Author Topic: Class of 2015  (Read 72100 times)

vine

  • 5 O'Clock Shadow
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Re: Class of 2015
« Reply #300 on: November 15, 2017, 12:53:31 PM »
Nowhere near FIRE but I just stumbled across the post...

@vine, you mentioned that "most of my net worth is stuck in a stupid, unproductive condo." 

So that means your holding onto real estate in the US? Are you renting it out? (i'd guess not based on your word choice of "unproductive") Trying to sell it? I was just curious as to why you didn't liquidate the equity (which seems significant based on your "most of my net worth" statement) since you aren't living there anymore.

It is US based condo in a high COL area that I bought long before I had a clue as to what is and what is not a good investment. At the time I fell into the classic "buy the biggest and nicest thing you can qualify for" trap.

I do rent it out, but management fees, hoa dues and maintenance eat up most of the profit. From a cash flow standpoint it's not very productive. If I had used the same cash I've thrown into the condo over the years and invested in say a broad market mutual fund I'd have a much bigger stash now, and I'd now have liquid assets. Obviously that would be preferable.

So I call it unproductive, although in truth it's mildly productive. But it's way less productive than mutual funds or a better rental would be.

So why haven't I liquidated? I suppose because over time returns will get much better since it's a fixed mortgage. When I calculate long term returns (say 5+ years from now) the cash flow starts to look good enough for me. In the really long term the cash flow should be excellent.

The bigger reason is that it's easier in the short term to hold onto it than it would be to deal with selling. Real estate transactions are either expensive or a lot of work depending on how you go about it. I'm overseas at the moment and I'd rather not have to deal with it.

Finally, the condo is located in a city that I might be interested in living in again at some point in the future. The area is getting more and more expensive, the condo might be the only way I'll be able to afford to live there without having to go back to work.