Facing the biggest decision of my life

[tlbwriter]

She would like to start investing in flipping homes. She would put up all the financing and we would manage the contractors to fix up the homes and we will split the profit. She has offered to pay all moving expenses and put DH on a salary to help us feel secure. She will also pay for a minimal health insurance policy. (snip) We own a small business here that gives us a small income that we have had for 20 years.

How would the salary she is offering compare to the income you earn now? If she's going to pay him significantly less, in exchange for him getting some of the profit, then you are looking at it the wrong way - she's not offering a job, she's offering an investment opportunity. Don't accept it unless you understand and are comfortable with the risk.

 

[PurpleDog]

I forget where I saw it [Time? Newsweek? the internet?] but the headline was: Florida "vacancy" rate is at almost 20%. It explained that 18.9% of the homes in FL are for sale, which is a staggering figure if you think about it !!

I would think there are plenty of homes to feed any market that dont need to be renovated; ie: homes that are move in ready.

 

[Virgderon]

I think moving to Florida is not a bad idea if you and DH have marketable skills. I am a recruiter and I found a job in Florida after about 2 months of looking.

I had a potential employer tell me that the unemployment rates in Florida are deceiving- college grads have only a 4% unemployment rate here. Even if you don't have a degree, if you have marketable skills you can find work.

So... maybe the house flipping thing is not a great idea, but moving here is not a bad idea depending on your job skills and abilities. No state income tax, housing prices very low, entertainment and food costs lower than in most of the midwest. The great weather opens up a lot of free or cheap entertainment options as well- playing tennis and other outdoor sports , going to the beach, lots of outdoor fairs and festivals, etc.

 

[seashoreCM]

Do you currently own or rent? If you own, what will become of your current home?

It would be a problem if you have to worry about your current house after you move. Would you sell it for its current market value? WOuld your friend buy it off you so you don't have to worry about it or be a long distance landlord?

Could DH go alone and after this pans out then the rest of the family moves to join him?

Would your friend advance you the moving money? And this is outright compensation and not a draw against commissions or sales and not a loan?

I would not do this if I had to shell out a significant amoutn of money in advance.

 

[Minnie]

IMO the only answer would be we appreciate the offer but will not be able to relocate.

Besides the horrible Florida market having DH work for your friend - that's almost as bad as family.

Best wishes on your DH's job search. My DF lost is job of over 20 years a couple of years ago due to a plant closer - it was very very difficult time.

 

[luvintink7]

My friend is a self made millionaire. She did not achieve this by making bad business decisions. She has been investigating and planning for this for a year. She has investors who are looking for homes to buy. I do trust that she knows what she is doing. I am going to florida next month to look into this further. She has another business that I will be working in with her. I have been her administrative assistant for over a year now. By the way, we live in Michigan and the job prospects are not so good here.

 

[luvintink7]

Also I find construction is all about who you know. I work for a contractor (as an estimator/project manager) and my husband owns his own business doing residential construction (mostly painting). And no one is going to jump thru hoops for you with a good price or getting it done fast if they don't know you. It will take a while to get enough subs that you can trust.

Does this friend have any experience with construction.

I would feel very iffy about it.

Also sept is still 6 months out a lot can happen.

This does not make sense to me. If there is no work then wouldn't contractors be low balling bids so they can get work?

 

[My3kiddos]

This does not make sense to me. If there is no work then wouldn't contractors be low balling bids so they can get work?

I don't understand that either. I work in the construction industry and any job is a bidding war. Construction guys want work, they aren't going to turn down work because they don't know you.

If I were you I would have to really have to consider the offer. I would find out how long she is willing to pay the salary to your husband and have her sign a contract. If she was just some regular Joe trying to flip houses by acquiring loans I would say no, but she has financial investors who have the money to shell out and they know what the market is like right now. Really it's not a bad deal if you have money that you need to invest because there is potential for a large profit, it just may take a few years (it may not but there is the posibility). I'm in Kentucky and while the construction industry isn't booming like it once was, in the past few months we have heard positive things for our area. There are builders coming back that haven't worked in the past 3 years and they said there is work out there now. Recovery is going to take many years, but any increase is better than what we have seen the last 3 years. Good luck with your decision!

 

[lillygator]

http://www.heraldtribune.com/article/20110325/ARTICLE/110329564

they "were" millionaires too....one involved was our friend.

 

[Colleen27]

This does not make sense to me. If there is no work then wouldn't contractors be low balling bids so they can get work?

That's how it is here. There are just so many out of work contractors that a lot of jobs turn into bidding wars, and it is hard for legit companies to compete with some of these guys who don't have liability insurance or proper licenses, much less actual employees with the accompanying costs. I saw you're in Michigan too; it really is a mess up here right now and I just thank my stars for the fact that we have a couple of regular customers (investors/landlords) who care about pesky details like licensing and permits because right now the residential market is all about the bottom line and tolerates a lot of corner-cutting.

For someone with the money to do it in cash (or enough cash reserves to cover a strategic loan), who can go in with a long-term mindset, and has enough knowledge of a market to predict with some accuracy which areas will remain desirable when this all shakes out, now isn't a bad time to get into real estate. The foreclosure crisis is creating a very large group of people who will be lifelong renters, most of whom will want a single family home rather than an apartment if they can get it, and in the long run prices will rebound. We won't see prices like at the housing peak for a very long time, but the market won't stay this depressed forever either. Particularly not in FL and other parts of the country with more desirable climates and political/tax pictures.

 

[manhattan]

Yes, it is true that sales homes are picking up here in South Florida, but they are all being bought by investors, waiting for the market to pick up. So the empty house that has been sitting there for 2 years was just sold and still sitting empty, but with a higher price tag. Cost of living is extremely high down here, price it all out, look at insurance, groceries and gas. I personally do not recommend anyone moving down here right now, companies are still laying off people, cutting salaries, reducing work hours, this state still has many years before recovering. Sorry to be such a downer, but it really is a mess down here.

 

[nunzia]

My friend is a self made millionaire. She did not achieve this by making bad business decisions. She has been investigating and planning for this for a year. She has investors who are looking for homes to buy. I do trust that she knows what she is doing. I am going to florida next month to look into this further. She has another business that I will be working in with her. I have been her administrative assistant for over a year now. By the way, we live in Michigan and the job prospects are not so good here.

It sounds like your mind is made up..did you want advice or validation? Since you have faith in her and prospects are poor where you live, it looks like you are going forward. Still, I would tread carefully and make sure the salary is enough to live on, and would ask lots of questions to her about long term income ability for this..if she just plans on doing short term flips what is the plan if the housing market recovers and all those investors have all they want? Enen wealthy people can run out of money for a business idea. It's good you've already worked with her and understand each other..working with a good friend can be really stressful..we are in that situation..our best friends own the business DH works for..there are certainly egg shell moments.
Best of luck and hey..either way you get to move to Florida and have better winters