Posted by Bernd Hanak on July 13, 2011 at 18:22:01:
Good morning, Steve
Shawn?s suggested cash price seems to be reasonable. However, you might want to consider buying with some of the proceeds, say, a half bag of ?junk-silver? (pre-1965, 90% silver coins). Such an investment I expect to nominally appreciate between 25% and 50% per year for the next few years without spending any of your own energy. Besides, it is the poor man?s gold.
How much is enough? - Posted by Dr. B. (OH)
Posted by Dr. B. (OH) on July 12, 2011 at 19:26:13:
No this is not a political question. It is a business question.
I have a home for sale for $21K and am willing to hold the financing at 10% down $325/mo at 12.75% interest for 91.02 mos. That’s $32,681 (including down payment) over the next 7.59 yrs.
If I have $9218.32 plus 20 hrs of my time in it, how do I determine what is a sensible all-cash discounted price I should take for it today.
Things to think about:
-The time value of money.
-It is likely that high inflation will lower the purchasing power of many of those future $30,581 dollars (full payout minus today’s down payment.
-On average, I get a financed home back in 11.93 mos.
-I have none of my own money in this deal.
-There have been rather few nice deals available in nice parks, lately.
-It costs a little over $3000 to move and set up a home here.
My general instinct is to keep the home in financed mode and churn away. However, I have gotten a sizable cash offer and turned it down. Naturally I’d take $21K cash for it. So the question remains, Is there a sensible discounted sale price somewhere between my cost (as above) and $21K, and how do you arrive at that?
Steve
Re: How much is enough? - Posted by JeffB (MI)
Posted by JeffB (MI) on July 15, 2011 at 11:03:06:
My 2 cents. The only thing that really matters here is the opportunity cost of letting your capital work in the financing of this home, as opposed to taking that cash and doing something else with it.
If the capital has a higher and better use, then take the cash and apply it elsewhere. If not, sell the home on terms. At least that’s how I look at these deals (not that I ever get cash offers that big anymore!)
Re: How much is enough? - Posted by shawn sisco
Posted by shawn sisco on July 12, 2011 at 22:36:21:
Steve,I would have to take a truly all cash- as-is-
where is $15,000 offer.
You have already mentioned many good reasons to take
your gain, but here is mine:The $5k gain is probably
enough $$ for you to invest in another sellable LD
house-a zero risk deal for you. The other factor is
that this business is streaky -you are probably more
apt to find and buy another bargain right now than you
will be while screening buyers.