Article by Tom Smith
When you purchase a new energy efficient home along the Florida beaches, built above the flood plain, with new hurricane standards and today’s updated amenities, are you “Spending” money or actually “Investing” those dollars? Most families don’t fully understand the difference when it comes to seeing their savings being transferred into another cash outlay.
We all understand that our everyday expenditures are trading dollars for consumer goods that almost certainly have a depreciating effect on cash. Clothes, food, your electric bill, etc., all are monies that will never be recouped and put back into savings for the future. Then there are large ticket items like cars, boats, motorhomes and the like, that although very enjoyable, are surely an expenditure that will never be fully recouped. That leaves a family with investments that may/may not increase the family portfolio depending on how the stock market, bonds, or mutual funds may fair, either up or down during certain periods.
What to consider. Real estate investments in a population growth state like Florida have traditionally been a very sound investment. It is true that investments in real estate like vacant property could diminish in value over the years depending upon your investment acumen. However, the historic tables clearly show that over time, residential real estate in Florida consistently increases in value, and offers a good return of capital when the family decides to sell. This is especially true with new homes constructed with the newest Florida Building Codes, very energy efficient and hurricane resistant, rather than the older 1960’s constructed re-sale homes. Those older existing homes served Florida well for the past 50 years, but with new federal regulations for flood insurance which are federally mandated to rise greatly over the next 4 years, these properties are probably an exception to the rule of increased valuation.
The question of liquidity should also be addressed. Can your Florida home be immediately sold should a family emergency or medical problem require cash? In most cases it does take months to put your home on the market and complete a sale of your home. However, options are available in the case of a quick cash need such as a conventional mortgage or even a reverse mortgage to replenish your cash position when immediate cash is needed. Historically your home probably increased in value over a period of time, so borrowing either short or long term normally would be easy.
This is precisely why so many families are now working with builders to replace their existing home to increase their investment potential. These families also gain the benefit of the security that comes with a new home that meets the 150 MPH wind that could accompany a hurricane, as well as enjoy a new kitchen, flooring, baths and all the new home amenities that are available today. Just maybe that new home “Investment” is a good idea after all, both for the complete enjoyment of the new home environment as well as future profit potential!
GHD Construction Services, Inc. has constructed 6,500 homes since 1971. If you have any questions pertaining to new home construction, feel free to contact Todd directly at: 813-956-8633 or by email INFO@ghdcsi.com, or request a meeting at our new model.