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Conducting Due Diligence Before Purchasing a Vacation Home

A vacation home is a great transition property. Because it will be used only part of the year, a vacation home has the potential to be rented out. This will help the property owner move from occupant to real estate investor. However, like any other real estate investment, a vacation home intended to serve as a rental property requires a high level of due diligence. This is especially true for vacation homes located in Florida.

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Local Area Knowledge of The Investment Property

The first level of due diligence is to know the threat of flooding associated with the property.  Finding this begins with the Federal Emergency Management Agency’s Flood Insurance Rate Map. These maps are broken down into only three flood zones. The information on them is basic and relates only to flood insurance.  More detailed information can be gleaned from topographical maps of the area.  These require some familiarity to read.

As in investing, the past performance of floodwaters is not a guarantee of future results. Tropical storms impact coastal communities differently based on how the storm hits the coast. A purchaser cannot depend on the fact that a property was not impacted by the last storm to come through as evidence that it is safe from all storms. Always keep in mind that being located near the coast is a double-edged sword. Everyone wants to live there, but that is where tropical storm damage is typically the worse.

A prospective buyer should also familiarize themselves with any levee system protecting the property. Levees are basically walls to keep water away from property. A levee can fail – known as a breach- if the water behind it gets too high or if it is driven against the levee by a powerful wind. The fact that a property is protected by a levee is not a reason to pass on it. However, this but it is not the sort of thing any buyer wants to learn about after the closing.

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Conduct Due Diligence on Building Codes

After Hurricane Andrew hit the state of Florida in 1992, the state changed building codes to require stronger buildings. Of course, there is plenty of housing stock that did not have to be rebuilt after Andrew. Those buildings still does not meet these new codes. New buyers in Florida need to become very familiar with the changes in building codes and cannot depend on assurances that a property “meets current code”. This phrase may mean it meets the current requirements because it is grandfathered.

Taking the time to learn what a “hurricane-proof” house includes takes some time and effort, particularly for property owners unfamiliar with the structural details of their own home. However, the information is readily available. The time spent becoming familiar with the terms and standards of hurricane-proof construction needs to be considered an investment in the property as much as the down payment or financing.

Pay particular attention to doors and windows, and the garage door in particular. Experts suggest that the overhead garage door is typically the weakest link in the protective armor of a house. If the garage door fails, they warn that the entire house has been compromised because of how the wind will increase the air pressure in the garage. Patio doors are another area of concern and should be equipped with hurricane shutters like all exterior windows.

Keep in mind that just because a house does not have a reinforced metal roof or tie downs on the foundation does not make it unsafe during a storm. It just does not meet the current standard for a hurricane-proof structure. Consider the fact that these upgrades may need to be done during a remodeling project. Those costs should be reflected in any offer made to buy a beautiful Florida vacation home.

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