My father in law approached me with a proposition, all these numbers are rough as none of the parties have invested a ton of thoughts in this yet. My wife's grand parents go to florida every winter (we are all canadians), my in-laws are nearing retirement and want to do the same, and me and my wife love it down there too. The thinking is that we could take advantage of the lower real estate prices and get in now by buying a place with all 3 generations contributing and when one generation passes it gets willed to the other 2 and then us at the end. The percentage that he brought up quickly was that the grand-parents would pay 20%, they would pay 35% and we would 45% of the costs (down payment, mortgage etc.) when the grand parents pass we each take on an extra 10%. Thoughts?

The other thing to keep in mind is that I have been looking myself with the intention of buying a place and renting it out as an investment place that i can use two weeks out of the year till I retire in the summer.

The negative that I see is that I could probably come pretty close to breaking even if I rent it out and not have to deal with the headaches of owning a property with family. But obviously renting it out to randoms, is also a huge headache. FWIW I'm 28 and my retirement date (where I would use it all winter) could be in 10 years or when I turn 60 depending on how the next few years go (I should know within 3 years which it's gonna be)

Basically I'm looking for why this is a good or bad idea and if it's a good idea what would be a fair structure for costs?

Thanks and I hope this is the right place to posts this

Where in FL and will you be on the water? Inland Florida is a real estate disaster with lots of buildable land.

1st) Mixing family & business doesn't work.

Sure, everything may be fine "now", but some little family spat a year from now will cause heart burn for you, then trouble betwen you and your wife and your bank account, bla, bla, bla.

Respectfully, you are married to your wife. Your are NOT married to the in-laws or anymone else.
Marriage is a great thing, I've been married a very long time and my wife is my best freind.....however, I wouldn't want any other family memeber meddling in our "business".

This is a *BUSINESS* choice, and investment. You make wise & prudent business investment decisions based exclusively on sound investment principals.....when "family feelings" or "emotions" become involved you undermine the foundation of sounds business choices.

2nd) "They" obviously *need* you more than them. They want you to contribute more than anyone else.

This really makes no business sence. ANYTIME someone approaches you to invest in something be skeptical.....there's always a reason "they" *want* you to do something. I have NEVER seen a good investment that someone else "wanted" me to do. Generally speaking only make investments they YOU want and you choose for your benifit. Make no mistake, no one cares more about your money than you do yourself.

3rd) What do you have in 15 or 20 or 30 years when you're ready to retire?

You have a run-down house thats outdated, maybe some real state thats worth something.

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Historically real estate investing has been very solid, conservative, low risk, modest rate of return.

I'm certainly not aginst real estate investing, I'm aginst getting involved with family deals, and aginst investing in a house -for all practical purposes, that you'll never really get to use, but have to pay for.

i just find it creepy to invest in something that when your family dies, you get wealthier.

it would have to be a property with access to the water and a golf course not necessarily waterfront but close at least.


Also this would not be an investement first type of deal but more a way for 3 generations to enjoy spending winters in florida in a cheaper way.

my first inclination was that it doesnt make sense for me but maybe i am missing something or maybe there is a way where it makes sense for everyone

An investment in real estate you get to keep eventually but never pay more then 50% to own?

Unless you just never wanted to do anything like this (own investment property) it sounds like a snap call.

All this being said, unless you guys make a really terrible decision on where/what you buy I don't see why this is not a great opportunity

maried 5 years with two kids no i dont lol.

but p funk thats the part that intrigues me im not sure how to run the numbers to figure out how much it would cost me to eventually get all the equity also what percentages would be fair for all parties to have to pay

Considering at least one of your in laws will still be alive for the next 20-30 years (safe to assume?), which should be the entire mortgage period and the fact that you are only paying 50% or less this entire period for a property at the greatest interest rates on housing we have seen and buying in a market that has bottomed out significantly, I would think this is a great opportunity.

All this said, its not impossible to completely mess this up with what and where you decide to purchase, but if you guys are smart about it and don't let anybody make a terrible emotional purchase I don't see how you can go wrong if you can afford this investment. Take the reins though and be in a majority position on the decision since ultimately you will be bearing the most cost and end up with the property, upkeep, and taxes long term.

Planning on renting it as a vacation rental in off season when not there?

I don't think you are properly discounting your future interest. How much do you plan to use it while the other generations are still alive and using it? If you plan on using it in 3 years and sharing it all winter then the numbers look fine, otherwise I think the future interest is worth much less.

What is your intended use over the period of time that the inlaws are still using the property? How old are all parties to the transaction? Who is responsible for taxes, maintenance and HOA fees and in what percentage?

Let's crunch some numbers.

Fwiw I own an interest in a vacation property with family members and there are things I would do differently but overall it works well.

there isn't any real benefit to getting yourself involved in something so convoluted, and there're a lot of potential complications.

it doesn't sound like anyone involved is knowledgeable enough to justify taking it on. the fact that her parents and grandparents are coming to you and your wife to finance a vacation property in florida should say a lot about their business sense.

just rent a place with them and split the costs.

right now the grand-parents(85 ish) would use it for 5 months in the winter , the parents (53) would use it in the summer for a few weeks and so would we 3-4 weeks. my wife and her mom would probably go alot more since they have the time. in 5-10 years the parents would go for 6 months in the winter and we would go a couple weeks with my wife going more during the winter.

all expenses would be split as per the percentages we agree on.

the problem i see with it is that yes for example it would cost me 125 000 to get all he equity in a place that today is worth 275000 or whatever it works out to be but i cant cash out until i own it outright and am like 70. so yes it could be worth 500 000 by then but its all tied up

If your parents and/or grandparents are rich enough to qualify for the death tax, the generations that inherit a portion of the equity will have to pay tax on it.

Canada though.

Using it ~5% of the year and ~10% of total usage time at max for the next 20-30 years? We don't have to crunch the numbers. This is an instapass. Your offer of the actual present value of the future interest would probably insult them.

Sorry I'm not sure what you mean by"the actual present value of the future interest"? Can you clarify for a newbie please?

This is simple, when your kids get older you can offer them a %.

But seriously, this sounds like you are loaning your in-laws money and are going to be in the weird spot of hoping they die sooner rather than later....