Dilemma

[Shadow]

Today the wife and I went riding around, lookig for landscaping ideas for the house. Gonna take some pics, see some houses and try to decide how we want to proceed.

She see's a sign for an open house in an old subdivision not to far from where we live now. This subdivision has been around for decades and is a very nice area to live.

So we hang a right and off to the open house.

Upon arrival, we find a small little house in need of serious cleaning and minor repair and certainly not what I/we'd want to spend our remaining years in.

However...it's on a HUGE Freakin' ski sized lake with 144' of lake frontage!!!!:dancer01: :dancer01: The property is best accessed with a bulldozer, right through the front door:rofl1:

Seriously, if we decide on this, we'd likely tear down the house (actually add to it so we can beat the max. 900 sq. ft. restriction) and build our waterfront home we've always wanted.
The houses in the area are small, but 4 of them have just been bought by doctors and attorney's and are being raized and rebuilt with some huge homes :thumbsup:
I really think this place is going to go through the roof in about 4-5 years.

So, here's the delimma...

They want 400k+ for the property & house. This is going to cause some serious strain on me/us for a year or so and probably require deleting the fund we had set aside for retirement

The flip side is, we can probably rent our house to cover it's mortgage (and maybe some of this?), and hang on to it for a couple years until the property rates go back up.

We could then either sell it and pay this one off or use the $$ to refill the retirement account.

Another up side to the property is that the lots this one has on the water can be subdivided and a portion sold off (hold it for a year or so first) at a substantial profit and help pay down this mortgage or re-up the retirement account as well.

There's also the possibility, if my projections are correct, that this place could re-sell in 5-6 years at probably 2-3 times the asking price now. In that case, we could sell and move on to something else.

This is a tough decision for me because I'm taking a risk with our financial future. Although I've always been a risk taker in life and business, when it comes to my families financial security, I'm a total chicken sh!t:yesnod:

Any investors or financial planners on board that might have some words of wisdom?

Thanks:thumbsup:

Gordon

 

[Rich Z]

Man, you're not the first person who wished he had a crystal ball. I'm the kind of guy who would rather stuff money into a mattress then trust my future on speculation.

Honestly, if what you are looking at is a REAL good deal, it will probably be gone while you are trying to make up your mind about it. That's the way it always works with me.

Wish I could help, bro', but I've been a victim of Murphy's Law far too many times to think I have any sage advice to offer.

 

[Shadow]

Man, you're not the first person who wished he had a crystal ball. I'm the kind of guy who would rather stuff money into a mattress then trust my future on speculation.

Honestly, if what you are looking at is a REAL good deal, it will probably be gone while you are trying to make up your mind about it. That's the way it always works with me.

Wish I could help, bro', but I've been a victim of Murphy's Law far too many times to think I have any sage advice to offer.

Thought of that too Rich. My wife knows the doctor that bought 3 parcels adjacent to the lots and he's going to level them and build big lakefront homes. The lawyer next door is going to do the same and the realtor already has a 3200 sq ft. home 3 doors down.

I can almost guarantee this place is going to jump in value.

The wife and I talked about it a lot last night and I'm not sure either of us really want to work just to support a house? We both want to retire in a few years and travel, etc. and not worry about $$

I started thinking about getting together 1 or 2 friends as investors and renovating the area, holidng it for a couple of years, let the doc and the atty get the prices up, then sell

If we do it right, I think we can all do pretty well with it and then go live on the beach! :yesnod:

Funny what a good nights sleep will do for you:thumbsup:

Thanks again bro and I'm still open for advise:thumbsup:

 

[zzzona]

Have you considered the property tax, and insurance? These 2 things caused me to have to sell my real estate investments earlier than I planned. I made out o.k. but not what I had projected... If the other home owners in that area build 2 mill. homes the taxes will be :ack2:

Whatever you decide...good luck

 

[krash721]

lakefront?

Hello,
7 years ago I found a house,on one full acre,on a lake here in Lakeland. It needed lots of work,but it was a very cool contemporary design (one of the more unique houses here in Lakeland), the owners had already relocated to Chicago,and were motivated to sell. It was 2500 sq. ft. Also,and here's the part I liked best,it was less than one mile to my work. Anyway,I offered 116,000, and they took it. Oh...the 116,00 deal was After they agreed to do about 12,000 in repairs prior to me buying it. Fast forward to 2005, I turned 50 and in December of that year I retired. Last August I sold the house for three times what I paid for it,paid cash for a downsized house,paid cash for my Vette,and am having a blast redoing the new house. In another three to four years I'll sell this one, downsize further,buy a motorhome,and check out the rest of the counrty. In your case,with the chance to sell off a piece...well...to me it's a no brainer. Yeah, U may have to cut back on things for a year or so...but the future possibilities outweigh that...well, IMOP that is. People will Always want to live near the water...that will not change. Think long-term, and U should be Golden!
Good luck!

 

[thebeepster]

Have you considered the property tax, and insurance? These 2 things caused me to have to sell my real estate investments earlier than I planned. I made out o.k. but not what I had projected... If the other home owners in that area build 2 mill. homes the taxes will be :ack2:

Whatever you decide...good luck

zzzona just hit the nail on the head...Florida is currently facing a crisis in RE taxes and property insurance. Tax assessments are very punitive for new real estate purchases (particularly for non-homesteaded property). The additional bad news is that I don't believe that our legislators are going to provide any meaningful relief. I recently retired after 32+ years in Fla. real estate and for the first time I am starting to believe that the party is really over.

If you decide, do it because its something you WANT and do not attempt to justify it from an investment perspective. Good Luck!

 

[Rich Z]

zzzona just hit the nail on the head...Florida is currently facing a crisis in RE taxes and property insurance. Tax assessments are very punitive for new real estate purchases (particularly for non-homesteaded property). The additional bad news is that I don't believe that our legislators are going to provide any meaningful relief. I recently retired after 32+ years in Fla. real estate and for the first time I am starting to believe that the party is really over.

If you decide, do it because its something you WANT and do not attempt to justify it from an investment perspective. Good Luck!

Actually this is a very good perspective. How long can the real estate boom party go on?

Are salaries keeping pace with the cost of buying a home? I am incredulous that most minimally acceptable single family houses these days are easily a quarter of a million dollars.

With Gordon's proposed purchase price of $400K+ and a hope for return of 2 to 3 times in the future meaning a selling price of $800K to 1.2 million, we have to assume that ALL housing will keep a like pace.

At what point will housing just price itself out of the market? Yeah, people are talking about selling these houses and moving to a smaller house for less cost than the selling price, but how long can that continue? How many people can afford a $1.2 million dollar home with taxes and insurance on top of that monthly payment? Will the job skills market be paying that much money so that the average joe can afford to do that?

From what I have heard a lot of people are in trouble right now because they bought into a rapidly inflating real estate market using balloon payment schedules with the plan of selling at a profit before the REAL payments kicked in. But the market dried up and now they are holding the bag. Rumor has it that real estate is now finally a buyer's market, and it's no wonder why. BANKS are going to be holding a LOT of real estate pretty shortly, and they aren't going to be happy about it. It's quite possible there will be fire sales if people hold out and just wait out the artificial inflation the real estate industry has caused. Banks can't loan people land. They have to have MONEY.

Connie and I were looking for land a few years ago. We would see something interesting, but it would be sold before we could inquire about it. A few months later, it's back on the market at a higher price. So apparently real estate brokers and agents were selling among themselves using the banks to seed their ventures. We dropped out because prices just spiralled upwards too quickly and it looked like we were going to have to compete against first line troops holding all the cards. So they priced right out of our market. I'm sure this happened to a lot of other people as well. It became a rich man's game or a foolish hoping to be a rich man's game.

As beepster said, if you WANT that house, then go for it, but I'm not so sure looking at it as an investment and having to endure a real sacrifice for it, is a real good idea.

Now I am NOT a real estate speculator and did not sleep at a Holiday Inn Express last night. Just simply stating some opinions based on casual observations here and there, that may be COMPLETELY wrong. So take this all with a big grain of salt.