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Saturday, April 19, 2008

Key West Real Estate Q & A





I have been getting e-mails and phone calls regarding some pretty basic real estate issues in Key West. So I thought I would start a Q & A thread.

Explain the difference between Transient Rental and Vacation Rental The City of Key West has an ordinance that prohibits homeowners (and condo owners) from renting their homes on a nightly basis unless the house has a transient rental license. Transient rental licenses are limited to specific areas that are zoned for such use, and those areas are specific and very limited by design. There are a limited number of new transient rental licenses that the city can issue. Some transient rental licenses are available for purchase through Realtors, but the transfer of these licenses from one property are restricted. The City of Key West issues a medallion that is to be affixed to the outside of any property to identify it as being a legally licensed transient rental. I encourage any potential purchaser to verify with the city licensing office and private counsel to ensure that a license if purchased may be transferred and used for the purpose intended.

Since the transfer of transient licenses is so tightly regulated you may appreciate the value of such a license. A transient rental license is a license to make money, sometimes lots of it. Tourism is the biggest business in Key West and tourists who flock here need a place to lay down and rest their heads in beds. In recent years several established guest houses and motels were converted into condominiums, so the number of available hotel type rooms decreased.

The City of Key West does permit property owners who have obtained a non-transient occupation license to rent there homes or condos legally once per month for a period of 28 dyas or less. That means a property owner can rent his or her home for one week in January or for the entire month to the same renter. The property owner may not rent the property for one week to one tenant, skip a week, and then rent the same property to someone else for the remainder of the month.

Are there any special rules for transient rentals at 1800 Atlantic? The rules cited above apply to 1800 Atlantic, and it is in an area that is zoned to receive transient rental licenses. But you cannot purchase a license from one place (even within the complex) and transfer it to a unit that has not previously had a transient license. If you purchase a unit at 1800 Atlantic that has a transient license you are not required to rent your property out as a vacation rental. But you should pay the annual license fee to the City of Key West and Monroe County to maintain the license (about $80 total) because that license adds about $50,000 in additional value to your unit at 1800 Atlantic.

By the way there are some good buying opportunities at 1800 Atlantic. CLICK HERE to checkout all of the current condos listed for sale. Some have transient licenses, some are rented as vacation rentals, and some folks actually call 1800 Atlantic home. If you see a unit that interests you and you want more info, e-mail me at kw1101v@aol.com.

April 22nd: CLICK HERE to see a new listing at 1800 Atlantic with a transient rental license. Although this unit is not listed as a short sale, it may in fact become one because the amount the owner owes on the mortgage cannot be satisfied even if the unit sells at full asking price. The unit is on the second floor on the Bertha Street side (east) of the complex and is located 5 units from the Atlantic Ocean so it does have an ocean view. It does have a new kitchen and baths, but the asking price is high in my opinion for this demanding market. But should not deter a serious buyer from looking.

What is HARC? HARC is a board of Key West citizens appointed by the Mayor of Key West to oversee the development plans and execution of same in the historic district of Key West. CLICK HERE to see the official City of Key West Historic Architectural Guidelines. The guidelines provide a simple statement of the types of materials that are generally permissible in the restoration or renovation of historic properties or the construction of new properties in the historic district. If you intend to buy an renovate a property in the Old Town area it is essential that you review these guidelines before you start planning to demolish anything or construct anything that is new.

What happens in Short Sale if I am a Buyer? A Short Sale offering is made by a Seller who owes more against a property than he believes the property will sell for in the current real estate market. The Seller will have contacted his lender(s) and provided detailed financial information about himself and his inability to sell the real estate for the amount(s) owed to secured lenders on the property. The Seller asks that the lender(s) agree in principal to permit the property to be sold at a market price that is negotiated between seller and buyer. The lender then determines whether to release the existing by examining the nature of the offer: is the price reasonable given the condition, location, and comparable recent market sales in the area.

The Key West Association of Realtors requires that a Short Sale Addendum accompany any Short Sale Contract for Sale and Purchase of Real Estate. The addendum references the contract and then interjects a provision that permits the lender a specific time period within which to accept or reject the terms of the contact. If the lender accepts the purchase price, the lender normally agrees to either release the mortgage on the real property subject to receipt of the sales proceeds less closing costs, taxes, and real estate commissions.

Other than the lender acting as the final arbiter of price, the seller and buyer are still free to negotiate the other terms of the contract. The lender's primary objective is minimizing loss and mazimizing recovery. So contracts that are all cash with no contingencies (other than inspection, survey, and clean title) are recommended. Get pre-approved for your financing before you attempt to buy any short sale property or any bank owned property.

Who pays the real estate commission? In most instances the Seller has a signed contract with the Seller's Real Estate Broker agreeing that Seller will pay a specific percentage of the purchase price as a real estate commission at closing as a fee procuring a purchaser. This fee is usually divided between the listing broker and the broker who procures the buyer. If you are a buyer you do not have to pay a Realtor for his/her services (unless you have a specific agreement to the contrary).

If you have a Question please leave a comment or send me an e-mai at kw1101v@aol.com.

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Disclaimer

The information on this site is for discussion purposes only. Under no circumstances does this information constitute a recommendation to buy or sell securities, assets, real estate, or otherwise. Information has not been verified, is not guaranteed, and is subject to change.

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Gary Thomas in a Nutshell

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Key West, Florida, United States
I first read about Key West in a magazine called "After Dark" sometime in the mid 1970's. But it wasn't until March 1984 that I made my first visit to the island that would become my home. I had two weeks for a vacation and reserved a room at Colours Guesthouse (now Marrero's Guest House) for one week. I thought that if I didn't like Key West, I could always go back to Miami or Ft. Lauderdale for the rest of my trip. But after a couple of days in Key West, that was no longer a consideration. But when I wanted to extend my stay for the extra week I found there was no room at the inn. The guesthouse owner did find me a room at LaTeDa, the infamous guesthouse/restaurant. That's a story I'll write another day. But those two weeks in Key West gave me the realization that I had found Paradise. Key West has been my home since 1993 and my only regret is that it took me so long to get here. I am a full time Realtor at Preferred Properties CRI. Let me help you find your new home or business in Paradise. Living in Paradise is not a slogan, it's a way of life.