BiggerPockets

Hello all,

I am exploring the option of going in 50/50 on a property with some family members in Florida. I currently live in Colorado and do not own any property. I am working to figure out how the lending process will work if I go in 50/50 with another party and also figure out the implications of owning a property in Florida that is not my primary residence. Am I considered a first time home buyer for that house or is it purely an investment? Also, will I lose any benefits when I go to purchase my first home to actually live in here in Colorado (first time home buyer incentives or primary resident incentives)? Could I still be considered a first time home buyer if the house in Florida is just an investment? Would it make sense to form an LLC for the investment property so that it is considered a business? Therefore I may be able to personally still qualify for first time home buyer incentives?

There are a lot of questions, I am just trying to figure out how this all would work and the best way to go about it to make the best decision. Who would I speak to about these topics, a lender or real estate agent?

Thank you!

Thanks for the input. I pretty much have no choice. I know it's a buyer's market in Florida right now and my immediate family lives there, able to manage and take care of the property. Being in Colorado with a job here and not enough money to buy a home, this is pretty much my only option to start investing, as I believe we will never see prices this low again. Other than telling me not to do it, do you have any advice on the best way to go about it with the mortgage, etc. in my position? Thanks.

If the media is telling everyone prices are at rock bottom, they are no where close. They will get lower.

Just like when all the market analysts on the news networks say "its not guna get lower" it cant get lower. Last time i checked the dow was still over 8000......it can get lower it always can

My so far one and only SFR rental is here in the Denver area. I'm looking to buy more right now. I do have an investment in a mini-storage in Mobile, but that has both a management team and an on-site manager.

I have considered other areas that are not too far away. But I know that I do not know those areas as well. And that I would have to pay someone to deal with any issues.

I think Florida's a bad place to invest for several reasons. Insurance is expensive. I think prices could fall an additional 40%. I think there is limited demand and huge overbuilding. Pest problems are huge. There's an assumption you'll have many retirees moving down there. But they have had their portfolios decimated, and are probably in the process of figuring out how to keep working another 10 years. It will take four years of "long term stock market returns of 10%" just to recover the recent fall in the market. I seriously do not think we'll see 10% stock returns for the next four years.

Case Shiller shows Tampa is down 30% from the peak. I believe prices there are 37% higher than they should be. If it were to drop that 37% in the next year (not at all unlikely, IMHO), then were to resume appreciating at 3% per year driven by inflation then 10 years from now nominal prices will be right where they are now. After inflation, you're way behind.

Seriously, though, you may know something about the area I don't.

What is up with all the doom and gloom?

This market decline is an investors paradise and something everyone should be excited about!!!!!

1. Folks who try to time markets lose, period.

The market is not at the bottom, but if you wait for it, you will miss it.

People preach "buy low and sell high", but for some reason many of us always seem to buy on the way up, and sell on the way down.

That said, there is also no hurry! I feel confident in telling people that we have a 12 to 18 month window of opportunity here. Take your time, perform your due diligence, and START INVESTING!

Instead of worrying about a market bottom, I feel future interest rates should be more of a concern. They will probably rise by 2010, making money much more expensive. The banks will live to lend another day, but they will make us all pay for it dearly.

2. There are some PHENOMENAL deals in Florida right now.

As long as the state is surrounded by water and filled with sunshine, people will find a way to get there.

I believe in the West Coast of Florida. While I am not going to say that the market will not have another double digit decline, I would not count on it either.

Florida is now a buy and hold market that will pay off for investors over the next decade. Just focus on location, location, location. If there was ever a time to get back to the basics of real estate investing, that time is now.

3. Doing deals with family can be a wonderful experience if done correctly.

They key is to treat the business part of the relationship in a professional manner. The disaster comes into play when people enter these family partnerships in too casual of a manner. Just get your arrangements in writing and make sure everyone is clear as to their role.

Keep in mind that people have just as many horror stories of bad partners that they were not related too as well.

Congratulations on getting started and taking the first steps to your successful investment career!

2. There are some PHENOMENAL deals in Florida right now.

You know, I remember hearing radio ads touting the phenomenal deals in FL in 2006. I wasn't paying attention before that, but I suspect that had been going on for years before that. At that time, they really did look like phenomenal deals based on the price trend. They don't seem like such great deals now, do they?

But, I'll say again, that I don't know the area. This may be a great area with lots of potential. Spend some time in the area, do your research, and make your own decision.

I have a home in Ft. Myers, lived there for 6 years, and now back in NJ taking over my old business plan. I'd like to add something about Florida:

I will use Cape Coral / Ft. Myers area as an example. The median price dropped from its peak in the $250k range down to $105,000 recently. You can buy homes for literally 60-70k, and nicer newer homes away from the beaches and "central spots" but if all you care about is long term, that is not a bad buy.

Could those prices further decline? Maybe, maybe not. Over 600 homes sold in November, showing a pick up in homesales. More foreclosures are expected in 2009. But at the pace of homes being bought will that balance out another huge decline in prices. I doubt prices come down another 35%, but I don't think 15% is unrealistic. On the flip side, I also can't guarantee you that we ARE NOT at bottom.

Bottom line..If you are in it for the long haul (decade or more) I can live with buying now and possibly risking a 15% decline of the median. Rental rates are about $950 for single family homes, so I can get positive cash flow and hope that the market in paradise turns around in a decade