The devastation wrought by Hurricane Ian could present an opportunity for real estate investors due to federal disaster rules that victims are just beginning to recognize.
Homeowners along Florida’s Gulf Coast had their homes damaged and destroyed by storms. Subject to the Federal Emergency Management Agency (FEMA) Substantial Damage and Substantial Improvements Rule (also known as the FEMA 50% Rule). This rule also applies to commercial real estate.
According to the FEMA 50% rule, if the repair or renovation of a home is estimated to cost more than 50% of its value, the owner must bring the structure into compliance with the flood damage prevention rule. If you don’t do this, your home will not be insured.
Zahra Antaramian, Director of Field Operations for ADG4, a real estate management company in Naples, Fla. Most of these people don’t have the money to do it. They are forced to sell their home. In that case, the investor really is the only option as the house is a complete loss and a demolition. “
Hurricane Ian destroyed or severely damaged at least 11,000 homes in Florida. american red cross.
In Fort Myers Beach and Sanibel Island, Florida, many low-lying homes in the 1970s and 1980s were severely damaged or completely destroyed.
favorable tax laws
FEMA’s 50% rule is one reason investors are interested in Florida now, but the Sunshine State will always be attractive because of its favorable tax environment, Antaramian said.
People who work in Florida do not pay state income tax, creating a huge demand for housing as people flock from other states to avoid returning some of their income to the government.
Florida also does not tax income generated by investments, including real estate and rental income, but rental income is taxed at Florida’s 6% sales tax rate for the first six months.
In addition to FEMA’s 50% rule, homeowners wishing to rebuild must adhere to strict Florida building codes that came into force after Hurricane Andrew destroyed tens of thousands of homes near Miami in 1992. .
“It’s very expensive to build to the new Florida building codes,” said Antaramian. “Commercial owners want it as well. Multifamily buildings don’t have to deal with it.
“The FEMA 50% rule opens up a lot of opportunities for investors.
If you want to invest in real estate but aren’t ready to buy and renovate a damaged Florida home, Benzinga has other options. You can invest in a rental property for as little as $100. Here’s how.
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