Your Florida Property Went Up in Value. That Doesn't Mean It's Working.
Three numbers most owners have never put on paper and why the second one is the one that surprises people.
Every property owner I talk to can tell me roughly what their place is worth. Most are within five percent, because they've been watching the same Zillow number I have.
Almost none of them can tell me what it's earning.
Those are two different questions, and only the second one helps anyone decide anything. Value tells you what happened. Performance tells you what to do next. And in Florida right now, the gap between the two has widened faster than most owners particularly owners who live somewhere else have had reason to notice.
Here's what I mean, using a composite of a property type I see constantly on the Broward side. The figures are illustrative, but nothing here is unusual.
The property
A two-bedroom condo bought in 2012 for $210,000. Today it's worth about $565,000, with roughly $182,000 left on the mortgage.
The owner lives in New Jersey. If you asked her what she has in it, she'd say $383,000 value minus mortgage. That's the number in her head, and it feels good, because she's more than doubled her money.
Now the three numbers.
One: what she'd actually net
Not the sale price. The wire.
Commission at 5.5% is about $31,000. Documentary stamps on the deed run $0.70 per $100 of price, roughly $3,950. Title, closing and attorney, call it $3,400. Tax prorations and credits to the buyer, another $2,900. Small repairs and estoppel fees, $2,200.
That's about $43,500 in costs, before the mortgage. Take out the $182,000 payoff and she nets roughly $339,000.
She thought $383,000. The real number is $44,000 lower. That gap isn't a surprise to anyone in this business, but it's a surprise to almost every owner, and it's the number that should be in front of them before they sign a listing agreement, not at the closing table.
Two: what her equity is earning
This is the one that stops people.
She rents it for $3,350 a month or $40,200 a year. After a normal vacancy allowance, call it $37,000 of effective income.
Against that: property tax around $9,800. Insurance around $4,600. The HOA fee is $950 a month, which is $11,400 a year. Management at 10%, and a maintenance reserve.
Net operating income lands near $4,200 a year.
Now put that against the $339,000 she'd have in hand if she sold. That's a return of about 1.2% on her money.
Sitting in a money market at 4.5%, the same $339,000 would produce roughly $15,300 a year. The property is behind by about $11,000 annually and that's before her association's reserve funding requirement kicks in. Add a $6,000-a-year assessment, which is entirely ordinary for a Florida condo working through a milestone inspection right now, and the return goes negative. She'd be paying to own it.
She has no idea. Not because she's careless but because nobody has ever put the return on today's equity in front of her. Every statement she gets measures performance against what she paid in 2012, which flatters the property and answers a question that stopped mattering a decade ago.
Three: what another year costs
If the unit were empty, or a second home, the carrying cost for the next twelve months would run about $30,600 on taxes, insurance, HOA and reserves.
And that number grows on its own. Without a homestead exemption, assessed value in Florida can rise 10% every year, and it compounds. Insurance is renewing on roof age rather than claims history. Reserve assessments are landing across the state as milestone inspections complete.
Which is the real point: the cost of waiting is not flat. Every year she doesn't decide, the decision gets more expensive to defer.
None of this means she should sell
I want to be direct about that, because this is the part where you'd expect a real estate agent to arrive at a conclusion that happens to require a real estate agent.
There are perfectly good reasons to hold a property returning 1.2%. She may be betting on appreciation. She may want the unit for herself in ten years. It may be part of an estate plan, or the last thing her family owns in Florida, and that can be worth more than the spread.
What's not defensible is holding it without knowing. The decision to keep a property is a real decision with a real price tag, and it deserves the same scrutiny as the decision to sell. Right now most owners are making it by default, on a number that flatters them.
The report
So I started writing these up. It's two pages, it has the owner's address on it, and it contains exactly the three numbers above: net proceeds after every real cost, return on today's equity, and the twelve-month carrying cost with Florida's tax cap and insurance trend applied.
It's free. There's no listing agreement attached, and I don't follow up asking whether you're ready to sell. I write them for people who have no intention of selling, because that's usually who needs one most and because an owner who knows their numbers is a better client three years from now than one I pestered into a decision today.
If you own property in Broward or Sarasota County, or you advise people who do: estate attorneys, CPAs and trust officers, this is a useful document in a difficult conversation. You can request one here:
It takes about a minute, and you'll have it within a business day.
Julie Melrose is a licensed Florida REALTOR® with Town Real Estate, working Fort Lauderdale and Broward County on the Atlantic coast and Nokomis, Venice and Sarasota County on the Gulf. The figures above are illustrative and not a valuation of any specific property. Nothing here is tax or legal advice — talk to your CPA or attorney about your own situation.
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