Roofs & Other Insurance Issues in Pensacola
As most roofs that were replaced after Hurricane Ivan are now 15 years old, the Pensacola area is being inundated with insurance and financing issues surrounding one of the major (and most expensive) components of your home- your roof! 

We've seen the following roof and insurance related issues: 
-Current owners experiencing difficulties renewing an insurance policy
-Current owners receiving a letter from their existing insurance carrier stating they need to trim trees or replace their roof in order to keep coverage
-Current owners trying to change insurance companies 
-Sellers trying to sell their properties having to a replace a roof that isn't leaking to close
-Buyers trying to buy a property with an older roof unable to secure financing

In addition to roof repairs and replacement requests from insurance companies, there's been an increase in insurance companies requiring the following:
-A flat switch for your HVAC that shuts the unit off in case of a water backup
-A pan required under the HVAC unit indoors
-A pan required under the water heater 
As these items were not previously required to be up to code, they are now, and you may consider having these items done at your rental property if they are not in place already.

We have discussed this topic in length in previous  newsletters and on our blogs! Here's a few articles for more information in case you missed it.
- Impact of Hurricane Michael on the Pensacola Area
- Does it need a New Roof?

If your roof is approaching this 20 year mark, you need to consider setting aside money for roof replacement in the near future. Also, consider these issues when you are deciding whether to repair or replace a roof that is leaking or having other issues.  You may repair an area of your roof only to find the roof needs additional repair soon after, and then, ultimately replacement. These funds may be better spent on a total replacement. 

• Gifting a gift card to Walmart, Target, or Amazon to buy something for the home or to help buy presents for the family. 
• Giving a small deduction off the rental rate for the month of December to help offset the expenses of the holidays.
• Feel free to buy them a small gift if you're a good gift giver. Everyone appreciates a surprise gift basket. Consider Pensacola area companies that make gift baskets Just Judy's Flowers Gift Baskets and  Basket of Dreams Gift Baskets. Everyone likes food so look at some options like  Pensacola Edible Arrangements  or Harry and David.

• Gift a carpet cleaning! Have your tenants been in place more than a year? This gift benefits all parties. Carpets should be cleaned routinely to keep the pile healthy and to promote a better indoor living environment.  
• Gift a one time yard clean up from a professional lawn company. It's hard to keep up with these Florida lawns between the heat of summer and the leaves of winter. Often times, shrubs need to be trimmed more than once a year and tenants do not have the proper equipment to do them. However, we make most shrubs tenant responsibility. Leaves fall in winter just as fast as the grass grows in summer and this is constant maintenance for your tenants.  
• Gift a deep cleaning from a maid service to help them prepare for family to come in town or to take a vacation. 

• Consider fixing or updating items in the household. You can invest in the house and your tenants will appreciate that as well. Let us ask them what one affordable improvement they may desire- like a ceiling fan in a bedroom, a new outside motion light or new weatherstripping on the back door! You'd be surprised what small items increase tenant satisfaction.
• Did you previously elect not to make a repair the tenant's had asked for? Now is the time to revisit that issue and get it repaired before the end of the tax year and as a gesture of goodwill to your tenant.

One issue that can cause a long repair response time is a home warranty. For example, an AC breaks in the middle of summer. A certain part is needed, but the home warranty cannot get that part for another ten days and after it finally comes in, it may be another two days before the appointment can be scheduled for installation. That is an unreasonable amount of time to make a tenant go without AC. Chances are, your tenant is going to want to stay somewhere else in the meantime. They may also seek reimbursement for their expenses along with a rent abatement. So, while you think you are only paying the minimal service fee to the home warranty, you may also end up losing a few hundred more dollars depending on the amount of rent and expenses you agree to credit. After that all adds up, it’s that likely you could have saved a bunch of time, hassle, and money had you chosen for a vendor outside of the warranty company to make the repair the same or next day, for $200 or less in most cases that we’ve seen. You keep a tenant happy as well!

Such an ordeal can leave a bitter taste in the tenant’s mouth. It may also be one of the main reasons they feel the need to vacate upon lease expiration which will result in a vacancy and additional turnover expenses. Was waiting the extended amount of time to try and save some money worth damaging your relationship with your tenant? Valuable time may also be wasted if you require multiple estimates for a repair. Two estimates can usually give you a good idea of what you can expect to fork out, but wanting to get three or four estimates not only increases the repair time, but also increases your tenant’s frustration.

Many factors contribute to the relationships we have with tenants. The most common feedback we get from tenants includes the condition of the properties they live in, communication, and maintenance request response times. We work every day to improve in all of those categories and we act as a liaison and at times, a mediator, between you and the tenant. While we represent you, we do make sure we are providing an objective outlook on all situations so things may be handled as quickly, efficiently, and as smoothly as possible. Just keep in mind that sometimes you may need to pay a little more to have a little less trouble with your tenant/landlord relationship.

Opportunity Zones & Avoiding Capital Gains Taxes
When it comes to capital gains taxes, there's been a lot of talk this year about Opportunity Zones and a new way to reinvest funds that would have normally been paid towards capital gains taxes in real estate in low income zones designated "opportunity zones." 

The Tax Cuts and Jobs Act of 2017 in conjunction with the Internal Revenue Code Section 1400Z provides new tax incentives in the way of exchanging capital gains if reinvested and held in accordance to the rules outlined. This rule applies until 2026. We're surely not CPA's and this topic digs quite deep into tax code so always consult your tax professionals before moving forward with an investment plan that involves significant tax implications. 

HUD has now created a website with information to further explain Opportunity Zones.  Visit it here as it applies for the entire U.S. and not just the Pensacola area.  https://opportunityzones.hud.gov/  and includes a map to show certified opportunity zones. The Florida Department of Economic Opportunity also has a variety of information about Opportunity Zones on their website here.

In Pensacola, there are limited zones identified as Opportunity Zones and includes 5 small areas in Pensacola, a portion of Milton, Florida and most of the city of Century, Florida. 

• East of Interstate 10 from Baars Street North to Royce Street
• A section between Fairfield Drive and Beverly Parkway west of Palafox St. 
• A section both North and South of W Cervantes St. 
• An area next to Corry Station including New Warrington 
• An area West of Palafox Street to P St. 

We're happy to run searches for properties located in the Pensacola opportunity zones for you. Definitely reach out to your accountant or CPA for more information on this topic and with your specific questions.

Pensacola Real Estate Market Stats
How's the Pensacola real estate market doing? Here's some single family market statistics from the Pensacola MLS for the 3rd quarter of 2019.

• The median sales price for the Pensacola area was $215,000 with an approximate average sales price of $250,000. These are records for the Pensacola area! 
• The average days on the market for properties sold in the 3rd quarter of 2019 was 57 days.  
• There's less a 4 month supply of homes for sale on the Pensacola MLS. There were approximately 2,740 sales in the last quarter of 2019 with an active inventory as of October 1, 2019 of 3,176 residential properties for sale.  
• Of the 2,740 sales in the last quarter, nearly 10% of them were new construction!
• The lowest inventory lies in the under $100,000 range. The highest amount of sales are in the $200,000 - $250,000 range.

Interested in multi-family sales? We've got some statistics for you year to date! 

• The average price for a fourplex sold in Escambia & Santa Rosa Counties year to date is $341,181. As one of those was a historic condo conversion quad, the average price excluding that unique property was $300,300 for a four unit building.
• The average price for a duplex sold in Escambia & Santa Rosa Counties year to date is $146,890.  
• Inventory levels for multi-family remain low. The median number of days on the market for multi-family inventory year to date is only 12 days on the market.