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Old 06-29-2010, 07:12 AM   #20
Mink Islander
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Default More than just memories

If you took that $7604 of annual negative cash flow and invested it in montlhly installments (i.e. $634/month), you would have a tidy sum of $$ at the end of 20 years. For example, if you invested it at a paltry 2% per annum, you'd have nearly $187K, at 5%, over $260K and at 8% (a common long term equity return assumption), you'd have over $373K. So if you buy the condo slip, (all the intangibles aside -- which are real but very subjective considerations) you are making an implicit bet that the slip will appreciate in value more than if you had invested the money elsewhere. And by comparison, the sum of the interest, taxes and condo fees plus your $100K investment will total $223K ($69K of interest, $54,000 of property taxes and condo fees plus your $100K investment) over those 20 years. So if you're making this as an investment, you really need to think hard about where you believe values will go over the long term. Single asset risk too. On any risk-adjusted basis, I think it's tough to argue condon slips are good investments unless you really truly believe you've bought at a very low point in the cycle. Just my 2 cents (with a little help from my HP 19B II calculator!)
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