Business and emotion don't mix
May. 16th, 2013 04:45 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
abqdanYou may already have followed the dramas we've had with trying to buy a condo in Palm Springs. It may be that we should just take a rest at this point and do nothing. But we have one last opportunity to buy right now. Here's the salient points:
Pros:
Cons:
So here's the problem; I have an emotional reaction that we should agree to the terms of the seller, just because I really like the complex, and the unit. But in pure business terms, we come out a little worse off after 5 or 6 years owning the condo, than if we just did nothing.
One big issue with 'what-if' modeling is that there is very little on which to base a prediction of how well our other investments might grow, or how fast the CA property market might rise in the next five years; so a lot of this is guesswork.
The difference between our last offer and full asking price is just 2.57%; though in reality, the price they want is about 5.7% higher than a fair market value for the property. So we'd effectively be starting out with a 5.7% loss...
Bill and I will have to sit down and talk this through tonight - do we go with a good solid investment decision, or an emotional decision (plus the 'joy' and benefits of ownership of the property long-term).
Pros:
- The market is improving, so now would be a good time to buy (a year ago would have been better, admittedly)
- I am mostly retired, so I could make use of the property when I want; Bill has the flexibility with his job for us both to go stay there for a week or two each year.
- Renting during 'the season' would cover part of the annual costs for the next three years; after which Bill would be retired and we'd use the condo to 'over-winter' in California.
- We've found a condo we both REALLY like
Cons:
- The owner of the condo we like wants to sell for $10,000 over currently appraised value - no negotiation will be accepted
- The same owner wants us to let her daughter stay there for three months after escrow closes (which isn't a huge issue, since we wouldn't need it particularly in that period).
- No matter how I work the figures, taking into account what we'd make on our deposit if it stays in other investments, the costs associated with running/maintaining a condo, and potential increase in equity over time, I can't make this look like a good investment on paper.
So here's the problem; I have an emotional reaction that we should agree to the terms of the seller, just because I really like the complex, and the unit. But in pure business terms, we come out a little worse off after 5 or 6 years owning the condo, than if we just did nothing.
One big issue with 'what-if' modeling is that there is very little on which to base a prediction of how well our other investments might grow, or how fast the CA property market might rise in the next five years; so a lot of this is guesswork.
The difference between our last offer and full asking price is just 2.57%; though in reality, the price they want is about 5.7% higher than a fair market value for the property. So we'd effectively be starting out with a 5.7% loss...
Bill and I will have to sit down and talk this through tonight - do we go with a good solid investment decision, or an emotional decision (plus the 'joy' and benefits of ownership of the property long-term).
