Personal question for the asylum
 

Looking for opinions from the inmates.

I'm thinking about buying an investment property with my father. 50/50 split. There would be no mortgage involved. Here's the question. Should I liquidate 50% of my metals position to do this deal?

Pros:

• It would provide income every year.
• The property would be maintained by my father who currently maintains another rental property he has.
• It's in a location that is going to see much growth within the next 5 years.
• It could also serve as a home for my family if we both lost our jobs...etc.
• This is the ONLY person in the world I would consider doing this with.

Cons:

• I would have to liquidate 50% of my metals position.
• Most likely, I wouldn't be able to extract myself (if I wanted or needed to) for 5 years.
• I would have additional exposure personally.

Thoughts?

It sounds very positive. Broadly speaking, real estate valuations haven't bottomed and will likely decline for a few years. But there will be local pockets of good economic activity and real estate appreciation - perhaps your area is one. If you can be certain of good paying tenants and the region has positive prospects then go for it. The steady income stream is a big plus. And starting a business relationship with your father is wonderful and well worth liquidating some metal holdings: who better for a partner then your old man.

Still a lot of variables, what % of return will this have? Are the demographics in this area good, and will they be good for the foreseeable future? Have home prices bottomed in this area? What is your honest assesment of downside risk if you had to get out from under it?

My father screened for tenants in his other property. They've lived there for 2 years and just signed a new lease for another 2. He's never had a problem with them. His judgement of people is sound and I trust it.

There isn't anyone else I'd even consider doing this with.

The percentage return will depend on the purchase price. Conservatively, we'd be looking at 10% a year, each.

The area is the same neighborhood my sister lives in. She's a 911 operator and I've got her looking up crime rates and growth patterns for the last 10 years for me.

I believe they have bottomed. My sister bought 3 years ago and prices have only dropped about 10% since then. Even if they haven't totally hit bottom, it's touch to call. I don't think they have much further to fall if at all.

Honestly, I'm having a hard time finding a downside. Worst case scenario, I've got a house my family can live in, in a gated community, mortgage free. My father wouldn't be asking for his half from me if that occurred.

I guess the worst downside could be the value dropping further and us needing to sell. The only way I can see us needing to sell is if the taxes jump to a level where it's not worth having it. It could happen...but that could happen anywhere.

Maybe the return isn't as high as predicted?

What is the shape of the property?

What are you expecting to fix in the next five to 10 years?

Are you ready to deal with tenant headaches?

How's your Dad's health? If something were to debilitate him unable to watch the place/maintenance, etc., are you close enough
to step in? If not, who/what's Plan B? Is it an area you'd like to live/move?

Do you have a mortgage now?

The property has not been decided on just yet. We've got an area staked out. In general the properties are well maintained.

Nothing major within the next 5 to 10. These houses were built in 2005. Washer, Dryer.

My father would be dealing with that aspect of it. I'll toss him a few extra dollars for dealing with it.

I'd do it,I have never regretted the rentals we bought, you can always start buying pm's again, and your Dad is no dummy.

( oh I wouldn't buy anything that had a HOA attached though)

Just some thoughts on the other side of the equation;

What will happen to the price of metals over the next 5 years regarding price appreciation (dollar devaluation)?
Homeowners insurance rates are rising as is utilities, property taxes, etc - will this increase the amount of rent that you'll have to charge?
Are you and your dad stuck in this deal or can you both decide to liquidate at any time if you see the winds changing?

While the income sounds nice, and the business relationship sounds great, it's a scary market to be in with the storm that's brewing

if you currently owned this and had half the pm-s you currently do, would you sell the property to buy more metals and double your position? there is your answer.

His health is good but he's getting older. I am not close enough to step in. I would hire someone to maintain the place if that happened. I don't have a "who" at this point...I would need to research that. It is in an area I would like to move.

I do have a mortgage now. This rental would be bought in cash and would be our plan B if both my wife and I lost our jobs.

It sounds like you've thought this through. My first hesitation was that you'd be tied in with another investor, but it sounds like you are also viewing this as a plus.

Curious, in what metro area is the property? You anticipate much growth over the next 5 years, so I'm wondering for what location that could be claimed over the next 5 years.

I feel the price of metals will go higher in the coming years. The reason for considering this is because I would have a home for my family that's paid off in a worst case scenario. I do not have the cash to pay off my current home.

Utilities will be in the name of the renter. Taxes...can't do too much about that...they'll charge what they'll charge. Since the house would be paid for in cash, there's nothing to really get out of. If the taxes increased to a counterproductive level, we'd tell the town to take the house or try and sell.

I would not sell the property because it would be paid for. The lack of mortgage is why I think this is a good move.

Without getting too specific, the property is in Georgia. There's development going on in the area that will necessitate affordable lodging.

It's hard to go wrong with owning land which you get rent from in a growing area. Having a fall-back home is an important factor.

I guess the potential bad scenario would be that the economy gets really bad and you are forced to move to that house. Would it be a viable place to live in a bad-economy scenario? Or would the surrounding population and employment opportunities make it better to liquidate the house (at a loss) to shore-up your current location? Or would you prefer to stop paying your mortgage and move into this house?

I think it would be better to leave where I am now. The cost of living difference between where I live now and where I'd be going is 30% overall and housing is 65% cheaper.

I'm not baller like you guys, so take that into consideration....

But, 10% per year doesn't really sound that great to me. Have you ever heard of Tax deed certificates? Pretty sure that's like a guaranteed 16% with an additional lotto scenario possibility. Though this comes from infomercials and also briefly scanning a book in the business and finance section of Barnes and Noble. http://www.discussworldissues.com/fo...ies/smiley.gif

There's something I'm not following here. Half of your PMs will buy you half of a house in a gated community. Yet, you do not have enough to pay off the mortgage on your current house. Perhaps you currently have too much house?

Having a paid off house in case of job loss seems to be important to you since you brought it up several times. I would recommend paying off the house you live in now and save the potential trouble of moving while unemployed. If that is not possible, maybe you should reconsider extending yourself even further on an investment property.