Reply to $7M vs $10M

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Reply to "$7M vs $10M"

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]There is no difference between a net worth of $7M vs, a $10M net worth.  Unless you are looking  to buy some big expenditure like a $1.7M Beach house.  Better off to do the beach rental for 2 weeks and let someone else deal with maintenance and upkeep. A diversified portfolio would easily generate about $250k off the $7M.  For most people that would be enough.  You need more cash flow............you are a spender.  Maybe that should be the focus and not the nest egg.  Curb your spending. This is coming from a 63 yo man with a net worth of $4M.  No worries at all.[/quote]

The 2 week beach rental is so true.  We have researched and concluded that a "vacation home" is not worth the purchase unless you plan to actually be there for 4-5 months of the year.  If you plan to rent it out, that means you have to plan your scheduled times a year in advance and if you can do that, you can plan and find a rental just as easily.  When you add maintenance and all costs you likely come out ahead just renting when needed[/quote]

[b]Except that if you keep the second home long enough, there’s a good chance the asset appreciation will cover the carrying costs or even net you a profit.[/b] We’ve had our vacation home 12 years and in that time it has tripled in value. I would have been happy breaking even, but if we sold it right now we’d come out have doubled our investment after expenses. [/quote]

That's recency bias.  I don't think RE has returned more than the stock market over the long-term.[/quote]

And I'm the PP.  We already have two homes within a 90 min drive from each other.  So I have plenty in real estate to get any appreciation.  We've looked at purchasing a condo in Hawaii.  But we have even had a RE agent tell us it is not worth it unless you plan to use it 4-5 months of the year.  Look at what happened to all the condo owners in Hawaii for almost 2 years with covid---they had to sell because they couldn't afford it without renters.  And condos in Hawaii appreciate, but not that rapidly.  Then you have the risk of hurricane hitting it, you have to pay someone to manage the renters, the cleaners, the repairs, boarding it up if a storm is going to hit, etc.  If you need the rental income to afford it, then count out going over thanksgiving or xmas because that is when you get extra high rental rates and pay for much of your costs.  But if you want to go then, you loose that chance.  Also, to rent it out successfully, you have to plan when you go a full year in advance.  If I'm going to do that I will just pay for the 2-3 weeks I want to go and not worry about the costs and hassle.  Also, In Jan I want to go to Maui, in July I want to go to Kauai next year I want to visit the Big Island and Europe.  So I'm not really using it as a vacation home for more than 2-3 weeks per year at most.  If it sits vacant for more than X days per month, then I'm not breaking even.    And I've tracked condos on all 4 major islands in Hawaii for over a decade----most of them have not appreciated as much as DCUM/SF/LA/Seattle/Boston area.  I've had two real estate agents in Hawaii tell me not to buy unless we plan to actually live in it or it will cost us [/quote]

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