Every investment is a risk, but real estate is one of the most versatile hedges available for diversifying your holdings, protecting your finances, and growing your assets. Whether you're looking for a vacation home, moving to a new home in South Florida, or want to expand your holdings as a real estate investor, every decision focuses on — or at least considers — risk management.
South Florida represents an exciting new horizon that buyers and residents of all types want to come home to. But instead of falling in love with the perfect beach-front view or seeing a promising purchase price that's too tempting to pass on, it pays to take a step back. Developing a real estate plan and working with experienced experts in the local South Florida luxury market can help you simultaneously find a dream home and protect your short-term and long-term financial interests. The RS Team, ONE Sotheby's Agents, specializes in serving domestic and international buyers who want to own a beautiful piece of Florida. We've compiled some of our team's top risk management tips that can guide your journey.
Work with a realtor from the start to develop your timeline and strategy
Ivan Ramirez and Monica Sarmiento aren't just real estate agents; they are dedicated realtors in South Florida. What sets them apart? Their unwavering commitment to uphold higher ethical standards and their stringent fiduciary responsibility to prioritize your best interests. Partnering with Ivan and Monica offers you:
- Expert insights into the South Florida real estate market, drawing from past performance data.
- Up-to-the-minute reports on current property rates and emerging market trends.
- Trusted, experience-driven advice to ensure you make informed decisions in the dynamic South Florida real estate landscape.
Engaging with Ivan Ramirez and Monica Sarmiento early in your home search process will allow you to effectively outline your priorities, identify the must-have features in your prospective home, and ensure efficient property tours and showings.
Tap your realtor's network for insurance providers that can stay the course in Florida
Most realtors offer more than just their own expertise. You can also access a carefully cultivated network of lenders, home inspectors, interior designers, and other professionals. Perhaps most importantly, a realtor can help you find high-quality insurance agents who can navigate the emerging trends and concerns of insuring Florida homes.
Over a dozen insurance companies, including Farmers Insurance, have stopped writing new home insurance policies for Florida properties. This is potentially alarming news for homeowners who need to make arrangements and don't know where to begin. But as you start your homebuying journey, you can contact insurance brokers partnering with numerous nationwide and niche insurance providers. Realtors know current and future residents are worried by this news, and good agents are shoring up their resources and contacts to help you find the right policy for your finances, future properties, and peace of mind.
Identify your down payment and monthly budget, especially if you're purchasing a vacation home
Budgets are always part of the equation when searching for a home. But you can make the house-shopping process much more efficient and fun by calculating your total house-buying budget at the outset by knowing your down payment and monthly budget. This can help you mitigate a lot of potential risks by:
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Giving you clear parameters so you don't have an unbalanced portfolio
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Setting conservative budget limits that give you more room for remodeling, updates, and furnishings
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Ensuring you can comfortably manage all of your monthly mortgages
That last point is particularly weighty if you're purchasing a second home, a vacation home, or an investment property. Many people can afford a new home by selling their current residence and using the profits. But if you're purchasing without selling, that will significantly affect your DTI, buying power, and monthly expenses.
Purchase a home in markets with long-term growth
A core tenet of investing in a home is picking a property in a neighborhood that offers long-term profitability and value. This may highlight great school districts and luxurious neighborhood amenities for a primary residence. For second homes and investments, there might be stable or growing demand. Your realtor can help you investigate the past growth trends and future growth trajectories of specific neighborhoods across the South Florida market.
However, as the departure of many insurance companies indicates, no risk management strategy is complete without considering environmental concerns. Storm hazards are a real and growing cost for homeowners. 41% of the hurricanes that have hit the US since 1851 hit Florida — and of those, 30% were at least a Category 3 hurricane. Before you purchase your next home, consider the following:
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Its proximity to typical storm paths and its potential vulnerability
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Repair fees and insurance costs, especially for waterfront properties
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The existence or cost of installing storm protective features and storm-resistant landscaping
Prioritize your inspection period, especially for FSBOs and cash purchases
Some types of real estate transactions are riskier than others. Cash-only deals, for example, may indicate a home that mortgage providers won't cover. FSBOs, or for sale by owner homes, may have opaque records. If you encounter a property you love that falls outside the conventional norms, it's important to practice due diligence and take some extra steps to protect your interests.
One of the most vital steps is hiring inspection professionals to assess the property for foundation concerns, roof and water damage, electrical and plumbing compliance needs, and other factors. The more you know at the onset of a non-standard transaction, the easier you can back out if needed or work considerations into the negotiation phase. An experienced realtor won't blanketly warn you away from these properties. Instead, they'll help you navigate the transaction stages with knowledgeable insights.
Evaluate your long-term financial goals
As more of a best practice than a specific tactic, always gauge how your potential new property fits into your long-term financial goals.
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Are you looking for a real estate investment property that will be a reliable source of revenue both now and during your retirement?
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Will a new vacation home likely become your future primary residence?
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Where does the property fit in your estate plan?
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Are you purchasing a home at the right price in a market likely to help you realize enough appreciation within five years that you have ongoing financial flexibility?
These questions matter at the outset of any homebuying journey, and your team of financial advisors, lenders, and realtors can help give you the insights and expertise you need to arrive at the right answers.
Schedule a conversation with Ivan Ramirez to start your real estate journey on the right track
Navigate the luxury South Florida real estate market with Ivan Ramirez and Monica Sarmiento. Our team has managed hundreds of millions of dollars in sales over 35 years, and we bring that experience to the table for each client. Reach out today to schedule a meeting and explore the local housing market with Ivan and Monica!
*Header photo courtesy of Shutterstock
