• Why is it time to Consider a Move to Florida Palm Beach Real Estate

Why is it time to Consider a Move to Palm Beach Florida

This is the Treu Real Estate 911 podcast with Lisa Treu. Lisa will share up-to-date real estate information with you that you need to know.

To listen to the show, click here. 

Brian Mudd: 

Welcome to Treu Real Estate 911. It is Brian Mudd along with your local real estate pro, and we are ready for the latest information that you need to know to make informed decisions when it comes to real estate. On today's show, we're going to be talking about why it makes sense to make Florida home. For those of us that are already here, we get it. For those of you that are on the fence, well, you eventually will. There's that old joke about, especially for our friends in the Northeast. You're eventually going to be down here with us. You might just not have figured it out quite yet, but you will. When you do, we've got a lot of compelling reasons why a lot of folks have already done it, will continue to do it, and the current lay of the land.

Before we get started, if you're not already there, go to treurealestate911.com. That's treurealestate911.com. What you're going to find is the best local resource for real estate information, and especially if you're out of the area. This is so neat because you can actually search the MLS in real time. So all throughout the Palm Beaches, if you're looking for real estate, you get to see the information firsthand as things are happening from the Treu group. It's information that's so far ahead of what you're going to find on other sites like Zillow and the like. You're also going to find a great deal of information from the Treu group themselves, and they're going to help you get informed. They're going to help you make the best decisions, and you'll also see a phone number that can help you as well. Seven days a week, the Treus, they are ready to help you. Just call 561-972-8326. Buying, selling, if you just have questions. 561-972-8326.

Lisa, we were talking just a bit before the show today, and you were saying, "Oh, yeah. It is definitely heating up out there," especially with folks that are looking to relocate.

Lisa Treu:

Yes. We're seeing our phones lighting up. We're seeing more people coming down to look at homes, buying both the second homes and also making Florida their primary residence. This topic is very relevant. I think we're going to see our Northeast movement south continue, and not just continue at the same pace, but increase over the next couple of years, both from a financial standpoint, and also let's face it. This winter. I think the-

Brian Mudd:

And spring

Lisa Treu:

Yes

Brian Mudd:

With record spring snowfall to start out in the Northeast.

Lisa Treu:

What is it? Four nor'easters this year

Brian Mudd:

Incredible.

Lisa Treu:

It was like the year that I decided that I had had enough, and I was moving to Florida. I wasn't old enough to move at the time, but the blizzard of 1977 was the year I said, "I'm not doing this the rest of my life." I think this year is going to be that for many people.

Brian Mudd:

You know, Lisa, you reminded me when you brought this topic up about actually what brought me here specifically, because I love the water. Very active, and I lived on one of the barrier islands outside of Savannah. I was very happy there. For me, it was the lifestyle. For years, iHeart tried to get me to relocate, and I'm like, "I'm happy here." So I worked on projects commonly in Atlanta and for some other markets from Savannah, but that was still my home base because of the lifestyle.

Then the opportunity, about 13 years ago, came available here, and I said, "All right. Well, I can be on the water, so let me take a look at it." The difference for me, I never fully appreciated. Even just Savannah, which doesn't seem that far from South Florida, the difference in having not only the nicer beaches and water and everything else, but also 12 months out of the year when you can be on it, enjoy it, be comfortable, rather than maybe eight, for example, in Savannah. That's a life change, for sure.

Lisa Treu:

It is a life change. People say, "Oh, it's so hot down there." Well, the great news if you're a water person, so what? It's hot in the summer. You go get in the water. That's the worst thing that we can say about our area is that it's hot. I love the lifestyle down here. Being able to go out at night and run, run to the beach, being able to enjoy so many outdoor. It's such an active, healthier lifestyle down here. The other thing that I always forget until I travel somewhere else that doesn't have it is our sunshine really is year round, and we take that for granted, but if you're up in the Northeast, it's not just that it's cold.

Brian Mudd:

Gloomy

Lisa Treu:

It's cold and gray. Why not Florida? I don't understand. We're not trees. If you don't like where you live, just pick up and move.

Brian Mudd:

I like that.

Lisa Treu:

We want to make this really simple and informative today on not just why you can move, but how you can move and what that process looks like and the benefits of making that move, both from a lifestyle standpoint, which is what I get to talk about and also from a financial positive impact.

Brian Mudd:

Let's get started talking that way. For years, I've joked that there are two reasons that people come to Florida, and it's really not a joke. It's probably more truth than not. It's our weather, which we just talked about, and it's taxes. Let's be honest. It's a huge deal, especially for folks that are used to some of the highest tax states in the country, like New York, for example, which is right behind California in terms of high taxation. Certainly, when you take a look at what's going on in Connecticut, in Massachusetts and the like, they're no stranger. Then you take a look at property taxes in New Jersey, and suddenly, Florida and South Florida, in particular, starts looking really good.

Lisa, we have a couple of folks that are here to help talk about this today and explain some of the value proposition. Tell us a little bit about that value proposition, and set up our guests today, Matt and Jason.

Lisa Treu:

We wanted to really bring in some experts that could help have this conversation be really valuable for those that are in the Northeast and talking about the tax benefits. I'm not an accountant, thank goodness. You don't want me doing your taxes. So we really found somebody who is excellent and can help us, at least, if nothing else, ask the right questions to our financial advisor. So we have Jason coming on to talk about taxes, and then one of the most probable processes orientated best lenders I've seen in a long time, Matt Weaver. He has seven days a week fully staffed. It blew my mind away when I actually realized what that meant. He's going to talk to us about how we can make that financing process easier when you're making Florida your new home. We're super excited to have them both on.

Brian Mudd:

Matt, let's start with you first, talking about mortgages here. Matt Weaver is Cross Country Mortgage. You take a look at what's changed and where the opportunities are. I know right now, front and center in a lot of people's minds, the changing interest rate and mortgage rate environment. But something Lisa and I have talked quite a bit about, it's easy to have near-term perspective even as rates might have moved up a bit from the lows of some years gone by, but when you take a look at the average 30-year fixed rate mortgage still about 8% historically, there are some really great opportunities right now. If you'll talk a little bit about what you see as the opportunity for folks that are looking to finance.

Matt Weaver:

Oh, absolutely. Thank you both for the opportunity. When we look at interest rates overall, it's important for us to all understand that even though rates have moved up about a half a percent to three-quarters of a percent in the past five to six weeks, which is substantial movement in that short period of time, but at the end of the day, rates and borrowing costs are still extraordinarily low relatively speaking. Whether someone is looking to perhaps dip their toe in the water and move, let's say, purchase a secondary residence down here in Florida to start and then make it their primary residence, financing options are very attractive.

As an example, as a secondary residence, someone can purchase a home down here in Florida with as little as 10% down. So if you think about that and you think about the values down here versus New York, which Lisa, of course, can touch on, you have a discount in terms of values, and also a discount in terms of borrowing power. So people can purchase with as little as 10% down if they are starting to make way down here to Florida.

Brian Mudd:

Good information for sure. Certainly, the ability to be able to cut through the nonsense and close quickly I know is on a lot of people's minds. A lot of folks will come down and maybe even on vacation or they see an opportunity may be on the Treu's website, and they want to move rather quickly. What is the process like these days in terms of your ability to go ahead and begin a process and ultimately to be able to close if all goes according to plan?

Matt Weaver:

Absolutely. Our market, particularly in the South Florida Southeast market, we are still in a very competitive market by way of there are just simply more buyers than there are sellers. What I decided to go back in 2010 is really develop a process flow that gives our clients the maximum advantage. We start by having a very thorough and extensive preapproval process from the beginning, but not only is it thorough and extensive, but it's also streamlined and very quick. The process is really, really simple. If you think about it, we start by taking a 10-minute application by phone. Then we'll gather the client's items. We'll have them reviewed in totality within two to four hours, seven days a week, from 8:00 a.m. to 9:00 p.m. Then once approved, we have a detailed consultation with the client so they're aware of all the parameters, process, what to expect. Then they now go out with Lisa, enter the marketplace fully prepared so once they find that home, we have a competitive advantage, because most of the agents in the local market here are aware of our process, and we can execute virtually quicker than anyone in the industry.

A couple ways of doing that are not only just shortening the length of a loan commitment, but also closing very quickly if that is a need as well. We have the ability to close transactions in as little as seven days if needed, and of course, that's not going to be for every occasion, but we can facilitate that in that short period of time. So being able to be prepared up front in advance is going to be key and has been key really since 2010 when our market really entered that multiple offer environment.

Brian Mudd:

All right. So Lisa, certainly Matt laid out the process and makes it sound nice, straightforward, and easy, which I know is what you're looking for is to minimize any of the stress in the process and to officially get the result that everybody is looking for. In your experience, what is this in terms of the level of importance in making an offer in transacting real estate, especially for folks that might be out of the area?

Lisa Treu:

It is absolutely 100% critical to have the right team on your side, having the right lender, having the right agent, somebody who is on your side negotiating on your behalf. We've had two successful transactions that really stand out that we've worked with Matt on. One was and what caused us to start working with Matt is he did a VA deal at Christmas time in 10 days.

Brian Mudd:

You're that guy. I've heard this from Lisa for a few months now, so okay. It's all come together.

Lisa Treu:

Yeah. This is the guy. Then just recently, we had a buyer who went up in multiple offers against a cash deal. Because of Matt and Chris' negotiating skills and being able to present the package properly and sell the agent on why our deal was the deal, we got it. Now, how many times does that happen when you're going up against cash? Let's face it. Cash, as they say, is king. And yet not always. If you have the right lender, you have the right agent on your side, you stand a shot. This was not what I would say a nice easy deal. The buyer even was able to get closing cost.

So it's not always guaranteed, but certainly, we pulled off what I would consider probably in this market a miracle, and it came from having a really strong process on both our side and also the mortgage side, having great reputations on both as somebody who actually gets the deal done. And then having a lender that will pick up the phone and help us sell this deal. That's the kind of relationships that we look for, and it's why we have upped our game this year with our lender partners.

Brian Mudd:

Earlier, we mentioned that there are two reasons that people traditionally have taken a look at Florida and South Florida in particular. We have our weather, and we have our taxes. Speaking of which, the strategy here in Florida, and especially a lot of strategy for folks who might be dealing with other states that are looking to relocate as well, we have with us, Jason Brown. He's a CPA for Forsyth Financial on the line with us as well. Jason, first and foremost, what is the typical experience like for someone who is relocating from say a northeastern state to South Florida? The difference in taxes, and also the tax strategy as it pertains to real estate?

Jason Brown:

Yes, absolutely. Thanks for having me on. I greatly appreciate it. When you come from a high tax state, such as New York and New Jersey or Connecticut, people they'll come here and see that there is no state income tax at all. Obviously, that's a hugely significant advantage on your overall bottom line and save more money when you're only subject to federal tax and not subject to state income tax.

States like New York, the state income tax rates are as high as over 9%, and then if you live in the city, I believe there's another upwards of three to 4% tax. States like New Jersey also have topped out at almost 9%, and Connecticut is almost 7%. If you look at that compared to Florida with zero, obviously there's a significant saving.

In addition to that, the new tax law can have a great effect on people who live in those states as well. For the first reason, the standard deduction has greatly increased. If you are married filing jointly, you will get a $24,000 standard deduction, or if you're single, it's half of that at $12,000 standard deduction. If you're head of household, it's $18,000. What that means is that if you itemize your deductions, you would have to have an amount higher than that standard deduction in order to receive a benefit. One of the biggest advantages of being in one of these high tax states is when you are able to itemize your deductions. One of the biggest deductions was how much money you paid in state income taxes. So even though you had a higher tax rate and you had a high tax rate in states such as New York or Connecticut or New Jersey, you were able to offset some of those taxes because you received a deduction on your federal return.

Not only has the standard deduction been greatly increased, but even if you do itemize, one of the changes in the tax law that has a significant effect on these people is that the maximum amount of state income taxes and property tax combined that you can deduct as an itemized deduction in these states caps out at $10,000. If you live in a state such as I said New York, for example, and you're paying a 9% tax rate, say you make $300,000 of income. That would be a $27,000 tax. That $27,000 tax, say if you have a federal tax rate of 30%, that would be $8,100 of tax that you would not be paying because of that deduction on your federal return. Well, most of that will be gone, because it's capped out at $10,000, and then like I said, the itemized deduction would only be beneficial to you if you have a higher amount than the standard deduction.

So in addition to living in a state where everything is generally more expensive, the property is more expensive, the weather is colder, there's cold weather. In addition to that, you're paying much higher taxes, especially now with the new tax law.

Brian Mudd:

It would sound like to me based on everything that you just said, for anybody who's on the fence, this would be enough to get them off of the fence if they're looking to relocate. Have you seen in your own practice an increase in interest in recent months?

Jason Brown:

Yes, I have, actually. I generally see every year people wanting to move down, obviously because of the weather and everything is generally more expensive, and because of the taxes. But even more so now, I've been seeing an uptick in people interested in moving to Florida, especially because of the nor'easters that they keep having. I would expect that trend to continue, especially with the new tax law.

Lisa Treu:

Jason, I have a question. What is the process for establishing residency in Florida? How does somebody go about that?

Jason Brown:

That is a great question, Lisa. Thank you for asking that. There is a number of steps that need to be taken to not only show that you are no longer a resident of a state such as New York but more importantly is that a state like New York sees this happening all the time. People wanting to show they're no longer a resident of New York because of high-income tax rates. So the state is extremely aggressive in going after people who they feel are really residents of New York that are trying to claim that they're not. Generally, if a person was, a taxpayer was audited by the state of New York, they would look at five factors to determine if you are a resident or not of New York. This is a great guideline to use to prove that you are no longer a resident, because obviously if you can pass the audit, then you're in good shape.

The first one is your home. Basically, where do you have a home? Do you have a home in Florida, and do you have a home in New York? If you have a home in both places, then that makes it a little bit more difficult. Then really it depends on a number of factors. Some of those include they'll want to know which residence was owned first. Is one a rental? What is the value and size of each residence? What actions did you take to remove yourself from your old community? Have you established roots in your new community? Where do your children go to school? Where does your family spend holidays? Really, it's not very straightforward, but it's really based on facts and circumstances, and then everything is weighed together, and then they make a determination to decide if you are considered a resident or not.

After they look at your home, some of the proof they'll want to see if they would want you to produce closing statements, moving bills, insurance policies, descriptions of the properties. If your children are in school, they'll need confirmation of your enrollment. These are the type of things that you want to make sure that you have readily available. Perhaps put them in a file that you can keep with your accountant so if the state of New York ever decides to look to question whether you really have left New York in this example, then you would have that information.

Some of the other factors they look at after that are where do you have an active business. The factors consider your pattern of employment and compensation you derive from that employment, and it will also examine your business involvement other than employment. You will need to establish ... They'll want to establish where you actually work on a day-to-day basis as well as the location of your primary offices. If you're a shareholder in a New York business, they'll want to see how much you participate in the day-to-day management of that business.

Then they also look at the time. Where do you spend more time? Are you a snowbird who spends part of your time in New York and part of your time in Florida? If you spend more time in Florida than New York, then that will certainly help your cause. You'll definitely need to be able to document where you spend your time. They'll look at things such as appointment books, expense reports, credit cards, phone bills. It's very intrusive this type of audit ...

Brian Mudd:

That's incredible.

Jason Brown:

... so obviously you want to be able to make sure you have all this documentation. Then they look at such as where you have near and dear items. I've heard of an audit for this actually go negatively for clients based on where they kept their grand piano. So these are other things to factor.

Then the last one is your family. Where are your wife and children, or where is your extended family? If you want to show that you're no longer a resident of New York, you really want to show as much as you can that you're in Florida, including getting a drivers license in Florida, getting your voter's registration down in Florida, joining health clubs here. Anything you can do to establish that you have a closer connection down here.

Brian Mudd:

A couple of things come to mind aside from that wealth of information that you just shared with us.

Jason Brown:

Sorry. That was a whole lot.

Brian Mudd:

No. Look, it's good, comprehensive information. One, you paint the picture about how valuable your service can be to people that are in this situation because going at it independent of that type of information and that level of understanding and documentation sounds like it's a recipe for disaster. Secondarily, you also say if you're taking a look at permanently living in one place or another, why it's a lot simpler to come on down here.

Lisa Treu:

I just say sell the place up there and buy a bigger house down here, and now we don't have that issue.

Brian Mudd:

It's a funny thing, because when I was listening to Jason-

Jason Brown:

That would definitely help, sure.

Brian Mudd:

Yeah. When I was listening-

Jason Brown:

The bigger issue is when you have a home in both states and like for snowbirds who might spend time in both places, it can be a bigger issue. But even if you live down here and you have a place there, that can cause issues as well.

Brian Mudd:

It's funny you mention that. I had an aunt and uncle who moved down late last year to the other coast. They had a place they were keeping in New York, and they figured they would be ... It would be more than six months and a day. It would be more like eight months and four. After a few months, they said, "We're just going to sell the place in New York." I was like, "Why did you decide that?" They said, "Oh, my gosh. If you knew about the nightmare in trying to prove that we are down here now to them." You painted the picture. They gave me the Reader's Digest version. It's really helpful information.

As we are putting all this together here for today, you talked about the process. We've had Lisa talk about the experiences with buyers that have been able to get to the closing table, even with something like a VA loan inside of a couple of weeks. Right now, do you think it's important to be time sensitive when it comes to interest rates? What's your guidance at this point?

Matt Weaver:

It is. Right now, we're seeing the markets stagnate right now. The Federal Reserve increased the federal prime rate last week, and the 10-year Treasury, which follows interest rates, for the most part, remains zero. In other words, the markets have already spoken. Interest rates have done what they've done thus far, and we're starting to see a little bit of a deterioration, meaning rates coming down a little bit. However, it is my recommendation today that if you are about to get under contract or when you get under contract, to take money off the table to lock in your interest rates. You want to make sure that the lender you're doing business with has what's called a float down policy, meaning if interest rates come down further after the lock, you have the ability to float that rate down into that lower rate. It's something that we do have here at Cross Country. That's really, really important.

To answer the question, though, yes. Take money off the table and lock in your interest rates. Now, at the same time, I think that the urgency should be there to if you're thinking of buying a home or if it's within your plan over the next month or two or three, definitely get out there, find what you need to find to make it happen. I wouldn't go out of my way, of course, to buy a home just because of where interest rates are today. Of course, it has to be the right time for you overall. I don't see rates in the immediate future going up that much further, at least that's what our indicators are showing. Of course, anything can happen. But we are in a less than 5% environment still for the most part on most products, and that just really goes back to money still being very cheap and borrowing being favorable.

Brian Mudd:

Jason, we take a look at the currencies we're in. We're in tax season. A lot of people are getting their wake up call from last year fully figured out about now. But when we're taking a look at the change in tax policy which you talked about, a lot of people are still very confused about what this means to them. What's your guidance for folks that are still trying to put all this together?

Jason Brown:

Give me a call. There's a lot to digest. As far as planning right now for going forward, there's just so much that has changed, it's just a wealth of information. It could affect you in so many if ways, depending on whether you own a C-corporation. The rates have drastically gone down for that, so people might want to consider switching their entity. If you have an S-corporation or partnership, for example, they added a special 20% deduction, but that only applies if you're not a service provider. If you are, then you still have that, but it phases out at a certain income limit. Certain deductions have been removed. Certain deductions have been increased.

I would definitely talk to your accountant or talk to myself if you're interested in ... If you'd like to know what has changed and how it affects your personal situation because everyone's situation is different. It helps some people. It hurts others. There's just a lot to digest, so I would definitely recommend speaking to your accountant sooner than later so you can do the right thing, so when next year rolls around, there won't be any sticker shock based on changes you were not aware of.

Brian Mudd:

Lisa, I know that you are always a resource for folks wherever they might be right now that are looking for the local real estate.

Lisa Treu:

Yes. We're here to help. We are gratefully very busy right now. All Trees are all hands on deck right now. If you're listening and you're looking for an opportunity, we're adding six new agents to the team this year. So if you're in sales, you don't have to be a real estate agent. We'll help you figure that part out, but if you love sales, you love people, you love offering amazing customer service, taking great care of our clients, and being a part of something that's bigger than one person. This isn't about me. This isn't about any of the Treus. This is about our clients.

If you like that kind of environment, we want to talk to you, because like I said, we know what's coming. We know what is, which is super busy, and we know what's coming. So we're here to help whether you're looking to create a great income opportunity for yourself or you're looking to buy. More importantly, if you're thinking of selling, if you have a single family home, and you think, "Oh, I'm going to be selling in the next couple of months," call me today. We have buyers that are looking for homes. We are out there literally going door to door looking for the right fit. Don't wait anymore. It's the perfect time to have your single family home on the market. We are here to help you achieve your goals. It isn't about us. It's about you.

Brian Mudd:

If you're not already there, visit treurealestate911.com. That's treurealestate911.com. Again, buying, selling questions seven days a week. If you want to get in touch with Matt or Jason, they're able to help you. Call 561-972-8326. 561-972-8326. I am Brian Mudd for Matt Weaver of Cross Country Mortgage, CPA Jason Brown of Forsyth Financial, and of course, your local real estate pro, Lisa Treu. We'll see you next time.