali Museum - One Dali Blvd, St. Petersburg, FL 33701. This is also north of Sarasota. Fascinating architecture, gardens and the works of famed artist Salvador Dali.

Of course there are many other things like the Opera House and Antique stores east of us in Arcadia, museums south of us in Fort Myers, and a 2 hour ride north-east to the many attractions of Orlando.

Soon we will be back to our beaches, sunsets, water sports, golf, and other outdoor activities.

Siesta Key Sunset
October 1, 2017

Sarasota Hosts 2017 World Rowing Championships

World Rowing Championships 2017

The world class 2017 World Rowing Championships were held in Sarasota, Florida from September 24, 2017- October 1, 2017 at Benderson Park.  

We were excited to attend on Thursday and found the event extremely well organized and a first class, professional venue. It was a huge operation with athletes and fans representing 69 countries. There were 930 athletes.

It was just the second time ever that this event has been held in the United States.

It is now being said that the event has put us on the map on par with the top rowing facilities in the world. Sarasota is on the West Coast of Florida one hour south of Tampa and two hours from Orlando.

The park includes grandstands to hold 3,600 people, picnic tables, beach chairs on the sandy lake shorefront, and the six story Benderson Finish tower. There were at least 4 huge Jumbotron sized screens so you could view all the details up close which was really fabulous.

It all started in 2009 with a hole that was dug for material used to build the I-75 interstate and other roads. Adjustments were made in the roads so the lake that was formed could be the necessary 2000 meters for rowing. A 30 acre island was created to allow room for events. In 2013 a bid was made and accepted to host the 2017 World Championships and then the race course and needed facilities were built.

Nathan Benderson Park was built to FISA racing standards and has 8 x 13.5 meter lanes. The race course specifications include 2,180 meters in length, 630 meters wide and on average 6 meters deep. In addition to the race course the lake has multiple 1500 meter warm-up and cool down lanes.

The park also has a state of the art floating wave attenuator platform that doubles as a dedicated TV lane for broadcast requirements, and exclusive 3m wide paved coaches cycle path.

In conjunction with the Rowing Championships, the book “The Boys in the Boat”  by Daniel James Brown was showcased throughout our area and by our library system. We both read the book and it was a wonderful way for us to learn more about the sport prior to the event.


The book is an inspiring true story of the University of Washington rowing team and the incredible story of the nine young men who rowed to victory in the 1936 Olympics in Germany. It begins during the fourth year of the Great Depression when the country was in deep despair. Rowing was a very popular sport then and sports were a way for people to feel optimism and have something to celebrate.

We learned how extremely challenging rowing is both physically and mentally. There was great emphasis on how the respect and love of teammates form powerful bonds. It reminds us of how much can be accomplished when everyone pulls together.

The story is not only heartwarming and encouraging – but it also reveals a fascinating glimpse of history at that time.

The boys beat the odds in desperate times and brought joy to our country when it really needed it.

We highly recommend this book. It really helped us appreciate the immense efforts and sacrifices that the athletes and their families, coaches and sponsors put forth for their sport.

We have several local teams in our area and we hope this venue will help to expand the sport and provide additional opportunities for those involved.

Bravo for Sarasota and all those who put this event together.

Let us know if you would like a world class effort to help with your real estate needs.