Choose That Investment

[Bryan Hancock]

Which investment would you rather have?

Investment 1 - 50% Rule Candidate
Year 1 => -$10,000 + $1,200 = -$8,800 ($10k investment, $100/month “cash flowâ€)

Years 2 – 29 => +$1,200/year ($100/month “cash flowâ€)

Year 30 => +$200,000 + $1,200 = +$201,200 ($200k sale with debt-free product, $100/month “cash flow†and no REAL appreciation)

Or

Investment 2 - “Speculative†Small Appreciation Case
Year 1 => -$10,000 - $1,200 = -$12,200 ($10k investment, -$100/month “cash flowâ€)

Years 2 – 29 => -$1,200/year (-$100/month “cash flow)

Year 30 => +$484,452.50 - $1,200 = $484,252.50 ($484kish sale with debt-free product, -$100/month “cash flow†and 3% REAL appreciation)

?

What say you?

How about the choice between these two?

Investment 3 - 50% Rule Candidate With Short-Term Hold
Year 1 => -$10,000 + $1,200 = -$8,800 ($10k investment, $100/month “cash flowâ€)

Years 2 – 4 => +$1,200/year ($100/month “cash flowâ€)

Year 5 => +$200,000 +$1,200 – 199,000 + $10,000 = +$12,200 ($200k sale with debt amortized $1k, $100/month “cash flow,†no REAL appreciation, and $10k investment back out)

Investment 4 - “Speculative†Small Appreciation Case With Short-Term Hold
Year 1 => -$10,000 - $1,200 = -$12,200 ($10k investment, -$100/month “cash flowâ€)

Years 2 – 4 => -$1,200/year (-$100/month “cash flow)

Year 30 => +$231,854.80 - $1,200 - $199,000 +10,000 = $41,654.80 ($232kish with debt amortized $1k, -$100/month “cash flow,†3% REAL appreciation, and $10k investment back out)

What say you?

So you have to choose either Investment 1 or 2 AND Investment 3 or 4. Afterwards you can choose between all four of the investments for your top choice. Please explain your reasoning ;-)

Disclaimer: I typed this out quickly so I may have fudged the math somewhere. I think it is right though. There are some things glossed over (imperfect) because I didn’t want to type a 10,000-word post so please don’t pick it to death.