A Tale of Two Investments

On today’s show we’re going to take you through thought experiment. I’m going to give you two distinct sales pitches. I’m going to bet that most people will choose the lifestyle investment.

The first is a luxury condo located in paradise. When you are not staying in your condo, it goes into the hotel's pool of rooms and you share in the hotel revenue. Hotel guests will pay for your vacation property.

The second sales pitch is for a two acre parcel of land in the downtown core that may have future development potential. For now, it’s a parking lot for 200 vehicles. The parking lot has daily and hourly rates, and a discounted rate for evenings and weekends. Parking is expensive at $24 per day or six dollars an hour for the first four hours, after which you pay the full day rate. The parking lot is often full each day. The land is expensive at $8M. If you finance a large percentage of the purchase, you are facing a debt service amount of about $56,000 a month.

The parking lot is not very sexy. It’s parking, surrounded by high rise office towers in the downtown core.

One of these will appeal to the true analytic investor, and the other will appeal to the lifestyle investor.

How many of the lifestyle investors will decline to even consider the parking lot?

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Host: Victor Menasce

email: [email protected]