Two friends and I are evaluating the purchase of a lot in the Florida
Keys for future development.  We've familiarized ourselves with the
relevant ins and outs of purchasing property in Monroe County and have
now gotten down to the brass tacks of the purchase and maintenance of
the property.  We all understand that there will be on-going costs to
get this property ready to build on, as well as the mortgage and tax
payments.

My question is this: what is the best way - or at the very least, what
are our options - to purchase this property with the intention of a)
either selling it in the future, or b) building a rental property on
it in the future which we will hold and manage?

Our main concerns are:
1) Flexibility in contribution: some of us have more liquid cash than
others and may be able to contribute more financially, while others
have more "soft skills" in construction or management, and we'd like
the ability to distribute equity appropriately.
2) Buyout: dealing with someone desiring to leave the investment
3) Taxes: dealing with the flow of personal cash necessary to pay for
the mortgage, taxes, permits, etc. and how that is reflected in the
personal incomes of the people contributing.  For instance, one of the
ways to gain "points" towards obtaining a permit to build is to
purchase a second plot of land and donate it to the county.  There are
obvious tax implications to such a donation so what type of entity
would be best suited to deal with such a purchase and deal with the
tax deductions from such a donation?

Specifics about the types of entities and the pros and cons of each
regarding this type of investment would be appreciated.

Hi Mopower,

I'm hoping that your laws might allow similar to this:

Consider a Unit Trust. The Trust can be directed by individuals or
company Directors. Unequal investment is simplified by each investor
buying units in that trust. A beneficiary of the Trust is a Unit
Holder. A Unit Holder may be yet another Trust .. a Family Trust.
Distribution of income to the lowest earning Family Trust beneficiary
will reduce the tax obligation.

If you try to distribute equity proportionately, you'll go nuts trying
to work it out. If Joe puts in $5K and you put in $200K, then that
will be reflected in the Units purchased. "Soft skills" should be
rewarded simply by payment for the hands on work.

Yep, you need an out clause before you go in. Other Unit Holders will
have the first right of purchase from someone who wants to quit. If
that opportunity is forgone, then the onus is on the quitter to find a
buyer.

Sounds like you are good friends. Make sure it stays that way. Keep it
simple and business-like from day 1.

All the best, Phil

p.s. Have the hurricanes subsided yet?

By the way, the biggest stumbling block is getting the actual building
permits.  Due to the Florida Keys being designated an area of
"critical concern" by the state, new building permits are nearly
non-existant.  Therre is a huge waiting list, and people are listed
according to the ROGO point system.  ROGO is the Rate of Growth
Ordinance, which is the legal stick the county is using to restrict
property owner's land use.
Now vacant land is being designated on a Tier System (on top of the
ROGO system). Basically, pristine land is Tier 1 and wouldn't get a
building permit before the other Tiers.  Tier 3 is land that is
already developed/zoned and is the first to get a permit...based upon
it's ROGO score.  Land owners can move up their ROGO score by doing
certain things:  donating land to the county for land preservation,
building efficient wastewater systems.
Frankly, the whole thing is a complete mess and you could spend years,
even decades waiting for a permit.  Also consider that the county is
having a severe affordable housing problem.  The prices of homes are
skyrocketing as speculators corner the limited market.  The crash is
coming, but not before devestating the community of working people.
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