Originally Posted by Andy R
I need a reality check from some of the wise folks on here (comments from the less wise also appreciated).
Dilemma: 10 years ago I lived in a cabin at the top of a mountain in Gilpin County, Colorado. I LOVED it up there, in the Aspen trees with the pure clean air. I used to stop at this one piece of land which had a short hiking trail out to this amazing knoll where there were 235 degree views of the continental divide. IMO, it was the best view and building site I have ever seen. I dreamed about owning this land and building a small cabin.
For the most part I am pretty good at deferring pleasure opting to save now and enjoy later. This opportunity has presented itself and I am seriously considering trying to nab this slice of real estate heaven (can you tell I admire it). Am I crazy for wanting to buy this land knowing that other investments will probably have better returns over the next 30 years? I know I am emotionally connected to this issue but should I allow the emotions to be part of my decision or just let the logical/calculated logic drive my decision? Any advice for someone like me who's facing a decision like this?
Reality check? You bet. I don't have the answers but I have lots of questions to consider.
Are you really in love with the property itself? Or are you more in love with your memories of the way it made you feel, what it represented at that time of your life, and the warm glow of today's sentiments? Or are you more in love with the idea of being able to conceive a plan and carry it to fruition across all of those years? Or are you a bit
baby sleep deprived
burned out on your current life and in love with the romantic images of "carpe diem", "follow your dreams", and "jump in with both feet"?
How many more years are you willing to postpone your ER for this dead equity?
Two sea stories:
1. Thousands of unmarried childless Navy ensigns pass through initial training and their first sea tours in areas like Norfolk & Pensacola. The country is easy to love, they're major homeports with the potential for many followon tours, and the youngsters have more money at that time of their lives than they've ever had before. So for all the right reasons, they buy a house.
Three years later they move on. Only about 20% of them ever return to those areas, and when they do the property isn't the right place for them to live in-- too small or bad schools or not close enough to spouse's employment or better deals on base housing. For literally decades they pay mortgages and taxes on rental property that loses a little bit each month (but they make it up after 20 years?), sucks up thousands in repairs and property-management fees, and needs a major overhaul every 7-10 years. Add in the usual tenant headaches.
At the end of their careers they retire from active duty and start a civilian career (gee, wonder why they don't have the assets to ER)-- but not in Norfolk or Pensacola.
When they finally retire, they go to live in their dream location in their dream home. By now you can guess that it's not where they've been paying a mortgage & property taxes for all those years. They sell that house to be able to afford their current dream home.
Will your Colorado mountaintop be that type of place for the next 20 years?
2. 20 years ago we Nords couple (childless at the time) found a similarly attractive home. (For those who know the North Shore, it's Alapio Drive on top of Pupukea.) We were so committed that we put down $5K, acquired two mortgages, and had to rent out the basement. Lousy schools and an hour's drive (each way) to Pearl Harbor on a good day. But oh the country and oh what great views.
"Luckily" after eight months of acrimonious negotiations the deal fell through, we lost our $5K, and we never found out what it would be like to watch a $650K home lose half its value. To be fair, after that it rose in value 6x.
Today we live in a dream home with great schools, equally awesome views, and a central location to both the North Shore and the south shore. In other words, it's better than anything we could've imagined 20 years ago. If we'd been homeowners up there (and financially leveraged to the point of bankruptcy) then we never could've afforded to snap up this place. Oh, and our Pupukea life would've been hell while we waited until we could ER to our "dream" home.
Will that Colorado mountaintop be a similar financial millstone around your neck? What will that investment do to your current quality of life?
Sociologists have hypothesized that there are up to 250 perfectly acceptable soulmates for every human. (I didn't get that far in my own research, but I'm willing to accept that it's a pretty big number.) I'd hypothesize that there are at least as many geographic locations with great views and other amenities capable of creating the same feelings you want to enjoy once again... only they don't require you to invest anywhere near as much money over all those years as this Colorado mountaintop. Most of them are probably a lot warmer in the winter, too.
I'm all about deferred gratification, but in this situation it's probably better to focus your human capital and your assets on building the best life you can today for you and your family where you are right now, and not trying to build the home you imagine you'll want in 10-20 years. If you want the property to use for the occasional vacation location (a different type of financial millstone) then that's what you should do. (Good luck with going to the same place for an annual week or two for the next 10-20 years.) But don't count on being the same person in 10-20 years, interested in doing the same thing at the same place, as you are today or as you were all those years ago. Life happens while you're making all these long-range obligations.
But I agree that there is an emotional component to every financial decision, and sometimes the emotional component is judged to be the more important one than the strictly financial logic. You just have to be willing to pay for it. And keep paying.