When Realization Strikes

OK, everyone here is sick of this; so am I but this is too funny.

From the Southwest FL Herald Tribune: Realty's summer slowdown hits early.

A condo at Grand Preserve on Lemon Bay looked like a hot deal when Dave Weam picked up the contract in 2005.

"I paid $650,000 for it and I owe less than $300,000 and it is costing me $3,000 a month, with the maintenance fee and property tax and payment (principal and interest)," he said. "I would rent it for $2,200. That is where we are at."

"If I lowered the price to $525,000 or $550,000, I still don't think I'd be able to sell it," Weam said. "And if I am willing to rent it for $2,200 a month, why would somebody want to buy it? It is a lose-lose for me."

Ooooh, it's almost too funny when you see the gears whirling.

Firstly, there's the cost of capital of the first $350K. You could be earning a hefty $1200 or so after taxes. Even after that, the rent is $800 less than the outlay. So he's in the hole for roughly $2000 each month.

You can see that he can see the dots but he can't draw the lines connecting it all up.

The answer, of course, is obvious.

DOH!!!