So, last week we mentioned that we were buying another investment apartment in DC. Well, after some going back and forth between the agents involved, ourselves and the seller, we eventually settled on a price of $182,000.
The deal isn’t closed yet. In fact there are several things that still need to be wrapped up. For example, we are still waiting for the bank – we are going with BB&T – to approve lending for that particular building. We also need to arrange an inspection and a few other last minute items.
Now, a key question you might be wondering is: does buying this place make sense? After taxes we should be making about as much as our stocks are paying us. It will also heavily weigh our portfolio towards investment real estate in Washington DC. as doing the deal will draw most of our stocks and available cash. These factors are hard to quantify, but my sense is the property would be neutral in terms of our cash flow and overall net worth growth.
So, if it won’t substantially juice the bottom line, why do it?
First, for my part, the decision is essentially emotional. When you get married and you choose to integrate your finances as much as we have, you find that sometimes your partner has de facto veto power. Its harder to move forward on complex projects if your partner isn’t interested or doesn’t “buy in” – they can just sabotage the processes via inaction. So I’ve been wanting to get more real estate for a while, and this is the first time my wife has been really committed to the idea.
Second, I love owning property and having people pay me a rent check. For some reason, this is tremendously gratifying to me. I also like the satisfaction from knowing that I am providing someone value. So, from my standpoint the reasons to get the place are emotionally driven: I find getting paid and running a business to be ego reaffirming.