The Anna Maria Island Sun Newspaper

Vol. 13 No. 17 - February 6, 2013

REAL ESTATE

Changing rental rules mid-stream

 

Remember when you were a kid and someone wanted to change the rules of the game mid-stream? Anna Maria homeowners dodged a major bullet in January that would have changed the rental rules in the city; the question is what’s next.

In case you’ve been spending too much time on the beach and haven’t heard, Anna Maria commissioners voted 4-1 to enforce a code that has been on the books restricting short term rentals in the city only to rescind it less than a week later. According to the city’s comprehensive plan and zoning code, rentals of 30 days or less of residential properties are prohibited. This ruling has never been enforced and, therefore, short term rentals have become common-place especially since the proliferation of super-size homes designed specifically for this purpose.

So how much value does the ability to rent a property add to its net worth? On an island like Anna Maria or any other beach community the answer is a lot. In season, rental fees have escalated in recent years to an all-time high, and even out of season rates are higher since the financial crisis has attracted visitors who are within a one-day drive of Anna Maria.

There is an actual financial calculation used to determine property value when purchasing or selling income producing property such as single-family homes, condos and duplexes similar to what we have on the Island. The method is called the Gross Rent Multiplier (GRM), and although it is not precise, it is the formula that is generally used.

To use this method, you first need to gather the recently sold income producing properties in the comparable area and determine the annual gross rental income for these properties. Next you divide the sales price for each of these comps by the annual gross rental income. For example, if the property sold for $500,000 and the annual rental income is $120,000, the GRM is 4.17 percent.

After determining the GRM for each of the comps, calculate the average by dividing the number of GRMs used. By using this average you can then get a good idea of the market value of the property you are either purchasing or selling. For example, if the income is $110,000 and the GRM multiplier is 4.09 percent, the estimated market value is $449,900.

Anna Maria in its attempt to tighten rental regulations is certainly not alone. Towns and subdivisions in Florida and around the country are trying to institute tighter rental regulations ranging from limiting the percent of properties available to rent to asking for a nonrefundable fee payable to the city before landlords could rent a property.

Property owners in the city of Anna Maria who do not rent their properties are understandably concerned that the quality of life is being negatively impacted. However, the owners of rental properties who have made a significant financial investment also have rights which, thankfully, the commissioners ultimately recognized.

Sometimes long-held policies do need to be changed, but this isn’t a game of stick ball; the financial consequences are real to homeowners and businesses. Some creative thinking is in order that will protect property owners and not hurt the character of the community before absolutes are declared.

Real Estate Transactions
Real Estate Transfers from October 2012
Sponsored by Alan Galletto Island Real Estate

Sold Date | List Price | Sold Price | Address | Provision | Property Style

Anna Maria

11/05/2012 1,089,000 1,000,000 511 Loquat Dr 2752 85x117 3 Br/2 Ba SFR
11/09/2012 749,000 700,000 108 Willow Ave 1504 50x11 3 Br/2 Ba SFR 11/14/2012 429,000 429,000 516 Magnolia Ave 1401 52x145 3 Br/2 Ba SFR 11/14/2012 575,000 540,000 212 Coconut Ave 1653 52x100 3 Br/2 Ba SFR 11/15/2012 475,000 442,500 771 Jacaranda Rd 1447 52x98 2 Br/2 Ba SFR

Bradenton Beach

11/05/2012 325,000 230,000 301 Church Ave 1344 102x100 2 Br/2 Ba SFR, Short Sale
11/13/2012 399,000 395,000 303 22nd St 50x100 3 Br/2 Ba Inc. 11/16/2012 330,000 320,000 2407 Avenue B 1650 25x100 4 Br/4 Ba Inc.
11/16/2012 597,000 555,000 104 23rd N St 2088 5800 Units Inc.

Cortez

11/29/2012 579,000 560,000 4130 Marina Ct # 511 2307 3 Br/2 Ba Condo
11/20/2012 825,000 825,000 12913 42nd W Ter 4058 5 Br/3Ba SFR Short Sale
11/02/2012 69,000 54,750 12614 Safe Harbour Dr 81x123x61x122 Vac.

Holmes Beach

11/05/2012 325,000 325,000 6200 Flotilla Dr # 242 1458 2 Br/2 Ba Condo
11/09/2012 499,000 445,000 7205 Gulf Dr # North 1032 3 Br/2 Ba Condo
11/20/2012 179,900 165,000 3607 E Bay Dr # 105 976 2 Br/2 Ba Condo
11/30/2012 475,000 465,000 3804 6th Ave # 3804 1725 3 Br/2 Ba Condo
11/07/2012 599,000 520,000 521 74th St 1625 100x110 3 Br/2 Ba SFR 11/07/2012 449,000 443,000 5805 De Palmas Ave 1150 50x101 2 Br/2 Ba SFR
11/16/2012 335,000 305,000 205 Peacock Ln 1653 43x87 4 Br/3 Ba SFR
11/16/2012 499,000 475,000 211 71st St 1344 54x105 2 Br/2 Ba SFR
11/16/2012 489,000 480,000 309 59th St # B 2083 3 Ba/2 Ba SFR 11/20/2012 859,000 790,000 520 Key Royale Dr 3720 100x108 5 Ba/2.5 Ba SFR 11/21/2012 449,000 445,000 5802 Imperiore Ave 1200 48x101 3 Ba/2 Ba SFR 11/23/2012 419,000 398,600 5704 Holmes Blvd 1678 82x117 2 Br/2 Ba SFR 11/26/2012 439,000 430,000 205 77th St # A 900 2 Br/2 Ba SFR
11/29/2012 400,000 415,000 116 81st St 1494 68x80 3 Ba/2 Ba SFR 11/29/2012 585,000 570,000 603 Dundee Ln 1920 3 Ba/2 Ba SFR 11/30/2012 450,000 425,000 312 57th St 1665 3 Ba/2,5 Ba SFR 11/30/2012 469,000 460,000 212 81st St # B 1200 90x90 3 Ba/2 Ba SFR
11/08/2012 389,000 369,000 3007 Avenue E # 2 756 100x105 2 Br/1 Ba Villa 11/08/2012 375,000 375,000 202 64th St # A 1481 67x100 2 Br/2 Ba Inc. 11/09/2012 350,000 320,000 302 60th St 101x107 Vac.

Source: Manatee County Property Appraiser’s Office


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