patrick.net

At that price:

It must be east of US1 at minimum.

East of the intracoastal waterway is even better. I would hope for that price it has ocean access (is on a navigable canal) Even better if it has no fixed bridges to the intracoastal.

You are right housing is off 40-50% on South Florida, and I looked at 3/2, no fixed bridges east of US1 for about 600K at the peak. It was about 750K-800K for no fixed bridge, east of intracoastal (so you are less than two blocks from the beach) in northern Broward in 2007.

Source:

I lived in Broward from 2002-2008, renting a condo (2006-2008) on the eastern side of the intracoastal in Pompano Beach. I saw condo values in my building go from 400K to 240K for a one bedroom from '06 - '08. I looked last month and there was a unit for sale in the building for 199K. FWIW, condos have crashed more than SFR.

If you are not from New York/New England or South Florida (east coast, south of Jupiter), be prepared for a huge culture shock. South Florida is chock full of a-holes.

If I owned a business where it didn't matter too much where I lived, I would move to SW Florida. People are way nicer, less crowded, and housing is even more affordable and has crashed more greatly. Naples or Ft. Myers are really nice. Weather is the same. Schools better.

If that business is local to the Miami/Ft. Lauderdale/Palm Beach corridor, good luck.

KP, are you a local from that area, comfortable with having roots where hurricanes are part of life?

I'm from Fort Laud originally. I have been living outside of Fla for the past 10 yrs. The biz is a good opportunity and my aging parents live here. I know about heat, hurricanes and rude people. Saying that, do you'll think it would be an ideal time to buy or should I wait a yr? (taking in my info. above) I am actually renting a condo on the galt ocean mile, but want to move into a townhouse or house in 4 months

It looks like prices may fall more in FL - but it's so cheap already that I wouldn't have a problem buying at current levels.

For the last couple of years, 50% of homes sold in Florida are bought by investors. Most of those are foreign investors. That tells me that Florida is a place to own property to rent out. Purchasing a home to live in is risky. I don't think it makes any difference what it was "worth" 2-3-5-10 years ago. Can you afford it? Can your neighbors afford their homes? As in, will the neighborhood be overrun with foreclosures within the next few years? Have you ever owned in Florida? Do you know what the hurricane insurance rates are? Understand that this is a mandatory additional expense for mortgaged property. I agree with those who suggest that it could be a good value if the home is on water. Waterfront property always has a market.

If it takes $2500/mo. rent to get what you want, and you can buy the same thing for $400K, I would buy. The income tax advantage on that is going to be around $200 a month (over and above the st. deduction) for your property taxes and interest.

My estimation is you are all in PITI on a 400K purchase with 20% down for about $21-2200, and with the income tax deduction you are looking at closer to $2k. Stay there ten years and it is likely you wont be losing when you go to sell, especially if it is waterfront.

I would say in ten years time good Ft. Laudy property east of US1 will be anywhere from down 10% to up 40% from where prices are today. I would avoid Weston and similar areas like the plague. It reminds me of the Inland Empire in Cali. Since I think the likelihood of this property falling another 20% or more is low, I would buy if it was cheaper than renting when comparing similar properties. When I sold down there and decided to rent it cost me $1250 to rent a top floor 1BR condo on the beach, when they were selling for $400K with a $566 HOA. Renting made much more sense there since interest rates where about 6%, making the monthly owning nut over twice what it cost me in rent. And I was positive the market was going to crash then. The Sun-Sentinel was running articles about how a landscaper and his grocery checkout clerk wife bought two 600K homes as investments to flip. Pretty sure how that ended up..

You are unlikely to time the market perfectly. To me, the downside on a good 400K property is 80K. If I save $500 a month in rent (difference between owning and renting now, not to mention the amount you are "saving" when paying down principal) for 120 months, that is 60K. Lets say present value it is 45K. So I would roll the dice. Take it for what it is worth though. I am relatively young (30s) so I would be able to recover from a 35k hit well enough.

If you have any doubts about the business, perhaps it's worth renting.

However, with 150K in income + dividends, you're income seems like it will be beyond what most people in that area make. With each passing year, if you do continue to save, you're going to have more and more dividend income as well. This is assuming you've saved the money vs come into it.

Your house isn't going to be your largest investment by far, it's going to be your business in this case. Unlike other people who might move due to changing jobs every 5-7 ears, it's less likely you're going to move for those reasons. If you're happy with the house and it's what you want, it's probably not bad to get it. At $2500 rent, you're going to pay out 30/year in rent. If you hold off buying for 2 years, you're looking at paying out 60K in rent, to save what? 60K in house value if it drops? How far are those houses going to drop at this point?

Are the people who live, able to afford these houses? I'm guessing you aren't a typical income earner in this area, because your income level can easily handle this mortgage. But can your neighbours afford theirs? Are they likely to leave and undesirable people move in?

That should be your biggest worry. The downside is semi-limited, so can the people you want to live with, afford this place?

Thanks for the comments and advice. I'll stay East of US1, most likely. There are 2 excellent elementary schools in the areas I'm looking in. That along would save me 40-50K for 5 yrs instead of private school. It a solid biz with room for growth, so not too worried in that respect. A good comment ,I might add was about, who can't afford to continue living and undesireables move in. I guess in that case, I should try to buy a modest house in the best neighborhood I could afford other than a bigger house in an OK area,right?? I also could run alot stuff through the biz to save on taxes , including my wife's small healthcare products biz she sells from home, correct?

Actually, 150K in areas like Victoria Park , Coral Ridge, and Rio Vista (all East of US1) would be an average household salary. It would be on the low side if the house happened to be on the water. It would take about around 700K to get a decent house on the water(canals) I'm paying $1400 a month on a 2/2 furnished condo(older building) right on the beach, but 1 yr is enough with a 2 yr old.

You definitely want your child going to school with the children who expect the most from life, which is generally the richer areas. And you yourself want to be in a good neighborhood.

Considering the amount you're making, amount saved, and your current expenses, it seems like you're used to living a semi-frugal life style of some sorts. Find something you're comfortable with and happy with.

I would talk to an accountant about what you can write off, but it does seem likely the cost of ownership might not be that great, and your possible business deductions might be fairly high. Which is actually pretty good, if you're getting a low rate loan where less of the repayment is tax deductible due to more of it being a principal repayment.

Thanks. Can't speak about taxes. I'll leave that up to a good accountant. I would be buying a modest 3/2 with under 2000 sq ft. They are safe , educated, and family oriented areas. The two schools I speak of, are only 1 of many reasons to buy there. The avg. price home in the 2 public school areas is 550-600K Definetely will be putting the child in good private schools after 5th grade, as the quality drops off big time.

Dude,

the thing you didn't mention in your original post was your familiarity with your area, etc. So you added it later, compared to the Cool and Hip Bay Areans who dominate this website, you are the expert on that location. Not too many people here can give you good advice on value in South Florida. From the rest of what you wrote, by any reasonable standards in the world you are a very wealthy, elite person, with the 160K per year in income.
From that perspective it sounds like your real question is more like, "will my pricing timing be perfect"? Who knows? Since your finances are so robust, does it really matter? - it sounds more to me like the real timing question is "is the timing for what's going on in our personal lives right?". Only you can answer that one.

"buying a modest 3/2 with under 2000 sq ft. "

For 400K it better be on a Canal, and East of US1. I wouldn't slap down that kind of money to live in Wilton Manors.