3rd Quarter Wrap Up from Realty Masters in Pensacola! 
Can you believe we are a month away from Thanksgiving? Here in the Florida Panhandle, we had our first day with temps below 60 degrees and *hopefully* our final tropical weather scare of the year, while some of you have already had your first snow of the season. 

This quarter's newsletter contains:
-ECUA Sewer Averaging
-Average Life Span of Appliances
-Roofs & Other Insurance Issues
-Donate to our Food Drive
-Disparate Impact Laws & Felonies
-Zillow Changes Advertising Structure
-Consider a Tenant Gift this Holiday Season or a Renewal Incentive
-The Price You Pay- Maintenance Expenses
-Year End Tax Items including Invest in your Property, Capital Gains Taxes, and Opportunity Zones
-Pensacola Real Estate Market Update 

Water/Sewer Averaging
ECUA is doing their yearly sewer averaging beginning November 15th. If you are paying a water bill that includes sewer, it may be worth the cost of a plumber to check all units and do some routine maintenance on the plumbing at your property or properties.
Not sure if you are paying a sewer bill? Your annual sewer charges with ECUA are based off a 90 day average that begins November 15, 2019.  Let us know if you are interested in approving the cost of a plumber to be sent to the property to check all plumbing for the upcoming sewer averaging period. No worries, reach out to our team for clarification.

Average Life Span of Appliances
Here's a list of the most common home appliances and their typical life span according to the National Association of Home Builders.
-Refrigerator 13 Years
-Oven 13-15 Years
-Washer/ Dryer 10-13 Years
-Water Heater 10 Years
-Dishwasher 10 Years
-Central Heat & Air 15-20 Years
Homes built in the late 2000's will be approaching the need for new appliances as time approaches. Consider adding an appliance package on your black Friday shopping list or escrowing funds for replacement in the coming year. 

Manna Food Drive
Are you local? We're asking for our owners, tenants and vendors to help us collect food for the local food pantry. We are hosting a food drive for Manna Food Pantries during the month of October. Clean out your pantries and donate some food to Manna Food Pantry. Bring any items by our office during the month of October. 1 in 5 kids in Escambia County don't have enough food to eat. Not sure what to buy or donate? Read more here

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. 
Disparate Impact Laws and Felonies
A few years ago, the Department of Housing and Urban Development issued a guideline stating that blanket screening policies that deny applicants with felonies can be discriminatory. Since then, we have updated our application and screening procedures to take into effect the disparate impact guideline. While we wait for HUD and Fair Housing to issue further guidelines on this topic, we are finding that lawsuits in relation to this topic are being filed all over the state of Florida (and likely the country). Watch this video from our friends at Florida Realtors that discusses this topic in further detail. 
48 Florida Housing Providers Sued for Allegedly Refusing 'Prior Felony' Tenants

What does this mean? Whereas we used to blanket deny anyone with felonies, we are no longer able to do this and need to consider each tenant on a case by case basis and consider a lengthy list of factors including the entire application, type of conviction, history since conviction, and any rehabilitation done since the conviction. 

We stay up to date with new laws by being active participants in the National Association of Residential Property Managers, National Association of Realtors, and from Chesser & Barr, our legal counsel. 
Zillow Charging for Rental Listings in Florida
As of October 1, 2019, Zillow began charging for single family rental listings on their website! For years, we were able to list on Zillow manually and through a feed at no charge. Florida rental listings are now $10 per week per listing in order to post on Zillow. 

Zillow is apparently testing this in three states- Florida, Colorado, and Oregon, but does plan to roll this out to other states in the future and will likely expand to real estate listings for sale if it's successful in the rental testing. What does this mean for us? Nothing! As of now, we have no need to change our marketing strategy. While our feed from our management software is no longer active, we list each and every property in the local MLS and this feed is still active. Your listings will still appear on Zillow and the Zillow network but may take a day or two longer to appear as they will come through the MLS feed. 
Consider a Tenant Gift this Holiday Season or Providing an Incentive at Renewal Time!
Everyone loves a little holiday cheer. Providing your tenants with a small gift during the month of December goes a long way for goodwill throughout the rest of the year. A small investment can make a large impact on your tenants.

While this is definitely not required, it's especially nice to consider your tenants if you've had a great tenant or one that has been in place long term.  Here's a few ideas on gestures you can make to increase goodwill with your tenants this holiday season!  

Gifts and other gift giving approaches:
  • 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.

Give the gift of deep cleaning or one time lawn clean up!  
  • 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. 

Making repairs or upgrades to your home:
  • 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.

If you are interested in any of these ideas, reply to this email or reach out to your property manager and we can help to execute it for you! 
The Price You Pay- Maintenance Expenses
When it comes to maintenance of rental properties and the many other expenses that come along with them, of course we would all love to spend the least amount of money as possible. It may make us feel like we are getting a larger return. But beware, there may be a bigger price to pay when you choose to pay the lower price!

If an appliance such as an AC or water heater were to break, it’s important to act quickly. While we want the tenant to be comfortable and back to normal in no time, we also want to be sure the repair is executed properly. Especially for those big ticket items, you would like the peace of mind that what you are paying is fair and reasonable. We all know that the only thing that should ever be ripped off is a band aid! Surprisingly, the amount of time it takes can also turn out to be just as expensive.
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.

Invest in your Property!
As we are now nearing the end of 2019 tax year, consider your income and expenses year to date.  It makes more financial sense to spread repairs out over time than to wait until the property is vacant and there is a loss of rental income.    If you've had an easy year maintenance wise, you may want to consider some updates or preventative maintenance to offset your income. Reach out to our team for recommendations on your property! There's always more you can be doing to your rental investment. 

Capital Gains Taxes
We recommend being aware of the Capital Gains Tax Rules and Exclusions when considering your short and long term plan for properties that you previously occupied as your primary residence. Section 121 of tax code allows you to exclude up to $250,000 of your capital gains taxes (or $500,000 if married, filing jointly) if you meet both the ownership and the use test. This can make a huge difference in your tax implications from the profit of the sale of your home.  Become educated on this topic on the  IRS website here
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.  

Curious about your property's value?
If you have questions about your home or property value, reach out to Pam for more information. You can call her at (850) 453-9220 or email  Pam@PensacolaRealtyMasters.com  

Our sales team is happy to provide a current market analysis on your property if you are curious, interested in selling, or have questions about refinancing to get a lower interest rate. Check your interest rates and see if it makes sense to refinance. For some, it does! 

Pensacola Rental Market
We're still seeing signs of strengthening in the Pensacola rental market in terms of lower inventory and higher rental rates. Since 2015, we have seen a decrease in the number of properties rented and an increase in rental rates since 2011. We're on track for this trend to continue in 2019. Make sure to keep your property updated so you can take advantage of increasing rents. Owners that made improvements to their properties saw a significant increase than those who did not. 
Realty Masters of Florida
4400 Bayou Blvd 58B, Pensacola, FL 32503 Rental Office
Call us Monday- Saturday at 850.473.3983

4400 Bayou Blvd 52B, Pensacola, FL 32503 Sales Office
Call us Monday- Friday 850.453.9220