After the water damage I wrote about in my last posting, I later had some fire damage restoration to contend with at the same property.  I began to think that the home was forever cursed or had some inbuilt cosmic bad luck attached to it!  How it happened was like this:

By the time I’d built the management consulting company up to a level where it was self sufficient, I had become completely bored by the wholesale travel that it entailed.  The USA is a big place and consulting jobs are scattered far and wide - the whole “road warrior” lifestyle of hotel living and airport waiting loses it’s sparkle very quickly.  So I decided to change careers and focus on something that would keep me in Central Florida for most if not all the time.

Eventually I built on the experience I’d gained in owning a vacation home and started a property management company, catering for absentee owners (mainly Brits) who bought properties close to Disney World and rented them out on a short term rental basis to cover the costs.  There was no shortage of clients and I included my own vacation home (the one that had been water damaged) in the mix.

Part of the job was to attract renters, mainly US families who wanted more comfort than just an hotel room and who appreciated the cost savings too.  We were pretty successful at attracting bookings and one of the renters was a family from New York.  They were a family of eight, including grandparents and kids, originally from India and still culturally Indian in their dress and language.  Absolutely nothing wrong with that, except that we found out later that they had washed all of their colored saris and other clothes with the house-provided white towels, resulting in garish multi-colored towels.

Anyway, I checked them in at the house on arrival and had trouble making myself understood, but I still went through the safety do’s and don’t’s that were part of the process.  I didn’t realize that at least one of them had brain cells that only operated intermittently. The main problem was carelessness, as with the towels except worse.  On their last day’s occupation, one of the party was cooking breakfast - fried whatever in abundance.  In the middle of that, he decided to make a phone call that went on for a while.  Eventually the food on the oven hob caught fire: the oven, counter top and some cabinets were wrecked.  The whole living, dining and entrance hall areas were smoke damaged.  The house was uninhabitable.

I was called to the house by the pool guy this time.  I was so angry that I could hardly stop myself from slapping the guy.  I had no idea how to proceed, other than to tell them to get out, but a neighbor gave me the phone number of a fire damage restoration company.  Their guy arrived within an hour and more or less took charge, negotiating with the Loss Adjuster, scheduling the work and making sure everything was completed within a week.  The loss of rental was minimized and the house was as good as new.  The job he did was fantastic.

It was my introduction to the US insurance industry and how rapidly they got things done - but only thanks to the fire damage restoration company, who were highly impressive.

It’s amazing what you can find on the Internet now - is there any subject that’s not covered?  Hard to believe.  Sometimes you realize yet again that it’s progressed amazingly fast in a short space of time.

For example, a few years ago (2001) I wish I’d been able to find this emergency water damage site when I had a sudden crisis to deal with.

It was before I graduated to full-time property management and during the period when I ran a newly-established management consulting company, based in Florida but with clients all over the USA.  We only had five employees (most of them in Washington DC or Virgina) but we worked with some big companies around the USA including Glaxo, Lockheed Martin and Burger King.  Due to the distances involved, we had relatively few face-to-face meetings but on one occasion, one of the consultants, Beth who live in Virginia, came down to Florida for a meeting with me.

Ever cost conscious, I made available a vacation home that I owned that was vacant at the time. It was a four bed three bath home with a pool in Kissimmee, just south of the Disney theme parks.  Although it was really far too large for one person, it was close to my own home and Beth preferred the informality rather than using a regular hotel.

After a days or two’s productive meetings, Beth came over to my house on the way to the airport.  While we were going over the agreed action plan, I received a phone call.  The yard guy had gone to service the place and spotted water leaking from around the faucet attached to the back wall of the house.

We cut short the meeting, Beth left for the airport and I raced over there to find a total mess.  As I found out later, the builder had cut costs by eliminating any support for the water pipe leading from internal plumbing to the faucet.  Over the space of a year or two (the house was less than three years old at the time), use of the faucet to fill the pool or clean the pool deck put a strain on the pipe until eventually it cracked, half way between the internal drywall and the external stucco.  Beth had been helping out by topping up the pool and that must have been the final straw.

Fortunately the yard guy found the problem soon after it started, otherwise the house would have been completely ruined.  Also fortunately, the family and kitchen rooms were the first to collect water but because they were tiled, clean up was fairly simple.

The worst part of the problem was one of the bedrooms where some water had also collected, and that’s where access to the emergency water damage site would have been ideal.  Without the benefit of that, I had a difficult learning period and had to get up to speed on shop vacs, carpet drying and mold prevention in an instant.

In one sense I was very, very lucky, because damage was slight.  But the lesson I learned is that you never know when you’ll have an emergency to face and access to independent advice via the Internet is a great asset.

Do you find that once you get started on something, it’s difficult to let go?  I certainly do.  Earlier on I was commenting about the wacky state of income taxes in the USA and after writing it, I remembered a business tax farce that I experienced a few years ago.  Maybe if I write it down and forget it I can then go on to do something productive today.

About seven years ago I started a property management company in Central Florida.  Our clients were absentee owners who bought second homes or vacation homes close to the Disney theme parks and who needed professional help to take care of their property while they were not using it.  Some were from the USA but most were from the UK, because the idea of buying your own Florida home and having all of the costs financed via short term rental income had grown up as a concept in the UK ten to fifteen years earlier.

The rule of thumb was that, if an owner could rent out his place for about thirty weeks a year he could cover all of his costs and therefore effectively enjoy a “free” vacation in a luxury home for some part of the remaining twenty-two weeks of the year.  In addition, property price appreciation made the idea attractive to many Brits.  Some of the owners actively found their own short term renters but most relied on us to get them ten, twenty or even more weeks rent per year.

We knew that at the end of the year we had to report the rents we obtained for each individual, because the IRS regards it as business income and requires a business tax return.  Each January we were required to issue 1099 forms to individual owners and send a copy to the IRS.  And here’s where the fun began.

The IRS works by numbers, of course, and a fundamental part of their process is an individual’s Social Security Number.  However, the Wise Men of Washington had decided that Social Security Numbers could only be issued to US citizens - those less-than-worthy Aliens (!!!) were not entitled to such a valuable prize.  But the primary IRS goal was to collect tax for the Wise Men to spend.  No number, no control, no tax.  So, the solution was to issue Individual Taxpayer Identification Numbers (ITINs) instead, so that the Aliens could still provide funds for the Federal machine.  A new form together with a whole new process was born!

Back to the property management company.  Most of the clients we took on were new to the US tax scene so they had no ITIN.  As soon as they closed on their property and handed it over to us to manage, we asked them to complete and file with the IRS an ITIN application.  That way, we had a chance of getting the number back from them in time to complete our business tax returns each January and they could file their required US business tax return when needed.

When we came to the first January and compiled the return, some numbers were missing because of IRS delays in processing ITIN applications.  Some numbers, we later found out, were incorrect because the homeowners just screwed up.  But we filled in the return and sent it off.

Some months later, back came a letter from the IRS.  It was about three pages long.  It advised us that our return had errors in it and it listed those homeowners where the ITIN we had sent in (or omitted) “did not match IRS records”.  It went in to expound at length about the need for good record keeping and filing accurate returns.  And it finished with a long convoluted bureaucratic screed that basically said: “We found errors but if you can’t fix them don’t bother”.  So we didn’t.  All of that effort to get things right, with my anally-retentive accountant’s mindset, and it didn’t matter a jot after all!

A year or so later, the IRS changed the process.  They decided that there were too many problems involved in issuing ITINs to people who had just bought a property.  Henceforth, they would only issue them when the homeowner filled in his first tax return, which could be up to eighteen months later.  Other than the IRS, everybody I spoke to thought this was a dumb idea.

What did the change mean to us?  It meant that, when we gave 1099 copies to the IRS in January each year, we had even less complete and accurate information than before, because almost none of the new clients had an ITIN.

By then we just didn’t care.  We took care of Disney World vacation homes as a business and tried to ignore the Mickey Mouse business tax system as best we could.  It worked well.

I came across this income tax web page the other day where the writer was having a rant about the crazy state of affairs that is the current US tax system and it struck a chord with me right away.  Taxes are something we all love to complain about and I’m no exception.

Originally I’m from the UK and I also own up (occasionally) to being an accountant by profession.  I managed to avoid specializing in tax work in the UK because it always seemed dry and boring (business finance was always more appealling but that’s another story).  Like most people in the UK I suffered the burden of dealing with the Inland Revenue, as it used to be called there, only when I absolutely had to and we all whinged and groaned as each new tax was imposed, increased or manipulated to take money off us.  But it was just one more inefficient government bureaucracy and for the most part it consumed very little of my time.

Having moved to the US, though, I can see that the UK guys are just plain amateurs: the IRS has almost perfected the art of over-complicating, baffling and bewildering the population.  It’s certainly done that to me!  The 1040 and other forms seem to be designed to be difficult.  The adjustments, allowances (and disallowances) have no discernible logic whatsoever.  And the rationale for calculations is obscure at best (I know, it’s probably been designed that way to keep accountants and tax people in a job).  I leave well alone and give all of my personal and business income tax forms to a local CPA to handle.

So why would a trained accountant, admittedly from another country, outsource his annual tax work?

The simple answer is that I have no intention of even trying to learn the spaghetti mess that is the US tax code.  It’s just not worth it to me to save a couple of hundred dollars if it means risking insanity by trying to figure out what the heck the IRS really wants.

I learned almost from first coming to live in the USA that no one person, no matter how clever or experienced, has the ability to understand the totality of the code.  Worse than that, no one really seems to know exactly how big or complex it is.  I read one web page that had collected quotes from about a dozen Washington Congressmen (those being the people actually responsible for passing the tax laws!).  They were asked, or volunteered a comment, on the length of the Code.  Estimates varied between 2500 and 2.5 million pages.  More informed experts appear to put the number at about 67000 (as of 2008).  Is there anything else that needs to be said?

Only, perhaps, that even 67000 pages is an out-of-control number,  and if you’re a legislator and you don’t even know the scale of the problem, sorting out the income tax mess is probably now too great a task for anyone – the only option may be to tear up the whole set of rules and start again.  Other than those folks with a vested interest in the status quo, is there anyone who would disagree?

Maybe you need to have been born and raised in the UK to appreciate the title of this post, but if you have been, in all likelihood you realize very quickly that steak in the USA is of a whole different quality than the stuff you find in good old Britain.  In case you haven’t experienced it, it’s chalk and cheese, night and day, whatever expression you can find to emphasize the contrast.

My first experience of how good US steak could be was during a business trip to Houston, Texas in 1987.  After the meetings and conferences of the day had finished, the local company managers decided to show the two European visitors just how meals were cooked Texas-style.  They took us off to a restaurant I’d never heard of before, but a name that I’ve been in regular contact with ever since: Ruth’s Chris Steakhouse.

In those days, Ruth’s Chris was a fairly small restaurant chain and not quite as up-market as now.  The first thing that met you on entering was the big offer: eat the 96 ounce special at one go and it’s free!  That’s right - get six pounds of steak inside you at one sitting and you pay nothing.  Otherwise pay the full (relatively expensive by US standards).  There was a photo display in the entrance showing those visitors who had been successful.  Most of them had large waistlines, of course.

Unable to face such a challenge, I opted for the mere 32 ounce choice.  Filet Mignon. Even that was ambitious - as I remember it, I managed to eat about 28 of the 32.  But the quality was something I had never before experienced: tender, tasty, melt-in-the-mouth and overall, just exquisite.  Compared to the typical UK offering in Berni Inns and even up-market restaurants, it was a totally different eating experience and one that I’ve never become tired of.

Since that time I’ve visited steak houses across the USA and never been disappointed.  New York, New Jersey, San Diego, Las Vegas, San Francisco, Miami, Washington DC, Orlando, wherever - most of those have been Ruth’s Chris restaurants but some have not.  No matter - the quality is always good and most times just great.  There’s a quality, texture and standard about US steak that’s just completely different to the one you find in the UK and if you haven’t tried it, I can strongly recommend it.

If cost is an issue and you prefer to do it “do it yourself” as far as cooking is concerned, I can also recommend that. I’ve done a little of the home cooking myself, but I’m far from being an exert. I can suggest that you do some research first about the different types of meat and you can find more details at this steak cuts site.

Happy eating!

Ok, so Alberta in Canada is many miles distant from Florida, not even in the USA, and it’s about as different a climate compared to Florida as you could find.  But running across this Alberta real estate website a short while ago emphasized to me how real estate investing goes in cycles no matter where you are.

I’ve been involved in Florida real estate for ten years now, first as an investor, then a property manager and eventually a Realtor.  Most of my clients have been out-of-state buyers, looking for a second home or a vacation home - “recreational property” I suppose, using the terms shown at the link, even if the recreation is of a very different sort because the local conditions in Alberta demand it!

Some of my clients have actually been from Alberta.  They all appreciate the warmth of Florida and they seem to make light of weather conditions that almost defy the imagination.  They’ve related how property prices have exploded in recent years due to the economic boom caused by oil price rises.  And how that has caused difficulties for first-time buyers who are unable to keep pace.  Plus, they all describe the impossibility of hiring employees because of a shortage of skilled, willing people.

As I’ve listened to that, it almost seems to have mirrored Central Florida, where similar property price rises took place until 2006, where it was also impossible to get reliable employees or contractors because of demand outstripping supply, and where some first-time buyer residents were priced out of the housing market due to a crazy appreciation in prices.  Then the bubble burst in Florida and more realistic property prices are the rule.

From my latest conversations with Alberta clients, the oil price slump has punctured the unrealistic price rises too.  I’m not hearing about the same kind of downturn as in Florida - but at least things appear to be returning to sanity.

So perhaps the message is that when things do get crazy, it might take a while, but the economic fundamentals will re-emerge eventually, whatever type of climate you live in!

When you come from the UK (like I do), the USA looks like an enormous place and when you finally visit it for the first time - you realize that it is! I moved to Florida in 1999 and spent a lot of time traveling to places such as California, Colorado and the North East. New Jersey was never my favorite place (most of my business trips were to places such as Newark and I have made more than one trip on the New Jersey Turnpike!) but I also know the State has some nice areas too.

The first time I visited New Jersey was on a business trip in 1987. At the time, I worked in the UK (where I’m from) for that well-know company called Nabisco. It was a year or so before the famous leveraged buy-out (88/89) and the company was in full-swing as far as spending all of the entertaining and travel expenses that it possibly could. I visited the corporate headquarters at Parsippany, New Jersey and the journey from New York to the Nabisco offices showed some of the less-endearing scenery of the State. Coming from the north west of England, as I do, it looked very familiar; dour, industrial/commercial and characterless.

However, I was considering a transfer from the UK to Nabisco New Jersey, so a couple of the Nabisco managers took me to visit the place they lived - Sparta - to see the other side of life in the surrounding area. Sparta was a complete contrast to Parsippany: out in the countryside near to Lake Mohawk, the place was fresher, cleaner and a very attractive prospect.   It taught me that you can never take anything for granted in the USA and there are areas of beauty close to even the most boring environments.

I remembered all of this today when I ran across the Lavallette website. I’ve never been to Lavellette, bit it looks like a great place on the coast.  If I’m in the area, I’ll remember my Sparta experience and give it look.

If you’re interested in learning about Florida property, try this web site

This isn’t going to help buyers or sellers:

Some mortgage costs on the rise.

For more information about Sunshine State real estate, check out our Florida property website.

Mortgage changes are catching buyers and sellers off guard these days, as many lenders suspend mortgage products, raise required downpayments or impose a premium on loans in “declining” markets. Sometimes the mortgage broker doesn’t find out about changes until the last minute.

Read the full story here.

And for more information, read our Florida property website.