Month: December 2019

Florida… Sunshine State. According to different weather websites Florida has about 260 days of sunshine per year. You would think the “Sunshine State” therefore is the leader when it comes to Solar energy. Well: think again because we aren’t. We are the taillight.

The short version is that it’s probably never going to happen. For sure not in the close future. Why?   Lobbyists and the 2 providers won’t let it happen. They are used to their great income because it leads to great pensions and a big influence on their CEO’s.

Maybe I hear a BUT: But there is the model town of Solar energy called Babcock Ranch. Right: let’s talk about this disaster later. First, let’s go back in time a bit cause of a funny story.  

I’ve built my home myself in 2005. Born and raised in Germany in an area where solar energy was a matter of course everywhere, it was simply normal I wanted my home to have solar panels and being self-sufficient.  I knew with enough solar panels installed on my roof, I would be able to skip my electric bill completely and maybe even make a few bucks when selling power to the grid. The “selling back”  part blew up in my face first. My provider simply told me they won’t pay me for any power I send back to the grid. OK: not good, but I was still excited and hoped to get away with a very small electric bill since I would only need power at night.

From friends and customers, I knew their energy bills were between a little below $100 to max. $250 per month depending on the temperatures for a home like mine. So I calculated an average $160 energy bill if going with my regular provider. After I heard I can’t sell anything back to the grid I was hoping to get away with about $50 / month. I didn’t expect what’s coming next:

Remember: This was back in 2005: I phoned around to find a dealer for solar panels. No luck. Everyone who had at least al little knowledge in solar power pointed me to British Petrol – BP in California. As a matter of fact, back then BP was the only company providing solar panels for private homes in the US. So I called and I was shocked to get the following facts:

• BP would be able to provide me with Solar panels
• Sales price: $30.000 – wow!!
• Shipping: Extra – of course
• And:  No warranty at all cause they had nobody in our area to install it.  
• Installation: About $5.000

My head started spinning: $35.000 for solar panels to maybe save about $110 per month. That comes down to 318 months to break even. That’s more than 26 years!!! No way the system would last this long.  Common sense made me drop the idea and hook up to the grid with the only provider in my area. Florida Power and light ( FPL )

Now let’s get back to Babcock Ranch: This is how they advertise the area:

• 343.000 Solar panels located on a 440-acre site
• 74.5 megawatts of quiet, zero-emissions energy, enough to power about 15,000 homes
• Emissions prevention equivalent to removing 12,000 cars from the road every year
• Combined with other FPL solar plants, customers will benefit from millions of dollars in savings due to several factors including system fuel savings
• Generating clean, solar power since 2016

Here’s the link to Babcock Ranch.

343.000 solar panels and they even have battery backup. Great. Does it mean homeowners won’t get an electric bill? NO!! Every homeowner at Babcock Ranch is paying exactly THE SAME price per KW than everyone else. The power goes to the grid and FPL sells it back to the homeowners with no credit at all. Ridiculous. If you point to this fact, they try to explain, that their homes only need about $70 per month for energy, because they are all built “High efficient” I’ll be darned: High efficient homes in Florida. Wow. Shouldn’t’ t it be COMMON SENSE to build all homes in Florida this way? I’m sorry, but under these conditions, I won’t point any homebuyers there because let’s not forget there is one winner in all of this: FPL!

• They got the land free from Babcock
• They even got the government to substitute money to build the solar field
• The panels can run up to 15.000 homes, but right now there are maybe 500 so far. Guess what happens with the exceeding power…… you got the picture!  

Babcock Ranch is far off everything and it will take years until this is a city of its own with more amenities. And even then: It’s not worth the extra money homes are going for. This is, of course, my personal opinion.

BUT what about help from the Government?  

Right now the Government grants a financial substitute to people willing to install solar panels on their roofs.  RIGHT!!!  Bit it’s no immediate Credit towards the purchase price but a tax Credit.  Does this mean we will see solar panels everywhere soon? Nope!! It still aint going to happen on a big scale. Here are a few simple facts pointing out why:  

• The financial substitute will decrease each year.
• The later you decide the lower your tax credit will be. 2022 no more Credit at all
• The price for panels is still incredible high: The estimate for my home  in 2019 came back with $32.000

Take a look at the numbers including the tax credit.  They are based on the $32.000 purchase price and an estimated taxable income of $100.000:

If installed in 2019:

If installed 2020:

If installed 2021:

If installed later than 2021:

Let’s do the math:

• Nobody is going to install a system in 2019 anymore. It’s too late in December to do this
• After the tax credit in 2020 the system will cost me $23.680
• This price is without any battery backup system for night use
• Meanwhile, FPL is buying back excess power from private customers at a retail rate of 10,8 Cent / Kwh. Great. Theoretically, you could install a system big enough to earn money during the day so your night usage would be covered. Theoretically. But the power companies allow their customers to install systems meeting up to 115 percent of their current energy needs.  More details see here: https://www.energysage.com/net-metering/fpl/
• These 15%  won’t cover the usage during the night but it’s at least something. See the chart below what uses the most energy. In our area, the AC during also runs at night. Let’s give some credit and assume we use only 30% of our monthly energy bill at nighttime.  
• My overall usage is about 1,500 kW / month.
• 15% ( 225Kw ) I can sell back to FPL for 10,8 Cent / Kw. That’s $24,30 per month.
• Your energy bill is never going down to ZERO, cause there is always some connection fee and government taxes etc.
• Based on the experience at Babcock ranch I heard the overall customer still has a $70 FPL fee. That’s because most homes are highly energy efficient. Let’s assume you build/buy such a home.
• If you now deduct the $24,30 net meeting, the energy bill now goes from $70 down to $45.
• The monthly saving is now about $135
• It would only take 175 months to balance out. That’s still 14.6 years

This is how it is supposed to work:

• Customers installing solar panels should not pay for power at all
• Everyone decides the size and power of the panels themselves
• The power company pays back the excess unlimited – maybe for a lower price
• This would cover the power for the night and the energy bill can be zero.  
• Then it would only take a few years

But this will never happen because a few lobbyists won’t allow it.

Summary / Conclusion:

This is the Sunshine State. But if you are not a real enthusiast or tree hugger and you do it to save our planet,  it’s not going to happen on a big scale.  With 10,8 Cent / Kw the financial incentive simply isn’t big enough. Some homeowners here and there and some smaller areas like Babcock aren’t’ going to save the planet.  It should be mandatory for new homes in the Sunshine State and all other southern States to install solar panels. For this to happen the Government needs to step in. This would mean they have to step on lobbyist’s toes. Therefore: It’s not going to happen.  Pity. We got the technology but as long as money and power are more important than our planet we won’t see it happen.

Americans find it difficult to understand European investors when problems such as non-payment of rent and, in bad cases, even nomadic tenancy arise. We actually almost don’t know such a thing in the USA. We will show you where the differences lie:

In general, it should be noted that the rights for rentals in the USA lie with the owners. Of course, tenants also have countless rights, but when it comes to unpaid lease payments, landlords in the U.S. do not have to stand idly by and often wait many months for often uncollectible payments. Here everything goes a little faster because for damage s up to $5,000 everyone in the US can go and claim it losses through a small claim court. Its a fast court process where you usually don´t need a lawyer to be present. experienced ex-lawyers and judges hear both sides in a court of arbitration and make suggestions on how a judge ruling might go.  More info about the small claim court process can be found here.

https://www.leeclerk.org/courts/small-claims

Let me show you the difference in both countries:

This is how it works in Europe ( especially in Germany )

• The tenant doesn’t pay rent.
• The landlord warns and sets a deadline. Nothing happens.
• Landlord sends the next reminder and sets a new deadline. Nothing happens.
• Landlord threatens with a lawyer, and sets a final deadline. Nothing happens.
• Landlord hires a lawyer. The lawyer writes a letter with a new deadline asking for payment from the tenant. Nothing happens.
• The lawyer writes another letter. Again he sets another deadline. Nothing happens.
• The lawyer announces the court date. Nothing happens.

Until we reach this step, often up to 4 months passed in which the landlord not only did not receive any rent but also had to pay the additional costs of the property to the property management. FINALLY, it comes to a court hearing. Since the tenant has not fulfilled his obligations, the outcome of such negotiations is quite often certain: The tenant is sentenced to the payments for rent, incidental expenses, interest and lawyer’s fees. Great. The rule of law has won. Theoretically….. But what if the tenant still does not pay? The landlord will be held responsible for all previous AND coming costs and expenses. After further often long periods it will come to forced eviction.  Of course, the landlord also bears the costs for this again. Often tenants have disappeared without a trace on the day of the eviction. In this case, the landlord even has to pay for the costs of evacuation and storage of the furniture left behind. A nightmare for everyone who has experienced it.  Loss of rent of 12 or more months (depending on how quickly the landlord reacted at the beginning) is the rule. The legal advice costs cause further costs which can never be collected again. Who has experienced this wants to hear from further lettings often nothing more.

Now let me show you how the same scenario is treated in the USA:

• The tenant doesn’t pay.
• The landlord sends a reminder after 12 days and sets a deadline. Nothing happens.
• The landlord sends another reminder and threatens to go to arbitration. Nothing happens.

Until this deadline max. 1 month has passed. For these cases, the landlord has a 1-month rent deposit. Thus no damage has occurred yet.

• The landlord goes now to the arbitration court. His court date is usually set no later than 3 weeks from now .

The costs for it amount to approx. $300. Depending upon the height of the outstanding amount also a little more.

• The tenant receives the court appointment PERSONALLY through the local sheriff. That leaves an impression.

After max. 2 months both parties meet at the small claim court for negotiation. Since we always collect the last month’s rent for our landlords in addition to the deposit, the landlord actually still has no loss of rent. The outcome of this arbitration procedure is always the same: The tenant is sentenced to payment with a single, but short deadline. It also happens tenants do not pay then as well. The landlord than simply takes his judgment back to court and tells he hasn’t received payment. The court immediately orders the eviction. This decision is handed over to the tenant again by the Sheriff personally.  Often the tenants have already disappeared by this time. The sheriff visibly clamps the note to the front door, which is clearly visible to every passer-by just because of the red color of the paper.  The eviction takes place within a few days afterward. This is carried out by 2 sheriffs in the presence of the landlord. If the tenant is still in the property, he will be arrested right away. If he has disappeared, the landlord has now received his property back legally and can immediately re-rent it. The landlord can keep all furniture and everything else in the property or put it on the street as bulky waste.   The maximum loss of the landlord amounts to approx. 1 month’s rent plus low court costs plus any possible damage to the property by the tenant. In contrast to Europe a dream state.

Not only the rights of the landlord are better in the USA – also the yield: 10% per year are the rule.

Single-family houses are often unaffordable in Europe and not suitable as a yield property. This is why apartments are usually rented throughout Europe.  In the event of a loss of rent, the owner must also pay the ancillary costs. Especially in our region in Florida, however, detached single-family houses are the better yield. Reasonable properties are already available from $150,000. Depending on location and condition, you get between $1200 – $1600 rent per month. In the table, I have calculated a small example, what kind of expenses and incomes you can count on based on a property purchased for $200,000.  I have calculated price and value increases at 6%. The costs for the acquisition of the tenant are only incurred in the 1st year:

• Average return on rental income: 5.72%. This is at least 5.72% more than on a savings account in Europe or even more on a negative interest rate policy.
• Rental income in 5 years: $ 57.190 that is approx. 30% on the invested capital
• Increase in value of the object: $52,495
• Total revenue/profit after 5 years: $109,685 – that’s almost 55% on invested capital or 11% per year

I understand that you are a little hesitant to believe these numbers. Thanks to the MLS search system in Florida, which is freely accessible to everyone, you can see for yourself. On my website under “Homebuyer” and Option 1 you have the possibility to verify the possible rental income yourself. I have searched for properties in Cape Coral with min. 3 bedrooms and a min. 1.500 sq ft ( approx. 140 m2 ) living space, which should not be older than 25 years. The input looks like this: 

And to find out how many properties are currently for sale in our area up to $200,000, you can easily test with these specifications on the same page:

When I checked today there were just under 1,000 properties in Cape Coral for less than $200,000. A dream for investors and all wannabees.  Feel free to try different entries on my site and feel free to contact me if you have any questions.

One more word about financing:

Financing, in general, is possible for foreigners in the USA with equity capital of at least 25%. The interest rates are much higher than in Europe. In addition, the bank charges (closing fees ) a quite high fee for the mediation of such a loan. In addition, the processing is lengthy and complicated. If you don’t want to miss our bargains and are dependent on financing, the procurement of the money via Europe is a much cheaper way.

Since 1994 I have been renting properties in Florida myself. So far there has only been 1 case where the arbitration procedure had to be applied.  As a property manager, I take over the search for suitable tenants. I perform a detailed background check for the costs of which the tenant himself pays. Suitable tenants must always hand over 3 months’ rent before moving into an object. This covers the 1st month, the last month and the deposit. This procedure alone ensures that you hardly get any defaulting tenants. Whoever has this much money usually also have sufficient income to pay further rent.

Conclusion:

Do it. Do it now. Negative interest for money in the bank in Europe is a clear sign. Don’t leave your money rotting away. I’m here for any questions you might have. Call me

Here all links again:

– Info about arbitration court: https://www.leeclerk.org/courts/small-claims

– Link to MLS on my page: https://floridasouthwestrentals.com/home-buyer/

The snowbirds are coming back and they often don’t like how their property looks. They thought they’d paid a management company to take care of their property, but it looks like hell. 

Did it happen to you too – or not YET???? Chances are, it might happen to you as well. I heard the excuse it seems to be in human nature to mess up. Crap. These boys are simply lazy and getting paid for not doing a ( good ) job which is better than working hard. Yes,  I agree: The summers in Florida are brutal. It ain’t funny to work. You sweat like hell whatever you do. But as a management company, you do have a responsibility towards a property owner who has often paid hundreds of thousands of dollars to purchase a lovely home and who also happens to pay a lot of money for regular maintenance to keep it up.

Here’s the problem: There are a few jobs where people think EVERYONE can do them. Cleaning homes and pools, yard work and of course property management. How hard can it be to look after a ( vacant ) property once in a while? Exactly!! It can be darn hard and very challenging if you aren’t in the real estate industry, if you aren’t very organized and if you aren’t detailed in your communication with the owners.

1. Managers who aren’t in the Real Estate business: it’s not an obligation to be a RE specialist, but it sure helps. When it comes to repairs, it’s always good to have some background knowledge. It happens often that unexperienced customers don’t get the best price for repairs. Since I’m in this business since 1984 and since I’ve built any kind of homes imaginable, I think I can get you a decent price for any repairs.
2. being organized: Let’s look at the fact of being organized: the property owner pays a monthly fee for management services. He expects whoever gets the money will look after his property on a regular basis. YOU THINK!! Let’s talk about a few stories I’ve personally witnessed with or heard from property owners that tell a different story:
   • Pool pump shot: This tells us the pool company responsible for the regular cleaning did not do what they were supposed to do AND the property management company did not check the property and the pool company. I can’t tell how many owners have complained about green pools and shot pumps.
   • Mold in the home: The owner comes back after several months up north and enters the home. Mold everywhere. As a fact, the company responsible for his home never went inside and therefore never noticed a water leak. Damage: Severe!!
   • Water invoice incredible high: Management companies are supposed to check everything. A leaking toilet can cause a serious amount on the next water bill. It happens often
   • Electric bill extremely high:  Pool heaters use a lot of energy. It’s the responsibility of the management to check they are off after tenants or even the owner left. Unattended they run every day for sometimes over a month and the owner has to pay for.
   • House dirty: Now I sure got your attention: It happens to the best and I know it’s hard to check the cleaning crew after each job. But we get paid for these services and we have to.  Vacation homes experience it most often, but it can be avoided. It’s tough to find a good crew, but people with honor and pride are out there
3. Detailed communication: Snowbirds and European owners are often far away from the properties for a long time.  They need to know what’s going on. The easiest way to make them feel comfortable is to talk to them. A phone call from time to time works wonder.  But even better are written reports. A simple email every week after each visit with information what was found ( or better what was NOT found ) gives owners peace of mind.  Since it’s hard to write detailed emails, I, for example, spent nearly $1.000 for the best speech recognition software you can find on this planet. With this, I can write detailed reports in minutes. My owners love it and it gives them peace of mind their property is in good hands.

I could go on for another few pages, but I guess you got my drift. A supposedly simple job turned out to be a nightmare for the owner. How can it be done better?

This business is based on trust and referral. People doing a good job are tough to find because they are busy. Never sign a long-term contract with a new company. Let them explain what they are doing and give it a try. 2 months should give you a good idea with whom you are dealing with.

Why is it owners don’t switch services to other companies even when they are unhappy?  I’m in this industry since 1984 and in Florida since 2004 and after talking to lots of people it’s often for the same reason: owners don’t know what happens with the next company and therefore give the old manager another chance…. And another…. And another. Until they got really frustrated.

If you are not ready to move, but still aren’t 100% happy, then why don’t we start working to build a business relationship with another topic. I can help you with getting more tenants. Our biweekly newsletter with news about Florida, vacation, real estate and other interesting topics goes out to about 800.000 business customers worldwide.  I’m not kidding or exaggerating. This is for real. I found a way to make this happen. This number of emails nearly a guarantee we will find people interested to rent your home.  Of course, we only charge if we find a tenant. You can list your home right on this website. Call or email me for further questions.

We are not saying we are the best. Nobody should say this. Mistakes happen. We all have good and bad days. We are all humans.  But maybe it has something to do with how we’ve been raised. We were born in Germany and we have been trained common sense, reliability, punctuality, and politeness.  That’s what we stand for and that’s what our customers appreciate and honor.  We are also not saying we are the only ones working this way in the area, but if anything of the above got your attention, right now  I’m the closest thing for you to get more bookings and probably a better service with managing your home.

I’m looking forward to hearing from you