Should I Pay Cash, Sell Stocks or Pass on this Real Estate Deal?

[Sherrie P.]

I am considering buying a beach condo. Our family will probably enjoy it a couple weeks out of the year. (when we don't have paying customers).

Most of our money is tied up in Mutal Funds. If we buy the property, we will have to sell stocks and pay cash. (held long enough to pay Cap. Gain tax) .. Financing is not an option because we are retired so we don't have the income to support a loan. I cannot figure out how you decide which is a better return on your investment. On one hand, the stock market is doing well the past several months but no crystal ball for the future. Here are the numbers on the condo unit.

Cost of condo 260,000.00 (fully furnished)

Average annual rental income 20,000.00 (past two years)

Annual carrying costs 13,000.00 (untilites, insurance, cable etc. everyone except a mortgage if you have one)

If we use a local management company, that is an additional 25% commission.

I guess I don't know how to figure ROI on investment property. I could really use any advice. Thank you in advance.

Sherrie

[Patrick L.]

Originally posted by Frank Romine:

Who knows the stock market might collapse.

So might the real estate market.