Another One Bites the Dust

Remember the song "Another One Bites the Dust"? Well, the Key West Citizen has a story in today's edition CLICK HERE TO READ THE STORY about the demise of The Deli located at the corner of Truman & Simonton Streets. It was an easy going diner with good food served Key West style--slowly. I only ate there a few times. The food was good, but like everything else in Key West it got expensive.

Now you may not care about the demise of a diner, but if you live in Key West or want to buy a place here, the closing may have some meaning if you put it into context. There are several announced plans for major redevelopment projects of some favorite and maybe some not-so-favorite properties. The Holiday Inn located right when you drive over Cow Key Channel from Stock Island has been raised and the new swank BEACHSIDE KEY WEST RESORT is rising from the dust. It will be operated very much like a Ritz Carlton hotel. The same developer, the Spottswood Companies, recently announced that it had purchased several major hotels across the street and running east towards Old Town that will be raised to make way for a very large convention center and more swant hotels.

The Hotel La Concha at the corner of Fleming & Duval is supposedly being renovated into a major luxury hotel as well. Back in January I wrote about the renovation that is currently going on at the Casa Marina Hotel. It has always been a luxury property, but it got a little run down. But the project is rolling along with a total make-over of the property. It too will cater to the tony crowd.

A few blocks away The Atlantic Shores Resort has two more weeks left before it gets demolished to make way for more luxury oceanfront condos. Even the seedy Key West Youth Hostel is getting the e axe to make way for new condos.

I am sure the developers all think the gentrification and luxurization (is that a word?) of Key West is a good thing, but I wonder if the premise of the Kevin Costner flick "Field of Dreams" will come true: Build it and they will come. More importantly who are the operators going to get to staff all these new luxury hotels?

Not every tourist or regular traveler or potential second homeowner to Key West wants a luxury hotel, a luxury condo, or luxury second home. A lot of people come here just to unwind and enjoy the funk and feel of the place. Key West is normally very clean, a little noisy, but almost always a lot of fun. I think the windbags that stay at the Ritz Carlton will turn this quaint little drinking town with a fishing problem into something we may not like.

About 30 years ago a small group of people in Denver (my hometown) organized themselves into an International Olympic Committee and successfully secured the 1976 Winter Olympics for Denver. The problem was that the public didn't want the games. Another group got organized and put an issue on a statewide referendum to walk away from the games. The measure passed and the Olympics did not occur in Denver.

I really question the merit of redeveloping so much of the infrastructure that helped make Key West such an inviting place. If it gets turned into another Boca Raton, why will people even consier coming here.

I'm not all that pessimistic. I still think people will want to come to Key West. And if you want to buy a place here, checkout our mls website by CLICKING HERE and then call me for more info. 1-305-766-2642.

An Uplifting Experience

The house pictured to the right is located right next door to mine in the Casa Maraina area of Key West. The folks who own it live in Atlanta and own several restaurants. The house is a vacation home that gets used a couple of times a year. It sits on a very large lot by Key West standards and the lot is filled with specimen palms and plants.

The house suffered major damage during Hurricane Wilma due to flooding. The house was built years ago and the ground floor was low to the ground. So the house is getting a face lift and a body lift. Two weeks ago the movers came in and within two days elevated the house six feet off the ground--it's new height.

Contractors are now building a new foundation and will lower the house onto it soon. The rest of the house will get redone as well. I will post additonal pics and comments as the construction progresses.

Although much of the Casa Marina area had about a foot or so of ocean water during Hurricane Wilma, not many homes flooded because they were built high enough off the ground not to get flooded. But I learned several years ago that certain parts of town can and do flood even during healthy rainstorms--not just hurricanes. I always make a point of asking a listing Realtor this question when he/she shows a property: Does this has flood. I insist that the buyer get a home inspection as a contingency of the purchase.

Thinking of buying a home or business, then please also think about contacting me to help you. 1-305-766-2642. CLICK HERE to checkout all mls listings for Key West and the Florida Keys.

Do I have to Eat My Words?

Back in March I wrote an entry about another new townhome development near the Atlantic Ocean just east of the Casa Marina are CLICK HERE to see what I said then.

The project is out of the ground and two of the buildings have been erected. Pics of the proposed development and the actual buildings are at the right. There is a noticeable difference between the proposal and the "as is". Now I understand the buildings are not complete. For example, the roofs have not been installed. "What?" you ask. That's right. These buildings are modular construction. They were made elsewhere and transported here and placed on concrete piers. The roofs will be installed later along with the balconies, etc.

The townhomes are like many of the new developments I have written about as far as planned amenities such as crown molding and individual pools. But if you look closely you will see that the "pool" is also preformed fiberglass. That is not the same as an in-ground poured pool in my opinion.

I was dismayed when I went by the development yesterday. We have not had any rain in about two weeks, but there is standing water at the far west side of the development. The area is known for flooding, but the city has spent a lot of money to create drains and injection lessen the problem. The standing water means trouble to me. There may be an explanation. I hope so.

It looks like about 1 1/2 blocks have been cleared to make way for this development. I does not look like the developer is going any further than the first two buildings. At least at this point.

I do not see the value in these townhomes. In fact, they look more like an urban "project" than a luxury townhome development near the ocean.

I also added a pic (bottom right) of another modular home being erected on James Street near the Historic Seaport. The building was put in place about two months ago and little has happened to the exterior since. The builder owns the adjacent lot and has poured piers for another house.

So far, I am not impressed with either of these modular projects.

I may have to eat my words for suggesting that the townhome project looks promising. As of now, it does not. Nor does the single family home on James Street. For the sake of the builders, I hope that both projects turn out okay. Time will tell.

As always, I would like to be your Realtor. Please give me a call and let me help you find your home in Paradise. 1-305-766-2642. Thanks.

Recently "Solds" in Old Town

I thought it would be interesting to compare the prices on the highest and lowest "solds" in Old Town Key West since May 1st. There were only five single family sales.

The two I am reporting on are at 1121 Petronia which is a 960 sq. ft. 2 bed, 2 bath wood frame home located one block east of the cemetery. It was "redone" a couple of years ago and has a pool. (The remodel was poorly executed and cheap in my personal opinion. Lots of work yet to be done.) The neighborhood is mixed of single family, apartments, and light commercial on White Street. The house listed at $699,000 and sold for $660,000 or $687.50 per sq. ft. The sellers bought the house in August 2004 and paid $699,000. Seller had to pay a 6% real estate commission (-39,600) and I am assuming seller's title transfer fees and closing costs. So the final net to the seller $605,000 or a $94,000 loss. Give or take.

The second property is located at 520 Emma Street in the exclusive Truman Annex. It is a single family home built in 1995 with 1914 sq. ft. of living space and private pool. The home has 3 bedrooms and 3 full baths on a private 3444 sq. ft. lot. The home has all the bells and whistles! The home was listed at $2,185,000 and sold for
$1,895,000 or $990.07 per sq. ft. and was on the market 40 days. The sellers bought the house in January 2000 and paid $749,000.

I think the buyer of 1121 paid a lot of money for that little house. It needs a lot of work and the location is not the best--it is really close to a very smelly Cuban restaurant. But I think the buyer of the Truman Annex house got a good deal. The house sold near the top end based on price per square foot in today's slow market. When the market rebounds,that price will be every bit as good as the price the seller paid for it in 2000. Mark my words.

CLICK HERE for more details and photos on both properties.

There are lots of homes and condos on the market in Key West. Some are good, some are really bad, and some are bargains, and some are properties that you should not even consider. CLICK HERE to search for the type of property that you are interested in purchasing, and then give me a call so that I can help you find your new home in Paradise.

Up, Up and Away

It just got easier to get to Key West. On Saturday Delta Airlines launched a new route between Key West and Tampa, flying two trips on Saturdays only on a 50 passenger regional jet. Continental already offers daily service between Tampa and Key West on a smaller 19 passenger plane.

Delta already files three daily nonstop flights to Atlanta on a 65-passenger regional from Key West.

United, US Air, American, and Continental all fly into Key West daily from Miami, Ft. Lauderdale and other Florida locations. Instead of booking your flight through Miami, try one of the other large Florida cities such as Tampa, Orlando, Ft. Meyers, or Ft. Lauderdale. And if you feel you want to drive to Key West, start out in Ft. Lauderdale. That airport is much more user friendly. It is just as easy to drive to the Florida Turnpike and take a left to go to Key West. If you have ever driven to Key West from Miami you will agree that the extra 40 minutes in driving time is worth it.

The Florida Turnpike, Interstate 95 and U.S. 1 all converge and meet in Florida City. From there the drive is interesting—if you are not following a funmobile going 40 miles per hour. There is basically one lane in and one lane out of Key West. The drive is pretty, however. Try the drive once and fly the rest of the time.

Of course you could take a boat from Ft. Meyers or Marco Island. CLICK HERE for more information.

I have one plea: Please do not tease the Realtors. So many people come to Key West and toy with the notion of buying a second home here. Many folks are serious, but not all. I don't know how many hours I've logged driving would-be buyers around looking at homes or condos. The real estate market in Key West is in the dumps right now, so please don't waste a Realtor's time or gas by going on a sightseeing trip in his or her car. But you can see all current mls listings by CLICKING HERE. If you are really considering buying, please think about calling me at 1-305-766-2642.

Herd on the Beach

Recently on Good Morning America there was a segment on Freakonomics which the author discussed the herd mentality and gave the example how he and his daughter used to go to a bus stop and wait several buses because it was so popular. After weeks of waiting and then being squished on a packed bus he had an idea. He walked a couple of blocks to the stop just before this popular stop and now he and his daughter get on the bus and get a seat when they used to have to wait for a bus and then stand for the ride.

And this little snippet relates to real estate how? you ask. Do you follow what everyone else is does, becoming part of the herd, or do you do your own research and make decisions that are in your own best interests? Do you blindly trust the media, or do you use those reports just as part of your deliberative process?

Herd behavior is the term used to describe situations in which a group of individuals react coherently without there being any coordination between them. Such a group is called a herd. The term is used uncontentiously to describe the behavior of animals within herds and flocks, and more controversially to describe some kinds of human phenomena such as stock market bubbles, and behavior in political demonstrations.

A great little item in Wikipedia describes it this way: "In the case of stock market bubbles, the optimal behavior for an individual may be to do what everyone else is doing, because even though everyone knows that they are in a bubble, until it bursts, most profit is to be made by staying in the market. In this case the term "herd behavior" is relatively appropriate, because the "collective" behavior emerges from uncoordinated individual choices. Interestingly, though the behavior of the group is evidently irrational, the behavior of the individuals that cause it is rational at least in the short term, though it does show some abandonment of risk aversion, as the crash usually occurs without much warning." I have found that the real estate bubble has affected the masses the same way: the masses have become the herd.

Most people know about Warren Buffet's theory of stock picks. Buy quality and do not buy when everyone else is buying. Buy value and buy it cheap. I think that's it pretty much in a nutshell. Books have been written about him so I am not going to expound any more. But I share his theory as it relates to real estate--especially in this market: buy value and get it for a good price. Take advantage of the down market. Perhaps even profit as the misfortune of others. I'm not being hard, I am being pragmatic. If you have cash and can afford to buy in this market and want to buy a good property, do it. The junk is not selling. Not in Key West. But the good properties are. And some are being purchased at very attractive prices.

CLICK HERE to search the Key West mls website where you can see every residential and commercial listing from Key West to Key Largo. If you are looking for a property in Key West or the lower Florida Keys, please give me a call and lets discuss how I can help you. 1-305-766-2642.

Buy This Old House

The grand two and a half story home at 1009 Southard Street is another bargain looking for a new owner. The 3719 square foot home sits on one of the great streets in Key West. Just a few doors to the east is the big house that sold last year for $5.5 million. And across the street is the home of the former Vice Chairman of AOL Time Warner. (It was featured in a huge Architectural Digest piece a few years ago.) White House Chief of Staff Joshua Bolten owns the house next door to the west. All in all, it's a pretty good neighborhood.

The house is presently configured as a 3 unit building with a studio apartment downstairs in the front, a two bed two bath apartment on the second and third floor, and the owners quarters are at the rear of the main level. The tenants have their own private pool, but the large pool at the rear is the domain of the owners. And the owner's guests have their own cottage accessed off Lowes Lane. Oh, and there is also a garage.

The house is in very good condition as it sits. The kitchen and bath in the owner's quarters are about 15 to 20 years old. But they are perfectly liveable as is. A new owner may want to restore the house to a single family residence. There is plenty of room to do whatever suits your fancy. And the price at $482 per square foot is a bargain.

CLICK HERE to see more photos and read more about this great Old Town home. And then please give me a call to see it. I think you will be surprised at how wonderful a property this is. My number is 1-305-766-2642.

Cutie Pie

A couple of months back I wrote a blog on Life on the Slow Lane describing why homes on the quaint lanes of Old Town are so inviting. GO HERE to read that blog if interested.

The house at 816 Carsten Lane is a real Cutie Pie. Carsten Lane is a one block lane
running perpendicular to William Street and Elizabeth Street and just south of Southard Street. It is within walking distance of everything Old Town has to offer, yet you almost need a map to find it. The five homes on Carsten Lane abut Carey Lane to the rear. And I think Carey Lane is one of the prime addresses in town. The MARC House is located across Carsten Lane and is going to become a major renovation project in the next couple of years.

CLICK HERE to see the mls data sheet and more photos of this cutie pie cottage. The cottage is almost 1100 square feet and has two bedrooms, two bathrooms, a new kitchen, and it just oozes charm. The ceiling in the main living area is vaulted and exposed wood. It is very dramatic. There is room for a pool.

This is not my listing, but I would be pleased to show it to anyone looking for a great little home in Old Town. The bathrooms are about 20 years old or so, but look fine and work well. So a new owner could move in and either do a few upgrades or do nothing at all. The seller has just reduced the price to way below the appraised value. It is now priced at $#779,995 or $727 per square foot.

CLICK HERE to search for your next home or business in Key West or the lower Florida Keys. The please call me at 1-305-766-2642 for further information or to set up a showing.

Key West is NOT South Beach

I watched part of an insipid Extra last night only because I woke up and could not go back to sleep. There was a segment on the beautiful people in South Beach and why the viewer ought to go to a particular club where only VIP's can enter. Now why would an average Joe want to go somewhere that he is not good enough to enter? New York and LA have the same type of clubs where one must be rich, or famous, or beautiful, or outrageous to gain entry. The same goes for the chic restaurants in those big cities. There are some restaurants that are so special that the average Joe cannot get a reservation, no matter how long he is willing to wait. Didn't the French have a Revolution about such non-egalitarian behavior?

Well, there are no VIP clubs or restaurants where you are not welcome in Key West. Everybody is welcome. I remember that during my first trip to Key West a local told me about how people from all stratas of society intermingle here. Of course, that was over 20 years ago. And for the most part I think it is pretty true today. Some of the newer arrivals who have spent big bucks on their homes may not get it, but most do. The golf course is public and the "Yacht Club" is open to anyone.

It is the openness and accepting nature of the way we get along in Key West that makes this little place so special. The town has lots of gays. But it probably has as many or more counter-culture (left over hippies). Key West has a huge population of foreigners who work in the hospitality business, many of whom are from the Russia and the Ukraine and are Muslims. The native conchs surely make up the largest segment of the population.

What does this have to do with real estate? Nothing other than if you want to be a snob and be with the beautiful people to to South Beach, or LA, or NYC where chic is in and VIP's rule. Key West is not South Beach. Thank God.

Take the pics to the right. This is a perfect example of what I tell potential buyers about location and value. The house at the top is locate in the 1000 block of Southard Street. It was on the market for over 2 years before it sold earlier this year at a real bargain price of $772,000 on May 19,2006 for $874 per square foot.
That price was a steal in my opinion because it's next door neighbor at 1017 Southard sold last year at $5.5 million. And almost all of the neighboring properties are price in the $2 million range. Except for one: the neighbor next door to the east, Cafe Sole`. That's the fly in the ointment.

The before pic shows the house at it's worst. It had an Ugly enclosed front porch with no street appeal. But it has a good sized side yard with room for a pool and existing off-street parking. But parking is not an issue at this location anyway. The former owner was a realtor and he kept dropping the price until someone bought the location and the development possibility. The pic below shows how the present owner is renovating the property. I could not tell if there will be a pool in the side yard or not. I think the new owner stands to make a sizable profit when and if he/she sells. A snob would never have bought this house because of Cafe Sole`, but I think a wiseman did.

People Don't Listen

Seven years ago a friend from 27 years ago came to Key West with his partner to look at homes. They had a 45 foot motor coach (a rock star bus, actually) and they wanted to find a place that would accommodate the monster. That requirement pretty much eliminated all of Old Town. We started looking in the Casa Marina area and the area just east of White Street. We met with a fellow in the city building department so that my buyers could understand what type of property the city would permit them to park their motor coach on.

We found a couple of properties that met their needs. They really liked a new house on Flagler. I warned them of the extreme difficulty in selling a house on that street because of the noise. Then they found a house on White Street that could have made a wonderful remodel. It told them that White Street was a killer address as well. I recounted two listings of superb homes on White Street that I just could not sell because every local hates that street. We finally found a property on Washington Street that met their needs. It had a very large lot, large specimen palms, and two ROGO units. They decided to tear down the existing structure and build a new home and a "carport" for the motor coach.

My friend was a real estate developer from Denver and had plenty of experience building homes. So he was able to build the new house much less expensively than one not so familiar with the construction trade. After the house was done we talked about the other properties he and his partner had looked at and he said something I thought was odd. He said I talk too much and that I gave too much information. He said that I should be quiet and let people figure out if the property works for them.

I replied that I want to help people make informed decisions and not buy something that has problems or that would be difficult to resell, because most people who buy in Key West don't keep their houses all that long. My experience has been that most people sell the first property and move up a notch. He replied that the buyers are adults and can make their own decisions and their own mistakes. That's a argument I could not refute.

I have not changed my ways, however. I still try to give lots of information to help buyers make the correct decision. But the house or condo they pick is their decision, not mine. I don't try to impose my choice on my customers.

I also know from experience that most customers do not listen to what a Realtor says when he or she shows a property. Most customers are too busy looking a the awful artwork or dreaming about what it would be like to relax by the pool. They overlook flaws to see things that impress then negatively or positively. The really experienced buyers do listen, however. And those buyers tend to be successful in their fields of expertise back home.

That's my theory at any rate. The Key West MLS website just expanded areas covered today. So you can now look at all mls listings in real time from Key West to Key Largo. That is over one hundred miles of homes and businesses. CLICK HERE to enter your search criteria. Remember to limit your search criteria. And consider giving me a call if I can be of any assistance to you. 1-305-766-2642.

An explanation about the pictures. The old black and white photo shows the Island City House in its condition from years ago. It was rehabbed several years back an made into a guest house. And a couple of years ago it was condominiumized. Sales have not done very well. Not by a long short. There are some outstanding properties on William Street where this building is located. This in my opinion is not one of them.

Season is Over. How did the Market Do?

Season is over. How did the real estate market do in Key West this year as compared to 2004, 2005, and 2006?

I did a quick search of SOLD homes, condos, duplexes, and 3-4 units from Key West through Shark Key priced over $200,000 from January 1st thru April 22, 2007. There were a total of 122 such sales. The least expensive sale was a studio condo listed for $239K and sold for $220K. The average sale was a 3-bedroom home with 1425 sq ft listed for $954,991 and that sold for $888,826. The most expensive sale was a Sunset Key home listed for $6.5 million that sold for $5.8 million.

In 2005 there were only 95 sales during the same time period. The least expensive condo sold for $287,000. The average sale was a 3 bedroom, 1706 sq ft listed at $775,000 and sold for $729,000. The most expensive home was an Old Town home on Southard Street that was listed for $5.9 million and sold for $5.5 million.

But 2005 had more sales that 2006 and 2007 combined. There were a total of 244 sales in the same time period. The least expensive sale was a condo listed for $324,900 that sold for $320,000. The average sale was a 3 bedroom 1411 sq ft listed at $982,502 and that sold for $948,271. The most expensive home was listed at $4.5 million and sold for $4.3 million.

But there is good news to go along with the above numbers for 2007. There are a total of 64 contingent or pending contracts. The least expensive is a condo listed for $250K, the average is a 3 bedroom 1550 sq ft home listed at $998,381, and the most expensive homes average $5.1 million.

I am fond of saying that statistics lie and liars use statistics. There is no doubt that the statistics I cited show that the market has taken a dramatic downturn from 2005. But 2007 average sales price appears to outshine the 2006 time period. There are currently 1160 units on the market with the least expensive listed at $239,000, the average listed for $1.090,501, and the most expensive averaged at $6.250 million. That’s a lot of inventory.

The hardest part of the market to sell is the mid range priced home. And if you go back through Key West real estate sales to 1997 you will see that the mid range priced home has always been the most difficult priced property to sell. Back then the affordable fixer-uppers in Old Town sold around $250-280K. Homes over a million sold quite easily. But the majority of homes in the $500-800K range languished. Those homes are now just priced a lot higher. And I think the pessimism or skepticism about the lack of sales is failing to recognize this fact. Doomsayers are comparing the "boom market" sales of 2003 thru 2005 to today, and they are seeing dome and gloom.

My suggestion: if you are a seller and don’t need to sell now: Don’t list your property. If you must sell now, price it correctly. If you are a buyer, now is the time to buy. The market may not have totally bottomed, but good properties will get purchased before the dregs. Get the right property at a price you feel comfortable with.

Look at it this way: Macy’s is having a clearance sale on Prada shoes originally priced at $500. The sizes vary, and the prices will drop hourly until the entire collection is sold out. Would you prefer to get your exact size for $300 or hope to wait and get it at $250 or $225? You might get it at the cheaper price. But someone else may get the last pair at $300, and you go home shoeless. I think my analogy translates across the board to what is happening in the Key West real estate market today.

If you are interested in buying one of the Key West bargains CLICK HERE to do your own search of all real estate for sale. And then give me a call at 1-305-766-2642. I would be glad to help you find your next home or business in Paradise.

Politics & Real--Estate Key West Style

A while back I mentioned the conviction of noted former Monroe County Attorney Jimmy Hendricks, CLICK HERE in US District Court. The charges were conspiracy, witness tampering and obstruction of justice. Well, this morning's Key West Citizen has a story about the arrest of 74 year old Assistant City Manager, John Jones, on two charges of "FRAUD-IMPERSONATION OF A BUILDING CODE INSPECTOR FIRST VIOLATION".
CLICK HERE to read the story.

I mention this again because the politics of how real estate gets developed is a big deal in Key West. And for some reason criminal charges (and sometimes criminal convictions) are often a direct result of the development process.


Same newspaper, same day, some of the same characters has this headline: Lawsuit, neighbors lose battle over building transfers. CLICK HERE to read the item. The paper reported about a Key West Planning Board meeting where the board approved a plan to let Pritam Singh (developer of many projects in Key West) parlay building rights from the razed Hampton Inn on North Roosevelt Boulevard into two transient rental units at 707 Simonton. Jimmy Hendrick was at the meeting acting as Singh's land-use consultant and persuaded the Planning Board the transfer is legal because a court has not ruled against the city in a pending lawsuit.

And for those who think the Key West real estate market has hit bottom, or hasn't even got anywhere near the bottom, I would suggest that you step back and consider this. Some very big players are spending a lot of money on several really big projects in Key West. The little uproar over two transient units on Simonton Street is no big deal. But the players make it a big deal because there is money to be made as a result of the issuance of transient licenses at that location. And the continued development of other projects supports the premise that there is substantial future money to be made in Key West real estate.

If you Google the term "politics and real estate development" you will find 11,600 links discussing the topic. Maybe the two items in today's Key West Citizen are among those 11,600 because in Key West politics and real estate go hand in hand (or maybe hand in pocket).

Dazed and Confused

A lot of people leave Key West with mixed emotions. They fall in love with the place and work real hard at having such a good time that they go home dazed and confused. I guess a lot of people spend a lot of time in the bars... It's like everything they did is kind of hazy. And they need to go home to rest before they go back to work.

There is life away from Duval, however. I have written about that before. I thought I would share a couple of links to where locals post comments about like on the rock.

One is an Ezboard site called Its Only Key West CLICK HERE. There are seven sub-boards to checkout. If you are in love with Key West you may want to look at
the IOW Scrapbook for some real fun old pics of Key West. You will be amazed.

Checkout the other sections as well. Read how locals refer to tourists and their driving abilities.

Another more infamous site is Pistol and Enema, a gay gossip, message, and picture board. (Caution: there are some nude pics there. Not porn.) Again it is geared towards locals, but lots of folk who are planning trips to Key West go there to help plan their vacation so they don't miss a thing.

If you are planning a trip to Key West and think you may want to take advantage of today's more affordable housing market, checkout the the Key West Association of Realtors mls website. You can search all residential, commercial, and lots/boatslips available from Key West to Marathon. CLICK HERE. Then please give me a call for more information. 1-305-766-2642. Thanks.

Is the Sky going to Fall?

I have been trading e-mails with a customer who wants to buy a big home in Key West (a third home if I recall correctly), but who has developed a few reasons why he is postponing the purchase. The current market valuation is the prime factor. He thinks the price correction that has taken place has not completed its course. And he writes that he is awaiting to see if a hurricane scrapes Key West this season. If Key West gets hit, he thinks the market will fall to where were it was five years ago.

I think he is envisioning another Hurricane Wilma, but maybe he thinks any hurricane will be devastating. Other than Wilma, the hurricanes I have experienced are very bad rainstorms accompanied by very hard winds. But I experienced snowstorms and hailstorms in Colorado that produced as much property damage as Wilma did (except for the flooding--and that was an anomaly).

But I do understand his pessimism. I went to the Wikipedia to find support for my customer's pessimism. And I found this explanation of The Sky is Falling CLICK HERE. "In the "happy ending" version, the moral is not to be a "Chicken Licken" and have courage. In other versions the moral is usually interpreted to mean "do not believe everything you are told". In the latter case, it could well be a cautionary political tale: Chicken Licken jumps to a conclusion and whips the populace into mass hysteria, which the unscrupulous fox uses to manipulate them for his own benefit."

My customer lives in a state that is pelted by tornadoes and hurricanes. (Not Florida). He is a very educated person. He is very successful. He is looking for a reason to justify his reluctance to buy now. He has lots of company...

But there are other equally well educated, successful, and financially stable buyers that are purchasing choice properties at what I think will be deemed bargain prices.
Another such example just hit the mls this morning. 911 Fleming Street CLICK HERE was listed for sale 94 days ago at $4.675 million. It went under contract this morning. Some buyer does not see the sky as falling, but rather sees a buying opportunity.


CLICK HERE to preview all current mls listings in the Key West are. Then give me a call for further information. Thanks. 1-305-766-2642.

Property Taxes

There was a story on the evening news last night about the political debate going on in Tallahassee (Florida's state capitol) over property tax reform. It seems that real property values have increased so dramatically over the past few years that there are many new home buyers that can afford the price of the house, but cannot afford the property taxes. Likewise, existing homeowners are getting squeezed by ever-increasing property values that make their taxes more costly.

CLICK HERE to read a short article in today's Miami Herald that discusses the issues concisely.

The tax rate in Monroe County Florida is set near ten mills. That means property owners pay $1 for every hundred dollars of value of the real property. A home with an assessed value of at $890,000 would pay $8,900 per year in property taxes. If the property is homesteaded, the assessed value would be reduced by an additional $25,000, so the tax would be 890,000 - 25,000 = 865,000 X .01 = $8,650. CLICK HERE for a description of Florida's Homestead Statute.

I was very surprised to learn that the tax rate is not uniform across the state. Each county sets it's own rate. And some counties apparently have very high tax rates--much higher than Monroe County. So it is understandable why so many taxpayers are feeling the pinch.

If you are looking to buy a property in the Lower Florida Keys you can use a computer tool provided by the Monroe County Tax Assessor to predict what your property taxes would be on any given property. CLICK HERE to go the the page, identify the property, enter the proposed sales price, the the County Assessor's website will show you what your taxes will be.

A spokesman for the county assessor told me that the county looks at the sales price to make sure that the price paid was bona fide (arms length transaction) and the value of improvements to the property to determine the final assessed value. I always tell prospective buyers to contact the county assessor directly and not to rely on anything I or any other Realtor tells them about what their individual taxes will be. Do your homework so you are not mistaken or mislead. Generalizations are just that.

Florida does not have an state income tax. So property tax is one of the primary sources of funding local government. Don't expect any rapid or dramatic change to the current system. But it does look like some type of reform may be in the works.

CLICK HERE to preview all current mls listings in the Key West are. Then give me a call for further information. Thanks. 1-305-766-2642.

Key West Guest Houses -- For Sale

I know something about Key West Guest Houses, because I used to own one -- Eaton Lodge located at 511 Eaton Street. Selling it ranks in the top five mistakes of my life. Buying it was one of the best things I ever did. Taking as long to buy it cost me big time. The time value of money.

I pretty much decided that I wanted to own a guest house after my first trip to Key West in 1984, but I put off even looking on that trip thinking I was being too impulsive. I had stayed in other guest houses in Provincetown and California during the four previous years and those experiences led me to believe I could be a very good innkeeper. Kind of like Bob Newhart on NEWHART.

When I first started to look at properties guest rooms were being sold in the range of $25,000 - $35,000 per room. Most recently the rooms have been sold around $300,000 per room. Quite a dramatic increase in20 years. Yet the prices pretty much fall in line with the price appreciation of single family homes in Old Town.

The reason it took me so long to buy a guest house was my failure to listen to my Realtor. I kept on insisting on over-lawyering every offer I made. I kept trying to weasel the last nickle out of every deal. And I kept not getting any deal done.

I ended up buying Eaton Lodge at a public auction conducted by the Small Business Administration. It had foreclosed a mortgage on the property and let the building sit vacant for two years. It is a beautiful Greek Revival building with mature gardens in a heck of a great Old Town location. Because of the auction, I was forced into accepting the building "as is" and without any ability to negotiate anything. I couldn't over-lawyer or nit-pick. Thank God.

I tell buyers to consider the following factors when looking at prospective guest houses:

1. Location. Once vacationers arrive in Key West, they can't drive anywhere. Pick a good location that is easy to find and that is near Duval. Many visitors come to Key West without reservations, so the better the location, the more likely you are to stay full.

2. Improvements. Every guest house that I know of was built and was used as something else before converted into a mini-hotel. And even though guest houses may be priced similarly, the fact is that each property is very different in the quality of renovation and utility for it's end use. Some buildings have more deferred maintenance than others. Others may have code violations. Or some properties may have more guest rooms than transient licenses. Some may have locational problems (noise, lack of any nearby parking, distance from Duval, etc.).

3. Book of Business. It is virtually impossible to create a new guest house out of an existing building. The City of Key West has so many restrictions on buildings that it is just easier to buy an existing business. Look for a business that is operated as a business. Request and study the business's financial records. Study the reported income for the periods of January through April. Well located guest houses ought to be near 100% occupancy during the entire period. If the numbers are not there, then something is wrong with the numbers or the operation. Some owners operate "off book"--they do not report all cash income. This can have a severe impact on a potential sale because all banks require appraisals based on the number of legal rooms (rooms with transient licenses) and verifiable income. Operations that are successful are easier to takeover than businesses that are mismanaged. Sometimes property costs more because it is worth more.

4. You are not Newhart. Many people think they will live in one of the guest rooms and live the life of Bob Newhart in his charming Inn. Wrong. You have to be rich, really rich to live on site. On most properties you would lose $200 or more per night in room income for 365 days a year. It is less expensive and easier on your mental health to live near, but not on the property.

5. Help. No, not "help me!", but how many employees will you need and how much will it cost to pay them. A mom and pop type of operation can usually handle a small guest house with 6 or 7 rooms with one or two additional employees to help as maids and relief from the front desk. But that mean mom and pop will be doing a lot of the work as well. Guest houses with 13 to 14 rooms become very profitable because you can afford to have enough employees to let you run the business and mingle with the guests as necessary. Some guest house owners use a service company that provides maids on an hourly basis, so the owner pays a flat fee to the company and that is it. The worker is not an employee of the guest house so there are no FICA or unemployment taxes to pay. However, many very successful guest houses run just the opposite. They pay their employees a good hourly wage, offer some form of medical insurance, and maybe even paid vacation. The latter businesses have employee loyalty and longevity. And returning guests know the names of those employees and come back year after year because they are treated nicely. In employee relations cheap labor can be very expensive.

A Realtor should be able to help you understand how these factors impact your potential investment in a Key West guest house.

Earlier I said "Selling it ranks in the top five mistakes of my life." After I sold Eaton Lodge I understood that I had thrown away years of easy income for a quick (real quick one time profit). Running a guest house is not an easy business, but it is not hard one either. Making the right choice and operating a business as a business and not as a hobby can provide a good and stable income and significant property appreciation.

To view all current Key West Guest Houses that are for sale CLICK HERE.


CLICK HERE to checkout all current Key West mls listings. Then give Gary Thomas, that's me, a call for more information. 1-305-766-2642.

Where do you park your Yacht?

One of the interesting things about Key West real estate is the continued development of boat slips in the Key West area. The Historic Seaport :"Conch Harbor" was re-vitalized a few years back and it looks great. It has great new facilities including pool, showers, restaurants, and businesses that meet the needs of boaters. Not too far away is the Galleon Marina that is located next to the famous A&B Restaurant. The yacht pictured to the right is located at the Westin Resort Marina. A mile or so east you will find the Garrison Bight Marina and not too far from that is City Marina and then the Key West Yacht Club.

When you cross over Cow Key Bridge and go on Stock Island there are a bunch of new marinas in existence or in the process of being built. On the Gulf of Mexico side you will find the Sunset Marina. Classy and it has deep water access. The Sunset Key Condominiums are right next door (some even come with their own deeded boat slips). And those condos are just across the street from the Key West Golf Club. You can park your yacht at your back door and drive your golf cart across the street to play 18 holes of golf.



The Atlantic Ocean side is where all of the new action is. Major development is going on there with expansion of existing marinas to the creation of new ones. One particular boat slip that may attract your attention is the 50' slip at Ocean Side Marina CLICK HERE. It is priced at $450,000.


CLICK HERE for an aerial map that shows the location of each marina mentioned above. Use your mouse and drag to get "up close" aerial images of each marina. This may help you if you are in the market for a boat slip in the Key West area.

There is a boat slip available in just about every length, and prices vary depending on location and amenities. CLICK HERE to checkout all current Boat slips in the Key West area.

CLICK HERE to checkout all current mls listings in the lower Florida Keys. Then give me a call for more information. Gary Thomas 1-305-766-2642.

Open House Sunday -- 617 Fleming Street

Please visit me on Sunday, April 15th between 11:30 AM - 2:00 PM at Campbell Courtyard, 617 Fleming Street to see
what I call a Slice O' Paradise. CLICK HERE for more pics and information on this charming two story cottage right in the very heart of Old Town Key West. It is two blocks to Duval and three blocks to the Historic Seaport. But tucked away in a quiet little island on the Isle of Key West.

This charming 2 bed / 2 bath home was recently appraised and is priced at the appraised value, $785,000. The home is an eyebrow house, and it sits at the rear of the Campbell Courtyard compound. The home is offered fully furnished as well. The home has an excellent rental history and would make an excellent investment for folks who want to buy a little place in Key West that can help pay for itself.

If the charm, convenience,location, furnishings, ability to rent the home but still use it and don't win you over, maybe this will. It also has privately owned off street parking space. Bring your checkbook. Let's write an offer this Slice O'Paradise this weekend.

Trouble (Ya Got Trouble) Fractured

ALBUM: The Music Man
ARTIST: Meredith Willson

FRACTURED BY: Yours Truly

Oh, we got trouble
Right here in Key West City
Right here in Key West City
With a capital 'T' and that rhymes with 'P' and that stands for 'Phool'
That stands for Phool
We surely got trouble
We surely got trouble
Right here in Key West City
Right here

I recently responded to a query from Solares Hill Newspaper regarding advice on listing ones home. In my reply I added my thoughts on what I see as a very troublesome matter. Key West has a bunch of brand new $2 million (and up!) town homes, condominiums, and single family spec homes being built or currently available for purchase. (I have even written about several such projects in this blog.) Key West does not enough buyers for all of these projects. In fact we don't have enough buyers for town homes, condos. and single family homes that already exist and that are far more affordably priced.

I then suggested that the developers and the bankers financing these "over-priced" projects are in for a rude awakening. I assume that there may be some pre-sales on the projects, because lenders require it. But I believe that most of the pre-sales are to insiders of the individual developers or are buyers who signed up for units a couple of years ago when the Key West market was entirely different. And only a Phool believes that the $2 million asking prices are achievable. Not on one unit and certainly not one hundred,

I think the big projects being built at the Key West Historic Seaport, the Atlantic Shores, and the Casa Marina will be built, but proably be built in phases. I predict that some of the smaller projects will finish units under construction but not commence any more units until the market rebounds.

If the asking price on existing inventory (completed or nearly completed) is not substanitally reduced, the lenders will eventually step in. I think the only reason that the local banks have not foreclosed yet is that the banks are continuing to fund the interest payments out of the construction loans themselves. One of these days the OCC (federal Bank Examiners) is going to require the banks to start writing down the non-performing loans, and when that happens the prices will get reduced.

The smart lenders will not dictate the sales price, because when the project invariably goes south (and that is my prediction for many of these projects), the lender would be setting it up for a defense of creditor interference. But if the developers do not convert the units to sales and if they are unable to pay down the construction loan as agreed, we should anticipate the bank going into ownership either through foreclousure or by deed in lieu of foreclosure.

There is just too much inventory out there. There are not enough buyers. The prices are still too high. And the sky is going to fall.

Oh, and if you think my prediction is contrary to what I have previously written about individual projects, I don't agree. Quality homes in a good location always sell for a higher price than inferior quality properties or properties in less desirable locations. The problem is not the projects, it is the current pricing.

f you are looking to purchase a home in Key West, please CLICK HERE to search the mls website for all current mls listings. Then please consider giving me a call to help you find your next home, vacation home, or commercial property in Paradise. 1-305-766-2642.