Bargains in the sunshine state

Famously known as the sunshine state, and home to some of the world's most popular theme parks, Florida doesn't just offer fantastic weather and great entertainment. Property prices there have plummeted over the last couple of years, with many homes being sold for less than it cost to build them. No surprise, therefore, that it's currently one of the most popular locations on the overseas property hotlist.

According to property magazine, 'A Place In The Sun', average annual price falls across Florida were 13 per cent up to October 2009, which is partly explained by the thousands of repossessed properties coming on to the market and dragging prices down. Now the USA is out of recession and it's hoped that repossessions will decline. This leaves us with prices at 50 to 70 per cent of their 2007 levels, so there are definitely bargains to be had. The magazine recently placed Florida at number two in its top ten list of places to buy a holiday home in 2010.

Many local experts believe that prices have nowhere to go but up, so a home bought at today's bargain prices could be a healthy investment over the longer term, as values appreciate slowly and steadily. There are already reports of an increasing number of enquiries by British buyers, who already make up an estimated 16 per cent of foreign investors in Florida. The most popular area for them is undoubtedly Orlando, around theme parks such as DisneyWorld, SeaWorld and Universal Studios.

However, whilst many investors have relied on rental returns from their Florida holiday homes in the past, they shouldn't be tempted to rely solely on this income to pay their mortgage, particularly in the current climate. The rental market in Florida has been strong in the past, but you can never take this as a given.

When it comes to mortgage availability, there are generally no restrictions to foreign nationals owning property in the USA and mortgages are available for purchases up to 70% of the property's value. Most are on a repayment basis, and while interest rates and loan terms vary depending on the property type and exact location, deals at present range from 4.25% on a variable basis, to 6.75% for long term fixed rates. The maximum term of any mortgage is 30 years, the minimum loan amount is $100,000, and your total mortgage payments and other financial commitments must not exceed 38% of your gross monthly income.

Clare Nessling, Conti's operations director, adds: "Bear in mind that if your rental income is likely to be in dollars, it may make most sense to take out a dollar-denominated mortgage, so that you're not subject to any currency fluctuations. Renting out your Florida property could also come with some tax-efficient benefits, as it's possible to offset mortgage interest payments, as well as other expenses, against any rental income."